Minsheng Climbs Toward Record After ICBC Raises Price Estimate

China Minsheng Banking Corp., the nation’s first privately owned lender, headed for a record close in Hong Kong trading after its profit forecast prompted ICBC International Research Ltd. to increase its price estimate.

Minsheng advanced 1.1 percent to HK$11.02 as of 1:05 p.m., set for the highest closing price since it began trading in the city on Nov. 26, 2009. The stock has climbed 54 percent in the past year, compared with a 17 percent gain in the city’s benchmark Hang Seng Index.

ICBC International increased its price estimate for the Beijing-based lender by 20 percent to HK$12.40 after Minsheng said its 2012 net income may rise 35 percent to 37.6 billion yuan ($6 billion). Daiwa Capital Markets Hong Kong Ltd. earlier this week upgraded Minsheng to buy, saying China’s economic recovery means an increase in bad loans may be milder than earlier estimated.

“The upbeat results could trigger consensus earnings upgrade,” Ivan Lin, an analyst at ICBC International, wrote today. “Concerns on capital adequacy, deposits and asset qualities” appear to be “overdone.”

China’s banking system is grappling with rising defaults and weaker loan demand. Bank of Communications Co., the country’s fifth-largest lender, warned in December that Chinese banks’ profit growth may slow to a range of 7 percent to 8 percent this year from an estimated 17 percent in 2012 as borrowers turn to bond financing.

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