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<Research>JPM Expects Privatization of HANG SENG BANK to Positively Impact HSBC HOLDINGS' Earnings, Reiterates Rating at Overweight w/ TP $122
Recommend 57 Positive 85 Negative 44 |
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JPMorgan released a research report predicting that HSBC HOLDINGS (00005.HK)'s privatization of HANG SENG BANK (00011.HK) will have a positive impact on earnings. Even without considering any revenue synergies or cost optimizations, the privatization will increase HSBC HOLDINGS' 2027 NPAT/ EPS by 3.7%/ 0.1%, with an average ROTE improvement of 38 bps, according to the broker's calculations. Moreover, the privatization of HANG SENG BANK will release approx. 40 bps of HSBC HOLDINGS' CET1 capital ratio. Therefore, JPMorgan believed that the privatization will help HSBC HOLDINGS optimize capital utilization and enhance the medium- to long-term profitability of its Hong Kong business. Although there is a lack of positive catalysts in the short term without share buyback support, HSBC HOLDINGS' performance may lag behind its peers, but its long-term yield remained at 5%. The downside risks from tariffs have been accounted for. Therefore, the broker expected HSBC HOLDINGS to outperform the HSI amid the current re-escalation in US-China trade tensions.; JPMorgan kept rating at Overweight, with a target price of $122. AASTOCKS Financial News Website: www.aastocks.com |
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