HSBC
HSBC Holdings plc
$92.02
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 18.2% below fair value
You pay
$92.02
Bear
$72.64
Fair
$112.50
Bull
$136.41
Bear
$72.64
-21.1%
ROTCE 10.2% → 1.79x TBV
Fair
$112.50
+22.3%
ROTCE 13.6% → 2.77x TBV
Bull
$136.41
+48.2%
ROTCE 15.6% → 3.36x TBV
Key Value Driver
ROTCE (13.6%) vs. cost of equity (7.5%)
Implied Market Multiple
1.92x
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 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $112.50 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: $1577.98 (1089% 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 19 analysts). Our estimate is 155% 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