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.

Equity Bottom-Up

<ul>
<li>Market expectations that the BoJ’s monetary policy meeting will raise benchmark interest rates in December are reflected in the rising JGB yields, and in the domestic lending rate trends</li>
<li>We reiterate our core recommendations of Resona and Mizuho for their leverage to higher interest rates, their low LDRs and their high share of strategic holdings relative to market capitalisation</li>
<li>We reduce Chiba to neutral from buy, keep our buy on Concordia; we add Shizuoka for its gearing to higher interest rates and very high share of strategic shareholdings</li>
</ul>


Market expectations that the BoJ’s monetary policy meeting will raise benchmark interest rates in December are reflected in the rising JGB yields, and in the domestic lending rate trends
We reiterate our core recommendations of Resona and Mizuho for their leverage to higher interest rates, their low LDRs and their high share of strategic holdings relative to market capitalisation
We reduce Chiba to neutral from buy, keep our buy on Concordia; we add Shizuoka for its gearing to higher interest rates and very high share of strategic shareholdings


Japanese Big Cap Banks – Shizuoka (5831 JP) Upgraded to Buy, Chiba (8331 JP) To Neutral from Buy

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Overnight, <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a> announced a placement of 25.87m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 3.88m shares.</li>
<li>There will be limited passive buying in the short-term and the shares offered is a large percentage of real float of the stock.</li>
<li>However, <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a> is the highest ranked non-constituent stock in a global index universe and a drop in the stock price could be used to accumulate positions.</li>
</ul>


Overnight, Sanrio (8136 JP) announced a placement of 25.87m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 3.88m shares.
There will be limited passive buying in the short-term and the shares offered is a large percentage of real float of the stock.
However, Sanrio (8136 JP) is the highest ranked non-constituent stock in a global index universe and a drop in the stock price could be used to accumulate positions.


Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Thematic (Sector/Industry)

<ul>
<li>Earnings surpassed consensus expectations providing no pullback to allow entry</li>
<li>Most operating metrics improved and all trends are goign in the right direction</li>
<li>Capital management is top of mind for management with a common thread of increasing ROEs and PBRs</li>
</ul>


Earnings surpassed consensus expectations providing no pullback to allow entry
Most operating metrics improved and all trends are goign in the right direction
Capital management is top of mind for management with a common thread of increasing ROEs and PBRs


Japanese Megabanks' Earnings Exceed Expectations - Stay on the Train?

<ul>
<li>This week, earnings results for the megabanks risk being a “sell on the news” event.</li>
<li>Analysts have been raising earnings estimates over the past 2 months.</li>
<li>Longer term story intact with most dynamics trending in their favour.</li>
</ul>


This week, earnings results for the megabanks risk being a “sell on the news” event.
Analysts have been raising earnings estimates over the past 2 months.
Longer term story intact with most dynamics trending in their favour.


Making Bank - Sector Outperforming Despite the BoJ's “dovishness”

<ul>
<li>We agree with market expectations that the BoJ’s monetary policy meeting will keep benchmark interest rates unchanged, and the market has barely suffered from post-election political turmoil</li>
<li>Despite the BoJ pausing on rate rises, the latest BoJ data indicates that market interest rates are, for the most part, rising, supported by a modest JGB yield curve steepening</li>
<li>We recommend Resona and Mizuho for their leverage to higher interest rates, their low LDRs and, among the big five, their high share of strategic holdings relative to market capitalisation</li>
</ul>


We agree with market expectations that the BoJ’s monetary policy meeting will keep benchmark interest rates unchanged, and the market has barely suffered from post-election political turmoil
Despite the BoJ pausing on rate rises, the latest BoJ data indicates that market interest rates are, for the most part, rising, supported by a modest JGB yield curve steepening
We recommend Resona and Mizuho for their leverage to higher interest rates, their low LDRs and, among the big five, their high share of strategic holdings relative to market capitalisation


Japanese Big Cap Banks – Stay Positive Ahead of BoJ’s Outlook Report and 2Q Fiscal Year Results

Japan

Mizuho Financial Group, Inc. provides comprehensive financial services through its subsidiaries. The Group provides variety of financial services such as general banking, securities brokerage, trust banking, and assets management.

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Mizuho Financial Group (8411 JP)

Japanese Big Cap Banks – Shizuoka (5831 JP) Upgraded to Buy, Chiba (8331 JP) To Neutral from Buy

Expectations are for BoJ to hike rates, potentially in December; we like Resona, Mizuho, Concordia, Shizuoka for higher rates gearing, low LDRs,...

Victor Galliano

Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics

The secondary offering in Sanrio is US$865m and represents 10x ADV and 25% of real float. There are some interesting dynamics that will play out...

Brian Freitas

Japanese Megabanks' Earnings Exceed Expectations - Stay on the Train?

Banks' strong earnings performance and focus on capital management drives positive stock price performance. Will it continue?

Rikki Malik

Making Bank - Sector Outperforming Despite the BoJ's “dovishness”

Analysts raise earnings estimates for megabanks, but upcoming results may trigger a "sell on the news" reaction. Overall, long-term outlook...

Rikki Malik

Japanese Big Cap Banks – Stay Positive Ahead of BoJ’s Outlook Report and 2Q Fiscal Year Results

BoJ is to hold rates, yet data shows rising market rates and the JGB yield curve is steepening; we rate Resona and Mizuho for their higher rate...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japanese Big Cap Banks – Shizuoka (5831 JP) Upgraded to Buy, Chiba (8331 JP) To Neutral from Buy

​Expectations are for BoJ to hike rates, potentially in December; we like Resona, Mizuho, Concordia, Shizuoka for higher rates gearing, low LDRs,...

Victor Galliano

Sanrio (8136 JP) Placement: Potential Global Index Migration Leads to Interesting Dynamics

The secondary offering in Sanrio is US$865m and represents 10x ADV and 25% of real float. There are some interesting dynamics that will play out...

Brian Freitas

Japanese Megabanks' Earnings Exceed Expectations - Stay on the Train?

Banks' strong earnings performance and focus on capital management drives positive stock price performance. Will it continue?

Rikki Malik

Making Bank - Sector Outperforming Despite the BoJ's “dovishness”

​Analysts raise earnings estimates for megabanks, but upcoming results may trigger a "sell on the news" reaction. Overall, long-term outlook...

Rikki Malik

Japanese Big Cap Banks – Stay Positive Ahead of BoJ’s Outlook Report and 2Q Fiscal Year Results

​BoJ is to hold rates, yet data shows rising market rates and the JGB yield curve is steepening; we rate Resona and Mizuho for their higher rate...

Victor Galliano

Expectations are for BoJ to hike rates, potentially in December; we like Resona, Mizuho, Concordia, Shizuoka for higher rates gearing, low LDRs,...

Analysts raise earnings estimates for megabanks, but upcoming results may trigger a "sell on the news" reaction. Overall, long-term outlook...

BoJ is to hold rates, yet data shows rising market rates and the JGB yield curve is steepening; we rate Resona and Mizuho for their higher rate...