To The Moon

🌟🌟🌟I am super excited that the Singapore Exchange started trading 5 HK SDRs on October 30.   I just found out that Tiger Brokers is currently doing a commission free promotion for all SDRs which include the Hong Kong SDRs until 31 December 2024.  

I would like to do  a deep dive into $HSBC HK SDR 5to1(HSHD.SI)$ , the SDR for HSBC.

A Hong Kong SDR stands for Singapore Depository Receipt which provides a strategic and efficient way for our Singapore investors to access Hong Kong's top companies.

HSBC is the largest bank in Europe with Assets Under Management of USD 156.17 billion as at December 31 2023.  HSBC is also one of the Top 10 largest banks globally too. HSBC is a British bank and financial services group with its headquarters in London.  From its early beginnings in 1865 in Hong Kong,  HSBC has grown to serve 41 million personal, wealth and corporate customers worldwide in 60 countries and territories.

On October 29, HSBC released an excellent 3Q 24 earnings report.  Profit before tax increased by USD 0.8 billion to USD 8.5 Billion compared with 3Q23.  This is primarily due to revenue growth in Wealth and Personal Banking as well as in Foreign Exchange, Equities and Global Debt Markets.  Profit before tax in 3Q24 included a USD 0.3 billion loss on the early redemption of legacy securities.  Profit after tax of USD 6.7 billion was USD 0.5 billion higher than in 3Q23.

Revenue increased by USD 0.8 billion or 5% to USD 17.0 billion compared with 3Q23.  The growth in revenue reflected higher customer activity in HSBC's Wealth Products which was supported by volatile market conditions.

Net Interest Income of USD 7.6 billion fell by USD 1.6 billion compared with 3Q23.  This was due to reduction in business disposals, higher interest expense on liabilities and a loss on the early redemption of legacy securities.

Operating expenses of USD 8.1 billion were USD 0.2 billion or 2% higher than in 3Q23.  This was due to higher spend and investment in technology and the impact of inflation.  However this was partly mitigated by continued cost discipline and the impact of HSBC's disposals in Canada and France.

Customer lending balances increased by USD 30 billion compared with 2Q24.  Customer accounts increased by USD 67 billion compared with 2Q24.

CET-1 ratio was 15.2%, an increase of 0.2% compared with 2Q24.

The Board of Directors approved a 3rd interim dividend of 10 cents per share.  On 25 October 24, HSBC completed a USD 3 billion share buy back.   It has also initiated another share buyback of up to USD 3 billion, scheduled to be completed before 2024  full year results announcement.

Group CEO Georges Elhedery said that HSBC has delivered another good quarter.  There was strong revenue growth and good performance in Wealth and Wholesale Transaction Banking.  HSBC's strong organic capital generation enables the bank to announce a further USD 4.8 billion of dividends for 3Q24, bringing the total dividends announced in 2024 to USD 18.4 billion. The current dividend yield is 6.81%.  Dividends are paid every 3 months. 

HSBC has announced a huge restructuring plan to separate its eastern and western banking operations.  HSBC is  pivoting to focus on its Asian operations particularly in China and Hong Kong, while scaling back in some Western markets. 

HSBC has the largest service network of any foreign bank in China.    It has also been focusing on wealth industry in Asia as the number  of  affluent clients in the region is expected to expand. 

Performance wise since HSHD was just listed on the SGX, its Hong Kong counterpart $HSBC HOLDINGS(00005)$ 

Is down by 3.7% in the past 5 days.  However HSBC is up 10.2% year todate.  In 2023, HSBC has risen by 19%.

Analysts are Bullish on HSBC with a Buy rating, Target price of HKD 75.74, an upside potential of 7%.

Why would I trade in HSBC in Singapore versus trading direct in Hong Kong? 

In Singapore $HSBC HK SDR 5to1(HSHD.SI)$ trades at a ratio of 5 to 1 in lots of minimum 100 shares.  This is a lot easier on the pocket for small investors like me.   In contrast if I have to trade in Hong Kong, it would be 5 times more. 

Another advantage is that I do not have to worry about foreign currency exchange.  Dividends are also paid in Singapore dollars.   Another great advantage is the ease of trading on the SGX and with the current zero commission promotion, this is an added bonus. 

HSBC is a phenomenal global bank with a vast network across the world.  At the last closing price of just SGD 2.40 per share, $HSBC HK SDR 5to1(HSHD.SI)$ offers incredible value for my money.  The best part is HSBC's awesome dividends paid every 3 months.  The current dividend yield is 6.81%.  That is much better than putting money in Singapore savings bank or the Treasury Bills.  

Is HSHD a good buy?  That is a resounding YES for me as I love collecting dividends while waiting for capital growth. 

As Warren Buffett likes to say "Price is what you pay, Value is what you get".  HSBC offers tremendous value for my money. 

@Daily_Discussion  @TigerStars  @Tiger_comments  @MillionaireTiger  @CaptainTiger