Bank of China (HK) 2388

[winston]

March 24 (Reuters) - Year ended December 31, 2008 (in million HK$ unless stated)
Shr (H.K. cents) 31.62 vs 146.09
Final Div (H.K. cents) nil vs 48.7
Net 3,343 vs 15,446
Net interest income 20,157 vs 19,395

BOC Hong Kong (2388.HK), a unit of state giant Bank of China, is Hong Kong's second-largest lender by assets after HSBC (0005.HK) (HSBA.L). The calculation of share earnings is based on the weighted average of 10,572.78 million shares in issue during the two
years. Total dividend for the year is 43.8 H.K. cents (including interim dividend of 43.8 cents) vs 91.5 cents.

The consensus (mean) forecast, according to a poll by Reuters Estimates, was for net profit of HK$6.31 billion for the year.

[winston]

BOC Hong Kong 2008 profit slumps 78%, omits dividend By V. Phani Kumar

HONG KONG (MarketWatch) -- BOC Hong Kong (Holdings) (HK:2388:boc hong kong hldg hkd5 HK:2388 8.27, +0.51, +6.6%) Tuesday reported a 78% slump in 2008 profit on write-downs linked to its investments and said it won't pay a final dividend to preserve capital.

Net income attributable to shareholders fell to HK$3.34 billion ($428 million), or HK$0.3162 a share, from HK$15.45 billion.

The bank's total assets increased 7.5% during the year to HK$1.15 trillion, while the ratio of impaired loans edged up to 0.45% from 0.44% in 2007. The shares rose 6.6% before the announcement

[winston]

Bank of China gears up to boost stake in Hong Kong subsidiary

Bank of China (3988), the world's third-largest lender by market value, said it will continually increase its stake in BOC Hong Kong (Holdings) (2388) over the next 12 months.

The Beijing-based bank owns about 65.8 percent of BOC Hong Kong's issued capital and will buy shares currently traded, it said yesterday.

There are no plans to take the unit private, Bank of China said.

The shares will be held on a long- term basis, it said.

BOC Hong Kong, the SAR's second-largest publicly traded bank by market value, last week posted its first full-year decline in earnings since a 2002 initial public offering.

Bank of China expressed confidence in the future development of BOCHK and said it will continue to strengthen strategic cooperation with its subsidiary.

It also wants to support the development of BOCHK in China and tap into its growth in the Asia-Pacific region. AGENCIES

[winston]

DJ MARKET TALK: Citi Raises BOC Hong Kong To Buy,Ups Target 94.1%

0924 [Dow Jones] STOCK CALL: Citigroup upgrades BOC Hong Kong (2388.HK) to Buy from Sell despite stock's recent strong performance on view valuations look reasonable at 11X FY10 P/E, over 5% FY10 dividend yield, 1.6X P/B for about 16% ROE.

Also tips book value upside from potential writeback of MBS values on belief MBS prices generally up about 10%-20% in 2Q09 through mid-May. Says bank well-positioned for pending CNY trade settlement plan.

Adds, well-positioned to benefit from property reflation due to high property-related lending exposure. Says bank most-leveraged in sector to stock brokerage if market turnover remains elevated.

Raises target price to HK$16.50 from HK$8.50 after increasing FY09-10 EPS forecasts by 11%, 36%, mainly to reflect lower credit cost, more benign-than-expected NPLs, higher deposit growth due to liquidity inflows. Stock ended yesterday down 2.9% at HK$13.32.

[winston]

Bank of China Helps Pay Lehman Notes in Hong Kong

BOC Hong Kong Holdings offered to pay 3.11 billion Hong Kong dollars ($401 million) to investors in notes tied to Lehman Brothers, Bloomberg News reported.

BOC, the local unit of Bank of China, and 15 other banks agreed to pay at least 60 cents on the dollar, for a total of 6.3 billion dollars, in a settlement reached with the Securities and Futures Commission and the Hong Kong Monetary Authority, the news service said.

Banks and regulators want to put the notes scandal behind them, and Hong Kong’s financial secretary called the deal reasonable, Bloomberg News reported.

The notes were sold to more than 40,000 investors, including the elderly and poorly educated people as well as mentally ill individuals, according to an investigation by the city’s central bank made public by lawmakers in April.

http://dealbook.blogs.nytimes.com/2009/ ... hong-kong/

[winston]

Not vested. From Phillips:-


Valuation

BOC HK`s loan growth relatively strong under its parent`s support; and its NIM is expected to bottom out next year, we estimate BOC HK`s 2010 EPS will hit the 2007`s record high again and ROE will rise above 16%. Based on our target 2010E P/B of 2.17x, which is 1 s.d. above the mean, we reach our 12-month target price of HK$20.66. We upgrade BOC HK`s rating to “BUY”, there is 19% upside potential relative to the last close price.


Key Risk
- NIM pressure is greater than expected
- Lower-than-expected loan growth

[winston]

Not vested. From Phillips:-

Valuation

After revising earning estimate, BOCHK's 2010E ROE and dividend yield will be 16.8% and 6%, we hence raise our target P/B ratio to 2.24x (previous: 2.17x) and our 12-month target price for BOCHK from HK$20.66 to HK$21.40.

We maintain our “BUY” rating on BOCHK, there is 30% upside potential relative to the last close price. The bank's good dividend yield makes it defensive at the current price, we recommend investors to buy BOCHK during the recent market correction.

[stilicon]

Taifook (does anyone know this house ?) issued a nice report on HK banking sector on 21/01/2010. They put a TP of HK$20,- on BOC HK. They have a DPS of 64c for FY09 and 91c for FY10.

With a current price of HK$16,08, that about a 5,6% yield.

Maybe, it is not a bad entry point. But I am still waiting.

[eauyong]

Taifook Securities's major shareholder is the Cheng Yu Tung family of New World Development group.

[winston]

Please see the Financial Industry thread.

The HK Banks may need to reduce their dividend yield by 10% to comply with Basel 3.