Manyi Lu, an analyst from DBS, maintained the Buy rating on China Merchants Bank Co (CIHHF – Research Report). The associated price target remains the same with HK$56.50.
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Manyi Lu has given his Buy rating due to a combination of factors including China Merchants Bank Co’s strong position in the wealth management sector and its sensitivity to supportive economic policies. The bank’s retail assets under management have shown significant growth, indicating a recovery in its wealth management business. Despite a decrease in fee income in FY24, there is an optimistic outlook for positive growth in FY25, supported by a more active Chinese capital market.
Furthermore, the bank’s earnings are expected to grow at a compound annual growth rate of approximately 5.3% from FY24 to FY27. Although the net interest margin is anticipated to decline, the impact will be mitigated by lower funding costs and higher interest rate expectations in China. The bank’s share price is expected to outperform its peers due to its retail focus and the anticipated economic growth and policy support in China. The target price has been revised upwards, reflecting a positive outlook on the bank’s future performance.