JP Morgan raises target price of HSBC HOLDINGS (00005) to 122 Hong Kong dollars. Rating: "Overweight"

JP Morgan released a research report stating that the stock price of HSBC HOLDINGS (00005) fell by 5.1% after the announcement of its performance in the second quarter of 2025, underperforming the Hang Seng Index (which fell by 3.6%) during the same period, despite pre-tax profits exceeding market expectations by 10% after excluding one-time items. The bank believes that part of the market disappointment stems from concerns about the unexpected write-down of $1 billion for BANKCOMM. The bank has raised its normalized earnings per share forecast for 2025/2026/2027 by 4%/3%/3%. It also estimates that the total shareholder return over the next 12 months will reach 9.7%, ranking first among financial institutions in the Greater Bay Area. The target price has been raised from HK$118 to HK$122, with a rating of "hold". The bank maintains a positive view on HSBC for several reasons. First, HSBC still holds a deductible balance of $14 billion in capital thresholds, meaning that even if there is further write-down of up to $14 billion for affiliated companies such as the Bank of Communications, the impact on dividends, capital, and stock buybacks will be limited. Secondly, management has provided some guidance on its digital asset strategy, indicating that the bank is prepared for the potential disruption of the accelerating global expansion of digital assets. Thirdly, the income performance has shown more resilience than expected.