China Merchants Bank

  • TickerM4B
  • ISINCNE1000002M1
  • 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 - Reassessing Impact Of COVID-19

With COVID-19 becoming a global pandemic, economic activities are unlikely to normalise by the end of May. Weak overseas demand would pose further challenges to Chinese corporates which are already hurting from a domestic slowdown. We reassess the fair values of our key stock picks in the best-, base- and worst-case scenarios, and highlight the stocks that are resilient during the pandemic, namely Ausnutria, Mindray, SHKP, Weichai and Tencent.

UOB
Greater China Research Team

China Strategy: Reassessing Impact Of COVID-19

With COVID-19 becoming a global pandemic, economic activities are unlikely to normalise by the end of May. Weak overseas demand would pose further challenges for Chinese corporates which are already hurting from a domestic slowdown. We reassess the fair values of our key stock picks under best/base/worst-case scenarios, and highlight the stocks that are resilient during the pandemic, namely Ausnutria, Mindray, SHKP, Weichai and Tencent.

UOB
Eric Wang Zhen ...
  • Jayson Kong

Banking - 2019 results review: In-line, but downbeat on NIM and NPL in 2020

We foresee an all-round deterioration in the sector’s fundamentals in 2020, expecting an 8bp NIM compression and at least 6bp increase in NPL ratio. Banks should raise more capital in 2020 to prepare for a potentially higher default rate. Default rate on credit card loans may increase while asset quality on SME loans should also deteriorate in 2021 and 2022 (due to loan moratorium). Maintain UNDERWEIGHT on the sector; top pick is China Merchants Bank (3968 HK).

Dave Nicoski ...
  • Ross LaDuke

Global Equity Strategy

Global equities (MSCI ACWI) are testing 52-week lows as prices have been consolidating over the last 1-2 months. Investors' primary sources of angst continue to revolve around concerns of (1) the global shift toward tighter monetary policy and the potential for perceived policy missteps, (2) trade and tariffs, and (3) the potential negative effects both (1) and (2) may have on global growth. Comments from Fed Chair Powell that interest rates are “just below” the neutral rate and the 90-day tariff ceasefire agreement between the U.S. and China have not been able to calm the markets. In Europe, ...

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 - Reassessing Impact Of COVID-19

With COVID-19 becoming a global pandemic, economic activities are unlikely to normalise by the end of May. Weak overseas demand would pose further challenges to Chinese corporates which are already hurting from a domestic slowdown. We reassess the fair values of our key stock picks in the best-, base- and worst-case scenarios, and highlight the stocks that are resilient during the pandemic, namely Ausnutria, Mindray, SHKP, Weichai and Tencent.

UOB
Greater China Research Team

China Strategy: Reassessing Impact Of COVID-19

With COVID-19 becoming a global pandemic, economic activities are unlikely to normalise by the end of May. Weak overseas demand would pose further challenges for Chinese corporates which are already hurting from a domestic slowdown. We reassess the fair values of our key stock picks under best/base/worst-case scenarios, and highlight the stocks that are resilient during the pandemic, namely Ausnutria, Mindray, SHKP, Weichai and Tencent.

UOB
Eric Wang Zhen ...
  • Jayson Kong

Banking - 2019 results review: In-line, but downbeat on NIM and NPL in 2020

We foresee an all-round deterioration in the sector’s fundamentals in 2020, expecting an 8bp NIM compression and at least 6bp increase in NPL ratio. Banks should raise more capital in 2020 to prepare for a potentially higher default rate. Default rate on credit card loans may increase while asset quality on SME loans should also deteriorate in 2021 and 2022 (due to loan moratorium). Maintain UNDERWEIGHT on the sector; top pick is China Merchants Bank (3968 HK).

UOB
Charles Wong Kok Min ...
  • Johnny Yum Chung Man
  • Joyce Chan Pui Lai
  • Julia Pan Mengyao
  • Ken Lee
  • Oscar Jiang
  • Shaun Tan

Greater China Daily: Friday, July 26, 2019

KEY HIGHLIGHTS CHINA Sector Automobile 1H19 results preview; maintain OVERWEIGHT. Results TAL Education Group (TAL US/BUY/US$37.51/Target: US$41.00) 1QFY20: Results in line but 2QFY20 revenue guidance below estimates. Update Tencent (700 HK/BUY/HK$372.40/Target: HK$437.00) 2Q19 results preview: Recovery in games growth, upgrade to BUY. HONG KONG Sector Property 1H19 results preview: On track to meeting sales targets; prefer SHKP as top BUY. TRADERS’ CORNER ZTE (763 HK): Trading Buy Range CM Bank (3968 HK): Trading Buy Range

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...

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