＜Research＞UBS Downgrades BANK OF E ASIA (00023.HK) to Neutral, TP Down to $10.5

　　From a research report released by UBS, it has accordingly lowered its EPS forecasts for BANK OF E ASIA (00023.HK) -0.240 (-2.400%) Short selling $1.21M; Ratio 13.148% from 2024 through 2026 to 34%, 28%, and 12% respectively after taking into account the weak HIBOR, expected Fed rate cut, sluggish loan demand, and rising overdue lending risk from Hong Kong's commercial real estate (CRE) exposure, which suggests that non-performing loan (NPL) risk will continue to be the largest uncertainty to earnings.

　　UBS expects that credit costs will remain high this and next year despite a series of supportive policies introduced by the central government that may aid in alleviating the NPL loan risk of mainland CRE exposure. As of the end of 2023, the share of BEA's real estate development in Hong Kong and investment loans reached 5.4% and 9.4%, with collateralized ratios of 59.4% and 92.4%, respectively. The outlook for the development of Hong Kong's property market and the trend of NPLs are expected to be the major risks that warrant concerns. UBS downgraded the bank's investment rating from Buy to Neutral, and lowered the target price from $12 to $10.5.

　　UBS forecasts that ongoing property-related provisions will be the toughest headwind to profitability this year, with NPAT expected to plunge 30.6% YoY in 1H24. However, a 5.9% dividend yield and 1.9% buyback yield will aid in partially cushioning the bank from downside risks.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-12 16:25.)

　　AAStocks Financial News