[ET Net News Agency, 11 March 2021] J.P. Morgan lifted its target price for China
Merchants Bank (CMB) (03968) to HK$83 from HK$50 and maintained its "overweight" rating.
The research house said CMB is its top pick in the sector and it is trading at 266% P/B
premium to Big 4 SOE (state-owned enterprises) banks and 167% premium to joint-stock banks
(JSBs).
JPM said CMB's strong focus on strategic goals (retail, private banking, technology),
solid execution track record, and emphasis on value creation for shareholders justify the
valuation premium.
The research house believes CMB has the best retail franchise in China in terms of
providing high-quality services. Its retail deposits per branch were significantly higher
than its peers' average. JPM added that CMB has the lowest deposit costs among joint-stock
banks and city commercial banks. This should be an advantage going forward amid
deposit-rate liberalization. (KL)