Bank of America Securities: Lower China Merchants Bank (03968) target price to 49.8 Hong Kong dollars, reiterating "underperform" rating

Bank of America Securities released a research report stating that it roughly maintains the profit forecasts for China Merchants Bank (03968, 600036.SH) in 2026 and 2027 unchanged, with target prices lowered from 50.52 Hong Kong dollars and 45.49 Chinese yuan to 49.8 Hong Kong dollars and 43.28 Chinese yuan. It reiterated its "underperform the market" rating and prefers state-owned banks with higher dividend yield. The bank stated that China Merchants Bank's net profit before deducting preferred stock dividends last year was 150.2 billion Chinese yuan, an increase of 1.2% year-on-year, in line with previous guidance. Profit before provisions decreased by 1.6% year-on-year. Return on equity (ROE) decreased by 1.0 percentage points year-on-year to 13.4%. Common equity tier 1 capital ratio (CET1) decreased by 97 basis points year-on-year to 14.16%. In addition, the dividend payout ratio was maintained at 35.3%, with dividends per share increasing by 0.8% year-on-year to 2.016 Chinese yuan. The estimated dividend yield for China Merchants Bank's H shares and A shares is 4.7% and 5.1% respectively.