UBS Group released a research report stating that it maintains a "neutral" rating for Bank of Communications (03328) with a target price raised from HKD 4.7 to HKD 5.95. The company's first-quarter performance was better than expected, and the valuation has risen to roughly match that of state-owned peers.
Although UBS has slightly adjusted its forecast, it still maintains a cautious attitude towards Bank of Communications. However, there are reduced concerns about the following factors: 1) growth in net interest income and more stable net interest margins compared to peers; 2) concerns about the default risk of real estate and local government financing platforms (LGFVs) have eased with the implementation of stronger and more effective policies.