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2009-6-16 10:34:00 a.m. HKT, XFNA
DJ MARKET TALK: Citi Ups Hang Seng Bank Target To HK$103 Vs HK$80
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| 1020 [Dow Jones] STOCK CALL: Citigroup raises Hang Seng Bank (0011.HK) target to HK$103 from HK$80 after increasing FY09-10 EPS forecasts 10%, 14%, mainly on lower credit cost assumption due to more benign-than-expected NPL environment. But notes, 1H09 NIM likely weak, down on-half due to impact of low interest rates on deposit spreads and free funds, bank's management indicates severe trade-finance contraction, pickup in mortgage lending insufficient to offset this weakness, China loans contracted on fierce competition by domestic banks. Keeps at Sell on rich valuations, low beta; expects stock to underperform. Says bank's earnings among least sensitive to economic recovery due to high profitability, ROA. "We believe HSB's valuations are rich on over 3X price/book, positive catalysts are lacking as negative trends are likely in almost every P&L line item, and earnings will likely be weak." Shares down 0.7% at HK$110.30. (LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
(Delayed by 1 hour)
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