[ET Net News Agency, 26 July 2019] Citi Research lowered its target price for China
Everbright (00165) to HK$11.9 from HK$16.8 and maintained its "neutral" rating.
The research house said China Everbright's share price has declined around 60% from the
peak in March. Citi said China Everbright owns 21.3% of Everbright Securities (EBS). In 2H
2018, EBS made provisions of RMB1.4 billion related to a contingent liability of RMB4bn of
Everbright Capital, a wholly-owned subsidiary of EBS. Should EBS make further provisions,
this could impact the earnings.
Citi expects the new CEO Zhao Wei to provide a strategic update along with the 1H
results. It noted that the fundamental business operations year-to-date are challenged by
the softer PE investment environment in mainland China. This could lead to slower than
expected AuM growth and smaller unrealized gains from the investment portfolio.
Citi cut its 2019 EPS by 28%, due to expectations of slower AUM growth, lower unrealised
gains and one-off provisions in EBS. Future-year EPS were trimmed by a smaller 15-17%.
(KL)