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雷达卡
Potential slow global economic recovery supports flow into H-share
banks. Our strategy team has been cautious on the very short-term market
outlook since September and expects modest market correction. While
recovery is clearly under way, the latest macro data on US Sept. ISM and
unemployment may increase doubts on the pace of recovery going
forward. We believe investors' return to relative safe haven will drive
flows into H-share banks given strong earnings growth visibility.
• Better earnings momentum, more consensus upward revisions ahead:
We see further upward revisions to 09/10 consensus earnings forecasts as
the street may have overestimated credit charges in 2010. Our trip to
China during September confirmed that NIM has recovered from 2Q09
trough, although the pace of recovery is mixed. 2010 PPOP growth should
be at least mid 20s. Given improving economy and strong liquidity, credit
costs should stay at least stable if not improving further on stable asset
quality.
• Strong valuation and dividend yield support: Increasingly, we believe
earnings will drive further re-rating. In contrast to certain sectors, Chinese
banks offer probably the clearest earnings visibility for 2010 among major
sectors. We expect 32% 2010 earnings growth on back of at least mid-teen
percentage loan growth, a modest NIM recovery and stable asset quality
outlook for 2010. The sector is on average trading at 10x FY10 PE. Bigger
banks such as CCB-H, BOC-H also offer about 4% FY09 dividend yield,
adding defensive nature should the market consolidate in the near-term.
• A-share banks may offer better upside from 12M period. As we argued
in our recent SPDB note, recent A-share weakness provided good entry
points in A-share banks. We believe domestic investors may have
exaggerated capital concerns of medium-sized A-share banks. Post their
respective announced capital raisings, we don't see any urgency for more
capital given capital rules may be tightened on a 1-2 year progressive
course only, minimizing dilutive impact. We however also advise reducing
beta in A-shares and add larger banks. We prefer ICBC-A and SPDB.
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