SEHK:3988

Stock Analysis Report

Executive Summary

Bank of China Limited, together with its subsidiaries, provides a range of banking and related financial services in the People’s Republic of China and internationally.

Snowflake

Fundamentals

Very undervalued with flawless balance sheet and pays a dividend.


Similar Companies

Share Price & News

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


Latest Share Price and Events


Market Performance


7 Day Return

1.0%

3988

1.3%

HK Banks

0.8%

HK Market


1 Year Return

-3.4%

3988

-4.5%

HK Banks

0.5%

HK Market

Return vs Industry: 3988 exceeded the Hong Kong Banks industry which returned -4.5% over the past year.

Return vs Market: 3988 underperformed the Hong Kong Market which returned 0.5% over the past year.


Shareholder returns

3988IndustryMarket
7 Day1.0%1.3%0.8%
30 Day1.9%1.2%-0.5%
90 Day-3.6%-4.1%-5.6%
1 Year2.7%-3.4%0.5%-4.5%4.1%0.5%
3 Year7.7%-8.9%17.0%0.8%15.5%3.9%
5 Year16.7%-11.7%30.4%-0.06%19.9%-0.2%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is 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

Undervalued: 3988 (HK$3.17) is trading below our estimate of fair value (HK$8.15)

Significantly Undervalued: 3988 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 3988 is good value based on its PE Ratio (4.7x) compared to the Banks industry average (5.8x).

PE vs Market: 3988 is good value based on its PE Ratio (4.7x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

Low PEG Ratio: 3988 is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: 3988 is good value based on its PB Ratio (0.5x) compared to the HK Banks industry average (0.5x).


Next Steps

Future Growth

How is Bank of China forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

5.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 3988's forecast earnings growth (5.3% per year) is above the savings rate (2%).

Earnings vs Market: 3988's earnings (5.3% per year) are forecast to grow slower than the Hong Kong market (11.4% per year).

High Growth Earnings: 3988's earnings are forecast to grow, but not significantly.

Revenue vs Market: 3988's revenue (7% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 3988's revenue (7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: 3988's Return on Equity is forecast to be low in 3 years time (10.9%).


Next Steps

Past Performance

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

0.6%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: 3988's earnings have grown by 0.6% per year over the past 5 years.

Accelerating Growth: 3988's earnings growth over the past year (5.2%) exceeds its 5-year average (0.6% per year).

Earnings vs Industry: 3988 earnings growth over the past year (5.2%) underperformed the Banks industry 5.2%.


Return on Equity

High ROE: 3988's Return on Equity (10.4%) is considered low.


Return on Assets

ROA vs Industry: 3988 has a higher Return on Assets than the Banks industry average last year.


Return on Capital Employed

ROCE Improving: Insufficient data to calculate 3988's Return on Capital Employed to determine if it has improved over the past 3 years.


Next Steps

Financial Health

How is 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: 3988 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 3988's debt is covered by short term assets (assets are 1.100590x debt).


Financial Institutions Analysis

Asset Level: 3988's level of assets compared to its equity is moderate.

Allowance for Bad Loans: 3988 has a sufficient allowance for bad loans.

Low Risk Liabilities: 3988's liabilities are made up of primarily low risk sources of funding.

Loan Level: 3988 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: 3988's loans are broadly funded by customer deposits.

Level of Bad Loans: 3988 has an appropriate level of bad loans (1.4%)


Next Steps

Dividend

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

6.43%

Current Dividend Yield


Dividend Yield vs Market

company6.4%marketbottom25%2.3%markettop25%6.3%industryaverage5.5%forecastin3Years7.0%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: 3988's dividend (6.43%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.27%).

High Dividend: 3988's dividend (6.43%) is in the top 25% of dividend payers in the Hong Kong market (6.25%)

Stable Dividend: 3988's dividends per share have been stable in the past 10 years.

Growing Dividend: 3988's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (30.4%), 3988's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 3988's dividends in 3 years are forecast to be well covered by earnings (30.8% payout ratio).


Next Steps

Management

What is the CEO of Bank of China's salary, the management and board of directors tenure and is there insider trading?

1.3yrs

Average management tenure


CEO

Liange Liu (58yo)

1.3yrs

Tenure

CN¥232,000

Compensation

Mr. Liu Liange serves as a Chairman at Bank of China Limited since April 28, 2019. Mr. Liu serves as Chairman of Board at Bank Of China (Hungária) Hitelintézet Zrt. since 2019. Mr. Liu served as a Vice Cha ...


CEO Compensation Analysis

Compensation vs. Market: Liange's total compensation ($USD32.76K) is too low to compare against companies of similar size in the Hong Kong market ($USD807.40K).

Compensation vs Earnings: Insufficient data to compare Liange's compensation with company performance.


Management Age and Tenure

1.3yrs

Average Tenure

56yo

Average Age

Experienced Management: 3988's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Age and Tenure

0.8yrs

Average Tenure

54.5yo

Average Age

Experienced Board: 3988's board of directors are not considered experienced ( 0.8 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

SellCN¥416,671,43905 Sep 19
BlackRock, Inc.
EntityCompany
Shares140,896,000
Max PriceCN¥2.96
SellCN¥27,423,22513 Nov 18
National Council for Social Security Fund
EntityCompany
Shares8,000,000
Max PriceCN¥3.43

Ownership Breakdown


Management Team

  • Liange Liu (58yo)

    Chairman & President

    • Tenure: 1.3yrs
    • Compensation: CN¥232.00k
  • Wei Xiao (59yo)

    Chief Audit Officer

    • Tenure: 4.9yrs
    • Compensation: CN¥1.17m
  • Jiandong Liu (50yo)

    Chief Risk Officer

    • Tenure: 0.7yrs
  • Yu Sun (46yo)

    Executive Vice President

    • Tenure: 1.1yrs
    • Compensation: CN¥272.50k
  • Zhe Yang

    IR Manager

    • Tenure: 0yrs
  • Feiqi Mei (57yo)

    Secretary to the Board of Directors & Company Secretary

    • Tenure: 1.6yrs
    • Compensation: CN¥757.50k
  • Jingzhen Lin (54yo)

    Executive VP & Executive Director

    • Tenure: 0.7yrs
    • Compensation: CN¥477.40k
  • Qiuwan Liu (58yo)

    Chief Information Officer

    • Tenure: 1.3yrs
    • Compensation: CN¥551.80k
  • Zhiheng Wang (46yo)

    GM of Human Resources Department - Head Office & Employee Supervisor

    • Tenure: 0.8yrs
  • Fulin Wu (56yo)

    Executive VP & Executive Director

    • Tenure: 0.7yrs

Board Members

  • Muhua Chen (98yo)

    Honorary Chairperson of the Board

    • Tenure: 15.2yrs
  • Angela A. Chao (46yo)

    Independent Non-Executive Director

    • Tenure: 2.8yrs
    • Compensation: CN¥425.00k
  • Liange Liu (58yo)

    Chairman & President

    • Tenure: 1.3yrs
    • Compensation: CN¥232.00k
  • Xiquan Wang (59yo)

    Chairman of Board of Supervisors

    • Tenure: 2.9yrs
  • Jingzhen Lin (54yo)

    Executive VP & Executive Director

    • Tenure: 0.7yrs
  • Changyun Wang (55yo)

    Independent Non-Executive Director

    • Tenure: 3.2yrs
    • Compensation: CN¥493.00k
  • Jingzhen Lin (54yo)

    Executive VP & Executive Director

    • Tenure: 0.7yrs
    • Compensation: CN¥477.40k
  • Guohua Jiang (48yo)

    Independent Non-Executive Director

    • Tenure: 0.8yrs
    • Compensation: CN¥17.00k
  • Zhiheng Wang (46yo)

    GM of Human Resources Department - Head Office & Employee Supervisor

    • Tenure: 0.8yrs
  • Fulin Wu (56yo)

    Executive VP & Executive Director

    • Tenure: 0.7yrs

Company Information

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


Key Information

  • Name: Bank of China Limited
  • Ticker: 3988
  • Exchange: SEHK
  • Founded: 1912
  • Industry: Diversified Banks
  • Sector: Banks
  • Market Cap: HK$1.119t
  • Shares outstanding: 294.37b
  • Website: https://www.boc.cn

Number of Employees


Location

  • Bank of China Limited
  • No. 1 Fuxingmen Nei Dajie
  • Beijing
  • 100818
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
BACH.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDJun 2006
3988SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDJun 2006
W8VDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURJun 2006
3988SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDJun 2006
3988SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDJun 2006
601988SHSE (Shanghai Stock Exchange)Domestic SharesCNCNYJul 2006
601988XSSC (Shanghai Stock Exchange - Shanghai - Hong Kong Stock Connect)Domestic SharesCNCNYJul 2006
BACH.YOTCPK (Pink Sheets LLC)ADRUSUSDOct 2008

Biography

Bank of China Limited, together with its subsidiaries, provides a range of banking and related financial services in the People’s Republic of China and internationally. It operates in six segments: Corpora ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/19 12:43
End of Day Share Price2019/10/18 00:00
Earnings2019/06/30
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.