外文报告：GS-HSBC HSBA L 1H12 HSBC preview 2Q12 HFC master trust review Conviction Buy-120724

July 24, 2012
ACTION
Buy
HSBC (HSBA.L)
Return Potential: 59%
Equity Research
1H12 HSBC preview, 2Q12 HFC master trust review; Conviction Buy
Source of opportunity
HSBC will release 2012 interim results on July 30, 2012. Our 1H12
estimates stand 5% below company-compiled consensus at the underlying
profit before tax level driven by moderately lower underlying revenues
($35.7 bn vs. $36.5 bn) and marginally higher costs ($20.6 bn vs. $20.5 bn)
partially offset by slightly lower impairments ($4.9 bn vs. $5.0 bn).
However, for FY12-14 our estimates are 5%-11% ahead of consensus at the
underlying pre-tax profit level driven by slightly lower revenues more than
offset by meaningfully lower costs and impairments (driven by HSBC
Finance Corporation).
Catalyst
We continue to believe that HSBC may accelerate the run-off of non-core
mortgage receivables in HSBC Finance Corporation (HFC) through asset
sales. In turn, this could push forward the benefits associated with the
group’s strategic realignment while offsetting the drag on group returns
stemming from the recently closed sale of card receivables to Capital One.
However, HFC’s June 2012 master trust data reinforces our view that the
unit’s P&L provisions could surprise positively, should HSBC continue to
organically run-off its US subprime mortgage book. We project 2Q12-4Q14
impairments of $4.9 bn for HFC, 45% below consensus of $8.7 bn.
Valuation
Our unchanged 12-month P/B-based price target of 820p implies 59%
potential upside. On our estimates, HSBC trades on 8.0x/7.1x/6.3x
2012/13/14E GS EPS and 1.0x 2012E P/TB.
HSBC remains on our Conviction Buy List and GS SUSTAIN Focus List.
Key risks
Worse-than-expected regulation, litigation, macro, costs and credit quality.

INVESTMENT LIST MEMBERSHIP
Pan-Europe Buy List
Pan-Europe Conviction Buy List
GS SUSTAIN Focus List
Coverage View: Neutral

Frederik Thomasen
+44(20)7552-9363 frederik.thomasen@http://wendang.chazidian.com Goldman Sachs International
Goldman Sachs does and seeks to do business with companies
covered in its research reports. As a result, investors should be
aware that the firm may have a conflict of interest that could
affect the objectivity of this report. Investors should consider
this report as only a single factor in making their investment
decision. For Reg AC certification and other important
disclosures, see the Disclosure Appendix, or go to
http://wendang.chazidian.com/research/hedge.html. Analysts employed by non-
US affiliates are not registered/qualified as research analysts
with FINRA in the U.S.
Olivia Treharne
+44(20)7051-2875 olivia.treharne@http://wendang.chazidian.com Goldman Sachs International
Monica Kalia
+44(20)7774-5716 monica.kalia@http://wendang.chazidian.com Goldman Sachs International
Jacqueline Cheung
+44(20)7552-5949 jackie.cheung@http://wendang.chazidian.com Goldman Sachs International


The Goldman Sachs Group, Inc. Global Investment Research
Growth
Returns *
Multiple
Volatility Volatility
Multiple
Returns *
Growth
Investment Profile
Low High
Percentile 20th 40th 60th 80th 100th
* Returns = Return on Capital For a complete description of the
investment profile measures please refer to
the disclosure section of this document.
HSBC (HSBA.L)
Europe Banks Peer Group Average
Key data Current
Price (p) 514.6
12 month price target (p) 820
Upside/(downside) (%) 59
Market cap (? mn) 91,949.2
Tier 1 ratio (%) 11.5
12/11 12/12E 12/13E 12/14E
GS Net income ($ mn) 15,560.8 17,893.6 20,690.6 23,771.0
GS EPS ($) 0.88 1.00 1.13 1.27
DPS ($) 0.41 0.46 0.52 0.62
BVPS ($) 8.56 9.15 9.77 10.45
GS P/E (X) 9.1 8.0 7.1 6.3
Dividend yield (%) 5.1 5.8 6.5 7.8
GS ROE (%) 10.6 11.2 11.9 12.5
P/BV (X) 0.9 0.9 0.8 0.8
Price performance chart
460
480
500
520
540
560
580
600
620
Jul-11 Oct-11 Feb-12 May-12
300
320
340
360
380
400
420
440
460
HSBC (L) FTSE World Europe (GBP) (R)
Share price performance (%) 3 month 6 month 12 month
Absolute (5.7) (5.6) (15.9)
Rel. to FTSE World Europe (GBP) (1.6) 3.5 3.1
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 7/23/2012 close.