China Banks - Finance Street Newsletter- Issue 4

作者：摩根大通
时间：2010.8.24
格式：pdf
页数：20
摘要：

• Industry news: 1) MOF, NDRC, PBOC and CBRC issued detailed
guidance on LGFV management. 2) PBOC allows foreign institutions to
participate in the domestic inter-bank bond market. 3) Huijin issued
Rmb183.5bn debt for capital injection to two policy banks and participation
in rights offering of BOC, ICBC, and CCB. 4) The 2Q10 report of payment
system said the NPL on credit cards declined.

• Company news: 1) BoComm (+30% y/y), CMB (+60% y/y) and CCB
(+27% y/y)’s interim results met or exceeded market expectations, and
confirmed our expectation that despite faster deposit growth and a declining
L/D ratio, medium-sized banks had enjoyed better NIM expansion during
2Q10 due to higher L/D and favorable loan re-pricing schedule in the near
term. 2) BOC and ICBC’s 1H10 results will be out after the market close on
Thursday. We expect 27% y/y earnings growth for ICBC and 29% growth
y/y for BOC. 3) SZDB is expected to report interim results on Tuesday
night. JPM expects SDB to deliver 40% yoy profit growth in 1H10. 4)
CSRC approved ICBC’s Rmn25bn CB issuance last Wednesday, which may
boost its CAR by 0.3%.

• Open market operations: Following four weeks of consecutive net
liquidity drain through open market operations, PBOC injected Rmb41bn
into the market as total new issuance of Rmb125bn was offset by Rmb166bn
bill maturity. Seven-days Repo and SHIBOR edged up by 12bps and 2bps,
respectively, on the back of large amounts of bill issuance by MOF and
other financial institutions. We believe market liquidity and inter-bank rates
will remain stable in the near term.

• Share price performance: The market had not reacted to the better-thanexpected
results and instead was still mainly weighed down by soft
economic data in the US and Europe. Relatively speaking, Citic-H (+1.7%
w/w) was the only stock among H-shares to deliver a positive return in the
past one week, on the back of very upbeat 1H10 results. Most other H share
banks rallied early last week but corrected along with the market in the past
few trading days. CMB-H was down 2.8% w/w in spite of robust earnings
due to an already very rich valuation compared with peers. A-share listed
banks averaged a slight decline of 0.3% w/w. CMB-A (+1.6% w/w) and
SPDB (+0.3% w/w) were top performers.

• Valuation: H-share China banks valuations ended up at 9.8x 10E earning
and 1.9x 10E book value last week, still about a 10% premium to the
average of A-share banks. Within our H-share universe, we reiterate our call
on BOC-H and Citic-H as top picks, which may offer a combination of
earnings surprise and better-than-peers' ROE improvement. Although we
also like CMB and Minsheng from an operation perspective, we would
suggest investors buy from the A share market, given lower valuations.