[ET Net News Agency, 22 January 2018] UBS Global Research lifted its target price for
China Merchants Bank (CMB)(03968) to HK$39.2 from HK$26.4, and maintained its "neutral"
rating.
The research house views CMB as a best-in-class, joint-stock bank (JSB) with superior
NIM, good asset quality and strong IT infrastructure. That said, with the stock up by 71%
in 2017 and another 15% year-to-date, UBS believes CMB's superior fundamentals are largely
priced in at its current valuation of 1.5x 2018 P/BV; a significant premium to the sector
average at 0.7x 2018 P/BV.
CMB targets a slower loan growth in 2018 than in 2017 as liquidity remains tight, with
retail loans still growing faster than corporate loans at a double-digit growth rate, UBS
said.
CMB maintains its judgement that its asset quality deterioration has peaked in 2016 and
the overall asset quality will continue improving in 2018. (KL)