JP Morgan downgrades China Everbright Bank (01114) to "neutral", expects dividend to fall in the future.

JPMorgan Chase released a research report stating that it has lowered its profit forecast for Huachen China (01114) for 2025 and 2026 by 11% and 4% respectively. The target price has been lowered from HK$4.7 to HK$4.1. The recommendation for investors is to lock in profits, and the rating has been downgraded from "neutral" to "hold". The bank estimates that Huachen China's cash balance on the balance sheet as of the end of this year is around HK$1 to HK$1.5 per share. Along with this year's earnings forecast of 0.64 RMB per share and an expected dividend payout ratio of 50%, the bank predicts that the dividend in the first half of 2026 will range from HK$0.35 to HK$0.9 (including a special dividend), implying a dividend yield of about 8% to 21%. Although the dividend level of Huachen China is attractive, the bank believes that the amount of future dividends may quickly decline as the company's cash levels are not as ample as before, and the profitability of the Huachen BMW joint venture in the Chinese market may continue to face challenges.