On Wednesday, HSBC initiated coverage on Cathay Financial Holding Co (2882:TT), assigning the company a "Hold" rating.
The financial institution, which is centered around its insurance operations and owns the largest life insurance company by premium in Taiwan, as well as one of the country's biggest banks, is expected to see a slowdown in profit growth in 2025.
This forecast follows a year of strong earnings in 2024, which were buoyed by gains in the equity market.
The HSBC analysts noted that despite Cathay Financial's share price experiencing a significant uptick in 2024, driven by an unexpected increase in dividend payouts, the potential for further increases in the payout ratio seems limited. They also pointed out that improvements in the company's recurring yield for the years 2024-2025 are expected to be negligible.
Cathay Financial's performance in 2024 was highlighted by the market's favorable reaction to its higher-than-anticipated dividend payout. However, HSBC's outlook suggests that the momentum from these equity market gains may not continue into the following year.
The price target of of NT$65.00 set by HSBC indicates a marginal downside of 0.1% from the current levels, signaling that the analysts do not foresee significant stock price movement for Cathay Financial in the near term.
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