[ET Net News Agency, 3 December 2020] BOCOM International Research lifted its target
price for Postal Savings Bank of China (PSBC) (01658) to HK$5.6 from HK$4.6 and maintained
its "buy" rating.
China Post Group plans to inject RMB30bn (6% of existing shares) to PSBC via A-share
private placement. The placement price is likely at FY2019 BVPS, 9% above the current
A-share trading price. The research house estimated the injection will dilute 2021 ROE/EPS
by 0.5ppt/4% but will lift its CET1 by 54bps to 10.1%. This may remove concerns on
dividend cut in 2020 due to capital restrictions, and dividend yield remains at 5%.
BOCOM expects PSBC to deliver faster loan growth than peers given its strength in retail
franchises and lower-than-peer LDR (loan-to-deposit ratio). Higher market rates will
support its asset yield and NIM rebound in 2021. (KL)