Investec plc：买入评级，平淡无奇但被低估

Issuer of report:HSBC Bank Middle East Ltd,DIFCView HSBC Global Research at:https://www.research.hsbc.comListen to our insightsFind out moreHSBC Global Research PodcastsMAINTAIN BUYTARGET PRICE(GBPp)PREVIOUS TARGET(GBPp)640630SHARE PRICE(GBPp)UPSIDE/DOWNSIDE524+22.1%(as of03 Jun 2025)MARKET DATAMarket cap(GBPm)3,381Free floatMarket cap (USDm)4,570BBGINVP LN3m ADTV (USDm)7RICFINANCIALS AND RATIOS(GBPp)Year to03/2025a03/2026e03/2027e03/2028eHSBC EPS76.381.290.3HSBC EPS (prev)75.982.790.6Change (%)0.5-1.7-0.4Consensus EPS78.282.790.2PE (x)6.96.55.8Dividend yield (%)7.07.48.3P/NAV0.90.80.8ROE inc. gwill (%)13.913.814.452-WEEK PRICE(GBPp)Source:LSEGIBES, HSBC estimatesHenry Hall*Banks AnalystHSBC Bank Middle East Ltd, DIFChenry.hall@hsbc.com+27 11 880 1855Harish Paliwal*AssociateBangalore* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulationsEquitiesDiversified Financial SrvcsUnited Kingdom38052567006/2412/2406/25Target price: 640High: 623 Low: 414 Current: 524 ◆◆◆ 100%INVP.L100.1nana97.25.29.20.714.8 2Financial statementsYear to03/2025a03/2026e03/2027eP&L summary(GBPm)Net interest income1,3581,4231,510Net fees/commissions464501536Trading profits156173187Other income137111116Total income2,1152,2082,350Operating expense-1,151-1,206-1,273Bad debt charge-119-135-137Other7695110HSBC PBT9209611,050Exceptionals-5400PBT8669611,050Taxation-170-178-193Minoritiesand others-74-74-74Attributable profit623710783HSBC attributable profit677710783Balance sheet summary(GBPm)Ordinary equity5,0115,2425,643HSBC ordinary equity5,0115,2425,643Customer loans32,52634,47836,547Debtsecurities holdings21,85323,60225,726Customer deposits47,67250,82654,300Interest earning assets53,54956,23060,176Total assets58,25361,87966,022Ratio, growth & per share analysisYear to03/2025a03/2026e03/2027eY-on-y % changeTotal income6.14.46.5Operating expense2.84.85.6Pre-provision profit10.34.07.5EPS1.96.411.1HSBC EPS1.96.411.1DPS5.86.811.5NAV (includinggoodwill)5.36.67.7Ratios (%)Cost/income ratio54.454.654.2Bad debt charge0.40.40.4Customer loans/deposits68.267.867.3ROE (including goodwill)13.913.814.4Per share data(GBPp)EPS reported(diluted)76.381.290.3HSBC EPS (diluted)76.381.290.3DPS36.539.043.5NAV578.1618.9667.0NAV (including goodwill)505.6539.2580.5Financials & valuation:Investec plc Too manyadjustments; too many restatementsInvestec makes large adjustments to reported earnings…Investec publishes a number it calls “adjusted earnings”. It uses this number to calculate EPS,ROE, etc. Investec’s rationale for using adjusted earnings is that IFRS does not generate anearnings number that reflects its operational performance and/or that reflects the earnings basefrom which itaims togrow.We have some sympathy for this as we also think there are certain accounting conventions thatdeliver numbers that do not reflect operational performance.Based on our analysis, weagreewith most of theadjustments Investec makes to reported earnings.But, as shown in Figure 1, the adjustments Investec makesto reported earnings to arrive atadjusted earnings are often very large and therehavebeen adjustments every year (we shownumbers from 2014, but it was also the case pre-2014).Why is headline earnings not good enough?South African companies publish a number called headline earningswhich is used tointerpretpretty-much all South African companies’ results. It is also a requirement of theJohannesburgStock Exchange (JSE)that JSE-listed companies publish headline earnings1. The rationale forhaving headline earnings is that it excludes non-operational items and items of a capital nature.We think in most cases headline earnings is a good reflection of a company’s operationalperformance. Yet Investec adjusts headline earnings to arrive at adjusted earnings (Figure 2).Importantly, Figure 2 shows that adjusted earnings is alwaysmorethan headline earnings.Figure 2:Adjustments made by Investec toheadline earningsWe are not saying Investec isadjustingheadline earnings to flatter its performance. What weare questioning is why Investecthinks headline earningsdonot reflect its operationalperformance when pretty-much all JSE-listed companies do?Comparatives have been restated each of the last six yearsAnother feature of Investec’s results is that it pretty-much always restates the prior yearnumbers. In Figure 3 below we show that we had to go back to the 2019 result to find ayear1Investec is also listed on the JSE which is why it discloses headline earnings.20142015201620172018201920202021292309335434447496276248353125144781642132734036043549157444026812%10%7%0%10%16%59%8%Figure 1:Adjustments made by Invested to reported earnings201420152016201720182019202020212952113354574734901 0912343112924( 23)1884( 651)3432734036043549157444026811%61%7%-5%4%17%-60%14% 32022202320242025489596619621161943565056146626773%3%7%9%202220232024202547776589362328( 151)( 231)545056146626776%-20%-26%9% where it did not do this. And Investec rest