Bank of East Asia Divests Tricor Holdings; Shares Remain Overvalued

Bank of East Asia: A Diamond with a Flaw Is Worth More than a Pebble Without Imperfections.

Before BEA China Releases Interim Results, We Remind of Its Well-Entrenched Financial Deterioration

BEA Shows How Credit Costs Can Ratchet Up

Leading Independent Investment Research, Morningstar, Inc.

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Equity Bottom-Up

Bank of East Asia's first-half result was weak as expected. With a decline in both net interest income and fees and commission income, first-half net profit fell 3.4% against the second half of fiscal 2015 to HKD 2.1 billion, and 37% against the same period last year.The result does not alter our view on the bank and at a 30% premium to our fair value, we believe the bank is overvalued. Our no-moat rating is reaffirmed as we do not believe the bank benefits from any competitive advantages, also reflected by our 5-year average return on equity forecast of 6.5%.Analysts: Michael Wu, CAIA &amp; Iris Tan, CFA

Bank of East Asia's first-half result was weak as expected. With a decline in both net interest income and fees and commission income, first-half net profit fell 3.4% against the second half of fiscal 2015 to HKD 2.1 billion, and 37% against the same period last year.The result does not alter our view on the bank and at a 30% premium to our fair value, we believe the bank is overvalued. Our no-moat rating is reaffirmed as we do not believe the bank benefits from any competitive advantages, also reflected by our 5-year average return on equity forecast of 6.5%.Analysts: Michael Wu, CAIA &amp; Iris Tan, CFA

Bank of East Asia's First-Half Result Weak as Expected