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<Research>Citi: CM BANK (03968.HK) 1Q Earnings Miss; Valuation Premium Relative to Larger Banks May Narrow
Recommend 9 Positive 7 Negative 4 |
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Citi Research noted in a report that CM BANK (03968.HK) was dragged down by pressure on net interest margins and weak fee income, with 1Q pre-provisioning profit falling 6.1% YoY, offsetting the positive impact of solid trading gains. Net profit after tax (NPAT) grew at a lower-than-expected pace during the period, falling 2% YoY to RMB38.1 billion. Return on assets (ROA) and return on equity (ROE) decreased by 15 bps and 235 bps YoY to 1.35% and 16.08% respectively. Citi expected CM BANK's share price to react negatively to the weaker-than-expected results in 1Q24, as well as worse revenue and earnings growth than its peers. The lender's H-shares have risen 25.7% year-to-date. The broker believed it is now difficult to justify the valuation premium for CM BANK, which may narrow relative to larger banks. While the broker remained confident in CM BANK's ability to deliver positive earnings growth this year, it believed investors may be disappointed by the results miss in the near term. Citi rated CM BANK H-shares Buy, with a target price of $35.52. AAStocks Financial News |
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