[ET Net News Agency, 29 September 2020] HSBC Global Research said Ant Group's IPO
should become the largest deal ever since the STAR market officially launched last July.
The research house believes its covered broker - CICC - should benefit significantly
from the deal, with RMB2.2-3bn incremental income (accounting for 54%-71% of its 2019
total revenue) based on HSBC's sensitivity test.
HSBC also expects a strong pipeline for the Chinese unicorns to go for listings in the
A-share market following Ant's deal. For example, JD Digits - JD.com's fintech arm - is
also reported to prepare for a STAR market IPO.
Assuming half of the 206 Chinese unicorns get listed in the mainland, HSBC's covered
eight brokers should gain incremental income of RMB34bn and profits of RMB21bn, which is
34% of their 2019 aggregate net profit.
HSBC has increased its 2020-22 profit forecasts of the covered brokers by 24%-27% on
average on better market assumptions. It also raised its 2020e market ADT (average daily
turnover) from RMB700bn to RMB850bn. HSBC also changed its target prices and ratings for
the covered brokers as follows:
Name Target Price Rating
--------------------------------------------------------------
CITIC Securities (06030) HK$24.30 to HK$28.70 Buy
Guotai Junan (02611) HK$15.30 to HK$16.00 Buy
Haitong Securities (06837) HK$10.50 to HK$9.00 Hold to Buy
Huatai Securities(06886) HK$19.90 to HK$20.90 Buy
GF Securities (01776) HK$12.30 to HK$14.70 Buy
CM Securities (06099) HK$12.40 to HK$13.30 Buy
Galaxy Securities (06881) HK$4.70 to HK$5.80 Buy
CICC (03908) HK$21.00 to HK$31.60 Buy
(KL)