[ET Net News Agency, 13 September 2018] Goldman Sachs trimmed its 2018/19/20 NPAT
estimates for China brokers and asset managers it covered by an average of 25%/16%/16%,
mainly on weaker prop-trading gains, lower brokerage commission income, and lower net
interest income due to its revisions in A-share market index return and market turnover
assumptions.
After marking-to-market, the index's 8-month performance, the research house lowered its
2018 CSI300 index return to -10.3% from 2.5% previously, which leads to falls in its other
market assumptions such as A-share market turnover and sector-wide margin finance balance.
Despite the macro headwinds for the broker sector, Goldman sees resilient growth in
certain business lines such as cross-border trading/financing and high-end wealth
management - all of which require brokers to have business expertise, a cross-regional
network, cross-department synergies and risk pricing/management.
It thinks only a few brokers are in a strong position to capture these opportunities,
and this has driven the greater divergence in earning growth among its covered brokers in
1H.
Goldman revised its target prices for the players in the industry as follows:
Name Target Price Rating
----------------------------------------------
CITICS (06030) HK$25.5 to HK$20.6 Buy
GTJA (02611) HK$20.4 to HK$17.3 Neutral
HTS (06837) HK$12.5 to HK$9.2 Buy
GFS (01776) HK$15.6 to HK$11.8 Neutral
HTSC (06886) HK$17.4 to HK$13.6 Neutral
CGS (06881) HK$4.3 to HK$3.2 Sell
CMS (06099) HK$10.9 to HK$11.2 Neutral
CSC (06066) HK$7.4 to HK$5.8 Neutral
CES (06178) HK$10.4 to HK$9.7 Neutral
DFZQ (03958) HK$7.7 to HK$6.4 Neutral
CICC (03908) HK$22.4 to HK$20.1 Buy
(KL)