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11: Privatisation Offer Will Cap Upside As Delisting Risk Dominates

Analysts Lift Hang Seng Bank Price Target amid M&A Moves and Adjusted Valuation Forecasts

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AnalystConsensusTarget
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Published 23 Feb 2025

Update shared on 05 Dec 2025

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Analysts have modestly raised their price target for Hang Seng Bank to HKD 108.50 from HKD 108.50, reflecting stable assumptions on the discount rate, revenue growth, profit margins, and valuation multiples.

What's in the News

  • HSBC has proposed to acquire the remaining 36.51% stake in Hang Seng Bank for approximately HKD 110 billion at HKD 155 per share, valuing the deal at an implied 1.8x price to book and paving the way for Hang Seng to become a wholly owned HSBC subsidiary, subject to regulatory and shareholder approvals, with closing targeted in the first half of 2026 (Key Developments).
  • As part of the proposal, Hang Seng Bank will seek delisting from the Hong Kong Stock Exchange through a scheme of arrangement, with all scheme shares to be cancelled in exchange for HKD 155.00 in cash per share, less any dividend adjustment amount, upon the scheme becoming effective (Key Developments).
  • The board has scheduled a meeting on October 10, 2025, to consider declaring the bank's 2025 third interim dividend, among other agenda items. This will influence the dividend adjustment mechanics in the privatisation proposal (Key Developments).
  • Hang Seng Bank is exploring the sale of a property backed loan portfolio of at least USD 1 billion as it seeks to clean up bad debt accumulated during Hong Kong's commercial real estate downturn (Key Developments).
  • The board has announced that Luanne Lim, currently CEO of HSBC Hong Kong, will become Chief Executive of Hang Seng Bank on October 20, 2025, succeeding Diana Cesar. Her appointment will run to the 2026 AGM and, subject to shareholder approval, to the 2029 AGM (Key Developments).

Valuation Changes

  • Fair Value Estimate remains unchanged at HK$108.50 per share, indicating no revision to the base case target price.
  • Discount Rate is stable at 6.9%, suggesting no change in the perceived risk profile or required return.
  • Revenue Growth is effectively unchanged at about 8.51%, with only a negligible technical adjustment to the forecast.
  • Net Profit Margin has risen slightly from about 36.72% to 36.79%, reflecting a modest improvement in expected profitability.
  • Future P/E has edged down marginally from about 15.53x to 15.50x, indicating a slightly lower valuation multiple applied to forward earnings.

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