Cm bank (03968.HK) stock price fell nearly 4.6% this morning, with the latest report at 31.8 yuan. Citigroup's report stated that by including cm bank (03968.HK) in a 30-day negative observation with negative catalytic observation, cm bank's stock price has risen by 32% this year, outperforming the four major state-owned commercial banks, with a growth range of 20% to 27% during the same period, partly due to the influence of mainland real estate support policies. Cm bank is deemed as the best representative of mainland banking stocks specializing in internal real estate business.

The bank has included cm bank in a 30-day negative observation with negative catalytic observation due to an expected year-on-year decline of 1.5% in its mid-term net profit. It is estimated that the net profit for Q2 this year may fall short of expectations, due to pressure on the profits of real estate loans, deleveraging of mainland households, deterioration of the quality of retail assets and higher bank insurance costs compared to its peers. Due to the fact that its profit growth in the first half of this year is unlikely to accelerate more than the four major banks, the bank believes it will be difficult to prove that the H-share premium valuation of cm bank is reasonable. Its forecasted market-to-book ratio is 0.81 times, only ranging from 0.39 times to 0.42 times compared to the forecasted market-to-book ratio of the four major banks.

Citigroup maintains a "buy" rating and a target price of 41.52 yuan for cm bank.