Broker Recommendations and Target Prices for the H-share of the Industrial and Commercial Bank of China (ICBC)
Introduction
In a previous article, I laid out the reasons why I added the H-share of the Industrial and Commercial Bank of China (ICBC) to my dividend income portfolio. In the same article I also described the discounted cash flow analysis which I used to estimate the intrinsic value of ICBC H-share, which worked out to be 5.83HK$ per share.
Not long after the article was posted on my blog, I came across a piece of news article on AAStocks.com which provided a summary of the latest Brokers' Recommendations and Target Prices for ICBC H-share (1398.HK).
The table is reproduced below.
Summary Table of Broker Recommendations and Target Prices for ICBC H-share (1398.HK)
| Broker | Target Price (HK$) | Recommendation |
|---|---|---|
| CICC | 8.19 | Outperform |
| Morgan Stanley | 7.2 | Overweight |
| HSBC Global Research | 7.1 | Buy |
| Citigroup | 6.99 | Buy |
| UOB Kay Hian | 6.7 | Buy |
| BofA Securities | 6.6 | Buy |
| BOCOMI | 6.6 | Buy |
| UBS | 6.5 | Buy |
| BNP Paribas | 6.5 | Buy |
| Nomura | 6.38 | Buy |
| Credit Suisse | 6.3 | Outperform |
| CCBI | 6.3 | Outperform |
| Goldman Sachs | 6.23 | Buy |
| CITIC Securities | 6 | Overweight |
| CMSI | 5.3 | Buy |
| JP Morgan | 5.3 | Neutral |
| Jefferies | 4.99 | Buy |
| Macquarie | 4.4 | Neutral |
| Data Source: AAStocks.com |
Average of the Broker target prices for ICBC H-share
The average of the target prices from all the different brokers = 6.31HK$ per share. This compares favourably with the estimate of the intrinsic value of ICBC H-share of 5.83HK$. It also indicates that the dividend discount model which was used in my analysis probably errs on the side of caution.
H-share of ICBC has sufficent margin of safety to allow an investor to sleep well at night
Assuming that the average target price of 6.31HK$ per share is a reasonable estimate of the intrinsic value of ICBC H-share based on the collective wisdom of the different Research Houses, the margin of safety represented by the purchase price of 4.29HK$ is 32%. This is certainly a comfortable margin which allows an investor in ICBC H-share to sleep well at night.
Disclaimer:
This article is a record of the thinking behind a personal investment decision. It does not represent any recommendation to purchase any stock mentioned in the article. As always, readers are strongly advised to do their own due diligence before making any investment decisions.