We expect CCB to deliver a strong set of FY17 results, with a 4% YoY netprofit growth and a sequential decline in its NPL ratio. PIOP may rise by9% on robust NII and lower CIR. Its solid capital position should keep thedividend payout stable and it may not need any equity raising in the nearterm. The bank's profitability should remain the highest among its Big-4peers. Maintain BUY with a higher GGM-derived TP of HKD10.30 （fromHKD8.60, 33% upside）， as we incorporate a lower assumption on its CoE,on a reduced systematic risk.
　　Strong FY17F earnings ahead. China Construction Bank （CCB） maytentatively announce its FY17 results on 27 Mar 2018. Net profit is expected togrow by 4% YoY to CNY241bn, driven by a robust NII growth, better costefficiency, and a lower effective tax rate. NIM is likely to pick up moderately in4Q17, underpinned by an improving loan pricing. On asset quality front, theNPL ratio may further decline, while provision charge should rise YoY, leadingto a higher LLC buffer. We believe management would keep a stable dividendpayout ratio of 30%, as the capital position remains decent.
　　Investment highlights:
　　i. Stringent NPL recognition as NPLs covered 145% of 90-day overdueloans;
　　ii. Lower funding costs given solid deposit base;
iii. Highest profitability among the Big-4 banks measured by ROE and ROA.
　　Potential catalysts:
　　i. Stronger-than-expected FY17 earnings;
　　ii. Rising asset yields to drive NIM expansion;
iii. Symmetric benchmark rate hike in 2H18F;Key risks:
　　i. Stricter-than-expected asset management rule;
ii. Accelerating corporate defaults in case of significant GDP slowdown;
iii. Property market correction due to over-tightening.
　　Maintain BUY with a higher TP of HKD10.30. We raise our FY18-19Fearnings by 2-3% to reflect faster NIM expansion and brighter asset qualityoutlook. This lifts our sustainable ROE assumption by 20bps to 13%. We alsolower the CoE by 100bps, as financial deleveraging has made a good progressin containing systematic risks, in our view. As a results, our GGM-derived P/BVrises to 1.16x （from 1.02x）， in line with its historical mean since listing.