Daiwa: Initiates coverage on Industrial and Commercial Bank of China (01398) with a "Hold" rating, target price HK$7.8

Daiwa released a research report initiating coverage on Industrial and Commercial Bank of China (01398) with a "Hold" rating and an H-share target price of HK$7.8. The bank noted that Industrial and Commercial Bank of China is the world's largest bank by total assets and is consistently ranked as the most profitable financial institution, but its current valuation multiple of 0.55x 2026 forecast price-to-book has already reflected its funding advantages. Daiwa believes that for Industrial and Commercial Bank of China to achieve a valuation re-rating, its return on equity must significantly exceed expectations, or it must increase dividend payouts, but neither is expected to occur in the current downturn cycle. However, downside will be limited by its sovereign background, systemic importance, and predictable dividends. Daiwa estimates that Industrial and Commercial Bank of China's total operating profit will grow at an annual rate of 4%-8% from 2026 to 2028, with dividends per share of RMB 0.319, RMB 0.336, and RMB 0.358 respectively during the period.