China Construction Bank (H)

  • Ticker0939
  • ISINCNE1000002H1
  • ExchangeHong Kong Stock Exchange
  • SectorBanks
  • CountryChina
UOB
Eric Wang Zhen ...
  • Jayson Kong

Banking - Large banks displayed resilience in earnings and asset quality; upgrade to MARKET WEIGHT

Larger banks (SOEs and JSBs) outperformed smaller ones (city banks and rural commercial banks) in asset quality and profit growth in 1Q20. Amid the current economic downturn, larger banks showed better NPL management ability while higher provisions offered protection from asset deterioration. Besides, larger banks showed a better ability to moderate NIM compression in the low interest environment. Upgrade the sector to MARKET WEIGHT; top pick is CCB (939 HK).

UOB
Greater China Research Team

Infrastructure - Infrastructure REITs Pilot Scheme: Baby steps

While we are optimistic for infrastructure REITs to gain traction in the long term as it aligns with China’s structural reform goals, projections of near-term impact would be premature for now as key details remain sparse. We expect a scale of Rmb300b- 500b to set the ball rolling. This reinforces our positive view on infrastructure FAI. Within our coverage, Sany Heavy, Zoomlion and Anhui Conch could be upstream beneficiaries. Unfavourable tax regime may be a potential stumbling block.

UOB
Greater China Research Team

Strategy - Alpha Picks: Greater China May Conviction Calls

The Chinese equity markets in Apr 20 saw the strongest monthly rebound since the beginning of 2020, but the uncertainties of the COVID-19 pandemic are still deterring the markets from a full recovery. We remain positive on the beneficiaries of policy support and durable themes, and focus on names with strong balance sheets and low dependence on global supply chains. Our key picks are Ausnutria Dairy, CEG, CIFI, JD.com and ZTE.

UOB
Eric Wang Zhen ...
  • Jayson Kong

China Construction Bank - 1Q20: Results in line. Solid asset quality but NIM compressed; upgrade to BUY

CCB’s revenue and net profit growth held steady at 4.2% yoy and 5.1% yoy respectively in 1Q20. NIM compression was widely expected while the loan growth of 6.6% qoq was also in line. The improvement in asset quality was evident from the stable NPL ratio and higher provision coverage. Future growth is well supported by ample capital. Upgrade to BUY with an unchanged target price of HK$6.89.

UOB
Eric Wang Zhen ...
  • Ivy Xu Da
  • Jayson Kong
  • Joyce Chan Pui Lai
  • Julia Pan Mengyao
  • Ken Lee
  • Lee Yuk Kei
  • Neo Chen Wentao
  • Robin Yuen
  • Sandra Huang Jieqiong
  • Vanness Wong Wan
  • Zhifeng Shen
  • Ziv Ang Sze Champ

Greater China Daily: Wednesday, April 29, 2020

KEY HIGHLIGHTS Results Anhui Conch Cement Co (914 HK/BUY/HK$58.95/Target: HK$66.90) 1Q20: Results slightly beat expectation; operations resilient amid COVID-19 outbreak. BYD Company (1211 HK/SELL/HK$45.30/Target: HK$35.00) 1Q20: Core net loss expanded 32% qoq on EV subsidy cuts and COVID-19 outbreaks, missing estimates. Maintain SELL. China Construction Bank (939 HK/BUY/HK$6.25/Target: HK$6.89) 1Q20: Results in line. Solid asset quality but NIM compressed; upgrade to BUY. Goldwind Science & Technology (2208 HK/BUY/HK$7.31/Target: HK$10.06) 1Q20: One-offs to drive earnings growth. Guan...

UOB
Eric Wang Zhen ...
  • Jayson Kong

Banking - Large banks displayed resilience in earnings and asset quality; upgrade to MARKET WEIGHT

Larger banks (SOEs and JSBs) outperformed smaller ones (city banks and rural commercial banks) in asset quality and profit growth in 1Q20. Amid the current economic downturn, larger banks showed better NPL management ability while higher provisions offered protection from asset deterioration. Besides, larger banks showed a better ability to moderate NIM compression in the low interest environment. Upgrade the sector to MARKET WEIGHT; top pick is CCB (939 HK).

UOB
Greater China Research Team

Infrastructure - Infrastructure REITs Pilot Scheme: Baby steps

While we are optimistic for infrastructure REITs to gain traction in the long term as it aligns with China’s structural reform goals, projections of near-term impact would be premature for now as key details remain sparse. We expect a scale of Rmb300b- 500b to set the ball rolling. This reinforces our positive view on infrastructure FAI. Within our coverage, Sany Heavy, Zoomlion and Anhui Conch could be upstream beneficiaries. Unfavourable tax regime may be a potential stumbling block.

UOB
Greater China Research Team

Strategy - Alpha Picks: Greater China May Conviction Calls

The Chinese equity markets in Apr 20 saw the strongest monthly rebound since the beginning of 2020, but the uncertainties of the COVID-19 pandemic are still deterring the markets from a full recovery. We remain positive on the beneficiaries of policy support and durable themes, and focus on names with strong balance sheets and low dependence on global supply chains. Our key picks are Ausnutria Dairy, CEG, CIFI, JD.com and ZTE.

UOB
Eric Wang Zhen ...
  • Jayson Kong

China Construction Bank - 1Q20: Results in line. Solid asset quality but NIM compressed; upgrade to BUY

CCB’s revenue and net profit growth held steady at 4.2% yoy and 5.1% yoy respectively in 1Q20. NIM compression was widely expected while the loan growth of 6.6% qoq was also in line. The improvement in asset quality was evident from the stable NPL ratio and higher provision coverage. Future growth is well supported by ample capital. Upgrade to BUY with an unchanged target price of HK$6.89.

UOB
Eric Wang Zhen ...
  • Ivy Xu Da
  • Jayson Kong
  • Joyce Chan Pui Lai
  • Julia Pan Mengyao
  • Ken Lee
  • Lee Yuk Kei
  • Neo Chen Wentao
  • Robin Yuen
  • Sandra Huang Jieqiong
  • Vanness Wong Wan
  • Zhifeng Shen
  • Ziv Ang Sze Champ

Greater China Daily: Wednesday, April 29, 2020

KEY HIGHLIGHTS Results Anhui Conch Cement Co (914 HK/BUY/HK$58.95/Target: HK$66.90) 1Q20: Results slightly beat expectation; operations resilient amid COVID-19 outbreak. BYD Company (1211 HK/SELL/HK$45.30/Target: HK$35.00) 1Q20: Core net loss expanded 32% qoq on EV subsidy cuts and COVID-19 outbreaks, missing estimates. Maintain SELL. China Construction Bank (939 HK/BUY/HK$6.25/Target: HK$6.89) 1Q20: Results in line. Solid asset quality but NIM compressed; upgrade to BUY. Goldwind Science & Technology (2208 HK/BUY/HK$7.31/Target: HK$10.06) 1Q20: One-offs to drive earnings growth. Guan...

UOB
Carol Dou Xiao Qin ...
  • Charles Wong Kok Min
  • Eric Wang Zhen
  • Jayson Kong
  • Joyce Chan Pui Lai
  • Julia Cheung Pui Man
  • K Ajith
  • Katrina Chen Chucan
  • Lee Yuk Kei
  • Michael Cheung Ho Bun
  • Neo Chen Wentao
  • Nick Liu Sunliang
  • Sandra Huang Jieqiong
  • Shaun Tan
  • Tham Mun Hon
  • Zhifeng Shen

Greater China Daily: Thursday, August 29, 2019

KEY HIGHLIGHTS Economics The Big Picture Financing squeeze may prove to be the Achilles heel of FAI growth. Results China Construction Bank (939 HK/BUY/HK$5.80/Target: HK$7.23) 1H19: Results in line; NIM squeezed as expected, but asset quality improved. China Jinmao Holdings (817 HK/BUY/HK$4.75/Target: HK$5.30) 1H19: Top-line disappoints but core profit in line; stable gross margins. China Molybdenum (3993 HK/HOLD/HK$2.09/Target: HK$2.30) 1H19: Results below expectation; production of major products and ASPs dropped. China Southern Airlines (1055 HK/BUY/HK$4.41/Target: HK$5.40) 1H19: R...

UOB
Jayson Kong ...
  • Joyce Chan Pui Lai
  • K Ajith
  • Neo Chen Wentao
  • Nick Liu Sunliang
  • Sandra Huang Jieqiong
  • Tham Mun Hon

Greater China Daily: Tuesday, June, 11, 2019

KEY HIGHLIGHTS CHINA Economics Trade Better-than-expected exports unlikely to be sustainable. Sector Property Weekly: Developers with strong sales. Update China Resources Cement Holdings (1313 HK/BUY/HK$7.20/Target: HK$9.27) Infrastructure demand observed; margins to sustain in 2H19. HONG KONG Update BOC Aviation (2588 HK/HOLD/HK$65.85/Target: HK$69.00) Slowing pax traffic, weak Libor and uncertainty over B737 Max recertification could curtail outperformance in 2H19; downgrade to HOLD. TRADERS’ CORNER CCB (939 HK): Trading Buy Range Beijing Enterprises Water (371 HK): Trading B...

UOB
Eric Wang Zhen ...
  • Johnny Yum Chung Man
  • Joyce Chan Pui Lai
  • Julia Cheung Pui Man
  • K Ajith
  • Ken Lee
  • Lee Yuk Kei
  • Robin Yuen

Greater China Daily: Thursday, May, 2, 2019

KEY HIGHLIGHTS CHINA Sector Aviation Flat pax yields in 1Q19; earnings could improve in 2H19 with a cut in civil aviation development fee. Results China Construction Bank (939 HK/BUY/HK$6.93/Target: HK$9.00) 1Q19: Margins squeezed but non-interest income boosted. China Merchants Bank (3968 HK/BUY/HK$38.85/Target: HK$45.59) 1Q19: Steady growth supported by strong balance sheet. Guangzhou Automobile Group (2238 HK/BUY/HK$8.43/Target: HK$12.00) 1Q19: Core net profit falls 42% yoy but surges 279% qoq, slightly missing estimates. Industrial and Commercial Bank of China (1398 HK/BUY/HK$5.89...

UOB
Johnny Yum Chung Man ...
  • Joyce Chan Pui Lai
  • Ken Lee
  • Robin Yuen
  • Zhifeng Shen

Greater China Daily: Wednesday, April, 17, 2019

KEY HIGHLIGHTS CHINA Shariah Gems Conference Highlights China Gas (384 HK/BUY/HK$25.55/Target: HK$35.44) Key takeaways from Malaysia Shariah Gems Conference: Organic expansion in FY19 gas sales. China Lilang (1234 HK/NOT RATED/HK$8.81) Smart casual and e-commerce driving growth Geely Auto (175 HK/BUY/HK$16.68/Target: HK$20.00) Takeaways from Malaysia Shariah Gems Conference: Updates on sales, margins, competition, partnerships and strategies. TRADERS’ CORNER CCB (939 HK): Trading Buy Range China Education (839 HK): Trading Buy Range

CHINA CON.BK.CORPORATION sees an upgrade to Slightly Positive due to a better fundamental star rating

The general evaluation of CHINA CON.BK.CORPORATION (HK), a company active in the Money Center Banks industry, has been upgraded by the independent financial analyst theScreener with the addition of a star. Its fundamental valuation now shows 4 out of 4 possible stars while its market behaviour can be considered as moderately risky. theScreener believes that the additional star(s) merits the upgrade of its general evaluation to Slightly Positive. As of the analysis date October 18, 2019, the closing price was HKD 6.26 and its potential was estimated at HKD 6.60.

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