Buy Rating for Postal Savings Bank of China Co., Ltd. Class H: Strong Fee Income Growth and Strategic Focus Amidst Challenges

Postal Savings Bank of China Co., Ltd. Class H (1658 – Research Report), the Financial sector company, was revisited by a Wall Street analyst today. Analyst Manyi Lu from DBS maintained a Buy rating on the stock and has a HK$5.90 price target.

Manyi Lu has given his Buy rating due to a combination of factors influencing the Postal Savings Bank of China Co., Ltd. Class H’s stock. Despite the bank’s first-quarter results falling short of expectations due to a decrease in net interest margin and an increase in impairment costs, there are positive aspects that support a Buy rating.
One of the key reasons for the Buy rating is the bank’s strong fee income growth and improved cost efficiency, which have led to an increase in pre-provision operating profit. Additionally, the bank’s strategic focus on differentiated growth areas, such as the ‘Sannong Business’ targeting rural areas, is expected to drive loan growth. While the bank faces challenges with asset quality, particularly in retail loans, the recent capital injection is anticipated to bolster its capital position. The revised target price of HKD 5.2 reflects these considerations, alongside a lower cost of equity assumption due to reduced systematic risk.

Lu covers the Financial sector, focusing on stocks such as Agricultural Bank of China, Bank of Communications Co, and BOC Hong Kong (Holdings). According to TipRanks, Lu has an average return of 23.6% and a 75.00% success rate on recommended stocks.