Bank of China (SEHK:3988): Valuation Check After RMB 60 Billion Tier 2 Capital Raise

Bank of China completed a RMB 60 billion tier 2 bond issue to enhance capital and strategic flexibility. Despite a recent 4.65% share price drop, the bank shows a solid year-to-date return of 16% and a 1-year shareholder return over 30%. The stock is considered undervalued with a fair value of HK$5.26, suggesting upside potential. However, margin pressure and China's property sector stress could impact earnings. The bank trades at 5.9 times earnings, slightly above the sector average, indicating modest multiple risk.