Goldman Sachs: CICC (03908) preliminary first quarter performance far exceeds expectations, reaffirming a "buy" rating with a target price of HK$28.15.

Goldman Sachs released a research report stating that it has reiterated its "buy" rating on CICC (03908) H shares with a 12-month target price of HK$28.15, based on a forecasted 11 times price-to-earnings ratio for 2027. CICC has reported strong preliminary performance for the first quarter of this year, guiding that the net profit attributable to shareholders for the first quarter of 2026 is expected to be between 3.4 billion to 3.9 billion RMB, representing a year-on-year growth of 65% to 90%, much higher than Goldman Sachs' expectations of 27% to 46%. However, the bank believes that while the industry data are largely reflected in market expectations, CICC's exceptional performance is more likely to be attributed to its strong performance in Hong Kong operations, as Hong Kong contributes approximately 30% of the group's revenue, and the Hong Kong IPO market is showing strong growth with a year-on-year increase of 489%. Given that CICC's merger integration is still ongoing, the bank believes that strong profit performance will help boost stock prices, thereby narrowing the discount between stock prices and the exercise price of cash options, and reducing the likelihood of cash options being exercised. Looking ahead, Goldman Sachs recommends focusing on the following points: 1) The second board meeting scheduled for April is expected to alleviate market concerns about the uncertainties of the merger transaction itself, which could help improve valuation; 2) Detailed breakdown of the first quarter performance in 2026, especially the competitive Hong Kong operations and the growth trajectory of wealth management business in CICC.