HSBC's Long Restructuring Finally Bearing Fruit; FVE for HK-Listed Shares Up to HKD 77

We maintain our narrow moat rating for HSBC Holdings, our fair value estimate of $49 for its U.S. ADRs, and our fair value estimate of GBX 800 for its London listing, while the fair value estimate for its Hong Kong listing rises slightly from HKD 75 to HKD 77 due to rounding and minor currency fluctuation upon change of coverage analyst. Our fair value estimates are equivalent to 1.17 times book value as of the end of 2022 and represent 25%-27% upside to the current prices. Our narrow moat rating for the group reflects our view that HSBC enjoys a wide economic moat in Hong Kong, where it is the dominant local bank, that it has a narrow-moat position in the U.K., and no economic moat in most other geographies such as the U.S. Its moat sources are in cost advantage from sticky deposits in its key markets and customer switching costs both in its key markets and in some parts of its global banking operations.