Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/16104" target="_blank" data-smartkarma-citation="entities:16104:1">Jb Financial Group Co Ltd (175330 KS)</a></p><table class="table table-striped"><tbody>
<tr>
<td>JB Financial</td>
<td style="text-align: center;">'13</td>
<td style="text-align: center;">'14</td>
<td style="text-align: center;">'15</td>
<td style="text-align: center;">'16</td>
<td style="text-align: center;">'17</td>
<td style="text-align: center;">17 v '16</td>
</tr>
<tr>
<td>CAPITAL ADEQUACY</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
</tr>
<tr>
<td>BIS Ratio</td>
<td style="text-align: center;">12.90%</td>
<td style="text-align: center;">13.12%</td>
<td style="text-align: center;">12.51%</td>
<td style="text-align: center;">12.05%</td>
<td style="text-align: center;">12.16%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>Tier1 Ratio</td>
<td style="text-align: center;">7.24%</td>
<td style="text-align: center;">8.34%</td>
<td style="text-align: center;">8.59%</td>
<td style="text-align: center;">9.20%</td>
<td style="text-align: center;">9.70%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>CET1 Ratio</td>
<td style="text-align: center;">5.88%</td>
<td style="text-align: center;">7.12%</td>
<td style="text-align: center;">7.40%</td>
<td style="text-align: center;">7.92%</td>
<td style="text-align: center;">8.57%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>ASSET QUALITY</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
</tr>
<tr>
<td>Delinquency Ratio</td>
<td style="text-align: center;">1.66%</td>
<td style="text-align: center;">1.14%</td>
<td style="text-align: center;">1.19%</td>
<td style="text-align: center;">1.04%</td>
<td style="text-align: center;">0.87%</td>
<td style="text-align: center;">↓</td>
</tr>
<tr>
<td>NPL Coverage Ratio (New)</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;">72.71%</td>
<td style="text-align: center;">67.92%</td>
<td style="text-align: center;">↓</td>
</tr>
<tr>
<td>NPL Coverage Ratio (Old)</td>
<td style="text-align: center;">82.39%</td>
<td style="text-align: center;">63.00%</td>
<td style="text-align: center;">130.52%</td>
<td style="text-align: center;">144.33%</td>
<td style="text-align: center;">154.57%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>PROFITABILITY</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
</tr>
<tr>
<td>ROA</td>
<td style="text-align: center;">0.40%</td>
<td style="text-align: center;">1.71%</td>
<td style="text-align: center;">0.40%</td>
<td style="text-align: center;">0.47%</td>
<td style="text-align: center;">0.56%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>ROE </td>
<td style="text-align: center;">6.59%</td>
<td style="text-align: center;">26.71%</td>
<td style="text-align: center;">6.28%</td>
<td style="text-align: center;">7.17%</td>
<td style="text-align: center;">8.64%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>ROE </td>
<td style="text-align: center;">3.37%</td>
<td style="text-align: center;">41.34%</td>
<td style="text-align: center;">5.72%</td>
<td style="text-align: center;">6.45%</td>
<td style="text-align: center;">7.84%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>NIM (Bank, Quarterly)</td>
<td style="text-align: center;">2.</td>
</tr>
</tbody></table>…

Jb Financial Group Co Ltd (175330 KS)

JB Financial
'13
'14
'15
'16
'17
17 v '16


CAPITAL ADEQUACY
 
 
 
 
 
 


BIS Ratio
12.90%
13.12%
12.51%
12.05%
12.16%
↑


Tier1 Ratio
7.24%
8.34%
8.59%
9.20%
9.70%
↑


CET1 Ratio
5.88%
7.12%
7.40%
7.92%
8.57%
↑


ASSET QUALITY
 
 
 
 
 
 


Delinquency Ratio
1.66%
1.14%
1.19%
1.04%
0.87%
↓


NPL Coverage Ratio (New)
 
 
 
72.71%
67.92%
↓


NPL Coverage Ratio (Old)
82.39%
63.00%
130.52%
144.33%
154.57%
↑


PROFITABILITY
 
 
 
 
 
 


ROA
0.40%
1.71%
0.40%
0.47%
0.56%
↑


ROE 
6.59%
26.71%
6.28%
7.17%
8.64%
↑


ROE 
3.37%
41.34%
5.72%
6.45%
7.84%
↑


NIM (Bank, Quarterly)
2.

…

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<p>It was reported in numerous Korean media on March 15th that <strong>Sustinvest</strong> has opposed the reappointment of Kim Jung-Tae as the Chairman of <strong><a href="https://www.smartkarma.com/entities/12843" target="_blank" data-smartkarma-citation="entities:12843:1">Hana Financial Group (086790 KS)</a>,</strong> which is having its AGM on March 23rd. The fate of Chairman Kim Jung-Tae at Hana Financial Group will be determined on this date. </p><p><strong>Why is this significant and who is Sustinvest? </strong></p><p><strong>Sustinvest</strong> is one of the leading companies in Korea providing <strong>ESG</strong> (Environment, Social, Governance) related consulting and <strong>proxy advisory</strong> services…</p>

It was reported in numerous Korean media on March 15th that Sustinvest has opposed the reappointment of Kim Jung-Tae as the Chairman of Hana Financial Group (086790 KS), which is having its AGM on March 23rd. The fate of Chairman Kim Jung-Tae at Hana Financial Group will be determined on this date. Why is this significant and who is Sustinvest? Sustinvest is one of the leading companies in Korea providing ESG (Environment, Social, Governance) related consulting and proxy advisory services…

Sustinvest Opposes Reappointment of Kim Jung-Tae as the Chairman of Hana Financial Group

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Thematic (Sector/Industry)

<p>Last month, foreign investors went on a buying spree in the Korea's second largest stock market, KOSDAQ. In contrast, they went on a selling spree in the Korea's largest stock market, KOSPI during the same period. This is very interesting since these foreign investors seem to be thinking that NPS initiated passive investing paradigm might have come to an end. In fact, foreign investors net purchased ₩536bil worth of KOSDAQ stocks in Sep alone. This is more than one fourth of their total net purchase from Jan to July. However, they net sold a total of ₩3.465tril worth of KOSPI stocks in the last two months. It seems clear that foreign investors' appetite has changed drastically in the last two months. That is, they are scooping up KOSDAQ stocks and dumping KOSPI stocks.</p><table class="table table-striped"><colgroup></colgroup><tbody><tr><td>(Shares, ₩)</td><td colspan="2">KOSDAQ</td><td colspan="2">KOSPI</td></tr><tr><td></td><td><strong>Net trade volume</strong></td><td><strong>Net trade value</strong></td><td><strong>Net trade volume</strong></td><td><strong>Net trade value</strong></td></tr><tr><td>Jan - July</td><td>-26,469,863</td><td>+2,036,022,065,002</td><td>303,361,818</td><td>+8,724,829,647,120</td></tr><tr><td>Aug</td><td>11,853,686</td><td>+276,445,341,427</td><td>15,985,082</td><td><em><strong>-1,875,161,062,234</strong></em></td></tr><tr><td>Sep</td><td>18,014,568</td><td><em><strong>+535,789,044,679</strong></em></td><td>-20,254,807</td><td><em><strong>-1,589,880,870,918</strong></em></td></tr><tr><td colspan="5"><em>Source: KRX</em></td></tr></tbody></table>

Last month, foreign investors went on a buying spree in the Korea's second largest stock market, KOSDAQ. In contrast, they went on a selling spree in the Korea's largest stock market, KOSPI during the same period. This is very interesting since these foreign investors seem to be thinking that NPS initiated passive investing paradigm might have come to an end. In fact, foreign investors net purchased ₩536bil worth of KOSDAQ stocks in Sep alone. This is more than one fourth of their total net purchase from Jan to July. However, they net sold a total of ₩3.465tril worth of KOSPI stocks in the last two months. It seems clear that foreign investors' appetite has changed drastically in the last two months. That is, they are scooping up KOSDAQ stocks and dumping KOSPI stocks.(Shares, ₩)KOSDAQKOSPINet trade volumeNet trade valueNet trade volumeNet trade valueJan - July-26,469,863+2,036,022,065,002303,361,818+8,724,829,647,120Aug11,853,686+276,445,341,42715,985,082-1,875,161,062,234Sep18,014,568+535,789,044,679-20,254,807-1,589,880,870,918Source: KRX

Foreign Investors Vs. Local Institutions in Korean Stock Market - Who Is Right?

Event-Driven

<p>Obviously, Lotte restructuring is still far from being done. What is next? The newly created Lotte Holdco first needs to do a tender offer to the shareholders of the four affiliates (Confectionary, Shopping, Chilsung and Food) for Holdco shares. Holdco now owns a 17.95% stake in Shopping, a 19.29% stake in Chilsung and a 22.10% stake in Food. However, it has no stake in Confectionary. To legally qualify as a holdco under Korea's holdco law, Holdco must have 20+% in listed affiliates (and 40+% in unlisted affiliates). With the exception of Food, Holdco needs to do increase its stake in the three affiliates through a tender offer.</p><div><table class="table table-striped"><tbody><tr><td colspan="2">Holdco's shareholding % in the four affiliates</td></tr><tr><td>Confectionary</td><td>None</td></tr><tr><td>Shopping</td><td>17.95%</td></tr><tr><td>Chilsung</td><td>19.29%</td></tr><tr><td>Food</td><td>22.10%</td></tr><tr><td colspan="2"><em>Source: Dart, <a href="https://www.smartkarma.com/profiles/354" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a></em></td></tr></tbody></table></div><p>Shin Dong-bin personally owns a 9.07% stake in Confectionary, a 13.46% stake in Shopping, a 5.71% stake in Chilsung and a 1.96% stake in Food. The total shareholding of Holdco+Shin Dong-bin in the four affiliates will be 9.07% (Confectionary), 31.41% (Shopping), 25.00% (Chilsung) and 24.06% (Food). If Shin Dong-bin successfully tenders all of his shares in the four affiliates for Holdco shares, his total shareholding in Holdco will be about 50%.</p><table class="table table-striped"><tbody><tr><td></td><td>Confectionary</td><td>Shopping</td><td>Chilsung</td><td>Food</td><td>Holdco</td></tr><tr><td><em><strong>Shin Dong-bin</strong></em></td><td><em><strong>9.1%</strong></em></td><td><em><strong>13.5%</strong></em></td><td><em><strong>5.7%</strong></em></td><td><em><strong>2.0%</strong></em></td><td><em><strong>10.9%</strong></em></td></tr><tr><td>Shin Dong-ju</td><td>4.0%</td><td>8.0%</td><td>2.8%</td><td>2.0%</td><td>5.7%</td></tr><tr><td>Shin Kyuk-ho</td><td>6.8%</td><td>0.9%</td><td>1.3%</td><td>0.0%</td><td>3.9%</td></tr><tr><td>Shin Young-ja</td><td>2.5%</td><td>0.7%</td><td>2.7%</td><td>1.1%</td><td>1.7%</td></tr><tr><td>Shin Yoo-mi</td><td>0.0%</td><td>0.1%</td><td>0.0%</td><td>0.3%</td><td>0.0%</td></tr><tr><td>NPS</td><td>4.0%</td><td>6.1%</td><td>10.0%</td><td>12.3%</td><td>5.2%</td></tr><tr><td colspan="6"><em>Source: DART, CEO Score Daily</em></td></tr></tbody></table><table class="table table-striped"><tbody><tr><td colspan="4">Holdco+Shin Dong-bin's shareholding in the four affiliates</td></tr><tr><td></td><td>Holdco</td><td>Shin Dong-bin</td><td><em><strong>Holdco+Shin Dong-bin</strong></em></td></tr><tr><td>Confectionary</td><td>-</td><td>9.07%</td><td><em><strong>9.07%</strong></em></td></tr><tr><td>Shopping</td><td>17.95%</td><td>13.46%</td><td><em><strong>31.41%</strong></em></td></tr><tr><td>Chilsung</td><td>19.29%</td><td>5.71%</td><td><em><strong>25.00%</strong></em></td></tr><tr><td>Food</td><td>22.10%</td><td>1.96%</td><td><em><strong>24.06%</strong></em></td></tr><tr><td colspan="4"><em>Source: Dart, <a href="https://www.smartkarma.com/profiles/354" target="_blank" data-smartkarma-citation="accounts:354">Sanghyun Park</a></em></td></tr></tbody></table><p>In regard to the requirement of holdco conversion, Lotte doesn't have any problem with Shopping, Chilsung or Food. But the problem is Confectionary. which is still far short of meeting the 20% rule. As I said in my previous insight <a href="https://www.smartkarma.com/insights/lotte-group-restructuring-part-1-shareholding-status-investment-opportunity" target="_blank" data-smartkarma-citation="insights:10200">Lotte Group Restructuring Part 1 - Shareholding Status &amp; Investment Opportunity</a>, this is exactly why many local investors in Korea are talking about the possibility of merging Holdco with Hotel Lotte merger.</p>

Obviously, Lotte restructuring is still far from being done. What is next? The newly created Lotte Holdco first needs to do a tender offer to the shareholders of the four affiliates (Confectionary, Shopping, Chilsung and Food) for Holdco shares. Holdco now owns a 17.95% stake in Shopping, a 19.29% stake in Chilsung and a 22.10% stake in Food. However, it has no stake in Confectionary. To legally qualify as a holdco under Korea's holdco law, Holdco must have 20+% in listed affiliates (and 40+% in unlisted affiliates). With the exception of Food, Holdco needs to do increase its stake in the three affiliates through a tender offer.Holdco's shareholding % in the four affiliatesConfectionaryNoneShopping17.95%Chilsung19.29%Food22.10%Source: Dart, Sanghyun ParkShin Dong-bin personally owns a 9.07% stake in Confectionary, a 13.46% stake in Shopping, a 5.71% stake in Chilsung and a 1.96% stake in Food. The total shareholding of Holdco+Shin Dong-bin in the four affiliates will be 9.07% (Confectionary), 31.41% (Shopping), 25.00% (Chilsung) and 24.06% (Food). If Shin Dong-bin successfully tenders all of his shares in the four affiliates for Holdco shares, his total shareholding in Holdco will be about 50%.ConfectionaryShoppingChilsungFoodHoldcoShin Dong-bin9.1%13.5%5.7%2.0%10.9%Shin Dong-ju4.0%8.0%2.8%2.0%5.7%Shin Kyuk-ho6.8%0.9%1.3%0.0%3.9%Shin Young-ja2.5%0.7%2.7%1.1%1.7%Shin Yoo-mi0.0%0.1%0.0%0.3%0.0%NPS4.0%6.1%10.0%12.3%5.2%Source: DART, CEO Score DailyHoldco+Shin Dong-bin's shareholding in the four affiliatesHoldcoShin Dong-binHoldco+Shin Dong-binConfectionary-9.07%9.07%Shopping17.95%13.46%31.41%Chilsung19.29%5.71%25.00%Food22.10%1.96%24.06%Source: Dart, Sanghyun ParkIn regard to the requirement of holdco conversion, Lotte doesn't have any problem with Shopping, Chilsung or Food. But the problem is Confectionary. which is still far short of meeting the 20% rule. As I said in my previous insight Lotte Group Restructuring Part 1 - Shareholding Status &amp; Investment Opportunity, this is exactly why many local investors in Korea are talking about the possibility of merging Holdco with Hotel Lotte merger.

Lotte Group Restructuring Part 5 - Issues Regarding Hotel Lotte & Financial Affiliates

<p>This report has two parts. First, it discusses the impact of the "trial of the century" involving the Samsung Group heir Lee Jae-Yong as well as major policies enforced and the impact on various industry sectors in the first 110 days of Moon Jae-In as the President of South Korea. The local media has described the trials involving the three key individuals, including former President Park Geun-Hye, her confidant Choi Soon Shil, and the Samsung Group heir Lee Jae-Yong as the "trials of the…</p>

This report has two parts. First, it discusses the impact of the "trial of the century" involving the Samsung Group heir Lee Jae-Yong as well as major policies enforced and the impact on various industry sectors in the first 110 days of Moon Jae-In as the President of South Korea. The local media has described the trials involving the three key individuals, including former President Park Geun-Hye, her confidant Choi Soon Shil, and the Samsung Group heir Lee Jae-Yong as the "trials of the…

The "Trial of the Century", First 110 Days of Moon Jae-In Presidency, and Waiting for Tofu

South Korea

Hana Financial Group Inc., in accordance with Financial Holding Companies Act, was established on December 1, 2005, through stock transfer with the former shareholders of its subsidiaries in order to provide management services and financing to associated companies.

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Hana Financial (086790 KS)

Top PH Scores™ in South Korea

Jb Financial Group Co Ltd (175330 KS)Kwangju Bank (192530 KS)The PH Score™ is a fundamental momentum-quantamental score that scores banks according...

Paul Hollingworth

Sustinvest Opposes Reappointment of Kim Jung-Tae as the Chairman of Hana Financial Group

It was reported in numerous Korean media on March 15th that Sustinvest has opposed the reappointment of Kim Jung-Tae as the Chairman of Hana...

Douglas Kim

Foreign Investors Vs. Local Institutions in Korean Stock Market - Who Is Right?

Last month, foreign investors went on a buying spree in the Korea's second largest stock market, KOSDAQ. In contrast, they went on a selling spree...

Sanghyun Park

Lotte Group Restructuring Part 5 - Issues Regarding Hotel Lotte & Financial Affiliates

Obviously, Lotte restructuring is still far from being done. What is next? The newly created Lotte Holdco first needs to do a tender offer to the...

Sanghyun Park

The "Trial of the Century", First 110 Days of Moon Jae-In Presidency, and Waiting for Tofu

This report has two parts. First, it discusses the impact of the "trial of the century" involving the Samsung Group heir Lee Jae-Yong as well as...

Douglas Kim

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