China Minsheng Bank: Revenue Pressure Rises on Faltering Credit Demand and Increasing Competition

China Minsheng Banking Corp's, or CMBC’s, first-half revenue and net profits declined 3.6% and 3.5% year on year. The bank was unable to keep positive first-quarter 2023 momentum into the second quarter. Overall, we think the underlying trends were anticipated, and we retain our fair value estimate for CMBC at CNY 3.30 per A-share and HKD 3.60 per H-share. CMBC H-shares are trading at a sharp discount to A-shares as mainland China investors are anticipating a strong recovery off a low base with CMBC completing its three-year asset clean-up and restructuring in 2022, but we expect this rebound is likely to be muted as mounting industrywide challenges indicates higher-than-peer revenue pressure for CMBC. While we continue to see H-shares as undervalued, we think the below-peers asset quality and loan growth will continue to weigh on its share price in the near term.