SEHK:1398

Stock Analysis Report

Industrial and Commercial Bank of China

Executive Summary

Industrial and Commercial Bank of China Limited provides various banking products and services primarily in China and internationally.

Rewards

Trading at 65.3% below its fair value

Earnings are forecast to grow 5.96% per year

Earnings grew by 4.1% over the past year

Pays a high and reliable dividend of 5%

Risk Analysis

No risks detected for 1398 from our risk checks.


Snowflake Analysis

Flawless balance sheet established dividend payer.


Similar Companies

Share Price & News

How has Industrial and Commercial Bank of China's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 1398 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0%

1398

0.5%

HK Banks

0.3%

HK Market


1 Year Return

-6.2%

1398

-10.3%

HK Banks

-5.1%

HK Market

Return vs Industry: 1398 exceeded the Hong Kong Banks industry which returned -10.4% over the past year.

Return vs Market: 1398 underperformed the Hong Kong Market which returned -4.5% over the past year.


Shareholder returns

1398IndustryMarket
7 Day0%0.5%0.3%
30 Day-4.3%-3.6%-3.9%
90 Day-1.8%-0.09%4.4%
1 Year-1.5%-6.2%-5.6%-10.3%-1.6%-5.1%
3 Year25.0%7.3%6.9%-7.8%13.4%1.9%
5 Year28.3%-1.8%16.0%-11.0%15.6%-3.6%

Price Volatility Vs. Market

How volatile is Industrial and Commercial Bank of China's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Industrial and Commercial Bank of China undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 1398 (HK$5.56) is trading below our estimate of fair value (HK$16.03)

Significantly Below Fair Value: 1398 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1398 is poor value based on its PE Ratio (5.8x) compared to the Banks industry average (5.7x).

PE vs Market: 1398 is good value based on its PE Ratio (5.8x) compared to the Hong Kong market (10.1x).


Price to Earnings Growth Ratio

PEG Ratio: 1398 is good value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: 1398 is overvalued based on its PB Ratio (0.7x) compared to the HK Banks industry average (0.5x).


Next Steps

Future Growth

How is Industrial and Commercial Bank of China forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

6.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1398's forecast earnings growth (6% per year) is above the savings rate (1.6%).

Earnings vs Market: 1398's earnings (6% per year) are forecast to grow slower than the Hong Kong market (11.8% per year).

High Growth Earnings: 1398's earnings are forecast to grow, but not significantly.

Revenue vs Market: 1398's revenue (7.2% per year) is forecast to grow slower than the Hong Kong market (10.5% per year).

High Growth Revenue: 1398's revenue (7.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1398's Return on Equity is forecast to be low in 3 years time (12.3%).


Next Steps

Past Performance

How has Industrial and Commercial Bank of China performed over the past 5 years?

1.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1398 has high quality earnings.

Growing Profit Margin: 1398's current net profit margins (47.8%) are lower than last year (48.4%).


Past Earnings Growth Analysis

Earnings Trend: 1398's earnings have grown by 1.8% per year over the past 5 years.

Accelerating Growth: 1398's earnings growth over the past year (4.1%) exceeds its 5-year average (1.8% per year).

Earnings vs Industry: 1398 earnings growth over the past year (4.1%) exceeded the Banks industry 3.7%.


Return on Equity

High ROE: 1398's Return on Equity (11.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Industrial and Commercial Bank of China's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: 1398 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 1398's debt is covered by short term assets (assets are 7.3x debt).


Financial Institutions Analysis

Asset Level: 1398's level of assets compared to its equity is moderate.

Allowance for Bad Loans: 1398 has a sufficient allowance for bad loans.

Low Risk Liabilities: 1398's liabilities are made up of primarily low risk sources of funding.

Loan Level: 1398 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: 1398's loans are broadly funded by customer deposits.

Level of Bad Loans: 1398 has an appropriate level of bad loans (1.48%)


Next Steps

Dividend

What is Industrial and Commercial Bank of China's current dividend yield, its reliability and sustainability?

5.00%

Current Dividend Yield


Dividend Yield vs Market

company5.0%marketbottom25%2.3%markettop25%6.3%industryaverage5.4%forecastin3Years5.7%

Current dividend yield vs market & industry

Notable Dividend: 1398's dividend (5%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.28%).

High Dividend: 1398's dividend (5%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.38%).


Stability and Growth of Payments

Stable Dividend: 1398's dividends per share have been stable in the past 10 years.

Growing Dividend: 1398's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (29.1%), 1398's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 1398's dividends in 3 years are forecast to be well covered by earnings (30.6% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.5yrs

Average management tenure


CEO

Shu Gu (52yo)

3.3yrs

Tenure

CN¥672,900

Compensation

Mr. Shu Gu has been the President and Executive Director of Industrial and Commercial Bank of China Limited since October 2016 and December 29, 2016 respectively. He serves as President of Industrial and C ...


CEO Compensation Analysis

Compensation vs Market: Shu's total compensation ($USD96.16K) is below average for companies of similar size in the Hong Kong market ($USD987.80K).

Compensation vs Earnings: Shu's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Shu Gu
Vice Chairman & President3.3yrsCN¥672.90kno data
Bairong Wang
Chief Risk Officer3.6yrsCN¥1.14mno data
Xueqing Guan
Board Secretary3.6yrsCN¥1.15mno data
Siqing Chen
Chairman of the Board0.8yrsno datano data
Wenwu Zhang
General Manager of Finance & Accounting Department0yrsCN¥50.00kno data
Bresson Xu
Corporate Strategy & Investor Relations0yrsno datano data
Li Huang
Chief Responsible Officer of Internal Audit Bureau & Employee Supervisor3.7yrsno datano data
Lin Liao
Senior Executive Vice President0.3yrsno datano data

3.5yrs

Average Tenure

55yo

Average Age

Experienced Management: 1398's management team is considered experienced (3.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Shu Gu
Vice Chairman & President3.3yrsCN¥672.90kno data
Siqing Chen
Chairman of the Board0.8yrsno datano data
Li Huang
Chief Responsible Officer of Internal Audit Bureau & Employee Supervisor3.7yrsno datano data
Anthony Francis Neoh
Independent Non-Executive Director4.8yrsCN¥445.00kno data
Siu Shun Yang
Independent Non-Executive Director3.8yrsCN¥440.00kno data
Si Shen
Independent Non Executive Director2.9yrsCN¥413.30kno data
Sheila Colleen Bair
Independent Non-Executive Director2.9yrsCN¥365.00kno data
Arnout Henricus Elisabeth Maria Wellink
Independent Non-Executive Director1.2yrsCN¥25.00kno data
Guozhong Yang
Chairman of board of supervisor0yrsno datano data
Fuqing Zheng
Non-Executive Director5yrsno datano data

3.2yrs

Average Tenure

61.5yo

Average Age

Experienced Board: 1398's board of directors are considered experienced (3.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Industrial and Commercial Bank of China Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Industrial and Commercial Bank of China Limited
  • Ticker: 1398
  • Exchange: SEHK
  • Founded: 1984
  • Industry: Diversified Banks
  • Sector: Banks
  • Market Cap: HK$2.112t
  • Shares outstanding: 356.41b
  • Website: https://www.icbc-ltd.com

Number of Employees


Location

  • Industrial and Commercial Bank of China Limited
  • No. 55 Fuxingmennei Avenue
  • Xicheng District
  • Beijing
  • 100140
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
601398SHSE (Shanghai Stock Exchange)Domestic SharesCNCNYOct 2006
1398SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDOct 2006
ICKDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEUROct 2006
IDCB.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDOct 2006
1398SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDOct 2006
601398XSSC (Shanghai Stock Exchange - Shanghai - Hong Kong Stock Connect)Domestic SharesCNCNYOct 2006
1398SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDOct 2006
ICKWBAG (Wiener Boerse AG)YesForeign Shares-Foreign ListedATEUROct 2006
IDCB.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDOct 2008

Biography

Industrial and Commercial Bank of China Limited provides various banking products and services primarily in China and internationally. It operates through Corporate Banking, Personal Banking, and Treasury Operations segments. The Corporate Banking segment offers financial products and services to corporations, government agencies, and financial institutions. This segment’s products and services include corporate loans, trade financing, deposit-taking activities, corporate wealth management services, custody activities, various corporate intermediary services, etc. The Personal Banking segment provides personal loans and cards, deposits, personal wealth management, and personal intermediary services to individual customers. The Treasury Operations segment is involved in the money market transactions, investment securities, and foreign exchange transactions, as well as holding of derivative positions. The company also offers e-banking services, including Internet, telephone, and mobile banking services; and fund and asset management, trust, financial leasing, broker dealer, insurance, and other financial services. It operates approximately 16,394 domestic institutions and 426 overseas institutions. The company has a strategic alliance with Pintec Technology Holdings Limited to jointly leverage financial technologies and to enhance the efficiency of lending services for small and micro-sized enterprises. Industrial and Commercial Bank of China Limited was founded in 1984 and is headquartered in Beijing, the People's Republic of China. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/19 12:53
End of Day Share Price2020/02/19 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.