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2026-08-21 11:28:58 M Stanley published a report forecasting that BOC HONG KONG (02388.HK)'s profit after tax and pre-tax profit for 1H26 will remain stable YoY, although they may decline QoQ due to the impact of non-interest and non-fee income. Operating trends were mixed, with weaker bancassurance business and NIM offset by loan growth and other fee income. Credit risk in Hong Kong commercial real estate remains manageable. Management is expected to announce details of its 2026-2028 shareholder return plan during interim results, which is expected to support the share price. The broker noted that the market focus is on the capital return plan, with management expected to disclose details during the interim results announcement. Measures may include raising the common equity payout ratio to the upper end of the 40%-60% range, special dividends and share buybacks. M Stanley forecast an interim common dividend of HKD0.58 for 1H26, but believed the key issue is not the quarterly dividend itself, but how quickly management is willing to reduce excess capital and whether the announced return plan will be sufficient to alter the medium-term return profile. M Stanley raised its EPS forecasts for BOC HONG KONG for 2026-2028 by 1.5%, 4.4% and 5%, respectively, mainly reflecting stronger balance sheet growth. The TP was raised from HKD39.9 to HKD44.2. However, the broker believed the current share price of BOC HONG KONG already reflects its valuation, with forecast 2026 P/E ratio at 12.8x, P/B ratio at 1.42x, cash return on equity at 11.4%, and dividend yield at 4.4% (plus a forecast 1% share buyback). The valuation is not cheap. The broker maintained a "Reduce" rating, believing better risk-reward opportunities can be found in HSBC HOLDINGS (00005.HK) and STANCHART (02888.HK). (ad/da)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |