行业报告：StandardChartered(1)

ANALYSTCERTIFICATIONANDREQUIREDDISCLOSURESBEGINONPAGE71abUBSInvestmentResearchStandardCharteredStillaccelerating
RaisingearningsandpricetargetNewsflowfromHongKongkeepsgettingbetterforStanChart;andrecentAsianpeerresultshavecomeinstrongly.Weareraisingourearningsforecastsby1%for2003,4%for2004and5%for2005asaresult,toUSc89,USc103andUSc116,respectively.Weareincreasingourpricetargetfrom825pto1000p,basedonhighernear-termearningsandanincreasetoourexpectedsustainablegrowthrate
CreditqualityimprovingHKMAfiguresshowmortgagedelinquencydeclining.PersonalbankruptcyfilingsfellfortheirfourthstraightmonthinSeptember.WithitsHongKongloanbookandearningsmixdominatedbymortgagesandcreditcards,thissupportslowerbaddebtforecasts.
PositivelygearedintorisingUSratesWeestimatethatStanChartwouldseea2%earningsupliftfrombetterliabilityspreadsonitsUS$6billionofexcessdepositsinHongKongifUSratesroseby50bp.
Valuation:HighersustainablegrowthWehaveincreasedoursustainablegrowthrateforStanChartto6%,toreflectwhatwebelievetobeaclearimprovementinprospectsforHongKong.Togetherwiththeimpactofhigherearningsforecastsonbookvalue,thisaccountsforour175ppricetargetupgrade.Weseethesharesasreasonablyvalueddespitetheirrecentstrongrally.Highlights(US$m)12/0112/0212/03E12/04E12/05ERevenues4,4054,5394,7465,0345,358Pre-provisionprofits1,8201,9822,1512,3932,677Pre-taxprofits1,0891,2621,4971,7441,983Netincome6317369111,0761,235EPS(UBS,US$)0.680.790.891.031.16Profitability&Valuation5-yrhist.av.12/0212/03E12/04E12/05ECost/income%55.756.354.752.550.0ROE%15.911.313.314.916.1P/Opx8.16.68.77.87.1P/BVPSx3.42.93.73.43.1PE(UBS)x18.614.317.915.613.8Source:Companyaccounts,ThomsonFinancial,UBSestimates.UBSEPSisstatedbeforegoodwill,exceptionalsandotherspecialitems.Valuations:basedonanaveragesharepricethatyear,(E):[e-mail][phone]IanSmillie,[e-mail][e-mail][phone]November2003ForecastreturnsForecastpriceappreciation+4.7%Forecastdividendyield3.6%Forecaststockreturn+8.3%Marketreturnassumption9.0%Forecastexcessreturn-0.7%NetDPS(03E)US$0.52TrendEPSgrowthrate+11%Tradingdata(local/US$)52-wk.range969p-614/US$16.27-10.11Marketcap.£11.1bn/US$16.3bnShareso/s1,160m(ORD)/1,160m(ADR)ADRRatio1ADR:1ORDFreefloat85%Averagevolume('000)8,653/OTCConvertibleNoVolatilityMediumBalancesheetdata12/03EShareholders'equityUS$7.87bnP/BV(UBS)3.7xTieronecapitalratio8.7%EPS(UBS,US$)12/0212/03EPriorCons.H10.380.45A0.45A-H20.400.440.43-FY0.790.890.880.82UBSdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.(ADR)RIC:STAN.LBBG:STANLNStandardChartered6November2003UBS2AnincreasinglyfavourablebackdropforgrowthWeareraisingourpricetargetfrom825pto1000p,basedonincreasedearningsexpectationsandahighersustainablegrowthrate–botharesupportedbythedramaticimprovementinHongKonginrecentmonths.OurearningsupgradeofearlySeptemberseemsnowtohavebeentoomodesttocapturetheextentoftheimprovementforStandardChartered–particularlythankstoitshighP&Lleveragetobothmortgagesandcreditcardsintheterritory.Table1:cashEPSforecasts(US$)2003E2003E2004E2004E2005E2005EOldNewOldNewOldNewEPS888999103110116Change145Source:UBSestimatesHongKongnewsflowremainssupportiveStartingwiththepropertymarket,accordingtotheHKMA(MonetaryAuthority),newmortgageapprovalsinSeptemberrosebyastriking26%m/mtoHK$7.5billiononthebackofimprovedmarketsentiment.Combinedwithourestimatethatresidentialpropertypriceshaverisenbymorethan6%sinceAugustwhileofficepricesinCentralhavepickedupover5%,thisprovidesgreaterconfidenceinapropertymarketrecovery.Lookingatbaddebts,themortgagedelinquencyratioimprovedforafourthconsecutivemonthinSeptember,to1.05percentfrom1.09percentinAugust.Andbankruptcypetitionskeepfalling–downto1,450inSeptember.Chart1detailstheprogressionofbankruptcyfilingssincethebeginningof2002.Chart1:bankruptcypetitions,monthly100012001400160018002000220024002600Jan-02Mar-02May-02Jul-02Sep-02Nov-02Jan-03Mar-03May-03Jul-03Sep-03Source:OfficialReceiversOfficeStandardCharteredisaleadingcreditcardplayerinHongKong,withitscardbookcomparablewithHSBC’sdespiteitstotalassetsintheterritorybeingonlyaquarterthesize.ThismakesStandardCharteredparticularlygearedintofallingpersonalbankruptcies:attheirworst,inH202,bankruptcy-relatedchargeoffsconsumed29%ofconsumerbankingrevenuesinHongKong.StandardChartered6November2003UBS3PeerresultsalsostrongDBS,thebankwiththemostcomparablegeographicalmixtoStandardChartered,reportedthirdquarterresults20%aboveexpectationsattheendofOctober.Asaresult,weincreasedourearningsestimatesby4%for2004and5%for2005.ParticularlystrikingwastheimprovementinHongKong,witha48%quarterlyriseinprofits.Strengthwasalsonotableininvestmentproduct