Ka Wah wins admirers with impressive result

KA Wah Bank's 43 per cent leap in profits last year has prompted new interest in the mainland-controlled bank, which is regarded as the purest China investment among Hongkong's financial counters.

The bank's heavyweight shareholder line-up features Beijing-owned China International Trust and Investment Corporation (CITIC) with a 60 per cent stake, the People's Construction Bank of China with 7.8 per cent, and China Travel Service with 4.6 per cent.

While the result was in line with expectations, reflecting the performance of the local banking sector generally, one analyst said that as the local market's leading China bank stock, Ka Wah was deserving of a higher price-earnings ratio than the current17.

It has maintained a high growth rate for the past few years, with 1991 profits 33 per cent higher than 1990's, and the long-term growth potential is seen as excellent, with major shareholders likely to funnel business in Ka Wah's direction.

While last year's profits attributable to shareholders jumped more than 50 per cent, the final dividend per share was halved to 2.5 cents.

Some analysts speculate that the bank may be saving for future expansion, both in China and Hongkong, and that it may bid for the Government-owned Overseas Trust Bank (OTB) in partnership with mainland steelmaker Shougang Corp.

The 31-branch bank certainly appears eager to expand through acquisition, as shown in its unsuccessful bid to buy the failed Bank of Credit and Commerce Hongkong in mid-1991.