UBS Global Research lowered its target price for Huishang Bank (03698) to HK$2.9 from HK$3.2 and maintained its "sell" rating.
The research house said Huishang Bank's reported a net profit of Rmb4.9bn in 1H was in line with its previous preliminary results. The bottom-line growth was driven by growth in
both net interest income (+16.1% YoY) and net fee income (+11.2% YoY). NIM expanded by 22bps HoH to 2.56% in 1H as both asset yield (+17bps HoH) and funding cost (-7 bps HoH) improved.
Management now focuses on pushing forward its A-share IPO. That said, considering the long queue for equity-raising approval and the min 1x PB requirement versus its low H-share valuation, UBS thinks the bank's weak capital position would probably last and continue to constrain the bank's future growth.