HSBC
HSBC Holdings plc
$103.70
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 4.5% below fair value
You pay
$103.70
Bear
$68.01
Fair
$108.63
Bull
$133.01
Bear
$68.01
-34.4%
ROTCE 9.0% → 1.48x TBV
Fair
$108.63
+4.8%
ROTCE 12.1% → 2.37x TBV
Bull
$133.01
+28.3%
ROTCE 13.9% → 2.90x TBV
Key Value Driver
ROTCE (12.1%) vs. cost of equity (7.4%)
Implied Market Multiple
1.93x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $52.00 from 21 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $108.63 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $1635.34 (1183% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $52.00 (from 21 analysts). Our estimate is 145% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly