Dividend-News

Daily dividend news for investors in dividend stocks


BOC Hong Kong: Dividend Cut In The Spotlight

Published Fri, 16 Oct 2020 08:32:59 -0400 on Seeking Alpha

Seeking AlphaDividend Ideas | Financials  | Hong KongBOC Hong Kong: Dividend Cut In The SpotlightOct. 16, 2020 8:32 AM ET|| About: BOC Hong Kong (Holdings) Limited (BHKLY)by: The Value PendulumThe Value Pendulum Asia Value & Moat StocksUncover cheap stocks, great businesses listed in Asia focusing on HongKong SummaryBOC Hong Kong's interim dividends declined -18% YoY in absolute terms, and the company's dividend payout ratio was cut from 33% in 1H 2019 to 31% in 1H 2020.
Lower net interest margin and higher provisions will likely weigh on its earnings in 2H 2020.
The company trades at 0.73 times P/B and 7.7 times consensus forward FY 2021 P/E, and it offers a consensus forward FY 2021 dividend yield of 6.4%.
Elevator Pitch
I maintain my Neutral rating on Hong Kong-listed bank BOC Hong Kong (Holdings) Limited (OTCPK: BHKLY, OTCPK: BNKHF, 2388:HK).
This is an update of my prior initiation article on BOC Hong Kong published on April 16, 2020. BOC Hong Kong's share price has declined by -12% from HK$24.15 as of April 15, 2020 to HK$21.15 as of October 15, 2020 since my initiation. BOC Hong Kong trades at 0.73 times P/B and 7.7 times consensus forward FY 2021 P/E, and it offers a consensus forward FY 2021 dividend yield of 6.4%.
BOC Hong Kong's interim dividends declined -18% YoY in absolute terms, and the company's dividend payout ratio was cut from 33% in 1H 2019 to 31% in 1H 2020. Also, lower net interest margin and higher provisions will likely weigh on its earnings in 2H 2020.
However, BOC Hong Kong's P/E and P/B valuations are attractive on an absolute basis and below historical averages, so I retain a Neutral rating on the company.
Readers have the option of trading in BOC Hong Kong shares listed either on the Over-The-Counter Bulletin Board/OTCBB as ADRs with the tickers BHKLY and BNKHF or on the Hong Kong Stock Exchange with the ticker 2388:HK. For those shares listed as ADRs on the OTCBB, note that liquidity is low and bid/ask... Read more