STOCKWATCH: Dao Heng Bank lower on weak sentiment ahead of results

HONG KONG (AFX-ASIA) - Dao Heng Bank shares closed lower in line with the broader market ahead of the bank's interim results amid weak sentiment towards finance sector stocks, dealers said. Dao Heng Bank closed down 1.00 hkd or 2.59 pct at 37.50 on volume of 868,000 units. The Hang Seng index closed down 26.47 points at 13,466.56. "There is no special news about the bank nor are any reasons for the attributed to the interim results due on Friday," Patrick Pong, analyst of South China Research, said. But the selling pressure on the bank may have been triggered by weak sentiment towards finance stocks in general after Goldman Sachs downgraded HSBC, he said. Guoco Group, which holds 72 pct of Dao Heng Bank, was higher ahead of its results, he said, adding that this indicates the bank should not be sold down on its fundamentals. Guoco Group closed up 0.4 or 1.75 pct at 23.25. "We don't have an interim forecast for the bank, but we still recommend a 'buy' on the stock with a target price at 45.0 hkd," Pong said. He said the bank may also be attractive to investors in that it is likely to acquire assets like the securities trading business of the parent group. But among banking stocks, he said, Dao Hengis not the top pick. "It's relatively expensive compared with Wing Hang Bank and Dah Sing, given its price to book value is estimated at about 2.1 times and PE is at 13.4 times, while Wing Hang is at about 1.3-1.4 times and Dah Sing is at 1.9 times in price to book value and at about 10 times in PE for both," he added. He said the target price for Wing Hang Bank is 40.0 hkd and Dah Sing 50.0. Wing Hang Bank closed up 0.30 at 27.40 and Dah Sing closed down 1.0 at 39.90.

Related stock : (NIL)