Bank of America Securities: Maintaining CICC's (03908) H share “buy” rating target price of HK$27.6, net profit for the third quarter is expected to increase 172% year-on-year

The Zhitong Finance App learned that Bank of America Securities released a research report stating that it reaffirmed the “buy” rating of CICC's (03908) H shares, and that the target price remained at HK$27.6. The bank expects CICC's net profit to reach RMB 6.1 billion in the third quarter, up 172% and 31% year-on-year respectively, mainly driven by Changxin Technology (688825.SH) investment income in terms of market capitalization. The relevant pre-tax investment income is estimated to be about RMB 2.7 billion; underwriting expenses and derivatives revenue are also expected to record strong year-on-year increases.

Bank of America Securities predicts that CICC's net profit for the first three quarters of this year increased 117% year over year, which is equivalent to 88% of the market's profit forecast for the full year, and is the fastest growth rate in the industry. The bank pointed out that CICC's mid-term profit increased 89% year on year, and the third quarter performance is expected to be even stronger. Currently, profit performance is out of touch with stock prices, which will provide investors with attractive opportunities to enter the market.

CICC received approval from the China Securities Regulatory Commission last month to absorb Dongxing Securities (601198.SH) and Cinda Securities (601059.SH) through a share exchange. Bank of America Securities believes that investors are overly concerned about the risks associated with the merger. Considering that the transaction is expected to be completed in October, the profit and loss of the merger of Cinda Securities and Dongxing Securities is less than 3 months, the bank believes that the dilution effect will be limited this year.