Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>On 16 May, it was reported that the Korean financial regulators have approved DGB Daegu Bank to become the 7th commercial bank in Korea. </li>
<li>DGB Daegu Bank is the core entity of DGB Financial Group (139130 KS) which currently has a market cap of 1.4 trillion won (US$1.0 billion).</li>
<li>This change will allow the company to expand in the more lucrative metropolitan Seoul and other regions in Korea. We have a positive view of DGB Financial Group (139130 KS).</li>
</ul>


On 16 May, it was reported that the Korean financial regulators have approved DGB Daegu Bank to become the 7th commercial bank in Korea. 
DGB Daegu Bank is the core entity of DGB Financial Group (139130 KS) which currently has a market cap of 1.4 trillion won (US$1.0 billion).
This change will allow the company to expand in the more lucrative metropolitan Seoul and other regions in Korea. We have a positive view of DGB Financial Group (139130 KS).


Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds</li>
<li>NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most</li>
<li>Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist</li>
</ul>


In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds
NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most
Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist


South Korean Banks Screen; Stick with Hana Financial (086790 KS)

Event-Driven

<ul>
<li>On 13 July, it was reported in the local media that the Korea Development Bank selected Hana Financial as the preferred bidder for the sale of KDB Life Insurance. </li>
<li>The potential overpaying for KDB Life and the rising delinquency rates of loans by all the major banks in Korea are likely to result in continued underperformance of Hana Financial. </li>
<li>If Hana Financial is able to acquire KDB Life Insurance, this would boost Hana Financial as the 8th largest life insurance company in Korea in terms of asset size.</li>
</ul>


On 13 July, it was reported in the local media that the Korea Development Bank selected Hana Financial as the preferred bidder for the sale of KDB Life Insurance. 
The potential overpaying for KDB Life and the rising delinquency rates of loans by all the major banks in Korea are likely to result in continued underperformance of Hana Financial. 
If Hana Financial is able to acquire KDB Life Insurance, this would boost Hana Financial as the 8th largest life insurance company in Korea in terms of asset size.


Will Hana Financial Acquire KDB Life Insurance?

<ul>
<li>The Deputy Prime Minister Choi Sang Mok reaffirmed the Corporate Value Up program, pushing up the major value driven/low PBR stocks in Korea today.</li>
<li>Deputy Prime Minister Choi emphasized that as part of Corporate Value Up program, corporate tax benefits to companies that have made efforts to strengthen shareholder return policy will be provided.</li>
<li>The Korean government also plans to revise the law to separate taxation on the dividend income of shareholders of companies that expand dividends.</li>
</ul>


The Deputy Prime Minister Choi Sang Mok reaffirmed the Corporate Value Up program, pushing up the major value driven/low PBR stocks in Korea today.
Deputy Prime Minister Choi emphasized that as part of Corporate Value Up program, corporate tax benefits to companies that have made efforts to strengthen shareholder return policy will be provided.
The Korean government also plans to revise the law to separate taxation on the dividend income of shareholders of companies that expand dividends.


<ul>
<li>In our latest South Korean banks screener; we stick with quality play Hana Financial and deep value Industrial Bank of Korea, despite rising credit quality headwinds</li>
<li>We introduce delinquency ratio charts that show that NPLs and other poor quality credits are on a rising trend, yet most banks have healthy NPL provisions coverage</li>
<li>Hana has a low PBV ratio relative to its premium ROE and an undemanding PEG; Industrial Bank of Korea has attractive multiples, PEG ratio and near top returns versus peers</li>
</ul>


In our latest South Korean banks screener; we stick with quality play Hana Financial and deep value Industrial Bank of Korea, despite rising credit quality headwinds
We introduce delinquency ratio charts that show that NPLs and other poor quality credits are on a rising trend, yet most banks have healthy NPL provisions coverage
Hana has a low PBV ratio relative to its premium ROE and an undemanding PEG; Industrial Bank of Korea has attractive multiples, PEG ratio and near top returns versus peers


South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)

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)

Asian Dividend Gems: DGB Financial Group

On 16 May, it was reported that FSC has approved DGB Daegu Bank to become the 7th commercial bank in Korea. This change will allow DGB to expand in...

Douglas Kim

South Korean Banks Screen; Stick with Hana Financial (086790 KS)

In South Korean banks, we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to the latter's fast...

Victor Galliano

Will Hana Financial Acquire KDB Life Insurance?

On 13 July, it was reported in the local media that the Korea Development Bank selected Hana Financial as the preferred bidder for the sale of KDB...

Douglas Kim

Mr. Choi Goes to Washington

The Deputy Prime Minister Choi Sang Mok reaffirmed the Corporate Value Up program, pushing up the major value driven/low PBR stocks in Korea today.

Douglas Kim

South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)

Despite worsening sector NPL trends, we like Hana for attractive valuations to its premium ROE and an undemanding PEG; Industrial Bank of Korea has...

Victor Galliano

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