Goldman Sachs: Raise target price of STANCHART (02888) to HK$203 and upgrade rating to "Buy"

Goldman Sachs released a research report stating that it has upgraded the rating of STANCHART (02888) from "Neutral" to "Buy," while also raising the target price by 21%, from HK$168 to HK$203. The bank believes that despite the 83% increase in STANCHART's stock price in the Hong Kong market so far this year, there is still room for further revaluation. Goldman Sachs predicts that by the end of this year, STANCHART's return on tangible equity (ROTE) will reach 14.6%, exceeding the management's 13% ROTE target, and will further increase to 15% in 2027, and 15.7% in 2028. Therefore, the bank expects STANCHART to raise its mid-term ROTE target during its financial report in 2025 or investor day event in May 2026, which could act as a further catalyst for the stock price. The bank points out that STANCHART offers attractive returns to shareholders, with an expected total return rate (dividends + buybacks) of 8.4% by 2026. With strong capital creation capabilities, STANCHART's long-term total payout ratio is expected to remain at 80%. Therefore, the bank has raised its stock buyback forecast from $2.5 billion annually to $2.8 billion in 2028-2029, and increased the dividend payout ratios for 2026-2028 from the previous fixed 21% to 25%/30%/35%. The revised forecasts show an average total payout ratio of 75% for 2026-2028. The bank expects that this proactive capital management strategy will further support ROTE improvement and revaluation of the stock.