[ET Net News Agency, 8 June 2018] Daiwa Research cut its target price for Haitong
Securities (HTS)(06837) to HK$12 from HK$13.4 mainly due to an earnings cut on lower ADT
assumption of CNY520bn versus CNY580bn and higher proprietary trading losses, and retained
its "buy" rating.
The research house believes HTS's share-price underperformance in the past two years is
likely to end soon. Concerns on losses from its EU business and book-value risk have been
fully priced in, and these concerns should gradually ease going forward.
Daiwa believes the market has been overly bearish on HTS' book-value growth. For Haitong
Bank, as most of its impairments have been written off and redundancies dealt with, Daiwa
now expects Haitong Bank to deliver better earnings in 2018 after completing its 2-year
restructuring.
For its domestic proprietary trading business, Daiwa's sensitivity analysis suggests a
10% further decline in 2018 A-share market annual returns would only result in a 1%
drop in its 2018 BVPS for HTS. (KL)