China Construction Bank

The reason for the impressive surge in the H-shares of China bank stocks

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On May 10, 2024, the H-shares of the China Banks rose substantially. The four largest state-owned banks in China ended the day with the following closing prices: News reports that the China authorities are considering the the City’s proposals to reduce the 20% dividend withholding tax on stocks purchased through the Southbound Stock Connect account for the impressive gains in the stock … Read more

ICBC, CCB, BOC and ABC plan to begin paying interim dividends in 2024

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Four of China’s largest state-owned banks: Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Bank of China (BOC) and Agricultural Bank of China (ABC), have recently announced plans to pay interim dividends (half-yearly) beginning in 2024.This move signals the intent and resolve of management to continuously enhance shareholder value through increased frequency … Read more

Broker’s Ratings and Target Prices for China Construction Bank (0939.HK)

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Broker Rating Target Price HK$ BOCI BUY 8.23 CITI BUY 6.93 Bank of America BUY 6.85 CICC Outperform 6.77 JP Morgan Overweight 6.45 Morgan Stanley Overweight 6.40 Huatai Securities BUY 6.21 GF Securities BUY 6.16 HSBC BUY 6.10 CITIC Securities Overweight 6.00 Nomura BUY 5.93 Haitong Outperform 5.41 Goldman Sachs BUY 4.62 UBS Neutral 4.65 … Read more

I purchased H-shares of the China Construction Bank (CCB) for my Dividend Income Portfolio. Here are the reasons why.

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Summary

In this article, I take a deep look at the stock valuation of the H-share of China Construction Bank (CCB 0939.HK) through the eyes of a Dividend Investor. Dividend Cash Flow analysis was used to evaluate the H-share of China Construction Bank. The Dividend Discount Model was employed to estimate its Intrinsic Value, Expected Return on Investment, and its Margin of Safety.
Continue reading to learn more.

Introduction

Following my previous article on the H-shares of the Bank of China (BOC), I also recently purchased the H-shares of the China Construction Bank (CCB). Here, I would like to discuss the rationale behind the investment decision to add China Construction Bank to my dividend income portfolio.

As my investment philosophy evolves over time, I find myself preferring stocks which provide attractive dividend income streams at inexpensive valuations. I used the following set of questions to help determine the investment worthiness of China Construction Bank:

  • Does the stock have a good long-term dividend track record?
  • Does the stock currently offer an attractive dividend yield (above the average yield of Hang Seng Index constituents)?
  • Is the current payout ratio of China Construction Bank sustainable?
  • What is the expected return on investment of China Construction Bank over a 10-year period? Majority of recommendations by financial analysts tend to have a 12 month time horizon. I find the 10-year period to be more suitable for a dividend income stock, especially one which is part of a retirement dividend income portfolio.
  • Does the stock price offer a sufficient margin of safety to its intrinsic value?
  • Are the H-shares of China Construction Bank (CCB) considered attractive when measured against the traditional value investing yardsticks? A good dividend stock with inexpensive valuation will minimize the risk of capital impairment and increase the probability of capital gains.
  • Does the stock have a history of consistent earnings growth?

With the above questions in mind, let us delve into the analysis of the stock to find the answers.

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