高盛高华_China_ Banks - Beyond the Noise, We See Gains_10.08.26

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China: Banks - Beyond the Noise, We See Gains

作者：高盛高华
时间：2010.8.26
格式：pdf
页数：23
摘要：

Near term noise on LGP related issues, but we see reasonable 11E

P/E even factoring in a hard landing case

The next 3-4 months will see uncertainty, as CBRC and policymakers

restructure and classify LGP loans. However we expect modest rather than

sharp NPL formation, and highlight that the current average 11X/9X

10E/11E post-recap diluted P/E for H-share and A-share banks already

partly discounts the LGP uncertainties. Even after factoring a hard landing

case into our 2011 earnings estimates, P/E valuation post recap would

remain reasonable at average 12X 2011E.

We prefer banks with a strong risk management track record, high

overall NPL coverage and collectively assessed coverage. These

banks will have less risk from LGP NPL downgrades and credit cost

increases: We would buy CMB A-shares (upgraded to Buy, regional

Conviction list) as our top pick, followed by CCB/ICBC H/A-shares

(Buy). We would be even more aggressive buyers of these names

as uncertainties pressure share prices in the coming months.

MTM estimates to reflect macro deceleration, 1H10 results; still see

21% EPS growth in 2011/12

We have lowered earnings/NIM estimates and modestly raised some credit

costs for some major banks to reflect the recent slowdown and low chance

of rate hikes, but have raised earnings for some smaller banks with

improving SME exposure raising NIM sustainability (CMB, Minsheng). Our

revised earnings estimates on average reflect 21% EPS growth in 2011/12.

Roll-over target prices; switch CCB H for CMB A for on CL-Buy

We have removed CCB H-shares from the C-Buy list in favor of CMB Ashares,

given CCB H’s recent outperformance and valuation. We retain Buy

on CCB H shares on solid fundamentals.

Upside/downside risks to monitor

Positives: 1) fiscal reform delivering formal and transparent municipal

borrowing and infrastructure project financing; clarity on LGP provisioning;

2) macro easing. Downside risks: overly harsh NPL/provisioning standards

on LGP loans may lead to risk of significant slowdown of investment/GDP.

However, we believe these downside risks are already partly discounted.

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关键词：Beyond Banks noise China Gains reasonable factoring average current landing

thank you very much