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HSBC Holdings PLC HSBA

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Stock XLON Rating as of
GBX 705.00 +7.50 (1.08%)
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Company Report

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HSBC Earnings: Higher-for-Longer Interest Rates; Raising Fair Value Estimate

Lorraine Tan

We lift our fair value estimate for HSBC to GBP 872 per share (HKD 84.80, $54.50 per ADR) from GBP 850 (HKD 80.00, $51.00) following first-quarter 2024 results that reflected solid noninterest income growth. Its net interest margin of 1.63% is also tracking our expectation comfortably, particularly with interest rates looking to stay high into second-half 2024. HSBC’s share price is reacting positively to the results as well as the announced ordinary dividend of $0.10 per share, a special dividend of $0.21 per share, and a share buyback of $3 billion for the second quarter. We remain buyers of HSBC.

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Price vs Fair Value

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HSBA is trading at a 20% discount.
Price
GBX 697.50
Fair Value
GBX 646.00
Uncertainty
Medium
1-Star Price
GBX 7,296.80
5-Star Price
GBX 392.30
Economic Moat
Dphc
Capital Allocation
Symdpzrcq

Bulls Say, Bears Say

Bulls

HSBC has cost advantages and significant intangible assets in its core market of Hong Kong that help it generate strong earnings there even when the local economy is weaker.

Bears

HSBC has operations in many jurisdictions around the world, including some where it is a secondary player and doesn't enjoy the same advantages that it does in core markets like Hong Kong.

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Trading Information

Previous Close Price
GBX 697.50
Day Range
GBX 704.44–705.40
52-Week Range
GBX 572.90–705.40
Bid/Ask
GBX 704.80 / GBX 705.90
Market Cap
GBX 13.27 Tril
Volume/Avg
8.0 Mil / 38.7 Mil

Key Statistics

Price/Earnings (Normalized)
11.59
Price/Sales
2.54
Dividend Yield (Trailing)
6.98%
Dividend Yield (Forward)
6.98%
Total Yield
9.70%

Company Profile

Established in 1865 in Hong Kong, London-based HSBC is one of the largest banks in the world, with assets of USD 3 trillion and 40 million customers worldwide. It operates across 64 countries with around 220,000 full-time staff. Key regions include Asia, Europe, the Middle East and North Africa, and North America. The United Kingdom and Hong Kong are the two largest markets for the bank. The bank offers retail, commercial and institutional banking, global banking and markets, wealth management, and private banking.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Value
Total Number of Employees
214,400
Website
https://www.hsbc.com

Competitors

Valuation

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Metric
HSBA
D05
C
Price/Earnings (Normalized)
 11.598.8611.99
Price/Book Value
 0.871.590.62
Price/Sales
 2.544.861.51
Price/Cash Flow
 8.648.954.62
Price/Earnings
HSBA
D05
C

Financial Strength

Metric
HSBA
D05
C
Quick Ratio
 ———
Current Ratio
 ———
Interest Coverage
 ———
Quick Ratio
No chart available

Profitability

Metric
HSBA
D05
C
Return on Assets (Normalized)
 0.77%1.38%0.41%
Return on Equity (Normalized)
 12.89%17.20%5.31%
Return on Invested Capital (Normalized)
 ———
Return on Assets
HSBA
D05
C
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