Equity Analysis /
Hong Kong

HK : GTJA International - End of multi-year derating

    CGS-CIMB
    20 January 2021
    Published byCGS-CIMB

    The P/Bv of GTJAI dropped from a peak of 5x in 2015 to the current 0.97x because of its unexciting ROE trend. However, we expect to see a turnaround in its ROE trend, thanks to sustainable average daily turnover (ADT) growth of the HK market and the completion of the adjustment of its margin financing business. Although the share price rebounded 45.5% in the past month, its P/Bv is still lower than the historical average by 1 s.d., which suggests large room for a further rerating. We raised our FY21F/22F EPS by 17.1%/20.9% to reflect higher ADT and investment income assumptions. Reiterate ADD with a new TP of HK$1.93, implying upside of 31.3%.