Hang Seng Bank Earnings: We Lower Our Fair Value Estimate by 8% but Still See Shares As Attractive

We lower our fair value estimate for Hang Seng Bank, or Hang Seng Bank, to HKD 136 from HKD 148 after its interim 2023 earnings, still about 23% upside from the current share price and indicating that we view the shares as attractive at present. We value Hang Seng Bank at a price/book ratio of 1.63 times and assume midcycle return on equity of 12.5%. This equates to a midcycle price/earnings ratio of 13 times, and a midcycle dividend yield of 5.4% on our assumption that Hang Seng Bank maintains a 70% payout ratio.