[ET Net News Agency, 17 July 2018] UBS Global Research trimmed its target price for
Bank of East Asia (BEA)(00023) to HK$25.8 from HK$34.7, and downgraded its rating from
"neutral" to "sell".
The research house appreciated the continuing recovery in BEA's China operation, but
with a 7% ROTE outlook UBS does not see much value at the shares' current 16x 2019 PE -
especially since BEA is the least geared to rising rates among the three domestic Hong
Kong banks it covers.
UBS is relatively cautious over the bank's retail strategy in China, although it does
expect it to be accretive to shareholder returns in one to two years'time.
While the current rate cycle is still a positive for BEA, UBS expects the bank to
benefit the least compared to its peers. This is mainly because of BEA having the lowest
US$/HK$ balance sheet exposure and a lower-quality deposit franchise. Its CASA ratio was
33% as of end-2017, which makes its margin more vulnerable than peers' to higher deposit
pricing in the context of a likely Prime rate hike in 2H. (KL)
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00023 BANK OF E ASIA
Nominal 
10.260 +0.160 (+1.584%) Others
17/07/2018 18:01
[I-bank focus]UBS cuts Bank of East Asia (00023) to HK$25.8
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