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<Research>CICC Elevates BOC HONG KONG (02388.HK) TP to $29.53; Asset Quality Solid
Recommend 16 Positive 31 Negative 10 |
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BOC HONG KONG (02388.HK)'s first-half results were slightly ahead of expectations, mainly due to a better performance in net interest income, according to a research report from CICC. The group's ROE reached 12.39% in 1H24, returning to above 12% for the first time since 2019. The broker noted that BOCHK's valuation is still at a historically low level and believed the discount may be mainly due to market concerns over Hong Kong's economy and asset quality. As the US interest rate cut cycle approaches, the rebound in Hong Kong's macro-economy and market sentiment is expected to boost the lender's valuation. BOCHK declared an interim dividend of $0.57, with a payout ratio of 30%. Although the payout ratio dropped 3 ppts YoY, CICC highlighted that the dividend has been steadily improving. The broker also believed that compared to the interim dividend payout ratio, the annual dividend payout ratio is more worthy of attention, and it is optimistic that BOCHK's dividend payout ratio for the whole year will steadily improve. In addition, considering the lender's relatively abundant capital, the broker expected it to make effective use of capital through dividend payouts, buybacks or M&A in the future. Considering the significant improvement in ROE and solid asset quality, CICC raised its target price on BOCHK by 4.7% to $29.53 and maintained its Outperform rating. The broker kept its earnings estimates unchanged. AAStocks Financial News |
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