Buffett Brain · Research note
600036.SS· Financial Services
China Merchants Bank
China Merchants Bank's 45% net margin and 15% earnings yield highlight its strong financial position and valuation appeal.
Buffett fit
Strong fit
Owner
50
Durability
73
Management
84
Price
100
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of China Merchants Bank would mean benefiting from a net income of $150.18B and a of $423.32B, indicating strong cash generation.
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The bank's profitability over the last five years, with a consistent net income and minimal EPS decline, suggests strong durability.
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With a share count CAGR of 0.14%, management has been disciplined in maintaining shareholder value.
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The current of 6.6 and an yield of 42.96% present a compelling valuation case.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1Net margin of 45.23% is top-quintile in the financial services sector.
- 2Earnings yield of 15.24% indicates strong profitability.
- 3 yield of 42.96% suggests significant value.
- 4Debt/equity ratio of 0.32 shows conservative .
Concerns
5- 1No data available, limiting visibility on capital efficiency.
- 2Revenue CAGR of -1.0% over 5 years suggests growth challenges.
- 3EPS CAGR of 2.71% is below typical Buffett thresholds.
- 4Potential regulatory risks in China could impact operations.
Price history
$41.26-22.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
China Merchants Bank provides a range of banking services including personal and commercial loans, savings accounts, and various financial products. It operates through wholesale and retail finance segments, generating substantial revenue from interest income and fees. The bank's net income of $150.18B highlights its profitability. The unit economics are strong, evidenced by a net margin of 45.23%, placing it in the top quintile of its sector.
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Financial Services
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