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<Research>UOB Kay Hian Says CN Banks Interim Earnings Generally in Line; Top Pick CM BANK (03968.HK)
Recommend 9 Positive 7 Negative 3 |
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UOB Kay Hian commented in its recent report that the 1H24 earnings of Chinese banks were largely in line with expectations. The broker estimated that the cumulative reduction in mortgage rates by 80 bps will impact next year's earnings of Chinese banks by 6.5 bps or 9.2%. UOB Kay Hian maintained an Overweight rating on Chinese banks, noting that macro headwinds and the mortgage repricing news could affect stock prices. However, after the recent correction, the valuation of such stocks has been depressed and the dividend yields rebounded, which may bring a ray of hope for defensive stocks. The broker selected CM BANK (03968.HK) as its top pick, stating that even though CM BANK has higher mortgage risk, with its higher NII contribution, financial indicators (including ROE, asset quality, and provision buffer) remaining superior to peers, and a dividend yield of 7.2%, the impact on its potential earnings is relatively lower than that of state-owned banks. Believing that CM BANK has ample buffer capital to maintain its dividend level, UOB Kay Hian gave it a Buy rating with a TP of $42. AAStocks Financial News |
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