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<Research>Ping An Securities: CN Banks' LT Div. Levels Still Have Upside Potential; LT Funds Intensifying Allocation Efforts
Recommend 40 Positive 71 Negative 31 |
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Four major state-owned banks in China, namely CCB (00939.HK), BANK OF CHINA (03988.HK), BANKCOMM (03328.HK), and PSBC (01658.HK), simultaneously announced that their boards had approved proposals to issue A-shares to specific entities, including the Ministry of Finance (MOF), Ping An Securities released a report indicating. The total financing scale was RMB520 billion, of which the MOF contributed RMB500 billion, while the remaining funds came from the major state-owned shareholders of each bank. The individual issuance scale of the four banks ranged from RMB105-165 billion. In terms of pricing, the additional shares of the four major banks were issued at a premium. The premium rate fell between 9-22% based on the closing price on March 28. The P/B ratio calculated using the 2024 annual report data was between 0.67-0.76, below the static P/B ratio of 1 time but higher than the current stock price level, reflecting the confidence of major shareholders like the MOF in the banks' ability to maintain long-term stable operations. In the long term, however, there is upside potential for the long-term dividend levels after capital replenishment, considering the sustainability of the four Chinese banks' earnings growth. Especially in the Hong Kong stock market, the current discount of major banks' H-shares compared to A-shares is 10-25%, with overall dividend levels above 5%. Since last year, Ping An Securities has already observed that long-term funds, represented by insurance capital, have been lifting their allocation to Chinese bank stocks, particularly through the Other Comprehensive Income (OCI) accounts, to stabilize dividend income while reducing the impact of stock price fluctuations on the profit statement. Based on current stock prices, the overall dividend yield of the sector touches 3.8%, with the premium level still at a high level compared to the risk-free rate. As a sector heavyweight, the long-term dividend allocation value of mega Chinese banks remains. AAStocks Financial News |
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