Analyst Manyi Lu of DBS reiterated a Buy rating on China Merchants Bank Co (CIHHF – Research Report), with a price target of HK$52.20.
Manyi Lu has given his Buy rating due to a combination of factors that highlight the potential for growth and stability in China Merchants Bank Co. The bank’s financial performance for FY24 met expectations, with a slight increase in net profit, and its asset quality remains largely stable. Despite a decrease in net interest margin, the bank’s performance was better than anticipated, and it is expected to benefit from lower funding costs and higher interest rate expectations in China.
Moreover, China Merchants Bank’s strong position in the wealth management sector, with a significant increase in retail assets under management, supports a positive outlook. The bank is also expected to benefit from China’s economic growth and policy support, which could lead to its share price outperforming peers. The valuation is supported by a dividend discount model, reflecting a lower cost of equity and a reasonable return on equity, making it an attractive investment opportunity.
In another report released on March 13, J.P. Morgan also maintained a Buy rating on the stock with a HK$56.00 price target.