Morgan Stanley lowered its target price for GF Securities (GFS)(01776) to HK$10.22 from HK$12.33 and downgraded its rating to "equal-weight" from "overweight" in light of its potential risk exposure and further provision for Pandion Fund and Kangmei Pharmaceutical (Shanghai code: 600518).
The research house said GF's operations are more flexible and market-oriented, with its distinctive non-SOE shareholding background among major brokers partly contributing to its higher ROE.
However, Morgan noted the uncertainties on Pandion Fund and Kangmei Pharmaceutical in 2019. It said GFS is trading at 0.6x 2020 P/B, lower than peer average of 0.8x.