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.

Thematic (Sector/Industry)

<ul>
<li>There was a release from the State Council in China in late September about increasing Tier 1 capital of 6 of China's banks through a government capital injection</li>
<li>This week there was a Bloomberg story on this, but only them, talking about something similar and indicating at least RMB400bn of new capital for <a href="https://www.smartkarma.com/entities/agricultural-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1120:1" rel="noopener"></a>ABC and BoCom.</li>
<li>Interpolating from the numbers, there can be a 10% increase in total equity which may also be equivalent or nearly equivalent or slightly higher than total stated NPLs </li>
</ul>


There was a release from the State Council in China in late September about increasing Tier 1 capital of 6 of China's banks through a government capital injection
This week there was a Bloomberg story on this, but only them, talking about something similar and indicating at least RMB400bn of new capital for ABC and BoCom.
Interpolating from the numbers, there can be a 10% increase in total equity which may also be equivalent or nearly equivalent or slightly higher than total stated NPLs 


China Banks - If Largest 5 Banks Are Recapitalized with RMB1,415bn It Can Be Highly Positive

Chief Executive Officer, Emmer Capital Partners Limited

Manishi Raychaudhuri

Chief Executive Officer

Emmer Capital Partners Limited

Emmer Capital Partners is an Asia Pacific focused financial advisory firm engaging in strategic financial asset allocation advice, bespoke thematic research and advising early-stage companies and connecting them to investors. Emmer Capital provides macro-economic and multi-asset investment strategy inputs to institutions, family offices, private wealth managers, private equity, and corporate boards directly and through independent research platforms. Emmer Capital also advises a wide range of startup companies on fund raising and business strategy. Emmer Capital's active engagement with the print and electronic media reaches a broad spectrum of investors across the globe.

Cross Asset Strategy

<ul>
<li>In today's uncertain scenario, cash is king. Moreover, the high US treasury yields, which had rendered a dividend yield strategy relatively unattractive, are beginning to decline again.</li>
<li>In addition to considering today's dividend yields, we think it's also imperative to take into account companies' future earnings potential to assess future dividend stability.</li>
<li>Screening companies with at least 6% forward dividend yield and 5% forecast EPS CAGR over next 2 years, we arrive at our basket of 23 dividend yielders, 13 from HK/China.</li>
</ul>


In today's uncertain scenario, cash is king. Moreover, the high US treasury yields, which had rendered a dividend yield strategy relatively unattractive, are beginning to decline again.
In addition to considering today's dividend yields, we think it's also imperative to take into account companies' future earnings potential to assess future dividend stability.
Screening companies with at least 6% forward dividend yield and 5% forecast EPS CAGR over next 2 years, we arrive at our basket of 23 dividend yielders, 13 from HK/China.


Asian Equities: Asia's Robust Dividend Yielders

Equity Bottom-Up

<ul>
<li>Granular data from DBS shows worsening credit metrics in Greater China and in Hong Kong. </li>
<li>We use DBS and other banks, as a window on credit metrics for China banks and HK local banks.</li>
<li>The NPL ratio for its HK business moved from 1.1% to 1.7% YoY, while Pillar 3 data shows sharp rise in New NPLs in 2H24</li>
</ul>


Granular data from DBS shows worsening credit metrics in Greater China and in Hong Kong. 
We use DBS and other banks, as a window on credit metrics for China banks and HK local banks.
The NPL ratio for its HK business moved from 1.1% to 1.7% YoY, while Pillar 3 data shows sharp rise in New NPLs in 2H24


DBS - Granular Disclosure Shows Aggressive Deterioration in HK and China. Look at Pillar 3 Also.

<ul>
<li>There is increased collateral risk for banks in Hong Kong and China considering ongoing stresses in real estate in both regions</li>
<li>China Vanke just issued a Profit Alert indicating a loss during FY24 compared with a profit in preceding year</li>
<li>Land mark downs are to blame and worsening profit margins and additional provisions for impairments</li>
</ul>


There is increased collateral risk for banks in Hong Kong and China considering ongoing stresses in real estate in both regions
China Vanke just issued a Profit Alert indicating a loss during FY24 compared with a profit in preceding year
Land mark downs are to blame and worsening profit margins and additional provisions for impairments


HK Banks - China Vanke FY24 EPS Profit Alert: Loss RMB3.79 Vs Profit RMB1.03, Bank Collateral Risk

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>SOUTHBOUND gross trading activity rebounded about 20% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK remain weak.</li>
<li>
<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd-d7b798e2-202d-4e01-9a1e-799e2ae8f0c7" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group Holding (9988 HK)</a> was again the top buy and EV names <a href="https://www.smartkarma.com/entities/xpeng-inc-4cc65854-d10c-4d20-bf7e-ca0e016715ff" target="_blank" data-smartkarma-citation="entities:33772:1" rel="noopener">XPeng (9868 HK)</a> and <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> were bought, but tech as a whole was sold.</li>
<li>I continue to expect HK-listed tech to see ongoing buying. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don't compete in the US. </li>
</ul>


SOUTHBOUND gross trading activity rebounded about 20% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK remain weak.

Alibaba Group Holding (9988 HK) was again the top buy and EV names XPeng (9868 HK) and BYD (1211 HK) were bought, but tech as a whole was sold.
I continue to expect HK-listed tech to see ongoing buying. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don't compete in the US. 


HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too

Hong Kong

BOC Hong Kong (Holdings) Limited provides a comprehensive range of financial products and services to retail and corporate customers.  Its products include retail banking, corporate banking, and treasury services.  The Company operates its branches in Hong Kong and China.

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BOC Hong Kong (BOC HK) (2388 HK)

China Banks - If Largest 5 Banks Are Recapitalized with RMB1,415bn It Can Be Highly Positive

BBG article about China recapitalizing its largest 5 banks, may be real news, coming after an official release in September. Recapping banks can be...

Daniel Tabbush

Asian Equities: Asia's Robust Dividend Yielders

In uncertain times, firms distributing cash as dividends are naturally investors' darlings. Screening large caps on min 6% div yield and future...

Manishi Raychaudhuri

DBS - Granular Disclosure Shows Aggressive Deterioration in HK and China. Look at Pillar 3 Also.

Granular disclosure in newly released data from DBS shows major deterioration in credit metrics in Hong Kong and in China. Its Pillar 3 release...

Daniel Tabbush

HK Banks - China Vanke FY24 EPS Profit Alert: Loss RMB3.79 Vs Profit RMB1.03, Bank Collateral Risk

The new profit alert from China Vanke highlights ongoing risks to banks, as land is their primary collateral. Real estate stresses are also evident...

Daniel Tabbush

HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too

Connect SOUTHBOUND volumes were +20%wow, Net buying continued though tech flows slower. Markets up. China first retaliation in trade is...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Banks - If Largest 5 Banks Are Recapitalized with RMB1,415bn It Can Be Highly Positive

BBG article about China recapitalizing its largest 5 banks, may be real news, coming after an official release in September. Recapping banks can be...

Daniel Tabbush

Asian Equities: Asia's Robust Dividend Yielders

​In uncertain times, firms distributing cash as dividends are naturally investors' darlings. Screening large caps on min 6% div yield and future...

Manishi Raychaudhuri

DBS - Granular Disclosure Shows Aggressive Deterioration in HK and China. Look at Pillar 3 Also.

Granular disclosure in newly released data from DBS shows major deterioration in credit metrics in Hong Kong and in China. Its Pillar 3 release...

Daniel Tabbush

HK Banks - China Vanke FY24 EPS Profit Alert: Loss RMB3.79 Vs Profit RMB1.03, Bank Collateral Risk

The new profit alert from China Vanke highlights ongoing risks to banks, as land is their primary collateral. Real estate stresses are also evident...

Daniel Tabbush

HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too

Connect SOUTHBOUND volumes were +20%wow, Net buying continued though tech flows slower. Markets up. China first retaliation in trade is...

Travis Lundy

In uncertain times, firms distributing cash as dividends are naturally investors' darlings. Screening large caps on min 6% div yield and future...