<News Alert> CMB (3968 HK) share price volatility with its former president being dismissed from public office and expelled from the Party
What’s new
- CMB (3968 HK) share price dropped by c.6% in morning trading session
- Its former president, Mr. Tian Huiyu, who was announced to be under investigation on Apr 22, was announced to be dismissed from public office and expelled from the Party on Oct 8
- He was criticized as “corruption under the name of marketization, investment and wealth management” (???“???”???????“??”“??”???“????”???????????????????????????????????????????????)
Our view
- The official criticism mentioned about Mr. Tian’s wrong doing under the name of “marketization”, “investment” “wealth management”,etc. These are what CMB is good at and the reason why it is trading at a premium to peers. Investors may worry about whether this means that official attitude turns negative on CMB’s strategy
- CMB is showing stable development in its strategy after Mr.Tian was under investigation in Apr. We believe such criticism is targeted to Mr. Tian only rather than on CMB’s strategy. CMB’s current president, Mr. Wang Liang, has been with CMB for more than 25 years and has mentioned about unchanged strategy in various occasions
- CMB’s share price has dropped by almost 50% from the peak earlier this year and is now trading around its 5-yr low at 0.8x FY23F P/B. We see the investor worries have been largely in price while the share price may still be under pressure in the short-term as we are yet to see strong positive catalysts of the sector (e.g. clearer signs of China property and economy recovery)
