Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company achieved a revenue of 2.099 billion yuan in the first half of 2025, representing a year-on-year increase of 14.9%. The net profit attributable to the parent company was 361 million yuan, also up by 14.9%. The interim dividend payout ratio was 50.6% [1][2] - Revenue growth was primarily driven by the consolidation of Pinglin Expressway and increased toll revenue from Hubei Han'e Expressway. The acquisition of a 55% stake in Pinglin Expressway in November 2024 contributed an additional 256 million yuan in toll revenue. The toll revenue from Hubei Han'e Expressway increased by 56.6% year-on-year to 154 million yuan due to the closure of competing routes [1][2] - The current estimated dividend yield is approximately 6.5%, with an interim dividend of 0.12 HKD per share, unchanged from the first half of 2024. The company is expected to maintain a dividend of 0.25 HKD per share for 2025, consistent with 2024 [3] Summary by Sections Financial Performance - In the first half of 2025, the company reported a revenue of 2.099 billion yuan, a 14.9% increase year-on-year, with toll revenue contributing 2.059 billion yuan, up 15.2% [1] - The net profit attributable to the parent company was 361 million yuan, reflecting a 14.9% increase year-on-year. The contribution from Pinglin Expressway was 42 million yuan, while Hubei Han'e Expressway contributed 57 million yuan, a significant increase of 987.3% [2] - Financial expenses decreased by 11.1% to 222 million yuan, attributed to management's optimization of the debt structure and reduction of interest rates [2] Future Projections - The company is projected to achieve earnings per share (EPS) of 0.44, 0.45, and 0.46 yuan for 2025, 2026, and 2027 respectively, with corresponding price-to-earnings (P/E) ratios of 7.98, 7.81, and 7.70 [3][4] - The estimated revenue for 2025 is 4.389 billion yuan, with a growth rate of 13%, followed by 4.511 billion yuan in 2026 and 4.605 billion yuan in 2027 [4]

Core Viewpoint - UBS downgraded China Electric Power Holdings (00002) from "Buy" to "Neutral" and reduced the target price from HKD 74 to HKD 70 due to short-term pressures on the company's fundamentals from unfavorable overseas factors [1] Summary by Relevant Categories Company Performance - China Electric's Hong Kong operations remain strong and predictable, but earnings pressure from Australia and mainland China is evident in the first half of 2025 [1] - The underperformance of non-local businesses may limit expected earnings growth for the fiscal year 2025, leading to a flat annual dividend per share, contrary to previous forecasts of a 3% increase [1] Dividend Forecast - UBS maintains a long-term forecast of a 3% average annual growth in dividends from 2026 to 2029, anticipating a gradual return to stable growth after the stabilization of non-local businesses [1] Market Comparison - The forward dividend yield of 4.8% for China Electric has narrowed to below the historical average by one standard deviation, compared to a 49 basis point yield on U.S. 10-year Treasury bonds, indicating reduced attractiveness relative to the industry average of 73 basis points [1] Earnings Projections - UBS has lowered its earnings forecasts for China Electric for 2025 to 2027 by 11%, 8%, and 7% respectively, reflecting last year's performance and the disappointing results of non-local businesses, particularly in mainland China and Australia [1]

Core Viewpoint - UBS downgraded China Electric Power Holdings (00002) from "Buy" to "Neutral" and reduced the target price from HKD 74 to HKD 70 due to adverse overseas factors impacting the company's short-term fundamentals [1] Group 1: Business Performance - The report indicates that while China Electric's Hong Kong operations remain strong and predictable, there is profit pressure from Australia and mainland China affecting the performance in the first half of 2025 [1] - The underperformance of non-local businesses may limit the expected profit growth for the fiscal year 2025, leading to a forecast of flat annual dividends per share, previously expected to grow by 3% [1] Group 2: Long-term Outlook - UBS maintains a long-term forecast of an average annual dividend growth of 3% from 2026 to 2029, anticipating a gradual return to stable growth once non-local business stabilizes [1] Group 3: Dividend Yield and Market Comparison - The forward dividend yield of 4.8% for China Electric has narrowed to below the historical average by one standard deviation, compared to a 49 basis point yield for the US 10-year Treasury, indicating reduced attractiveness relative to the industry premium of 73 basis points [1] Group 4: Earnings Forecast Adjustments - UBS has adjusted its earnings forecasts for China Electric for 2025 to 2027 down by 11%, 8%, and 7% respectively, reflecting last year's performance and the disappointing results from non-local businesses, particularly in mainland China and Australia [1]

Core Viewpoint - Morgan Stanley has revised down its net profit forecasts for Cathay Pacific for 2025 to 2027 by 7%, 5%, and 7% respectively, primarily due to a reduction in passenger yield forecasts, partially offset by improvements in cost control [1] Group 1: Financial Performance - The downward revision in net profit forecasts reflects a decrease in passenger yield expectations [1] - Capital expenditure forecasts have been increased [1] Group 2: Market Conditions - If demand for routes to Japan and Thailand recovers better than expected, it could support yield performance and lead to a more positive outlook [1] - The outlook for US-China trade is a variable that may impact cargo business momentum [1] Group 3: Cost Considerations - Fuel costs account for approximately 30% of Cathay Pacific's total costs, making oil price trends a significant observation indicator [1] Group 4: Rating and Target Price - In light of operational uncertainties, Morgan Stanley maintains a "market perform" rating for Cathay Pacific, with a target price reduced from HKD 12.1 to HKD 10.8 [1] - A 7% dividend yield may help limit downside risks [1]

Group 1 - Morgan Stanley reports that Cathay Pacific's (00293) passenger yield is below expectations due to the normalization of long-haul route yields and intensified competition on short-haul routes, despite strong demand for business class and a year-on-year increase in passenger load factor [1] - The market generally anticipates a year-on-year decline in net profit for the full year of 2025, but Morgan Stanley believes the downside risk is limited [1] - The rating is "in line with the market," with a target price of HKD 12.1 [1] Group 2 - Cathay Pacific reported a net profit attributable to ordinary shareholders of HKD 3.65 billion for the first half of 2025, representing a year-on-year increase of 8.3% [1] - Operating profit for the first half was HKD 5.9 billion, unchanged from the same period last year but below market expectations of HKD 6.6 billion [1] - The diluted earnings per share increased by 16.6% year-on-year due to the impact of convertible bond repurchases [1] Group 3 - Total revenue for the first half reached HKD 54.3 billion, a year-on-year increase of 9.5% [1] - Operating cash flow for the first half was HKD 11.2 billion, compared to HKD 10.6 billion in the same period of 2024 [1] - As of June 2025, the group had available liquid funds of HKD 21.5 billion [1] Group 4 - The interim dividend remains at HKD 0.2 per share, unchanged year-on-year [1] - Based on the closing price before the announcement, the dividend yield is 1.7% [1]

Summary of Conference Call on China Banks Industry Overview - The conference call focused on the Chinese banking sector, specifically discussing the performance of covered banks in the A/H share markets, with notable mentions of China Merchants Bank (CMB) and Bank of Communications (BoCom) [1][2]. Key Points and Arguments 1. Market Performance - Since the beginning of the year, A/H share performance of covered banks has increased by 15% and 26% respectively, with CMB outperforming BoCom by 15 percentage points [1]. - The banking sector is viewed as having reached an inflection point, supported by recent market performance and evolving economic conditions [1]. 2. Earnings Expectations - Average projected growth for 2Q25 is 0.3% for both Pre-Provision Operating Profit (PPOP) and net profit for covered banks [2]. - Target prices for A/H shares have increased by 7% to 12% on average due to improved dividend outlook and reduced earnings pressure [2]. 3. Dividend Yields and Fund Flows - Current dividend yields are historically low at 4.2% for A shares and 5.0% for H shares, compared to a 10-year median of 4.7% and 6.4% respectively [3][10]. - Despite low yields, there is an anticipated increase in fund allocation to the banking sector, driven by declining deposit rates and increased interest from non-bank financial institutions and retail investors [3][10]. - The 3-year time deposit rate has fallen to 1.25%, down from 1.95% and 2.60% in early 2024 and 2023 respectively, leading to a shift of funds from bank deposits to non-bank financial products [9][12]. 4. Positive Fundamental Changes - Capital strength and asset quality are improving, with proactive fiscal policies easing local government debt pressures [23]. - Net Interest Margin (NIM) is expected to stabilize sooner than previously projected, with a slower rate of decline anticipated in 2025 [24][27]. - Capital injections have strengthened bank balance sheets, allowing for sustained dividend payments despite short-term earnings pressures [29]. 5. Key Risks - Mortgage risk remains a concern, with expectations that NPL ratios will stabilize in 2026, but a sharper decline in housing prices could delay this stabilization [35][42]. - Manufacturing and export-related sectors pose risks, as they represent approximately 40% of bank loan portfolios, with potential increased provisioning expected in 2026 [35][49]. 6. 2Q25 Earnings Expectations - Revenue growth is under pressure, with large SOE banks expected to maintain loan growth while smaller banks may grow rapidly [52]. - Potential NIM stabilization in 2Q25 is highlighted, with some banks indicating lower deposit costs [59]. - Preliminary results from BONB suggest potential improvement in asset quality, contrary to market expectations [58]. 7. Shareholder Returns - While dividend payouts for 1H25 are unlikely to change, there is potential for increases in 2H25 driven by capital injections and pressure from institutional investors [65]. Other Important Insights - Retail investors are increasingly utilizing high-dividend ETFs rather than direct stock purchases, indicating a shift in investment strategies [21]. - The compression of deposit rates is driving funds into trust products and wealth management, further lowering funding costs for non-bank institutions [16]. This summary encapsulates the key insights and projections regarding the Chinese banking sector as discussed in the conference call, highlighting both opportunities and risks for investors.

该行对恒隆地产转为更乐观，因见到内地租户销售回稳，同比跌幅由今年首季的7%收窄至次季的1%。 管理层指，改善趋势已延续至7月，对下半年持审慎乐观态度，预期销售将持平或轻微增长，改善情况 亦与LVMH等奢侈品牌近期的说法一致。虽然该行不预期会有强劲复苏，但回稳迹象已足以触发首轮重 新评级。加上管理层确认全年股息将维持不变，且无发行可转债计划，两大投资者的疑虑已获缓解。 摩根大通发布研报称，将恒隆地产(00101)评级由"中性"上调至"增持"，目标价由7.5港元升至10港元， 并认为公司的6.5%股息收益率在同行中仍具吸引力，该股最多自高位下跌51%，而同行跌幅为7%，有 追落后的空间。 ...

Core Viewpoint - Morgan Stanley upgraded Hang Lung Properties (00101) from "Neutral" to "Overweight," raising the target price from HKD 7.5 to HKD 10, citing the company's attractive 6.5% dividend yield compared to peers [1] Group 1: Company Performance - The stock has declined by up to 51% from its peak, while peers have only seen a 7% drop, indicating potential for recovery [1] - There is a noticeable improvement in sales from mainland tenants, with the year-on-year decline narrowing from 7% in Q1 to 1% in Q2 [1] - Management expressed cautious optimism for the second half of the year, expecting sales to remain stable or see slight growth, aligning with recent statements from luxury brands like LVMH [1] Group 2: Investor Sentiment - The management confirmed that the annual dividend will remain unchanged and there are no plans for convertible bond issuance, alleviating concerns from two major investors [1]

Core Viewpoint - Morgan Stanley has become more optimistic about Hang Lung Properties due to signs of recovery in sales among mainland tenants, with the year-on-year decline narrowing from 7% in Q1 to 1% in Q2 [1] Group 1: Sales Performance - Management indicated that the improving trend has continued into July, maintaining a cautiously optimistic outlook for the second half of the year, expecting sales to stabilize or see slight growth [1] - This improvement aligns with recent statements from luxury brands like LVMH [1] Group 2: Investment Sentiment - Although a strong recovery is not anticipated, the signs of stabilization are sufficient to trigger a first-round re-rating [1] - The management confirmed that the annual dividend will remain unchanged and there are no plans for convertible bond issuance, alleviating concerns for two major investors [1] Group 3: Rating and Price Target - The company's rating has been upgraded from "Neutral" to "Overweight," with the target price raised from HKD 7.5 to HKD 10 [1] - The company's 6.5% dividend yield remains attractive compared to peers, and the stock has underperformed in the industry, having dropped 51% from its peak, while peers have only seen a 7% decline, indicating potential for recovery [1]

Core Viewpoint - UBS reported that HSBC Holdings (00005) announced a pre-tax profit of $15.81 billion for the first half of the year, a year-on-year decline of 26.7% [1] Group 1: Financial Performance - HSBC's pre-tax profit excluding significant items for Q2 was $9.162 billion, exceeding the company's expectations by 10% [1] - Revenue increased by 5%, with net interest income (NII) up by 2% and fee-based and other income rising by 11% [1] - Operating expenses met expectations, and pre-provision profit grew by 10% [1] - Impairment losses were 12% higher than market expectations, particularly due to $400 million in expenses related to Hong Kong commercial real estate (CRE) [1] - Loans and deposits grew by 3% to 4% quarter-on-quarter, supported by a strong British pound [1] Group 2: Capital and Dividends - The Common Equity Tier 1 (CET1) capital ratio stood at 14.6%, in line with expectations [1] - A stock buyback plan of $3 billion (1.1% of market value) was announced, compared to UBS's estimate of $2.5 billion and market consensus of $2.75 billion [1] - The dividend per share was set at $0.10, meeting expectations [1] Group 3: Future Guidance - UBS maintained its guidance for HSBC for FY2025, with net interest income expected at $42 billion, in line with market consensus [2] - Target cost growth is projected at 3%, approximately $33.3 billion, also matching market consensus [2] - Loan losses are anticipated at around 40 basis points, consistent with market consensus [2] - Average return on tangible equity (ROTE) is expected to be in the mid-teens for FY2025, FY2026, and FY2027, with market consensus at 15.5%, 15%, and 15.5% respectively [2] - The CET1 capital ratio is expected to remain between 14% and 14.5% in the medium term [2] Group 4: Market Sentiment and Valuation - Concerns were raised by investors regarding credit provisions for Hong Kong real estate and HSBC's ability to maintain its net interest income guidance for FY2025 [3] - Despite higher loan loss expectations, the outlook for non-interest income in Hong Kong was positive, showing a 22% increase or $182 million [3] - HSBC's current valuation is estimated at a price-to-earnings ratio of 9.5 times for FY2026, compared to Standard Chartered's 8.8 times, with a dividend yield of 5% and a tangible asset ratio of 1.4 times [3]