[ET Net News Agency, 20 September 2018] Morgan Stanley raised its target price for
China Merchants Bank (CMB)(03968) to HK$36.2 from HK$34.3, and upgraded its rating to
"overweight" from "equal-weight".
It said the upgrade reflects (1) the toughest time for financial cleanup is over; (2)
financial WMP rules from CBIRC could be catalyst for the stock; and (3) concerns of trade
tensions appear already somewhat priced in.
With continued investment in technology, CMB has notably improved the banking experience
for its client base. CMB's mobile banking app and credit card app combined has 54 million
actively monthly users, one of the highest among peers, noted the research house.
With higher-than-peer retail revenue contribution and half its loan portfolio in retail,
CMB is well positioned to defend against potential downside from US-China trade tensions,
Morgan added.
With Rmb6.6tn of retail AUM (Rmb2tn from private banking customers), CMB can continue to
benefit from a higher contribution from its capital-light fee income business,
particularly given still heathy household financial asset growth despite some moderation
in China GDP growth. (KL)