UBS: Upgrades China Minsheng Banking Corp., Ltd. (01988) to "buy", optimistic about profit turning point and valuation reassessment.

UBS released a research report stating that it has upgraded the rating of China Minsheng Banking Corp., Ltd. (01988) from "neutral" to "buy." This is based on the deep discount in its valuation, with a forecasted price-to-book ratio of only 0.22 times in 2026 (compared to CITIC BANK's 0.47 times), as well as the benefits from revenue improvement and the significant release of balance sheet risks. It is likely that profits will begin to turn around starting from 2026. The target price has been slightly adjusted downwards from 5.43 Hong Kong dollars to 5.30 Hong Kong dollars. The market currently views Minsheng Bank with the pricing logic that profit pressure will continue to exist, but UBS analysis believes that its provision risk may have peaked. With profits expected to reach a balance in 2026 and turn to positive growth from 2027 onwards, UBS believes that its valuation re-evaluation potential will exceed the recent weak return on equity. UBS has increased its earnings forecasts for Minsheng Bank by 5-6% for the years 2026-2029, but also slightly raised the cost of equity capital (CoE) to 11.5% due to short-term market volatility.