We revise up our TP to HK$69.72 and maintain our "Accumulate" rating for the Company. Considering the better-than-expected financial results in 1H22, we have revised up our earnings forecasts for FY22. We expect EPS for FY22/ FY23/ FY24 to grow YoY by -5.0%/ 4.2%/ 17.9% to US$0.593/ US$0.618/ US$0.729, respectively. We revise up our TP to HK$69.72 and maintain our "Accumulate" rating for the Company.
We hold a pessimistic view on the Company's ECL charges for 2H22. In 2H22, global economic growth is declining, and risk of economic recession of major developed economies is rising. We expect that ECL charges will become the biggest negative factor to impact the Company's earnings outlook, and the Company’s earnings in 2H22 will possibly be lower than the market consensus.
We project that the Company's continuing advancement of transformation programme will increase overall growth, which will become one of the core drivers for the Company to record better-than-expected future earnings growth. In reshaping its portfolio, the Company has exited, or is exiting, non-strategic businesses in the West and is reallocating capital towards areas of growth in Asia and the the Middle East. We expect the Company's portfolio reshaping to continue in the future.
Catalysts: Loans growth is better than expected; ECL charge outlook turns good.
Risk factors: Worsening Conflict between Russia and Ukraine; global economic recession risks rise; worsening COVID-19 pandemic.