[ET Net News Agency, 12 February 2018] Credit Suisse trimmed its target price for CITIC
(00267) to HK$12.5 from HK$12.8, and maintained its "neutral" rating.
Looking ahead, the research house expects CITIC's financials segment to steadily grow
whilst iron ore business remains a drag in non-financials. Regarding financials,
accounting for 80% of whole group's earnings, Credit Suisse expects it to steadily improve
at 7% CAGR over 2017-19, thanks to de-risking of CITIC Bank's balance sheet, recovering
brokerage business of CITIC Securities in underwriting and trading, as well as lower
provisions of CITIC Trust.
Among non-financials, although we sees stronger earnings growth from property and
resources, the main drag still arises from Sino Iron (-7% earnings excluding impairment
loss), which is still under lawsuit and has written down two-thirds book value. Per latest
court judgement, CITIC needs to pay Royalty B of US$100-150mn per year to the mine owner
if further appeal is rejected.
Credit Suisse lifted its 2017/18 earnings forecasts by 16%/7% by incorporating one-off
gains of 2017 and stronger financials/property earnings. (KL)