CICC raises target price of BOC HONG KONG (02388) to HK$ 45.1, expected to achieve special shareholder returns in the first half of this year.

Zhongjin released a research report stating that BOC HONG KONG (02388) announced its performance for 2025, with revenue increasing by 8.1% year-on-year and net profit attributable to shareholders increasing by 4.9% year-on-year. In the fourth quarter of last year, revenue increased by 13.8% year-on-year, and pre-tax profit increased by 5%. The performance met the expectations of Zhongjin. Introducing profit forecasts for the next two years, it is expected that the company's operating income will be 77.3 billion and 78.4 billion Hong Kong dollars respectively in the next two years, with net profit attributable to shareholders being 40 billion and 40.5 billion Hong Kong dollars respectively. Taking into account changes in market risk preferences and profit expectations, the company's target price was raised by 53% to 45.1 Hong Kong dollars, corresponding to 1.3 times and 1.2 times the price-to-book ratio for the next two years, with an upside potential of 11.2%. The "outperform industry" rating is maintained. The bank also expects BOC HONG KONG's net fee income to maintain double-digit year-on-year growth in 2026; credit costs are expected to remain flat at around 50 basis points. The company disclosed that the board of directors has tentatively approved a shareholder return framework for 2026 to 2028, mainly focusing on flexibly increasing the shareholder payout ratio within the established range (40% to 60%), share buybacks, special dividends, and other measures to increase shareholder returns, with the aim of implementing them at the time of the performance announcement in the first half of this year. Considering the company's current high valuation level, Zhongjin believes that the probability of adopting dividend-related measures may be higher, and special shareholder returns are expected to be implemented in the first half of this year.