ICBC 2006 Results

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ICBC (601398.SS, 1398.HK), Industrial and Commercial Bank of China, announced its 2006 result today, you can read the summary here (Chinese, English). Here is an offical PDF report (in traditional Chinese).

I started looking at it since last Wednesday, I believe it’s fairly valued from PE and price sales ratio. It earned CNY 0.18 in 2006, and it earning growth was about 30%. So if we apply a 30 PE, the A share stock would be CNY 5.40, which is close to current price 5.60.

Price sales ratio, using the market cap from the Xinhua article, USD 250 b, about CNY 2,000 b. For comparison, it’s about the size of Microsoft or Citibank. Its annual report says revenue is CNY 181,638 m. So the ratio is roughly 10: this is a bit high for a large cap company. Now the question is can they sustain this 30% earning growth going forward?

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