Table of contents
Executive summary ............................................................................................... 4
What’s new? .......................................................................................................... 8
Investment Thesis 1.0: near-term positive........................................................... 15
Investment Thesis 2.0: long-term bullish ............................................................ 51
Investment risks.................................................................................................. 61
Valuation and stock recommendations ................................................................ 70
Actionable ideas: market-neutral pair-trades ...................................................... 75
ICBC (1398 HK) ........................................................................................... 78
Investment thesis................................................................................................ 79
Valuation ............................................................................................................ 81
Earnings outlook................................................................................................. 85
Investment considerations................................................................................... 87
Company overview.............................................................................................. 89
Company structure.............................................................................................. 97
Market analysis ................................................................................................. 100
Risks to our investment recommendation.......................................................... 103
Pricing power analysis....................................................................................... 104
China Construction Bank (939 HK) ................................................... 108
Investment thesis.............................................................................................. 109
Valuation .......................................................................................................... 111
Earnings outlook............................................................................................... 115
Investment considerations................................................................................. 117
Company overview............................................................................................ 119
Company structure............................................................................................ 126
Market analysis ................................................................................................. 130
Risks to our investment recommendation.......................................................... 133
Pricing power analysis....................................................................................... 134
Bank of China (3988 HK)....................................................................... 138
Investment thesis.............................................................................................. 139
Valuation .......................................................................................................... 140
Earnings outlook............................................................................................... 144
Investment considerations................................................................................. 147
Company overview............................................................................................ 149
Company structure............................................................................................ 157
Market analysis ................................................................................................. 161
Risks to our investment recommendation.......................................................... 164
Pricing power analysis....................................................................................... 165
Bank of Communications (3328 HK) ................................................ 169
Investment thesis.............................................................................................. 170
Valuation .......................................................................................................... 171
Earnings outlook............................................................................................... 175
Investment considerations................................................................................. 177
Company overview............................................................................................ 179
Company structure............................................................................................ 187
Market analysis ................................................................................................. 190
Risks to our investment recommendation.......................................................... 193
Pricing power analysis....................................................................................... 194
China Merchants Bank (3968 HK)...................................................... 198
Initiation ........................................................................................................... 198
Valuation .......................................................................................................... 200
Earnings outlook............................................................................................... 204
Investment considerations................................................................................. 206
Company overview............................................................................................ 208
Company structure............................................................................................ 216
Market analysis ................................................................................................. 220
Risks to our investment recommendation.......................................................... 223
Pricing power analysis....................................................................................... 224
China CITIC Bank (998 HK)................................................................... 228
Investment thesis.............................................................................................. 229
Valuation .......................................................................................................... 230
Earnings outlook............................................................................................... 234
Investment considerations................................................................................. 236
Company overview............................................................................................ 238
Company structure............................................................................................ 245
Market analysis ................................................................................................. 249
Risks to our HOLD recommendation.................................................................. 252
Pricing power analysis....................................................................................... 253