JP Morgan raised its target price on China Construction Bank (CCB) to 10.10 hkd from 7.1 hkd after the mainland Chinese bank reported strong third-quarter results. The bank's Hong Kong listed H-shares retained their ""overweight"" rating. CCB posted unaudited net profit of 22.85 bln yuan in the third quarter to September in accordance with both Chinese and international accounting standards. The bank earned net interest income of 50.09 bln yuan, with fee and commission income reaching 10.27 bln yuan and investment gains of 424 mln yuan during the July-September period. ""CCB's strong third-quarter results were another evidence of strong earnings momentum in the Chinese banking sector,"" the brokerage said, noting that the bank's third-quarter net profit is about the same as the second-half of last year, and accounts for 67 pct of the first half's net profit, suggesting very strong sequential and annual growth. JP Morgan said the bank's net interest margin (NIM) performance was better than expected -- a further gain of 10 basis points to 3.21pct in third quarter -- due to further optimization of its funding mix and rising asset yields. A strong equity market also supported sharp fee growth, it added. ""CCB's better-than-expected results confirmed our view that in the current environment, in particular, favors bigger banks,"" it said. The brokerage also increased its 2007-2009 earnings estimates by 6-7 pct to 73.17 bln yuan, 97.2 bln yuan and 118.02 bln, respectively. According to Thomson Financial, the mean net profit estimate of 27 brokerages for CCB is 68.25 bln hkd.
Buy CHCBC-C1 at 18.5sen and below!
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