AgBank's first day of trading or waves

In the context of AgBank's IPO on July 15, the Wednesday drop in the market may reflect investor caution. The prevailing view in the current market is that ABC's pricing is reasonable, and if the IPO brings market stability, it may bring new opportunities for the market rebound.　　However, we believe that the first day of Agricultural bank trading may be out of the blue, one is not to plunge, the green shoe mechanism and public opinion on its bright spot disclosure, to a large extent closed the agricultural bank's fall space, but also difficult to rise, the current market is also difficult to appear new bull market. First, from the price of ABC, compared to market expectations, especially relative to other state-owned listed banks, Agricultural Bank 1.76 times times PB pricing has a certain discount space. However, given that the entire banking sector is at the peak of the performance growth cycle, the downward pressure on future performance remains. By public data, China's listed banks ' revenue growth was 40.6% in 2007, while 2008 and 2009 were 26% and 1.5% respectively, with a marked decline in income growth. At the same time, 2007-year profit growth reached a peak of 56.9%, while 2008 and 2009 respectively fell to 30.5%, 17.4%. In view of the overall profit growth and revenue growth of listed banks has peaked since 2007, and 2009 years did not appear in the volume of the optimistic situation, do not rule out the possibility of negative bank performance.　　Therefore, from the perspective of state-owned shareholders, in order to avoid the loss of state-owned assets, the IPO pricing also to consider the value of state-owned assets, the 2009 1.76PB should not be the sale of state-owned assets. Second, the market's concerns about bad assets in the banking sector may have somehow been reflected in the overall valuation of the banking sector. But the question of asset quality has not been fully validated, and the fog of bad bank debt remains unclear. The extent to which bank refinancing can make up for the capital shortfall is likely to be hard to measure with existing data. According to the rule that China's non-performing loans lag credit growth for 2-3 years, the huge amount of loans since 2009 may result in the rebound of non-performing loans after 2 years, in which the credit risk of government platform companies is particularly worth paying attention.　　Therefore, from this premise, the next two years bank refinancing is still large, and there are many uncertainties. Third, even if future performance can sustain a 2009-year profit level, according to the current research results, 1.76 times times the value of PB does not imply undervaluation. Based on the current calculation of the risk capital return of the listed banks by 14.6%, the reasonable market net rate is only 1.3 times times. The return on risky assets of around 15% is also based on the premise of a 2009 peak in banking profitability.　　It would be difficult to continue to offer such a high level of valuation if the future banking sector were to rebound sharply. On the whole, since 70% of the current revenue from the listed banking industry is derived from spreads, and once the monopoly-protected spreads are liberalized, bank stocks may reproduce the sharp response of the insurance stocks to the open interest rate. From the ongoing process of financial market opennessHow long can China's banking-protective spreads be sustained? Add the local financing platform, the real estate market system risk and so on. All of these market uncertainties, for the current ranking of the world's first listed banks of profit, I am afraid there are challenges and pains.