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What price is HSBC a buy?

simoan
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Re: What price is HSBC a buy?

#161776

Postby simoan » August 24th, 2018, 12:58 pm

FredBloggs wrote:Drifting below 700p at 686p a minute ago. Secure divi, perhaps not growing. But we must be getting near good value territory now for HSBA? I bought some a while back and I am tempted to buy some more soon. Not many decent bargains around presently. One to tuck away in the bottom drawer, perhaps?

I'm struggling , Fred. Why is HSBC better value than Lloyds? If you're going to increase your weighting to the banking sector, why would you choose HSBC over the other possible candidates? I can't see a single "value" metric (including forecast dividend yield, dividend growth and dividend cover) where HSBC looks a better choice than Lloyds. Is it because you want exposure to a dividend stream declared in USD?

All the best, Si

Dod101
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Re: What price is HSBC a buy?

#161779

Postby Dod101 » August 24th, 2018, 1:18 pm

I bought some more the other day with accumulated dividends when it dipped below £7. To answer simoan, Lloyds is a pure UK play whereas HSBC has exposure worldwide and particularly the Far East. Furthermore the yield is higher although HSBC has said the dividend will be held at least for this year and next.

Dod

simoan
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Re: What price is HSBC a buy?

#161789

Postby simoan » August 24th, 2018, 1:35 pm

Dod101 wrote:I bought some more the other day with accumulated dividends when it dipped below £7. To answer simoan, Lloyds is a pure UK play whereas HSBC has exposure worldwide and particularly the Far East. Furthermore the yield is higher although HSBC has said the dividend will be held at least for this year and next.

Dod

Hi Dod,

Well it all depends how you measure dividend yield? The data I have which is based on a 1 year rolling yield shows the yield of HSBC as 5.85% and Lloyds as 5.89% as of last nights close. On every other value metric you care to choose i.e. PER, EV/EBITDA, Price to Book, Price to Tangible Book etc. Lloyds is better. If you go for quality it has a higher ROE, and if you want growth it has higher forecast EPS growth with PEG < 1. I'm not really sure how anyone could say HSBC is better and buying something just because the share price is lower than it was yesterday or last week doesn't wash in my book.... as you know :-) However, if you already have a holding and are just recirculating dividends, then fair enough.

TBH I thought I was replying on the HYP board but just realised it's the Banking Sector board. I have no interest in banks, other than LLPC preference shares which "are a buy and forget until Lloyds try and nick 'em" investment, so I will now sling my hook!

All the best, Si

simoan
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Re: What price is HSBC a buy?

#161793

Postby simoan » August 24th, 2018, 1:48 pm

FredBloggs wrote:@simoan, Dod has it spot on.

That's the opinion of you and Dod of course, plus maybe others. I don't agree :-)

FredBloggs wrote:Lloyds could be a casualty if Brexit goes badly and is losing value internationally as the GBP depreciates. On the other hand, HSBC is exposed to the faster growing economies of the world and totally uncorrelated to any Brexit fall out. And it's assets will appreciate while the GBP depreciates.

Woah! Way too many unknowns there. HSBC on the OTOH could be greatly effected by the ongoing US/China trade disputes and will not escape Brexit fall out given exposure to UK and EU. Who knows? the US authorities may even uncover some further malpractice they can hit them with. I have posted my general thoughts about Brexit elsewhere. It's hard enough to find good companies to invest in, and of course there is no compunction to invest in bank equity at all. Why choose HSBC over BP, for instance, if all you want is a dividend stream?

FredBloggs wrote:Add to that a rock solid 5+% divi and it should sit quite comfortable in that bottom drawer.

Seeing as the dividend is static, I'd hardly describe it as rock solid. I think precedent would show that a flat dividend is very often followed by a dividend cut at some stage.

FredBloggs wrote:I might put some of the uninvested proceeds from my NG sale into HSBA. Beats cash hands down?

Really? Cash may turn out to be a very good place to be over the next 12 months.

All the best, Si

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Re: What price is HSBC a buy?

#162026

Postby richfool » August 25th, 2018, 12:38 pm

I too prefer HSBC for its broader overseas exposure and particularly for its overseas earnings and US$ dollar dividends.

Disc: I hold HSBA but not Lloyds. (Though my UK IT's hold both).

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Re: What price is HSBC a buy?

#162053

Postby digitaria » August 25th, 2018, 3:04 pm

HSBA is nearly 8% of my portfolio. That's possibly a little high but reflects lack of better opportunities.

I see little reason to prefer LLOY. HSBC has global scale, is much more decoupled from Brexit-risk, has Far Eastern exposure, is relatively conservatively-run (didn't require a bailout).

I am currently trialling the Stockopedia service. Their ranking measures cast a poor light on HSBC, but I haven't quite worked out why. They score it highly on "value" but low on their other measures. I might be inclined to reduce my exposure a little, but it's hard to identify a better bank for a HYP.

Regards

digitaria

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Re: What price is HSBC a buy?

#163022

Postby mosschops » August 29th, 2018, 9:45 pm

simoan wrote:
Dod101 wrote:I bought some more the other day with accumulated dividends when it dipped below £7. To answer simoan, Lloyds is a pure UK play whereas HSBC has exposure worldwide and particularly the Far East. Furthermore the yield is higher although HSBC has said the dividend will be held at least for this year and next.

Dod

Hi Dod,

Well it all depends how you measure dividend yield? The data I have which is based on a 1 year rolling yield shows the yield of HSBC as 5.85% and Lloyds as 5.89% as of last nights close. On every other value metric you care to choose i.e. PER, EV/EBITDA, Price to Book, Price to Tangible Book etc. Lloyds is better. If you go for quality it has a higher ROE, and if you want growth it has higher forecast EPS growth with PEG < 1. I'm not really sure how anyone could say HSBC is better and buying something just because the share price is lower than it was yesterday or last week doesn't wash in my book.... as you know :-) However, if you already have a holding and are just recirculating dividends, then fair enough.

TBH I thought I was replying on the HYP board but just realised it's the Banking Sector board. I have no interest in banks, other than LLPC preference shares which "are a buy and forget until Lloyds try and nick 'em" investment, so I will now sling my hook!

All the best, Si


Isn’t Lloyds better valued against all those metrics because at the core of things it’s not as good a bank?

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Re: What price is HSBC a buy?

#163148

Postby richfool » August 30th, 2018, 12:56 pm

HSBA currently @ c 675p. The strength over the US dollar should enhance its (albeit static) dividend (back to sterling).

I hold HSBC,and although off-topic, I also like the insurers/asset managers: LGEN and SLA. Yields c 6%.

simoan
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Re: What price is HSBC a buy?

#163191

Postby simoan » August 30th, 2018, 3:32 pm

Well, best of luck to anyone investing bank equity. I think you'll probably need it over the next couple of years. With regard to HSBC, I would need a full nose peg before buying a company that starts their HY results statement with this kind of self aggrandising guff:

"HSBC aims to be where the growth is, enabling business to thrive and economies to prosper, and ultimately helping people to fulfil their hopes and realise their ambitions."

Good grief! We should all be so bloody grateful to them for existing to help us. We are not worthy...
Si

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Re: What price is HSBC a buy?

#163339

Postby Dod101 » August 31st, 2018, 12:29 pm

simoan

I have been away for a couple of days. That is not self aggrandisement at least not in my eyes. 'To make oneself greater'? I don't think so. They really believe that and that is the difference. They concentrate on the Far East and in particular in the Pearl River Delta. They are by far I think the strongest and most experienced bank based in the UK and were the only one to continue lending to the inter bank market throughout the 2008 crisis. In any case, companies are allowed to make these sorts of statements; they do it all the time.

No nose peg required whilst I enjoy their dividend and contemplate their prospects.

Dod

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Re: What price is HSBC a buy?

#163341

Postby scrumpyjack » August 31st, 2018, 12:35 pm

Yes these motherhood and apple pie statements must be dreamed up by the PR department and regurgitated by weak management.

I mean what company would aim to be where the growth isn't, or not try to do things that are in their customers interests?

Oh thinking about most of the banks have for decades focussed on doing things that are not in their customers interests and that is why they have had to pay tens of billions in redress for these 'legacy issues' (another awful PR dept phrase!)

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Re: What price is HSBC a buy?

#163350

Postby simoan » August 31st, 2018, 1:18 pm

Dod101 wrote:simoan
I have been away for a couple of days. That is not self aggrandisement at least not in my eyes. 'To make oneself greater'? I don't think so.


No, it means being self important. You'll have to remind me how a bank works? I thought it was our money they needed in order to run their business. And yet reading this statement you'd think it's them that's doing us a favour!

Dod101 wrote:They really believe that and that is the difference.

Yes, of course they do. And Fred Goodwin probably thought he was the master of the universe too back in 2007 around the same time as RBS was yielding 6-7% and people were expressing the same love and devotion to their dividend!

Dod101 wrote:They concentrate on the Far East and in particular in the Pearl River Delta. They are by far I think the strongest and most experienced bank based in the UK and were the only one to continue lending to the inter bank market throughout the 2008 crisis. In any case, companies are allowed to make these sorts of statements; they do it all the time.

Most companies don't need to put this kind of "mission statement" in their results announcements - leave it for the Annual Report with all its glossy pictures and marketing spiel that most shareholders never read anyway.

Dod101 wrote:No nose peg required whilst I enjoy their dividend and contemplate their prospects.

Dod

At this point I'm more concerned with preservation of capital but if you need the income you must accept the capital risk. Personally, if you need a 6% income I believe there are safer ways of getting it than bank equity dividends, particularly where the the bank in question is not growing revenue and the dividend is barely covered by earnings. You'd have to have a much sunnier outlook of the next few years than me to assume the dividend will not be cut and your capital not eroded. Bank equity has been a terrible investment (even including dividends) for the best part of 20 years and yet still people are attracted to it. Each to their own...

BTW I'm only replying as you addressed your post to me directly. I'm now on a self-imposed sabbatical from posting.
All the best, Si

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Re: What price is HSBC a buy?

#163360

Postby absolutezero » August 31st, 2018, 2:13 pm

simoan wrote: I thought it was our money they needed in order to run their business.


That's where you're wrong.
Banks create money from thin air every time a new mortgage, loan or credit card transaction goes through.
They only need to keep a very very small amount of money on their balance sheet.

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Re: What price is HSBC a buy?

#163411

Postby Dod101 » August 31st, 2018, 5:17 pm

simoan says he is taking a sabbatical. I can recommend that although I enjoy reading his sometimes misguided views. He has I believe, got HSBC wrong owing, I suppose, to some sort of prejudice or being badly burnt by bank shares in the past. To mention HSBC in the same post as Goodwin and RBS is simply ridiculous and nonsensical. HSBC is a very conservative and highly capitalised band; in fact I think the whole of bank regulation has now probably gone too far in the other direction from what it was before 2008.

He may also like to know that the HSBC dividend is definitely not covered by current earnings; that is why they are not to increase it for at least this year and next, but and it is an important but, they can still afford to maintain the dividend.

I recommend a search of his dictionary for the meaning of self aggrandisement. My Chambers certainly defines it as 'to make oneself greater' Popularily, I will concede that it tends to be used as though it meant self important. I do not think HSBC believes that any more than my dictionary definition. I have attended their AGMs for the last couple of years and have formed my own opinion of the Execs and self aggrandisement does not fit.

Dod

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Re: What price is HSBC a buy?

#163478

Postby Dod101 » August 31st, 2018, 11:25 pm

Going back to simoan's objection to the statement, it is a direct take from the Interim Report which I should have noted before. It is the sort of statement that many company's make in their Annual or Half Yearly Reports. To object to that is sheer prejudice.#

Dod

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Re: What price is HSBC a buy?

#164570

Postby StepOne » September 6th, 2018, 9:16 am

absolutezero wrote:
simoan wrote: I thought it was our money they needed in order to run their business.


That's where you're wrong.
Banks create money from thin air every time a new mortgage, loan or credit card transaction goes through.
They only need to keep a very very small amount of money on their balance sheet.


It might be a small amount, but it still comes from deposits, so Simoan is correct.

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Re: What price is HSBC a buy?

#165226

Postby Dod101 » September 9th, 2018, 7:18 am

The next dividend is due on 27 September and they will now be ex div. I think the (relatively) secure dividend will give support for the share price and if I had spare cash I think at current levels they are a good buy. The yield is now approaching 6%, but the whole market has fallen back so who knows?

Dod

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Re: What price is HSBC a buy?

#165629

Postby richfool » September 11th, 2018, 9:58 am

As well as HSBC, financials generally seem to be down lately, including LGEN and SLA., both offering c 6.00% dividend yields (and both of which I hold, as well as HSBA), but I am reluctant to add more to that sector.

Whilst banks should profit from rising interest rates, the only place they are rising and only slightly is the US and that maybe slowing. Asset Managers I see as susceptible to market corrections and bull markets.


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