Skip Navigation Links
Do China banks give good value to long term investors?
10 Sep 2020 (117 views)

I like the fundamentals of Industrial & Commercial Bank of China (ICBC). My friend told me that he invested in China Construction Bank (CCB) for many years.

I studied the financials of both banks and found that they looked similar. 

The price earning ratio is 4-5 times. The dividend yield is more than 6%. The market cap is between 1-2 trillion HKDs.

There are two economic forces that affect these banks. The China economy is recovering and should be positive for the banks.

Conversely, the economists expect the China banks to write off a large amount of bad loans to businesses. 

I consider, as possible bad scenario, that the China banks will see their earnings reduced by 50% for several years. 

This means that the price earning ratio will increase to 8 to 10 times. This is still quote low.

The banks do not need to cut their dividends because the earnings can easily cover the dividends. 

There is another little known secret. The price of the stock listed in Hong Kong are about 30% to 50% lower than the price of the same stock listed in China. You can get a good discount on a fundamentally strong stock. What more can you ask for?

The China bank stocks appear to give good value. I will buy some of the stock.

Tan Kin Lian


Do China banks give good value to long term investors?
[Back] [Print]


I like the fundamentals of Industrial & Commercial Bank of China (ICBC). My friend told me that he invested in China Construction Bank (CCB) for many years.

I studied the financials of both banks and found that they looked similar. 

The price earning ratio is 4-5 times. The dividend yield is more than 6%. The market cap is between 1-2 trillion HKDs.

There are two economic forces that affect these banks. The China economy is recovering and should be positive for the banks.

Conversely, the economists expect the China banks to write off a large amount of bad loans to businesses. 

I consider, as possible bad scenario, that the China banks will see their earnings reduced by 50% for several years. 

This means that the price earning ratio will increase to 8 to 10 times. This is still quote low.

The banks do not need to cut their dividends because the earnings can easily cover the dividends. 

There is another little known secret. The price of the stock listed in Hong Kong are about 30% to 50% lower than the price of the same stock listed in China. You can get a good discount on a fundamentally strong stock. What more can you ask for?

The China bank stocks appear to give good value. I will buy some of the stock.

Tan Kin Lian