< The 2014 All-China Research Team
Capital Corp.First-Place Appearances: 2
Total Appearances: 5
Analyst Debut: 2010As they did last year, buy-siders name China International Capital Corp.’s Junhua Mao their favorite analyst covering Chinese banks. Mao wins plaudits from one backer for “his diligence and strong relationships” with the management teams of the industry’s biggest players. At the end of March, the sector was down 11.4 percent for the trailing 12-month period, against the broad market’s decline of just 1 percent, and the 37-year-old researcher assigned the group a trading buy rating. Catalysts included beneficial changes in monetary policy and a decline in shadow banking financing that allays regulatory concerns, he notes, as well as government action that reduces competitive fears of Internet companies’ entering the financial services arena. As a result, Mao, who works out of Hong Kong, foresees secular investment opportunities for the banks in 2015, projecting in particular that macroeconomic conditions will stabilize in the second half of the year. By late November, China’s banking shares had advanced 5.7 percent, in line with the domestic broad market’s gain. The analyst’s top picks are two money center banks, Beijing’s China Minsheng Banking Corp., a long-standing favorite, and Chongqing Rural Commercial Bank Co. “With easing monetary policies and policy adjustments of the property market, the tail risks of a systematic financial crisis are declining,” he explains. “Thus, high-beta names could catch up in the second stage of a banking stock rebound.” He believes that Minsheng is well-positioned to benefit from those government-led changes, even as its new management is pursuing initiatives that could drive additional positive results next year. Chongqing-based CRCB’s price-to-book multiple, meanwhile, is factoring in a nonperforming-assets ratio that is too high, Mao believes.