China Merchants Bank 3968

[winston]

not vested

China Merchants Bank: Six Reasons Why This Analyst Sees 80% Upside

By Isabella Zhong

Jefferies analyst Victor Wang, who rates CMB a buy, has a HKD38.5 a share target price on the mid-tier lender, which implies a towering 80% upside.

We believe a business deserves high valuation if it has
1) a high and sustainable ROA,
2) a vast growth potential, and
3) a high entry barrier.

CMB's retail business, with >50x profit growth in 2005-16, meets all the criteria and should help re-rate CMB.

A 20% profit CAGR (achievable via moderate B/S growth and gradual credit cost normalization) and a P/E re-rating to 12x (not high vs. global premium retail banks) could make the stock a 5-bagger in 5 years.

1. CMB has a clear leading position in retail banking. Based on a proprietary China Retail Banking Strength (CRBS), CMB scores best in all major areas. CCB/ICBC rank the 2nd/3rd while BOC/BCOM rank poorly.

2. CMB can sustain 3.2% high retail pre-tax ROAA, given 1) further economy of scale benefit; and 2) cost saving from physical-to-mobile channel diversion.

3. Retail business has vast growth potential. For instance, we estimate CMB's leading private banking division only covers 3.1% of the financial asset of China's high net worth families in 2016.

4. The leading retail position won't be challenged in the medium-term. Retail banking has a high real entry barrier. We expect only a few banks have the potential to become a strong retail franchise and even for them it will take a few years to create a real threat to CMB's leading position.

5. Near 20% 5-year profit CAGR is achievable for CMB. A scenario analysis based on modest assumptions suggests 19% 2016-21 profit CAGR. We see more upside from efficiency gain and the fees. Hence, CMB is the only China bank who can potentially lift dividend payout ratio, in our view.

6. Global peers with strong retail business are trading at much higher valuation. We found CMB's medium-term ROE should be compared to global peers and retail contribution may be even higher.

Source: Barron's Asia

http://www.barrons.com/articles/china-m ... 1495511579

[winston]

July 25, 2017

Not vested

<Research Report>JPM: CM BANK (03968.HK) Interim Profit Above Estimates; Rated Overweight

After market close yesterday (24 July), CM BANK (03968.HK) pre-announced 1H17 net profits of RMB39.3 billion, up 11% yearly and 9% ahead of JPM estimates.

Given that total revenue was only 1% higher than the broker's estimate and NPL ratio is 18bps lower than the broker's estimate, credit costs are likely a key factor driving the better-than-expected net profit growth.

Sequentially trends are broadly encouraging:-
1. liabilities growth of +4% quarterly was mainly driven by robust deposit growth of +5% quarterly;
2. NPL ratio declined by 5bps quarterly;
3. NIM likely to be flat sequentially according to our calculation, despite rising wholesale funding cost in 2Q;
4. fee income contracted quarterly and yearly, likely due to financial de-leveraging and value-added tax.

The broker reiterated Overweight rating on CM BANK, with target price of $25.5.

JPMorgan will will revisit its estimates subsequent to detailed 1H17 results announcement.

Source: AAStocks Financial News

[winston]

not vested

China Merchants Bank (3968) said its first- half profit rose 11 percent to 39.2 billion yuan (HK$45.97 billion).

It outperformed all other mainland banks and its share price has doubled since early last year.

Source: The Standard

[winston]

[b]<Research Report>JPM Elevates CM BANK (03968.HK) TP to $48; Rated Overweight[/b]

CM BANK (03968.HK)'s 4Q18 and 1Q19 earnings posted better-than-expected revenue momentum under the support of NIM, JP Morgan said.

JP Morgan raised CM BANK's 2019-21E earnings by 4%/ 5%/ 5% to RMB90.999 billion/ RMB102.833 billion/ RMB115.835 billion.

As the sector top pick, CM BANK was retained at Overweight, with target up by 14% to $48.

Source: AAStocks Financial News

[winston]

vested

China Merchants Bank Co Ltd - Strong profitability and stable asset quality

CMB reported 1Q19 net profits of RMB25bn, up 92% QoQ and 11% YoY, supported by Net Interest Margin (NIM) expansion of 6bps QoQ to 2.72%.

Nonperforming Loan (NPL) ratio dropped by 1bp to 1.35% and NPL coverage ratio increased by 499bps QoQ to 363.2% at 1Q19.

Core Tier 1 (CET 1) ratio went up by 14bps QoQ to 11.92%. There were also improvements in tier 1 ratio (10bps QoQ) and total Capital Adequacy Ratio (CAR) (18bps QoQ).

Although deposits growth was only up 1% QoQ, a positive sign is that lower cost demand deposits went up by 3.4ppt QoQ to 64.4%.

Overall, we are positive on CMB. Mainly because of the company’s strong profitability and stable asset quality.

Source: Phillips

https://internetfileserver.phillip.com. ... 190628.pdf

[winston]

Different from the rest

CMB’s wealth management product (WMP) fees have recovered and are set to rise in FY19-21F, based on our deep-dive analysis of new
ly-issued WMPs.

CMB is the only China bank in our coverage universe with rising ROE in FY17-18, and we see this continuing in FY19-21F due to multiple drivers.

CMB has a great share price track record around results reporting dates, even though it pre-announces headline net profit 1-2 months before results.

Remains our top pick in our China banking sector coverage universe.

Maintain Add rating and TP of HK$45.40.

Source: CIMB

https://brokingrfs.cimb.com/X1a2Vw2bLEf ... G-YNw2.pdf

[winston]

not vested

Investors Fear US Sanctions On CMB

Source: SCMP

https://www.scmp.com/business/banking-f ... stors-fear

[winston]

not vested

<Research Report>Nomura: CM BANK (03968.HK) FY19 Earnings Beat Forecast by 0.4%; Rated Buy

CM BANK (03968.HK), in its preliminary results for 2019, forecast the net profit to grow 15.3% YoY to RMB93 billion, 0.4% ahead of Nomura's estimates.

The rating was retained at Buy with target price of $52.99.

Source: AAStocks Financial News

[winston]

China Merchants Bank (ADD, tp:HKD63.20) - Best positioned for the sector recovery

We see CMB as best positioned to benefit from the recovery of sector profit growth, in part given its track record of significantly better growth than peers.

A stable dividend payout ratio, minimal impact from rising corporate defaults and a better regulatory environment are other reasons why we like CMB.

Still our sector top pick with an Add rating.

Our higher TP of HK$63.2 is due to assumptions of a lower ‘stressed’ NPL ratio and a higher Rmb/HK$.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... CFF9501AEB

[winston]

not vested

China Merchants Bank (3968 HK / 600036 CH) - Solid results; strategic initiatives to focus on retail and wealth management

China Merchants Bank (CMB) reported strong earnings rebound in 4Q20 with net profit surged 33% y/y owing to a 23% y/y decline in impairment charges.

CMB maintained its dividend payout ratio at 33% and declared a DPS of RMB1.25 for FY20.

Both net interest income and fee income rose 11% and 13% y/y respectively, driving an acceleration in revenue growth of about 11% in 4Q20.

Asset quality and capital position remained solid with non-performing loan (NPL) ratio declined 6bps q/q to 1.07% in 4Q20, the lowest level since 2Q14. NPL coverage ratio edged up by 2ppt q/q to 427%. Common Equity Tier 1 (CET-1) rose 64bps q/q to 12.3% in 4Q20.

CMB announced several strategic initiatives:-
i) the acquisition of 14.9% stake in Bank of Taizhou,
ii) acquisition of 25.9% stake in Merchants Union Consumer Finance Company, &
iii) having JP Morgan Asset Management (Asia Pacific) Ltd taking 10% stake in its wealth management unit.

We believe these initiatives enable CMB to better position in serving small- and micro-enterprises and to strengthen its retail and wealth management franchise, which should support further re-rating.

We raised our earnings forecasts by 6-10% in the coming two years and Fair Value estimate to HK$70 (3968 HK) / CNY 59.50 (600036 CH), which is set at 1.9x forward Price-to Book. BUY.

Source: OCBC