Special interviews
Written by: Lin Leqian
2020-08-03 07:00
Last update date: 2020-08-03 07:00Tensions between China and the United States are heating up again, HSBC Holdings (0005) is caught in political disputes, and foreign news agencies have reported that the Bank of England is evaluating whether to extend the ban on bank dividends and repurchase until January next year. Under various unfavorable news, the closing price of HSBC last Friday fell below 35 yuan to 34.95 yuan, approaching the low of 33 yuan during the financial tsunami auction period!
HSBC will announce its interim results at noon today (3rd). The market will focus on the group's credit impairment, whether it will promise to resume dividends, the progress of the business restructuring plan, and even the assessment of political risks. The analysis pointed out that the group has too much bad news being fermented, and the stock price is as low as the tsunami price of 33 yuan, and even the stock price of 28 yuan is possible!
China and the United States continued to wrestle with each other. When the Hong Kong National Security Law was implemented, HSBC supported the legislation in a high-profile manner. Chairman Wang Dongsheng went to the street to sign a statement, which aroused criticism from the US and British governments. On the other hand, HSBC was directly criticized by Chinese state media and framed Huawei. Even if HSBC denies it, the market still worries that it will affect its business development in the Mainland, making HSBC involved in the political vortex of "two sides are not human."
In addition to political risks, the market is also focusing on HSBC's restructuring plan. Earlier, there were media reports that HSBC executives discussed with the Bank of England that as the political environment continues to deteriorate, the linked exchange rate of the Hong Kong dollar may be disrupted. Chairman Du Jiaqi is reviewing the operation of its European and American businesses and studying the possibility of selling related businesses. The company also announced a restructuring plan as early as February, which will cut 35,000 people worldwide. Recently, Foreign News also quoted news that Chief Executive Qi Yaonian urged more than 200 senior executives to speed up the overall reorganization in order to improve the performance of the group's return.
HSBC was directly criticized by Chinese state media to frame Huawei. Even if HSBC denied it, the market was still worried about affecting its business development in China. (Profile picture)
Investment bank is bearish on HSBC's performance, Motong lowers target price by 9%
Due to a number of uncertain factors, many investment bank analysts have taken the initiative to "sing down" HSBC. JPMorgan Chase recently lowered its target price by 9% to RMB 35. It is believed that under HSBC's restructuring plan, the Group’s strategy of relying on the Greater China region will lead to a downturn in valuations, and there is a risk of a reduction in dividends in the future. This is the benchmark for the first half of the year. Profit before tax fell 57% year-on-year to US$5.332 billion, and adjusted profit before tax fell 56.8% to US$5.405 billion. Credit losses and other credit impairments are expected to increase to US$6.155 billion. The adjusted earnings per share forecast is lowered by 5% and the investment rating of "Neutral" is maintained.
Goldman Sachs expects that HSBC’s profit before tax for the first half of the year fell 52% year-on-year to US$5.93 billion, adjusted profit before tax fell 50% to US$6.243 billion, and credit losses and other credit impairments increased by 3.8 Times to 5.467 billion yuan. The bank expects HSBC to resume its dividend of US$0.51 per share next year. The current stock price level does not fully reflect the relevant expectations, that is, the current price provides a forecast dividend return of 11% for 2021, and believes that its capital adequacy ratio is strong. Goldman Sachs lowered HSBC’s target price from 58 yuan to 55 yuan and maintained a “buy” investment rating.
Honghui Asset Management Director and Investment Strategy Director Lin Jiaqi said that HSBC has too much bad news to ferment, and investors must be psychologically prepared. (Profile picture)
Lin Jiaqi: Huawei sentenced to "death penalty" for HSC
Honghui Asset Management Director and Investment Strategy Director Lin Jiaqi believes that under the global economic stagnation, the expected performance of HSBC is not satisfactory. However, the worst has not happened. I believe the fourth quarter performance will be worse, and credit impairment provision may not be necessary. To reflect the actual situation, we must pay attention to the relevant increase throughout the year.
Regarding HSBC’s involvement in the political turmoil, he said that the impact of US sanctions on HSBC is relatively indirect. However, the internal media’s accusation of framing Huawei has a profound impact. The company’s main growth drivers come from the Chinese and Hong Kong markets. If it harms its business development in China, it will undoubtedly be right. HSBC "sent to death."
He continued to analyze that even if the Sino-US relationship is poor, China does not want foreign companies to withdraw their capital. He believes that investors can continue to hold the shares. It does not rule out that Ping An Insurance (2318), as a major shareholder of HSBC, has a "killer trick". The incident was reconciled with China and the company "revived". However, there were earlier reports that the company intends to sell its European and American businesses. He said related business costs were high and losses were recorded. However, after the departure, HSBC became an "Asia-Pacific bank", losing its status as an international bank, and doing business with European and American countries in the Mainland Investors may be deterred, affecting the group's medium and long-term development.
Zhang Zhiwei, co-director of Xincheng Securities, said that the market is more concerned about whether HSBC will promise to resume its dividend and business restructuring plan next year. (Profile picture)
Zhang Zhiwei: Stock price may wear 28 yuan supply price
Zhang Zhiwei, co-director of Faith Securities, predicted that HSBC’s business growth in the Asia-Pacific region would be weak, and that the worst would be a loss. He believed that "how much performance loss is not the focus", the market is more concerned about whether it will promise to resume dividend payment next year and The current business restructuring plan of HSBC is like "the pig is looking in the mirror, and the two sides are not human." The business environment in Europe and the United States is difficult, and the mainland business has offended the official media due to the Huawei incident. The prospects are very uncertain. Knowing when to decide, everything is far away." In addition, the Federal Reserve has maintained interest rates close to zero interest rates. With the narrowing of interest margins, bank interest income has fallen sharply. He expects bank stocks to be under pressure for a long time.
The European Central Bank announced the extension of the suspension of bank dividends and the repurchase ban. The Bank of England also pointed out that it will study the extension of the suspension of bank dividends. Lin Jiaqi expects that HSBC will not pay dividends next year, mainly depending on the development of the epidemic, plus the EU’s 750 billion euros The details of the bailout fund have not yet been announced. HSBC may continue to be restricted in dividends. "The stock price drops below 35 yuan, then the tsunami price of 33 yuan, or even the 28 yuan supply price is possible. There is too much bad news that investors want Be mentally prepared."
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