BOC Hong Kong (Holdings) (SEHK:2388) - Share price, News & Analysis

Q: What is the Fair Price of 2388 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

2388 (HK$27.9) is trading below our estimate of [[fair value]] (HK$49.57)

2388 fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	1/6
Financial Health	6/6
Dividends	3/6

2388 Stock Overview

BOC Hong Kong (Holdings) Limited, an investment holding company, provides banking and related financial services to corporate and individual customers in Hong Kong, China, and internationally.

Rewards

Trading at 43.7% below our estimate of its fair value

Earnings are forecast to grow 14.44% per year

Risk Analysis

Unstable dividend track record

BOC Hong Kong (Holdings) Competitors

Hang Seng Bank

SEHK:11

HK$244.1b

Bank of Communications

SEHK:3328

HK$374.8b

China CITIC Bank

SEHK:998

HK$220.3b

Postal Savings Bank of China

SEHK:1658

HK$483.2b

Price History & Performance

Summary of all time highs, changes and price drops for BOC Hong Kong (Holdings)
Historical stock prices
Current Share Price	HK$27.90
52 Week High	HK$32.75
52 Week Low	HK$22.20
Beta	0.78
1 Month Change	-1.59%
3 Month Change	-6.06%
1 Year Change	10.71%
3 Year Change	5.09%
5 Year Change	-25.90%
Change since IPO	244.44%

Shareholder Returns

	2388	HK Banks	HK Market
7D	-0.5%	0.5%	0.3%
1Y	10.7%	-6.2%	-21.6%

Return vs Industry: 2388 exceeded the Hong Kong Banks industry which returned -6.2% over the past year.

Return vs Market: 2388 exceeded the Hong Kong Market which returned -21.6% over the past year.

Price Volatility

Is 2388's price volatile compared to industry and market?
2388 volatility
2388 Average Weekly Movement	3.5%
Banks Industry Average Movement	3.2%
Market Average Movement	6.5%
10% most volatile stocks in HK Market	12.6%
10% least volatile stocks in HK Market	3.2%

Stable Share Price: 2388 is less volatile than 75% of Hong Kong stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: 2388's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1917	14,553	Yu Sun	https://www.bochk.com

BOC Hong Kong (Holdings) Limited, an investment holding company, provides banking and related financial services to corporate and individual customers in Hong Kong, China, and internationally. The company operates through four segments: Personal Banking, Corporate Banking, Treasury, and Insurance. It offers savings, current, and time deposit accounts; mortgage plans; payrolls, corporate deposits, and E-cheques services.

BOC Hong Kong (Holdings) Fundamentals Summary

How do BOC Hong Kong (Holdings)'s earnings and revenue compare to its market cap?
2388 fundamental statistics
Market Cap	HK$294.98b
Earnings (TTM)	HK$22.97b
Revenue (TTM)	HK$46.83b

12.8x

P/E Ratio

0.9x

P/B Ratio

Is 2388 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
2388 income statement (TTM)
Revenue	HK$46.83b
Cost of Revenue	HK$0
Gross Profit	HK$46.83b
Other Expenses	HK$23.86b
Earnings	HK$22.97b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	2.17
Gross Margin	100.00%
Net Profit Margin	49.05%
Debt/Equity Ratio	9.7%

How did 2388 perform over the long term?

See historical performance and comparison

Dividends

4.1%

Current Dividend Yield

52%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 2388 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 2388?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 2388. This is calculated by dividing 2388's market cap by their current preferred multiple.
What is 2388's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	HK$294.98b

2388 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does 2388's PE Ratio compare to its peers?

2388 PE Ratio vs Peers

The above table shows the PE ratio for 2388 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	9.5x
11 Hang Seng Bank	26.6x	31.4%	HK$244.1b
3328 Bank of Communications	3.6x	7.9%	HK$374.8b
998 China CITIC Bank	2.6x	10.5%	HK$220.3b
1658 Postal Savings Bank of China	5.3x	13.2%	HK$483.2b
2388 BOC Hong Kong (Holdings)	12.8x	14.4%	HK$295.0b

Price-To-Earnings vs Peers: 2388 is expensive based on its Price-To-Earnings Ratio (12.8x) compared to the peer average (9.5x).

Price to Earnings Ratio vs Industry

How does 2388's PE Ratio compare vs other companies in the HK Banks Industry?

Price-To-Earnings vs Industry: 2388 is expensive based on its Price-To-Earnings Ratio (12.8x) compared to the Hong Kong Banks industry average (5.3x)

Price to Earnings Ratio vs Fair Ratio

What is 2388's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

2388 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	12.8x
Fair PE Ratio	6.2x

Price-To-Earnings vs Fair Ratio: 2388 is expensive based on its Price-To-Earnings Ratio (12.8x) compared to the estimated Fair Price-To-Earnings Ratio (6.2x).

Share Price vs Fair Value

What is the Fair Price of 2388 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 2388 (HK$27.9) is trading below our estimate of fair value (HK$49.57)

Significantly Below Fair Value: 2388 is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is BOC Hong Kong (Holdings) forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

14.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2388's forecast earnings growth (14.4% per year) is above the savings rate (1.6%).

Earnings vs Market: 2388's earnings (14.4% per year) are forecast to grow slower than the Hong Kong market (16.7% per year).

High Growth Earnings: 2388's earnings are forecast to grow, but not significantly.

Revenue vs Market: 2388's revenue (12.3% per year) is forecast to grow faster than the Hong Kong market (10.1% per year).

High Growth Revenue: 2388's revenue (12.3% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 2388's Return on Equity is forecast to be low in 3 years time (11.4%).

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Past Performance

How has BOC Hong Kong (Holdings) performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-2.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 2388 has high quality earnings.

Growing Profit Margin: 2388's current net profit margins (49%) are lower than last year (51.2%).

Past Earnings Growth Analysis

Earnings Trend: 2388's earnings have declined by 2.2% per year over the past 5 years.

Accelerating Growth: 2388's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 2388 had negative earnings growth (-13.3%) over the past year, making it difficult to compare to the Banks industry average (11.2%).

Return on Equity

High ROE: 2388's Return on Equity (7.6%) is considered low.

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Financial Health

How is BOC Hong Kong (Holdings)'s financial position? (This company is analysed differently as a bank or financial institution)

Financial Health Score

6/6

Financial Health Score 6/6

Asset Level
Allowance for Bad Loans
Low Risk Liabilities
Loan Level
Low Risk Deposits
Level of Bad Loans

Financial Position Analysis

Debt to Equity History and Analysis

Balance Sheet

Financial Institutions Analysis

Asset Level: 2388's Assets to Equity ratio (11.1x) is moderate.

Allowance for Bad Loans: 2388 has a sufficient allowance for bad loans (229%).

Low Risk Liabilities: 85% of 2388's liabilities are made up of primarily low risk sources of funding.

Loan Level: 2388 has an appropriate level of Loans to Assets ratio (44%).

Low Risk Deposits: 2388's Loans to Deposits ratio (57%) is appropriate.

Level of Bad Loans: 2388 has an appropriate level of bad loans (0.3%).

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Dividend

What is BOC Hong Kong (Holdings) current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

4.05%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 2388's dividend (4.05%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.85%).

High Dividend: 2388's dividend (4.05%) is low compared to the top 25% of dividend payers in the Hong Kong market (8.27%).

Stability and Growth of Payments

Stable Dividend: 2388's dividend payments have been volatile in the past 10 years.

Growing Dividend: 2388's dividend payments have fallen over the past 10 years.

Current Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (52%), 2388's dividend payments are covered by earnings.

Future Payout to Shareholders

Future Dividend Coverage: 2388's dividends in 3 years are forecast to be covered by earnings (50.5% payout ratio).

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Management

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

3.7yrs

Average management tenure

CEO

Yu Sun (49 yo)

1.67yrs

Tenure

HK$8,295,000

Compensation

Mr. Yu Sun serves as Vice Chairman and Chief Executive Officer and Executive Director of BOC Hong Kong (Holdings) Ltd. since December 23, 2020. He serves as Vice Chairman and Chief Executive Officer at Ban...

CEO Compensation Analysis

Compensation vs Market: Yu's total compensation ($USD1.06M) is about average for companies of similar size in the Hong Kong market ($USD997.84K).

Compensation vs Earnings: Yu's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: 2388's management team is considered experienced (3.7 years average tenure).

Board Members

Experienced Board: 2388's board of directors are considered experienced (3.8 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.

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/08/13 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31