China Construction Bank: Strong Risk Management and Attractive Valuation Amidst Market Stabilization

DBS analyst Manyi Lu reiterated a Buy rating on China Construction Bank (CICHF – Research Report) today and set a price target of HK$9.10.

Manyi Lu has given his Buy rating due to a combination of factors that highlight the potential for China Construction Bank’s stock to appreciate. The bank’s risk indicators have shown resilience, with a decrease in the non-performing loan ratio and an increase in the coverage ratio, suggesting a strong risk management framework. Additionally, the bank’s dividend yield remains attractive, especially after the Ministry of Finance’s capital injection, which supports long-term investment appeal.
Furthermore, the potential stabilization of China’s property sector, aided by fiscal and monetary stimulus, could benefit the bank given its exposure to property developer loans and mortgages. Despite challenges such as declining net interest margins and fee income pressures, the bank’s earnings are expected to grow modestly. The revised target price reflects a favorable valuation, considering the lower risk premium due to increased capital inflow into the China/HK market, making the stock a compelling buy.