Morgan Stanley raised its target price for China Galaxy Securities (CGS)(06881) to HK$4.87 from HK$4.78 and maintained its "equal-weight" rating.
The research house said CGS has the highest revenue contribution from brokerage business among peers and is most sensitive to rising A-share market turnover. It is less affected by a tight regulatory environment with lower exposure in the non-brokerage business.
Morgan said CGS' current valuation at 0.5x 2020 BVPS (book value of equity per share) is lower than the average P/B of 0.8x for brokers under Morgan's coverage, but it believes CGS is fairly valued given its high reliance on brokerage business, which could lead to uncertainties amid volatile market trading volume.
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