price of Bendigo & Adelaide Bank Ltd (Right now, you could probably use Google or another data provider to see theof ASX: BEN ) is around $11 per share. But what are BEN shares really worth? How to get to an price target is one of the more popular questions our senior investment analysts get asked by Australian investors, especially those seeking dividend income. It’s not exclusive to Bendigo & Adelaide Bank Ltd, of course.Macquarie Group Ltd (ASX: MQG) and Bank of Queensland Limited (ASX: BOQ) are also ver ...

Core Viewpoint - The article discusses the recent surge in Chinese assets and the underlying factors driving this trend, emphasizing the importance of understanding how professional investors evaluate assets compared to amateur investors [3][4]. Group 1: Investment Evaluation - Professional investors focus on future cash flows rather than just asset prices, which distinguishes them from amateur investors who rely on price appreciation [7]. - The article references the cash flow discount model by economist Irving Fisher, highlighting its significance in assessing stocks and bonds [6][9]. Group 2: Comparative Valuation - As of September 30, the Shanghai Composite Index had a dividend yield of 2.48% and a price-to-earnings (P/E) ratio of 16.6, while the Hang Seng Index had a dividend yield of 2.24% and a P/E ratio of 12.3 [9]. - In contrast, the Dow Jones Industrial Average had a dividend yield of 0.56% and a P/E ratio of 32, and the Nasdaq had a dividend yield of 0.3% with a P/E ratio of 44, indicating that Chinese assets may be undervalued compared to U.S. markets [9][10]. Group 3: Shareholder Returns - The article notes that leading A-share companies are improving their dividend payout ratios and share buyback activities, which are expected to enhance shareholder returns [9]. - For instance, Kweichow Moutai's dividend payout ratio is projected to increase from 52% in 2020 to 75% in 2024, while Mindray Medical's payout ratio is expected to rise from 45.7% to 65% in the same period [9]. Group 4: Internal Measurement - The article emphasizes the need for investors to establish a scientific measurement perspective when evaluating investments, particularly in light of foreign capital's attitude towards Chinese assets [13]. - It cites Warren Buffett's investment philosophy, which stresses the importance of understanding intrinsic value and future cash flows rather than relying solely on market trends [14][15].

Core Insights - Chinese assets have seen a significant surge, with the Nasdaq Golden Dragon Index rising approximately 3.8% during the National Day and Mid-Autumn Festival holidays, indicating international capital's recognition of A-shares and Hong Kong stocks [1] - The recent strength of Chinese assets is attributed to the alignment of prices with their underlying value, as highlighted by the cash flow discount model [2] Investment Evaluation - The investment evaluation methods have been influenced by economist Irving Fisher, who emphasized the importance of future cash flows over mere asset prices, distinguishing professional investors from amateurs [3] - Professional investors focus on the income generated by assets, while amateur investors often rely on price appreciation, which can lead to significant losses if not grounded in cash flow realities [3] Comparative Valuation - As of September 30, the Shanghai Composite Index had a dividend yield of 2.48% and a price-to-earnings (P/E) ratio of 16.6, while the Hang Seng Index had a dividend yield of 2.24% and a P/E ratio of 12.3. In contrast, the Dow Jones Industrial Average had a dividend yield of 0.56% and a P/E ratio of 32, and the Nasdaq Index had a dividend yield of 0.3% and a P/E ratio of 44 [5] - The increasing dividend payout ratios and share buyback activities of leading A-share companies indicate a growing commitment to returning value to shareholders [5] Share Buyback Trends - A-share companies are beginning to adopt share buyback practices, although they lag behind international counterparts like Apple, which has repurchased 13.5% of its shares since August 2020 [6] - If A-share companies align with international practices and implement consistent buybacks, their current valuations may become more attractive [6] Internal Measurement Perspective - Establishing an internal measurement perspective is crucial for investors, as external capital flows provide only a partial view of asset value [7] - Warren Buffett's investment in a farm exemplifies the importance of understanding intrinsic value and expected returns, which can lead to successful investments without specialized knowledge [7] Behavioral Insights - Successful investing relies on a critical mindset and the ability to maintain confidence in one's investment strategy, as emphasized by Benjamin Graham [8] - The behavior of investors is more significant than their investment methods, highlighting the importance of discipline and courage in achieving stable returns [8]

Group 1: Company Overview - Bendigo & Adelaide Bank Ltd (ASX: BEN) shares are currently priced around $12.60, with a focus on determining their true value for investors seeking dividend income [1][11] - The bank operates in a competitive environment dominated by a few large players, with a preference among Australian investors for bank shares due to their dividend potential and franking credits [2][3] Group 2: Valuation Methods - The Price-Earnings (PE) ratio is a common valuation tool, with BEN's current PE ratio calculated at 14.5x, compared to the banking sector average of 19x, leading to a sector-adjusted valuation of $16.92 [6] - A Dividend Discount Model (DDM) is highlighted as a more effective valuation method for banks, with BEN's share price estimated at $13.32 using a blended growth and risk rate, and $13.75 using an adjusted dividend payment [11][12] - Considering fully franked dividends, the valuation based on a gross dividend payment of $0.93 results in a share price estimate of $19.64 [12] Group 3: Growth and Risk Considerations - The analysis includes various growth and risk rate scenarios, indicating that a 6% risk rate with a 2% growth rate yields a valuation of $16.25, while a 10% risk rate with a 4% growth rate results in a valuation of $10.83 [13] - Investors are encouraged to assess the bank's growth strategy, including its focus on lending versus non-interest income, and to consider economic indicators such as unemployment and consumer sentiment [14]

Core Viewpoint - Westpac Banking Corp (ASX: WBC) is currently trading around $38, and various valuation models are utilized to assess its share price, including the Price-Earnings (PE) ratio and the Dividend Discount Model (DDM) [1][3][9]. Valuation Models - The PE ratio compares a company's share price to its earnings per share, with WBC's current PE ratio calculated at 20x, compared to the banking sector average of 19x, suggesting a sector-adjusted valuation of $37.30 [5][8]. - The DDM focuses on future dividend forecasts rather than profits, with WBC's last year's dividend at $1.66, leading to a valuation of $35.10 under standard assumptions, and $34.05 using an adjusted dividend payment [10][13]. - When considering fully franked dividends, the valuation based on a gross dividend payment of $2.30 results in a share price valuation of $48.64 [14]. Growth and Risk Assumptions - Different growth rates (2% to 4%) and risk rates (6% to 11%) yield a range of valuations, with the highest valuation at $80.50 under a 4% growth rate and 6% risk rate [15]. - The analysis emphasizes the importance of understanding the growth in total loans on the balance sheet, as rapid growth may indicate higher risk, while slow growth may suggest conservatism [17]. Financial Health Indicators - Key areas to analyze include provisions for bad loans, assessment rules for bad loans, and sources of capital, with a focus on the cost of capital acquisition [18].

Core Viewpoint - Agricultural Bank of China has reached the top position in A-share market capitalization, surpassing Industrial and Commercial Bank of China, driven by strong stock performance and favorable market conditions [2][3]. Group 1: Market Performance - On August 6, Agricultural Bank's stock price closed at 6.62 yuan, marking a 1.22% increase and achieving the highest level since its A-share listing [2]. - As of August 7, the bank's market capitalization was reported at 2.35 trillion yuan, reflecting a 1.36% increase from the previous day [3]. - Since the beginning of 2025, Agricultural Bank's stock price has increased by 29.54%, while Industrial Bank's stock price has risen by 16.85% [4]. Group 2: Factors Contributing to Market Position - The increase in Agricultural Bank's market capitalization is attributed to a significant rise in bank stocks, which are favored by investors seeking high dividend yields and stable returns [3]. - Agricultural Bank's A-share circulating stock is 3.192 billion shares, compared to 2.696 billion shares for Industrial Bank, contributing to its higher market value [4]. - The bank's strong profitability and dividend stability have enhanced its appeal, with experts noting its high earnings certainty among the top four banks [9]. Group 3: Capital Structure and TLAC Bonds - Agricultural Bank has issued a total of 800 billion yuan in TLAC bonds since 2025, with the latest issuance of 500 billion yuan completed on August 4 [4]. - The issuance of TLAC bonds helps optimize the bank's capital structure, even though these bonds are not considered regulatory capital [5]. - The bank's ability to maintain a high level of excess provisions contributes to its capital adequacy and risk management [10][11]. Group 4: Investment Trends - The banking sector has become a star performer in the A-share market, with a notable increase in public fund holdings in bank stocks, which rose to 4.88% of the total A-share market capitalization by the end of Q2 2025 [7]. - The shift in market dynamics has led to increased allocations to bank stocks by institutional investors, driven by the need for stable returns amid market volatility [8].

Core Viewpoint - Agricultural Bank of China has reached the top position in A-share market capitalization, surpassing Industrial and Commercial Bank of China, driven by strong stock performance and investor interest in bank stocks [1][2][3] Company Performance - As of August 7, Agricultural Bank's stock price rose by 1.36%, with a total market capitalization of 2.35 trillion yuan [2] - The stock price has increased by 29.54% since 2025, while the stock price of Industrial and Commercial Bank has risen by 16.85% during the same period [4] - Over the longer term, Agricultural Bank's stock has surged by 145% since 2023 [5] Market Dynamics - The rise in Agricultural Bank's market capitalization is attributed to a significant increase in bank stocks, which are favored by investors seeking high dividend yields and stable returns [2][6] - The banking sector has become a star performer in the A-share market, with a notable shift in market dynamics favoring bank stocks [6][7] Capital Structure and Financial Health - Agricultural Bank has issued a total of 800 billion yuan in TLAC bonds since 2025, which helps optimize its capital structure [3] - The bank's high profitability certainty among the four major banks enhances its dividend appeal, supported by a strong capital adequacy ratio and low non-performing loan ratio [8][9] - Agricultural Bank's excess provisions for losses are higher than the regulatory limits, providing a buffer for future profitability [10]

Investment Rating - The investment rating for Ping An Bank is "Accumulate" with a target price of 12.75 CNY, representing a potential upside of 16% from the current price of 11.02 CNY [6][4]. Core Views - The report highlights a recovery in credit and deposits, with improvements in interest costs. The bank's revenue for Q1 2025 was approximately 33.7 billion CNY, down 13.05% year-on-year, while net profit attributable to shareholders was 14.1 billion CNY, down 5.60% year-on-year. The non-performing loan ratio stood at 1.06% with a provision coverage ratio of 237% [1][2][4]. Financial Performance Summary - **Revenue and Profitability**: In Q1 2025, net interest income was 22.8 billion CNY, accounting for 67.6% of total revenue, while non-interest income was 10.9 billion CNY, down 19.78% year-on-year. The pre-provision profit and net profit attributable to shareholders decreased by 12.92% and 5.60% year-on-year, respectively [2][10]. - **Asset Quality**: The non-performing loan balance was 36 billion CNY, with a non-performing loan ratio of 1.06%, unchanged from 2024. The ratio of non-performing and attention loans decreased by 15 basis points to 2.84% [3][22]. Asset and Liability Management - **Asset Growth**: The total interest-earning assets reached 5.59 trillion CNY, growing 1.1% year-on-year. The structure of interest-earning assets showed an increase in loans and interbank assets, while financial investments decreased [3][18]. - **Liability Management**: The interest-bearing liabilities amounted to 5.02 trillion CNY, with a year-on-year growth of 0.2%. Deposits grew by 6.2% compared to 2024, indicating significant improvement [3][21]. Profit Forecast and Valuation - The forecast for net profit attributable to shareholders for 2025-2027 is expected to grow by 0.81%, 2.92%, and 3.28%, respectively. The estimated book value per share (BPS) for these years is projected to be 23.24 CNY, 24.93 CNY, and 26.65 CNY [4][24].

Investment Rating - The investment rating for Ping An Bank is adjusted to "Accumulate" with a target price of 13.12 CNY, representing a potential upside of 14% from the current price of 11.49 CNY [5]. Core Views - The bank's non-interest income continues to show strong performance, with total revenue for 2024 estimated at approximately 146.7 billion CNY, reflecting a year-over-year decline of 10.93% but an upward revision in growth rate by 1.65 percentage points compared to the previous quarter [2][9]. - The net interest income for the year is projected at 93.4 billion CNY, down 20.82% year-over-year, while non-interest income is expected to reach 53.3 billion CNY, up 14% year-over-year, indicating a significant recovery in growth [2][9]. - The bank's asset quality remains stable, with a non-performing loan ratio of 1.06%, consistent with the previous quarter [3][19]. Financial Performance Summary - For 2024, the bank's total revenue is approximately 1467 billion CNY, with a net profit attributable to shareholders of 44.5 billion CNY, showing a year-over-year decrease of 4.19% [1][9]. - The bank's net interest margin (NIM) is recorded at 1.87%, a decline of 6 basis points compared to the previous quarter [3][19]. - The bank's total interest-earning assets amount to 6.09 trillion CNY, reflecting a slight increase of 0.2% from the previous quarter [3][19]. Profitability and Valuation - The bank's profitability is expected to show resilience, with projected net profit growth rates for 2025, 2026, and 2027 at 1.40%, 3.94%, and 3.15% respectively [4][26]. - The price-to-book ratio (P/B) is estimated to be 0.41x for 2025, indicating a valuation that suggests potential for price appreciation [4][26]. Asset and Liability Structure - As of the end of 2024, the bank's interest-bearing liabilities total 5.07 trillion CNY, marking a 2.9% increase from the previous quarter [3][19]. - The composition of interest-earning assets includes loans (54.1%), financial investments (26.2%), interbank and reverse repos (15.3%), and deposits with the central bank (4.4%) [3][19].