Shenwan Hongyuan Research: First, Shanghai Bank is given a "increase holdings" rating, and the fundamentals have entered a bottom stabilization zone.

Shenwan Hongyuan Research pointed out that with the transformation of credit structure and orderly resolution of risks, the fundamentals of Shanghai banks have entered a bottoming out stabilization range. In addition to the advantages of high dividend yields and convertible bond themes, in the process of valuation repair in the banking sector, the valuation of Shanghai banks is expected to rise. Furthermore, Shanghai Bank is based in the core area of the national economic and financial center. If the trend of economic recovery becomes clearer in the future, it will greatly benefit from the economic recovery dividend, and its performance elasticity will become more prominent. It is expected that the annual growth rates of net profit attributable to the parent company from 2025 to 2027 will be 2.1%, 3.5%, and 5.6% respectively. The closing price on September 25 corresponds to a PB ratio of 0.51 times for 2025. We give Shanghai Bank a target valuation of "0.6 times PB" for 2025, corresponding to an 18% increase potential. We initiate coverage with a "hold" rating.