UBS: Raises target price of HUISHANG BANK (03698) to HKD 3.25, rating "Sell"

UBS released a research report stating that HUISHANG BANK (03698) is expected to have lower revenue than expected in 2025, with net profit slightly exceeding expectations. The target price has been raised from HK$3.05 to HK$3.25, with a "sell" rating. The upside risk lies in the possibility of the dividend payout ratio increasing from the current 20%. Inclusion in the Hong Kong Stock Connect may also serve as a short-term catalyst for upward movement. HUISHANG BANK reported positive earnings, with full-year revenue of 37.67 billion yuan, a year-on-year increase of 1.2%, slightly below market expectations of around 3%. The bank believes this may be due to non-interest income performing below expectations, particularly in investment and trading income, considering the high base in 2024. Full-year net profit for 2025 is estimated at 16.93 billion yuan, a year-on-year increase of 6.3%, approximately 2% higher than market expectations, possibly due to operational expenses and impairment losses on financial assets being lower than expected. As for asset quality, the non-performing loan ratio stands at 0.98%, unchanged from the previous quarter, a decrease of 1 basis point from the same period last year.