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G Sachs Removes HSBC HOLDINGS from CL Buy List; Target Cut to $57
Goldman Sachs, in its report, said it removed HSBC HOLDINGS (00005.HK)  +0.600 (+1.294%)    Short selling $624.94M; Ratio 24.245%   from Asia Pacific Conviction Buy List after Brexit but kept it at Buy, and lowered the 12-month target price by 14% to $57 from $66. 

The broker lowered the EPS forecast of the bank for 2016-18 by 3%/8%/9% to $3.62/$5/$5.59 to reflect delayed Fed rate rises and the translation impact of the recent GBP move; higher credit costs on Europe’s weaker credit quality. HSBC trades at record low valuations of 0.68x 2016E P/B against its underlying ROE estimate of around 7% this year. 

Goldman Sachs continued to believe HSBC has ample capital to withstand a high dividend payout this year (>110%) and can hold its DPS at the current level. The broker projected that the current share price of HSBC provides estimated dividend return of 8.5%/8.5%/8.7% for 2016/17/18. 

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