[ET Net News Agency, 3 June 2020] Morgan Stanley lowered its target price for Haitong
Securities (HTS)(06837) to HK$6.21 from HK$10.65 and downgraded its rating to
"underweight" from "equal-weight".
The research house said the downgrade reflects potentially more provisions needed due to
its Luckin exposure and larger exposure to the Hong Kong business that may experience more
volatility amid higher uncertainties in US-China relations and Hong Kong.
Morgan cited a newswire report saying that on 8 April 2020 Haitong International's
(00665) stock pledged loan exposure to Luckin Coffee was US$140mn, i.e. Rmb952mn. HTS has
a 63.56% stake in Haitong International. Morgan sees the need for Haitong International,
thus HTS, to put aside more provisions in light of the risks, putting downward pressure on
HTS' profit growth and ROE in 2020. (KL)