Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/asx-ltd" target="_blank" data-smartkarma-citation="entities:552:1" rel="noopener">ASX Ltd (ASX AU)</a> is seeing weakness across key revenue items with best delta in what is non- core, net interest income. Suddenly, its operating cash flow is negative. </li>
<li>New listings are down from 217 companies to 57 companies YoY to FY23 and their market capitalization is down from AUD59bn to AUD3bn YoY to FY23. </li>
<li>SG&amp;A costs seem to be rising structurally now at 28% of gross profit in FY23 compared with 23% in FY22 and compared with 17-19% in preceding years. </li>
</ul>



ASX Ltd (ASX AU) is seeing weakness across key revenue items with best delta in what is non- core, net interest income. Suddenly, its operating cash flow is negative. 
New listings are down from 217 companies to 57 companies YoY to FY23 and their market capitalization is down from AUD59bn to AUD3bn YoY to FY23. 
SG&amp;A costs seem to be rising structurally now at 28% of gross profit in FY23 compared with 23% in FY22 and compared with 17-19% in preceding years. 


ASX - New Listings Big Decline, SG&A Costs Up Substantially, Best Income Delta Is Non-Core

<ul>
<li>The top line of <a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> is down 7% YoY, the next major income line is down 3% YoY while operating costs are up 8% YoY, in 1Q24.</li>
<li>Average daily turnover is down 22% YoY, and to us this is the main story, a marginalization of the Hong Kong Exchange. </li>
<li>Geopolitical risks remain high, the historical positioning of Hong Kong is less relevant today, with worsening economic concerns in China, in close proximity. </li>
</ul>


The top line of HKEX (388 HK) is down 7% YoY, the next major income line is down 3% YoY while operating costs are up 8% YoY, in 1Q24.
Average daily turnover is down 22% YoY, and to us this is the main story, a marginalization of the Hong Kong Exchange. 
Geopolitical risks remain high, the historical positioning of Hong Kong is less relevant today, with worsening economic concerns in China, in close proximity. 


HKEX - Revenue Down, Investment Income Down, Operating Costs Up, Will It All Reverse?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a> outlook has been withering for some time, and new data on property transactions, shows that this remains weak.</li>
<li>
<a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">SGX (SGX SP)</a> in a less volatile geopolitical financial center, has a much lower market capitalization while its earnings outlook is far stronger.</li>
<li>Two major differences between these two entities is their ROE and ROA, although the former may be more relevant. <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">SGX (SGX SP)</a> has an ROE that is nearly 50% higher. </li>
</ul>



HKEX (388 HK) outlook has been withering for some time, and new data on property transactions, shows that this remains weak.

SGX (SGX SP) in a less volatile geopolitical financial center, has a much lower market capitalization while its earnings outlook is far stronger.
Two major differences between these two entities is their ROE and ROA, although the former may be more relevant. SGX (SGX SP) has an ROE that is nearly 50% higher. 


HKEX - Worsening Property Transactions, Underscores Ailments for Hong Kong

Commonwealth Bank of Australia / Equity Bottom-Up

<ul>
<li>It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop</li>
<li>CBA's past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently</li>
<li>Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL</li>
</ul>


It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
CBA's past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL


CBA - Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>The <a href="https://www.smartkarma.com/entities/link-administration-holdings-ltd" target="_blank" data-smartkarma-citation="entities:970:1" rel="noopener">Link Administration (LNK AU)</a> IE considers <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>’s A$2.26 offer fair and reasonable as it is within its A$2.11-2.70 per share valuation range.</li>
<li>The scheme remains conditional on several regulatory approvals - FIRB, Central Bank of Ireland, Isle of Man Financial Services Authority, India SEBI, and Financial Services Agency of Japan.</li>
<li>Several substantial shareholders have sold or exited, lowering the scheme's risk. At the last close and for the 16 May payment, the gross/annualised spread was 1.3%/9.7%.</li>
</ul>


The Link Administration (LNK AU) IE considers Mitsubishi UFJ Financial (MUFG) (8306 JP)’s A$2.26 offer fair and reasonable as it is within its A$2.11-2.70 per share valuation range.
The scheme remains conditional on several regulatory approvals - FIRB, Central Bank of Ireland, Isle of Man Financial Services Authority, India SEBI, and Financial Services Agency of Japan.
Several substantial shareholders have sold or exited, lowering the scheme's risk. At the last close and for the 16 May payment, the gross/annualised spread was 1.3%/9.7%.


Link Admin (LNK AU): Scheme Vote on 24 April

Australia

ASX Ltd is a demutualized company which operates Australia's primary national stock exchange and equity derivatives market. The ASX operates markets for equities, derivatives, fixed-interest securities and capital-raising for unlisted companies using advanced computer systems for both trading and settlement.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

ASX Ltd (ASX AU)

ASX - New Listings Big Decline, SG&A Costs Up Substantially, Best Income Delta Is Non-Core

New listings in major decline, operating cash flow just turned negative, with SG&A moving well higher. Key profit delta is non-core and not likely...

Daniel Tabbush

HKEX - Revenue Down, Investment Income Down, Operating Costs Up, Will It All Reverse?

The direction of most line items are poor and this is not likely to reverse. The top line decline is especially severe as is average daily...

Daniel Tabbush

HKEX - Worsening Property Transactions, Underscores Ailments for Hong Kong

Results for HKEX are just out and there are not good at all, across many key line items, and with average daily trading volume with EBITDA at -20% YoY

Daniel Tabbush

CBA - Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

CBA shows sharply high past due loans that are not impaired, alongside worsening insolvencies in Australia. There are implications for its...

Daniel Tabbush

Link Admin (LNK AU): Scheme Vote on 24 April

Several substantial shareholders have sold or exited, lowering the scheme's risk. At the last close and for the 16 May payment, the gross...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)