Citi: Downgraded HSBC HOLDINGS (00005) rating to "Neutral" with a target price lowered to HKD 165.5; buyback scale is limited.

Citigroup released a research report stating that HSBC HOLDINGS (00005) has seen its stock price rise by 40% since the beginning of the year, making it one of the best-performing stocks in the industry. The current price corresponds to a forward price-to-earnings ratio of about 11 times and a tangible book value to market value ratio of 2.2 times, corresponding to a tangible equity return of about 18-19%. Therefore, the bank expects HSBC's stock price to temporarily consolidate, downgrading its rating from "Buy" to "Neutral," with the target price lowered from HKD 171.8 to HKD 165.5, and its earnings per share forecast revised down by about 0-3%. The bank believes that for HSBC to achieve a further revaluation, a period of faster revenue growth is needed. Although there are currently some encouraging signs, time is required to realize them. At the same time, HSBC has indicated that it will increase cost expenditures in the near term, which may limit the revenue growth above expenditure growth (positive jaws) by 2027, and a renewed focus on business volume growth may also restrict the scale of recent buybacks.