If you’ve been keeping an eye on Bank of China stock, you’re not alone. Whether you’re considering buying, holding, or wondering if it’s time to lock in some profits, the past few years have given you plenty to think about. With share prices up more than 23.8% in the past year and an outstanding 163.2% in the past five years, the Bank of China has exceeded many expectations. Over the past week, shares rose another 2.6%, reflecting the positive sentiment building among investors.
Some of this optimism is related to ongoing global financial shifts, with Chinese banks seeing stronger capital inflows and a broad wave of strategic government support. Recent headlines highlight regulatory efforts aimed at strengthening the stability of major banks, and the Bank of China will benefit from both its size and international footprint. These factors are changing the way many investors perceive risk in China’s banking sector. They also make those return figures even more interesting.
With a Value Score of 5 out of a total of 6 undervaluation checks, the Bank of China already looks attractive compared to its peers. Next, let’s look at how that score was arrived at using classical valuation approaches. As you’ll see, there may be an even more insightful way to look at the company’s value.
Why the Bank of China lags behind its peers
The Excess Returns valuation model measures how much return a company generates above the cost of its equity. This makes it a useful way to assess whether shareholders are receiving a valuable reward for their investment risk. For the Bank of China, this approach focuses on several key metrics drawn from forward-looking analyst expectations and historical performance.
Currently, Bank of China has a book value of HK$8.19 per share and a stable earnings per share (EPS) of HK$0.75, based on a consensus of 14 analysts. The cost of equity is calculated at HK$0.78 per share, resulting in a modest additional return of HK$-0.02 per share. The company’s average return on equity stands at a solid 8.26%, with forecasts assuming a stable book value of up to HK$9.11 per share, based on eleven analyst estimates.
Applying the Excess Returns model to these figures suggests an intrinsic value that is significantly higher than the current market price. The model estimates that Bank of China shares are undervalued by about 53.8%. This result suggests that the market may be underestimating the company’s ability to generate returns on equity, especially compared to its peers and the industry average.
Result: UNDERVALUE
To learn more about how we arrive at this fair value for Bank of China, visit the Valuation section of our company report.
3988 Discounted cash flow as of October 2025
Our Excess Returns analysis shows that the Bank of China is undervalued by 53.8%. Keep track of this in your watchlist or portfolio, or discover more undervalued stocks.
The price-to-earnings (PE) ratio is a favorite valuation tool when assessing profitable companies like the Bank of China, because a company’s market price is directly linked to its earnings power. A lower price-to-earnings ratio may signal that a stock is undervalued relative to its profitability, while a higher price-to-earnings ratio indicates higher market expectations for future growth or increased risk.
Growth prospects and risk perception both play a role in what is considered a standard or “fair” PE. Companies with higher, more reliable growth tend to justify higher price-to-earnings ratios, while companies in riskier or slower-growing environments tend to see lower returns. Currently, the Bank of China trades at a price-to-earnings ratio of 5.79x. This is below both the peer average of 6.66x and the banking industry average of 6.00x, indicating that the market is pricing the company more conservatively than many of its rivals.
Simply Wall St’s proprietary “Fair Ratio” refines the idea of appropriate valuation. The Fair Ratio for Bank of China is 6.71x, taking into account the company’s unique growth, risks, profit margins and scale. This serves as a more holistic measure than a simple peer or sector comparison, as it takes into account detailed company-specific financials as well as broader industry dynamics.
Compared to the Fair Ratio, the current price-to-earnings ratio of the Bank of China is only 0.92x lower. This places it very close to what would be considered fairly valued based on the company’s fundamentals and future prospects.
Result: APPROXIMATELY CORRECT
SEHK:3988 price-earnings ratio as of October 2025
P/E ratios tell one story, but what if the real opportunities lie elsewhere? Discover companies where insiders are betting on explosive growth.
We’ve said before that there’s an even better way to understand appreciation, so let’s introduce you to Narratives. A story is simply your own story or point of view about a company, linking your beliefs about its future growth, profitability and risks to a clear financial forecast and fair value estimate. Stories link the numbers to real-world drivers so you can explain Why you think the Bank of China’s value will move in a certain direction and compare that story to the perspectives of other investors.
Narratives are available directly on Simply Wall St’s Community page and are trusted by millions of investors. They are quick and easy to use. You can write your case for why the Bank of China’s digital innovation, international reach, or economic risks will impact the future, and then immediately see how your fair value compares to the market price and other users’ predictions. When new earnings or news are released, Narratives are automatically updated, keeping your story relevant and actionable. For example, some investors see the Bank of China’s urbanization and digital payments strategy unlocking long-term value, leading to price targets as high as HK$5.90. Others remain cautious about risks such as low interest rates and price as low as HK$2.79, highlighting how Narratives can clarify buying or selling decisions at any time.
Do you think there is more to the story for the Bank of China? Create your own story to let the community know!
SEHK:3988 Fair community values as of October 2025
This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.
Companies discussed in this article include 3988.HK.
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