Executive Summary
Zhongyuan Bank delivered a modest top-line expansion in Q3 2024, with revenue of RMB 3.5869 billion, flat gross profit margin (reported as 100% by the data), and a solid net income of RMB 698.2 million. The quarter showed meaningful QoQ growth in revenue ( +21.68% ) and a sizable YoY uptick in net income (+155.0%), but operating cash flow remained negative at RMB -22.9 billion as working capital movements dominated cash generation. For investors, the backdrop combines a low-cost balance sheet with a highly leveraged cash-flow dynamic and a balance sheet structure that supports liquidity while yielding an exceptionally low return on equity and asset turnover.
Valuation remains attractive on a price-to-earnings of approximately 6.5x and a price-to-book of about 0.19x, with a dividend yield near 1.86%. However, profitability metrics (ROE ~0.72%, ROA ~0.051%) and negative operating cash flow highlight earnings quality concerns. The bank retains a strong liquidity profile (current ratio ~1.49x) and a substantial net cash position, but is exposed to macro risks in China’s banking environment, asset-quality dynamics, and potential moderation in loan growth. The combination of conservative capital structure, improving but still modest profitability, and a deep discount to book value suggests an investment stance tilted toward risk-adjusted upside if efficiency improves and credit costs stabilize.
Key Performance Indicators
QoQ: -23.89% | YoY:107.20%
QoQ: -31.86% | YoY:155.02%
QoQ: -49.59% | YoY:62.67%
Key Insights
Revenue: RMB 3,586,929,500 in Q3 2024; YoY +1.25%, QoQ +21.68% (four-quarter data show Q3 2024 RMB 3.587b vs Q3 2023 RMB 3.543b).
Gross Profit: RMB 3,586,929,500; Gross margin effectively 100% as reported.
Operating Income: RMB 653,124,500; margin ~18.2%.
Net Income: RMB 698,219,000; net margin ~19.47%.
EPS: RMB 0.0122; Diluted EPS RMB 0.0122; YoY +62.7%, QoQ -49.6%.
ROE: 0.72%; ROA: 0.051%; Asset Turnover: 0.00263x; Debt to Equity: 0.139x; Debt Ratio: 0.982%; Current Ratio: 1.494x; Quick Ratio:...
Financial Highlights
Revenue: RMB 3,586,929,500 in Q3 2024; YoY +1.25%, QoQ +21.68% (four-quarter data show Q3 2024 RMB 3.587b vs Q3 2023 RMB 3.543b).
Gross Profit: RMB 3,586,929,500; Gross margin effectively 100% as reported.
Operating Income: RMB 653,124,500; margin ~18.2%.
Net Income: RMB 698,219,000; net margin ~19.47%.
EPS: RMB 0.0122; Diluted EPS RMB 0.0122; YoY +62.7%, QoQ -49.6%.
ROE: 0.72%; ROA: 0.051%; Asset Turnover: 0.00263x; Debt to Equity: 0.139x; Debt Ratio: 0.982%; Current Ratio: 1.494x; Quick Ratio: 1.494x.
Dividend Payout: 48.3%; Dividend Yield: 1.86%; Price to Book: 0.188x; Price to Earnings: 6.50x; Price to Sales: 5.06x.
Cash Flow (operating): RMB -22.912b; Free Cash Flow: RMB -23.627b; Net Change in Cash: RMB -100.58b.
Cash and Equivalents: RMB 39.837b; Total Assets: RMB 1,365.1969b; Total Liabilities: RMB 1,264.8137b; Total Equity: RMB 96.5578b.
Net Debt: RMB -26.413b (net cash position).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
3.59B |
1.25% |
21.68% |
| Gross Profit |
3.59B |
1.25% |
21.68% |
| Operating Income |
653.12M |
107.20% |
-23.89% |
| Net Income |
698.22M |
155.02% |
-31.86% |
| EPS |
0.01 |
62.67% |
-49.59% |
Key Financial Ratios
operatingProfitMargin
18.2%
operatingCashFlowPerShare
$-0.4
freeCashFlowPerShare
$-0.41
dividendPayoutRatio
48.3%
Management Commentary
No QQ3 2024 earnings call transcript data were provided in the materials. Consequently, no management quotes or theme-driven highlights from an earnings call could be extracted. If the transcript becomes available, relevant quotes organized by themes (strategy, operations, market conditions) will be incorporated with contextual analysis.
Forward Guidance
There is no explicit forward guidance in the supplied data. Investors should monitor: (1) Loan growth trajectory and credit costs in a slow-growing macro environment in China, (2) net interest margin development and non-interest income mix as a driver of profitability, (3) capital adequacy and liquidity metrics given the negative operating cash flow yet strong net cash position, (4) disposal or reallocation of non-core assets (notably the sizable 'other non-current assets') to improve efficiency and asset turnover. Given the bank’s valuation (P/B ~0.19x, P/E ~6.5x) and robust liquidity, the upside hinges on a sustained improvement in profitability and cash flow conversion, while the primary downside risk centers on credit quality deterioration and slower loan origination in key segments.