Post for: #China Construction Bank ^{(6 Posts)}

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…

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…

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…

China Construction Bank (CCB) is one of the big four State-owned Banks and its H-shares, trading on the Hong Kong Stock Exchange, currently offer some of the best values in the market. An earlier article on CCB provided an estimate…

I have previously published estimates of the intrinsic values of the H-shares of Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and China Citic Bank. In their latest quarterly financial reports, all…

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.