20130802-DBS_Group-Less_negative_towards_BEA_11页_243kb

报告摘要

Summary of DBS Group Research on Bank of East Asia (BEA)

Core Content

This report from DBS Group Research provides an analysis of Bank of East Asia (BEA) with a HOLD recommendation and an updated Price Target (PT) of HK$30.50, up from the previous HK$27.40. The report highlights a significant earnings and TP revision based on improved performance and outlook for BEA, particularly in the context of China's financial environment.

Main Points

Earnings Surprise: BEA's 1H13 net profit increased by 13% year-over-year (y-o-y) to HK$3.38bn, exceeding both the analyst's previous estimate and the Bloomberg survey mean.
NIM Improvement: The net interest margin (NIM) rose by 20bps y-o-y to 1.83%, driven by a higher loan to deposit ratio (LDR) and a strategic shift to higher yielding assets.
Capital Adequacy: Core Tier 1 Capital Adequacy Ratio (CAR) improved to 10.5% as of June 2013, indicating better financial strength and Basel III compliance.
Dividend Yield: The dividend yield increased to 4.2%, with higher dividend per share (DPS) forecasts.
Earnings Forecast: FY13-14F EPS estimates were raised by 13-18%, primarily due to improved NIM and fee income.
Market Position: BEA is the fifth largest bank in Hong Kong in terms of total assets, with a strong focus on SAR and Mainland China.
Catalysts: The report suggests that moderately tighter liquidity in China could benefit BEA more than its Hong Kong peers, and a potential Guoco Group share acquisition could further boost sentiment.

Key Information

Reason for Report: Significant earnings and TP revisions due to better-than-expected performance.
Price Target: HK$30.50 (up from HK$27.40).
Analysts: Alexander LEE CFA and Nicole Wu.
Market Capitalization: HK$66,609m / US$8,588m.
Major Shareholders: Caixa Bank (16.4%), Guoco Group (15.0%), Sumitomo Mitsui (9.5%).
Free Float: 59.1%.
Average Daily Volume: 2,503,000 shares.

Financial Highlights

Net Interest Income (NII): Increased by 22.6% y-o-y to HK$5,664m in 1H13.
Non-Interest Income: Grew by 19.1% y-o-y to HK$1,981m.
Total Income: Rose by 11.7% y-o-y to HK$8,320m.
Net Profit: Increased by 13.0% y-o-y to HK$3,376m.
EPS: Grew to HK$1.43 in 1H13, up 6.0% y-o-y.
ROE: Improved to 12.2% in 1H13, up from 11.4% in 1H12.

Valuation Metrics

PE Ratio: Increased to 11.2 in 2013, with a DDM-based PT of HK$30.50.
P/BV Ratio: Remained at 1.0x.
Book Value per Share (BVPS): Projected to increase to HK$29.90 by 2015.
Terminal Value Assumption: Based on a GGM model with 3.0% growth and 1.00x P/BV.
Present Value (PV): Calculated at HK$30.50, including HK$24.10 for the terminal value.

Key Assumptions

NIM: Expected to remain stable around 1.80% in FY13 and 1.77% in FY14.
Loan Growth: Projected at 10% for FY13, 6% for FY14, and 6% for FY15.
Net Fee Growth: Expected to grow by 16% in FY13 and 8% in FY14.
Cost-to-Income Ratio: Improved to 56.4% in FY13.
Credit Costs: Expected to increase slightly to 11.23bps in FY13.
Dividend Payout: Maintained at 45.0% for FY13, FY14, and FY15.

Sensitivity Analysis

NIM ±10bps: Net Profit ±12%.
Credit Cost ±10bps: Net Profit ±7.6%.

Dividend Discount Model (DDM)

EPS Growth: Expected to be 1.9% in FY13, -7.5% in FY14, and +8.5% in FY15.
ROE: Expected to remain around 9.9% in FY13 and 8.7% in FY14.
ROA: Projected to be 0.84% in FY13 and 0.77% in FY14.
Dividend Yield: Projected to increase to 4.2% in FY13.

Key Risks and Outlook

Maintain HOLD: Despite improved forecasts, the analyst believes a better entry level is around HK$28.
Impaired Loan Ratio: Increased to 0.38% in 1H13, driven by SME borrowers in Zhejiang and Fujian.
Liquidity Impact: BEA is expected to benefit more from tighter liquidity in China compared to Hong Kong peers.
Outperformance: BEA has underperformed other HK banks since early 2012, but the report suggests improving performance and potential for outperformance.

Ratings and Recommendations

Recommendation: HOLD.
Price Target: HK$30.50.
STRONG BUY: For a total return >20% over 3 months with identifiable catalysts.
BUY: For a total return >15% over 12 months for small caps, >10% for large caps.
HOLD: For a total return between -10% and +15% for small caps, -10% and +10% for large caps.
FULLY VALUED: For negative total return over 12 months.
SELL: For a total return < -20% over 3 months with identifiable catalysts.

Conclusion

The report concludes that BEA has shown improved performance in 1H13, particularly in terms of NIM and fee income, and that the analyst is turning less negative on the bank. However, the HOLD recommendation is maintained due to market conditions and a better entry point. The price target is raised to HK$30.50, reflecting improved dividend forecasts and earnings potential. The analysis highlights BEA's resilience in China's financial environment and potential for outperformance.