We revise down our TP to HK$37.65 and maintain our "Buy" rating for the Company. We have revised up our earnings forecasts for FY22/ FY23/ FY24. We forecast EPS for FY22/ FY23/ FY24 to grow YoY by 13.9%/ 16.2%/ 14.1% to HK$2.474/ HK$2.875/ HK$3.279, respectively. Considering the change in market valuations, we revise down our TP to HK$37.65, equivalent to 1.2x FY22 PBR, and maintain our "Buy" rating for the Company.
We expect that the Company’s earnings will continue to recover and record relatively good growth in 2H22. In 1H22, the Company’s shareholders’ net profit increased by 6.8% YoY to HK$14,165 mn, which was basically in line. The Company’s integrated service capability in Hong Kong local market, cross-border business, Southeast Asia business and RMB business all realized further enhancement in 1H22, which further consolidates the Company’s leading position in relevant areas. We expect that the Hong Kong economy will maintain a recovering trend. We expect that the Company’s NIM will further improve as market interest rates rise in Hong Kong given the US Fed's interest rate hike.
Catalysts: Loans growth is better than expected; net charge of impairment allowances is better than expected.
Risk factors: Global economic conditions aren’t in line with our expectations; worsening Covid-19 pandemic.