Ge Long Hui·2025-08-21 19:56Core Viewpoint - Everbright Bank's H-shares are initiated with a "Buy" rating and a target price of HKD 4.62, corresponding to a 2025E PB of 0.50 times, supported by strong group resources and a competitive edge in wealth management and financial markets [1] Group Strategy and Resource Support - The bank benefits from comprehensive financial resources from the Everbright Group, enhancing its non-interest income through a "commercial bank + investment bank + private bank" service model [1] - Everbright Bank's wealth management subsidiary leads in scale, with a total asset size of CNY 1.82 trillion as of the end of H1 2025, establishing a competitive advantage in wealth management [1] Solid Fundamentals and Risk Clearance - The bank is actively reducing high-cost deposits and has cleared existing risks, with a stable non-performing loan (NPL) ratio of 1.25% since 2024 [2] - As of August 19, the implied NPL ratio based on current PB is significantly higher than the actual NPL ratio, indicating a strong asset quality [2] Valuation and Dividend Yield - The bank's stock is seen as undervalued with a high dividend yield, with a projected dividend payout ratio of 30.14% for 2024 and a 2025E PB/dividend yield of 0.39 times/5.77% [2] - Shareholder confidence is reflected in the planned share buybacks by the Everbright Group, which aims to acquire up to 2% of the total share capital within a year [2] Market Perspective and Profit Forecast - There is a divergence between market concerns regarding asset quality and Everbright Bank's actual risk clearance achievements, with a financial investment provision coverage ratio exceeding 200% [3] - Profit forecasts for 2025-2027 indicate a growth in net profit of 0.7%/2.4%/3.9%, with corresponding BVPS of CNY 8.47/8.77/9.32, leading to a target PB of 0.50 times for 2025 [3]