Bank of China ++

3988 BANK OF CHINA 4.54 0.16+ 3.65% 2,412,307 536,837  

Greetings, doch: folgende primary "babies": ICBC !!!!, CMB !!, BOC !!! and CMCB !
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Bank of China  attempted to hold above the 10-day moving average where it is now at $4.15. By technical analysis, this share enters a technical correction after it has hit $4.50. If the counter stands firm above the 10-day supporting line, it signals to stay on a major upward trend. After the recent consolidation, it is likely to trace an upward trend towards $5.00 in the medium term. Thanks to the market anticipation on the finance sector, this counter gains strength from solid buying interest. This also stems up the share price to trace a major upward trend.

BOC Hong Kong (2388, $20.40) 6M Target $22.0 Trading BUY

The recent hike in HIBOR benefits BOC Hong Kong on its large deposit base.

Prosperity in Hong Kong securities trading favours the brokerage commission revenue of the bank.

According to Hong Kong Monetary Authority (HKMA), the outstanding value of mortgage loan as at August 2007 increased to $542.3bn, up 0.7% mom and 3.0% yoy.

Being the leader in Hong Kong’s mortgage loan market, BOC Hong Kong will benefit on the fact that both mortgage delinquency ratio and combined ratio for Hong Kong banks as released by HKMA have declined to record lows at 0.13% and 0.36% respectively.

The share price of BOC Hong Kong up 4% after the interim results announcement while the Hang Seng Index rose by 24% during the same period. We believe BOC Hong Kong is a laggard.

We believe the fear on the holding of US$1.6bn or 1.2% of its total assets on US AAA-rated sub-prime securities with no interim impairment is over done.

Traded at 2.3x FY08 price-to-book ratio with FY08 ROE of 16.3%, the valuation of BOC Hong Kong is attractive.

We maintain BUY and our 6-month target price of $22.0.