Morgan Stanley Reiterates "Overweight" Rating on CICC (03908) with HK$28.9 Target Price

Stock News12-18 15:30

Morgan Stanley has released a research report detailing the share swap merger specifics of China International Capital Corporation Limited (CICC) (03908). The implied price-to-book ratio (based on Q3 2025) from the swap ratio includes: 1.8x for CICC's A-shares (601995.SH), 1.8x for Dongxing Securities Corporation Limited (601198.SH) (including a 26% premium), and 3.1x for Cinda Securities Co.,Ltd. (601059.SH). The firm reiterated its "Overweight" rating on CICC's H-shares, citing potential synergies and limited dilution impact, with a target price of HK$28.9.

Morgan Stanley estimates that the net asset dilution per share will be minimal at approximately 9%, with no additional financing plans announced. Management expressed confidence in achieving synergies and rapid integration. Post-merger, net capital is expected to double, supporting more client-driven equity businesses and investment opportunities. CICC's capital leverage ratio may rise from 12% to 20% after the merger, while the net stable funding ratio is also projected to improve, reducing bond financing costs.

The report also highlights significant benefits for CICC's wealth management business, with the client base expected to grow by 51% to 14.7 million. The number of branches is projected to increase by 78% to 436, strengthening CICC's presence in key regions such as Fujian, Zhejiang, and Guangdong. Management remains optimistic about expanding CICC's leading wealth management services to a broader client base, driving revenue growth.

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CICC's capital leverage ratio may rise from 12% to 20% after the merger, while the net stable funding ratio is also projected to improve, reducing bond financing costs.</p>\n<p>The report also highlights significant benefits for CICC's wealth management business, with the client base expected to grow by 51% to 14.7 million. The number of branches is projected to increase by 78% to 436, strengthening CICC's presence in key regions such as Fujian, Zhejiang, and Guangdong. 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CICC's capital leverage ratio may rise from 12% to 20% after the merger, while the net stable funding ratio is also projected to improve, reducing bond financing costs.\nThe report also highlights significant benefits for CICC's wealth management business, with the client base expected to grow by 51% to 14.7 million. The number of branches is projected to increase by 78% to 436, strengthening CICC's presence in key regions such as Fujian, Zhejiang, and Guangdong. 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