---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 200820
conversation_id: e6856b8e-4bc8-4e9a-b5fc-28edc5485231
citations: 9
created: 2026-05-31 20:53:12Z
---

# Is CLSA incrementally more positive/negative on ABC. If so, why?

## CLSA on ABC (Agricultural Bank of China, 1288 HK / 601288 CH) — Incrementally LESS positive

ABC is most plausibly **Agricultural Bank of China**. On the substance, CLSA's stance has **moderated from outright caution (Sep 2024) → constructive on fundamentals (Oct 2024) → relative de-prioritisation (Jan 2025) → an O-PF rating that now sits below the share price (Jun 2025)**. Net-net, the trajectory since early 2025 reads as **incrementally LESS positive**, even though the headline rating is unchanged.

### The smoking gun — June 2025 target price implies downside, not upside

In the latest "Transfer of Coverage" note (6 Jun 2025), CLSA hands ABC over to analyst Ding Luo and re-states the rating/TP. Critically [1][2]:

| Ticker | Rating | Current price | Target price | Implied move to TP |
|---|---|---|---|---|
| **ABC – A (601288 CH)** | O-PF | Rmb5.57 | **Rmb5.10** | **‑8.4%** |
| **ABC (1288 HK)** | O-PF | HK$5.29 | **HK$4.20** | **‑20.6%** |

The H-share has rallied ~20% past CLSA's target. The rating is being held at Outperform on a total-shareholder-return basis (i.e., dividend yield still carries the call), but the target itself is now **below the market**. That is the textbook signature of an analyst becoming **incrementally cautious** — they would not chase the stock at current levels [1].

For context, only a handful of names in the same coverage table sit in similar "TP < price" territory (BOC-H, CCB-H, ICBC-H, and Minsheng), and CLSA has explicitly downgraded Minsheng to U-PF [1]. ABC sits squarely in the "fundamentally OK, but valuation has run" cohort.

### Trajectory of CLSA's view

**Sep 2024 — Clearly cautious on ABC specifically.** Post the late-Sep policy rally, CLSA wrote that "aggressive style rotation puts pressure on dividend stocks. **State banks may underperform, ABC in particular**" [5]. They added: "we think it might be more negative in the case of ABC; many buy the stock for its dividends. A potential dilution would put pressure on its price… Southbound holdings in ABC and ICBC are particularly high at 31% and 30%" [6]. The thesis was: ABC was over-owned by yield/Southbound flows, and a capital injection (CLSA expected ABC to be in the first batch, given CET1 had declined 72bps in 2022-23) would dilute that yield.

**Oct 2024 — Constructive on fundamentals.** After 3Q24 prints, CLSA said "**ABC remained the leader and left others far behind**" — NII +2.6%, revenue +3.4%, PPoP +4.8%, NP +5.9% YoY, NIM held at 1.45% from 1H, NPL stable at 1.32%, coverage 302% [7][9]. So operating delivery was strong heading into 4Q24.

**Jan 2025 — De-prioritised in top picks.** In the 2025 Outlook (Redux+), CLSA explicitly recommended "**ICBC (H) and CCB (H), as well as CMB (A), Bank of Jiangsu and Bank of Chengdu**" [4]. ABC was conspicuously NOT in the top-pick list, despite being a large state bank under coverage. CCB (H)'s 7.3% and ICBC (H)'s 6.8% dividend yields were highlighted as the preferred yield exposure — ABC's yield was not used as a positive selling point. That is a relative de-rating versus its state-bank peers.

**Mar 2025 — One incremental positive (delayed dilution).** The Mar-30 recap note flagged that the first batch of capital injection (Rmb520bn) went to BOC, BOCOM, CCB and PSBC, leaving "**ABC and ICBC to the second batch in 2026, which we estimate at another Rmb500bn**" [3]. That is a tactical positive — the Sep 2024 worry that ABC would be in the first batch did not materialise, so the near-term dilution overhang lifted.

**Jun 2025 — But TP now below market.** Despite the dilution-timing relief, the new H-share TP of HK$4.20 (vs HK$5.29 spot) implies CLSA is unwilling to validate the rally [1][2]. They are not chasing yield compression on ABC.

### Why incrementally LESS positive — the why

1. **Valuation has run past the model.** The H-share is c.20% above CLSA's TP and the A-share is c.8% above. The target is the analyst's signed view of fair value; an unchanged rating with TP-below-price is a soft-cautious posture, not bullish [1].
2. **ABC is not in the top picks.** Among China state banks, CLSA's preferred yield names are **ICBC (H) and CCB (H)**, not ABC [4]. The relative ranking has stepped down.
3. **Yield-stock vulnerability flagged Sep 2024 has only partially eased.** CLSA's specific worry was style rotation hitting dividend stocks with high Southbound ownership — ABC's ~30% Southbound share was top of the list [8]. While the dilution timing was pushed to 2026 [3], the structural over-ownership and yield-trade fragility argument has not been retracted.
4. **NIM pressure is still the dominant 2025 narrative.** CLSA flagged that state banks "expect NIM to fall mildly in 4Q24 due to mortgage loan repricing, and foresee bigger pressure in 2025" [7]. ABC enters 2025 with an industry-leading 1.45% NIM but limited room to expand it.

### What would flip this to "incrementally more positive"

A target-price hike on Ding Luo's transfer (to clear the H-share rally), or an inclusion of ABC into the named top-picks list alongside ICBC/CCB. Neither is in the current dataset.

### Caveats on scope and recency

- The most recent CLSA coverage of ABC in this archive is the **6 Jun 2025** Transfer of Coverage. There is no Ding Luo follow-up note in scope, so the "latest" CLSA stance is read off that single document.
- CLSA's H-share TP of HK$4.20 on 1288 HK and A-share TP of Rmb5.10 on 601288 CH are the current calls of record [1].
- An older Dec 2024 sector table in the archive shows ABC TP "HK$109 vs HK$66.30" — those figures appear to be an A-share Rmb level mis-labelled "HKD" in the parsed table, not a real H-share TP. The clean reference points are the Jun 2025 numbers in [1].

---
**Sources**
[1] China banks (Transfer of coverage) — CLSA, 6 Jun 2025 — TP/rating table for ABC and peers — 607961079LinqAlpha.PDF
[2] China banks (Transfer of coverage) — CLSA, 6 Jun 2025 — coverage transfer text — 607961079LinqAlpha.PDF
[3] China banks sector (Recapitalisation plans unveiled) — CLSA, 30 Mar 2025 — ABC/ICBC moved to second batch in 2026 — 607954420LinqAlpha.PDF
[4] China financials (2025 Outlook: Redux+) — CLSA, 12 Jan 2025 — top picks (ICBC-H, CCB-H, CMB-A, BoJiangsu, BoChengdu); ABC not named — 607947966LinqAlpha.PDF
[5] China Financials (Investor feedback on policy changes) — CLSA, 29 Sep 2024 — "state banks may underperform, ABC in particular" — 607940395LinqAlpha.PDF
[6] China Financials (Investor feedback on policy changes) — CLSA, 29 Sep 2024 — ABC dilution + Southbound over-ownership — 607940395LinqAlpha.PDF
[7] China Banks (Quick take: state bank's 3Q24) — CLSA, 30 Oct 2024 — "ABC remained the leader and left others far behind" — 607942647LinqAlpha.PDF
[8] China Financials (Investor feedback on policy changes) — CLSA, 29 Sep 2024 — Southbound ownership table (ABC 30%) — 607940395LinqAlpha.PDF
[9] China Banks (Quick take: state bank's 3Q24) — CLSA, 30 Oct 2024 — ABC 9M24 results snapshot — 607942647LinqAlpha.PDF

## Citations

- [1] **607961079LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961079LinqAlpha.PDF>
- [2] **607961079LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961079LinqAlpha.PDF>
- [3] **607954420LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954420LinqAlpha.PDF>
- [4] **607947966LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607947966LinqAlpha.PDF>
- [5] **607940395LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/09/607940395LinqAlpha.PDF>
- [6] **607940395LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/09/607940395LinqAlpha.PDF>
- [7] **607942647LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/10/607942647LinqAlpha.PDF>
- [8] **607940395LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/09/607940395LinqAlpha.PDF>
- [9] **607942647LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/10/607942647LinqAlpha.PDF>

