On Wednesday, HSBC analysts launched coverage on shares of E.Sun Financial Holding Co (2884:TT) with a Buy rating, accompanied by a price target of NT$31.00. The new price target suggests a roughly 13% potential upside from the company's current stock price level.
HSBC's decision to begin coverage is based on a positive outlook for E.Sun Financial's earnings and return on equity (ROE) growth. The analysts project a stable growth trajectory for the company, driven by its operating revenue composition. A significant portion of E.Sun Financial's revenue, approximately 33%, is generated from fee income, which is considered a more stable source compared to other interest-sensitive income streams.
The analysts justify their target price-to-book (PB) multiple of 1.9x for E.Sun Financial, which is above the average PB multiple of 1.6x for other Taiwanese banks. This higher multiple is applied to the estimated 2025 book value per share (BVPS) of 16.5. According to HSBC, the premium is warranted given the company's robust earnings prospects relative to its peers.
E.Sun Financial's stock rating initiation and price target are influenced by the anticipated outperformance of the company's earnings in 2025 compared to its peers. HSBC's coverage begins with a confident stance on the financial institution's ability to maintain a stable growth in earnings and ROE, supported by a substantial contribution from fee-based income.
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