Industrial and Commercial Bank of China - A (601398.SS): Moving to an OW Rating and a Rmb9.70 Price Target from Not Rated

Following a period of restriction, J.P. Morgan resumes coverage of Industrial and Commercial Bank of China A-shares (601398.SS) with an Overweight rating and a December 2027 price target of Rmb9.70, up from Rmb9.50 before the restriction, versus the current share price of Rmb8.62. We forecast adjusted EPS of Rmb1.07, Rmb1.12 and Rmb1.17 for 2026-28E, implying net profit growth of 3.9%, 4.3% and 4.5%, respectively. ICBC has shown lower EPS and DPS volatility than the sector average over the past decade, lower downside risk from tariff wars than peers, and we believe it faces lower dilution risk than SOE peers in the event of a capital injection. The dividend is a key medium-term support, with limited DPS downside as provision releases could offset asymmetric rate cuts, lower-rate mortgage refinancing or higher NPL formation. Our Dec-27 PT is based on a DDM assuming a 10.7% cost of equity, 9.1% normalized ROE, 4.5% long-term growth and a fair terminal P/BV of 0.73x. Key downside risks ar