03 Jan 2022

CROSBY Research: Crosby Bi-noculars (Bi-weekly) - Feature Article on HSI: HSI end-2022 target: 27,900 - 19% upside on no material re-rating

HSI end-2022 target: 27,900 - 19% upside on no material re-rating

  • Global backdrop - Inflation is here to stay: With sustainable inflation on the back of surge in business costs, having the first rate-hike since late 2018 by the Fed in 2022 is almost a done deal and cumulative hikes of 50-75 bps is not an unreasonable assumption.
  • China - More policy support to buffer the slowing economy: Almost all major economic indicators of China have been slowing over the most of the past 12 months with exports as the only exception. But we expect there will be more supporting policies amid uncertainties facing the external sector, such as logistics and supply chain issues.
  • We expect the HSI will not have material re-rating in terms of PE valuation this year and assume it will stay at current level, which is at 10.9x on 12-month forward basis, by the end of 2022, which will translate into a year-end HSI target of 27,900 with 19% upside potential.