JP Morgan: Tensions in the Middle East, STANCHART (02888) may come under pressure in the short term, target price slightly raised to 270 Hong Kong dollars.

J.P. Morgan released a research report stating that it is expected that the short-term stock price of STANCHART (02888) will be under pressure, as its business in the UAE accounted for 2.4% of the group's assets and 5.6% of its revenue last year, higher than that of HSBC's Middle East business, which accounted for 2% and 3.8% respectively. The escalating geopolitical risks will impact market sentiment. Despite these unfavorable factors, J.P. Morgan still maintains a constructive outlook on Standard Chartered in the medium to long term. J.P. Morgan rates Standard Chartered as "overweight" with a target price slightly increased from the original 265 Hong Kong dollars to 270 Hong Kong dollars. After Standard Chartered announced its fourth-quarter results for 2025, J.P. Morgan held a non-deal roadshow in Hong Kong, where the management of Standard Chartered emphasized the structural and cyclical factors supporting income from deposits, wealth, and flow asset management. J.P. Morgan has raised its forecast for earnings per share and tangible return on equity for Standard Chartered for the years 2026 to 2028. Key catalysts in the future include Hong Kong's announcement of a stablecoin license in March and Standard Chartered's Investor Day in May, where new total return and tangible return on equity mid-term targets will be outlined. J.P. Morgan believes that Standard Chartered is undervalued compared to its peers in the sector and emerging markets, trading at 1.2 times the forecast tangible net asset value for 2027, with significant profit growth potential and support from structural growth drivers and relatively high capital returns. J.P. Morgan has raised its earnings forecasts for Standard Chartered for the years 2026 to 2028 by 5%, 2%, and 2% respectively, supported by increased revenue, expecting an average compound annual growth rate of 5% for revenue from 2025 to 2028. Dividend forecasts remain largely unchanged, with a dividend payout ratio of 35%, annual share buybacks of $2 billion, leading to a total payout ratio of 70%, and an estimated total yield of between 7% and 8% per year.