Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Citigroup has released its fourth quarter earnings for 2024, showcasing a notable rise in net income by almost 40% to $12.7 billion for the full year, indicating positive momentum across key business segments.</li><li>This performance was coupled with a revenue increase of 5% excluding divestitures, supported by a 17% uptick in fee revenue, and an efficiency ratio improvement by 340 basis points, which highlights the company's operational improvements.</li><li>However, certain macroeconomic challenges remain persistent, such as China's slower-than-anticipated growth and Europe's underperformance.</li></ul>

Citigroup has released its fourth quarter earnings for 2024, showcasing a notable rise in net income by almost 40% to $12.7 billion for the full year, indicating positive momentum across key business segments.This performance was coupled with a revenue increase of 5% excluding divestitures, supported by a 17% uptick in fee revenue, and an efficiency ratio improvement by 340 basis points, which highlights the company's operational improvements.However, certain macroeconomic challenges remain persistent, such as China's slower-than-anticipated growth and Europe's underperformance.

Citigroup’s Turnaround Playbook: Core Drivers Shaping Future Performance! - Major Drivers

External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

<ul><li>Investors are disappointed with Citigroup's lackluster profitability compared to other large US banks, leading to a low valuation of 0.65x TBV</li><li>Potential for improvement as the company has excess capital and may be able to increase profitability to reach a 10% ROTE in the next two years</li><li>Predictions suggest that if Citigroup reaches its targets, there could be a significant increase in share value, with TBV/share reaching $100 and EPS of $10 by 2026, presenting a compelling investment opportunity for those willing to take a risk on the bank's future performance.</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Investors are disappointed with Citigroup's lackluster profitability compared to other large US banks, leading to a low valuation of 0.65x TBVPotential for improvement as the company has excess capital and may be able to increase profitability to reach a 10% ROTE in the next two yearsPredictions suggest that if Citigroup reaches its targets, there could be a significant increase in share value, with TBV/share reaching $100 and EPS of $10 by 2026, presenting a compelling investment opportunity for those willing to take a risk on the bank's future performance.This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Citigroup Inc (C) - Wednesday, Sep 18, 2024

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.

<ul>
<li>HSBC holds 19% of BoCom and still carries it with a value of USD23.3bn despite the stock market valuation putting it closer to USD8.1bn on YE22 figures. </li>
<li>The bank cites its Value In Use testing as the justifiable reason for this gap, and this testing will include major assumptions like discount rates and long term growth rates.</li>
<li>Goodwill and other intangible charges were USD10.6bn in FY08, USD3.4bn in FY16, and USD7.4bn in FY19 for HSBC. </li>
</ul>


HSBC holds 19% of BoCom and still carries it with a value of USD23.3bn despite the stock market valuation putting it closer to USD8.1bn on YE22 figures. 
The bank cites its Value In Use testing as the justifiable reason for this gap, and this testing will include major assumptions like discount rates and long term growth rates.
Goodwill and other intangible charges were USD10.6bn in FY08, USD3.4bn in FY16, and USD7.4bn in FY19 for HSBC. 


HSBC - Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More

Thematic (Sector/Industry)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ally-financial-inc" target="_blank" data-smartkarma-citation="entities:9683:1" rel="noopener">Ally Financial (ALLY US)</a> gave a poor view of now and the immediate future for credit costs within its primary loan book, used cars for subprime borrowers</li>
<li>There is often good read-through for mainstream banks and overall credit metrics, we saw this in Thailand before 1997 and in the US with Indymac, Countrywide, Household</li>
<li>If the Fed has a better view on granular data than one single finance company, we believe they will use this data when considering rate cut magnitude, next week
</li>
</ul>



Ally Financial (ALLY US) gave a poor view of now and the immediate future for credit costs within its primary loan book, used cars for subprime borrowers
There is often good read-through for mainstream banks and overall credit metrics, we saw this in Thailand before 1997 and in the US with Indymac, Countrywide, Household
If the Fed has a better view on granular data than one single finance company, we believe they will use this data when considering rate cut magnitude, next week



Ally Financial - Suggests Large Fed Cut, Credit Cost Guidance Worsening, Fringe Finco View Can Lead

<ul>
<li>The risk for US small banks is clear with the major charge taken by <a href="https://www.smartkarma.com/entities/new-york-community-bancorp" target="_blank" data-smartkarma-citation="entities:1193:1" rel="noopener">New York Community Bank (NYCB US)</a> for its CRE exposure</li>
<li>Small banks in the US, those outside the largest 25 by assets, have 45% of their loans in CRE which equates to 2.9x shareholders' equity </li>
<li>The reality is that NYCB's credit costs are now far higher than in the recessionary period of the early 1990s, showing what some banks can face in coming quarters</li>
</ul>


The risk for US small banks is clear with the major charge taken by New York Community Bank (NYCB US) for its CRE exposure
Small banks in the US, those outside the largest 25 by assets, have 45% of their loans in CRE which equates to 2.9x shareholders' equity 
The reality is that NYCB's credit costs are now far higher than in the recessionary period of the early 1990s, showing what some banks can face in coming quarters


US Banks - NYCB Credit Costs Are Much Higher than in the Early 1990s

United States

Citigroup Inc. is a diversified financial services holding company that provides a broad range of financial services to consumer and corporate customers. The Company services include investment banking, retail brokerage, corporate banking, and cash management products and services. Citigroup serves customers globally.

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Citigroup Inc (C US)

Citigroup’s Turnaround Playbook: Core Drivers Shaping Future Performance! - Major Drivers

Citigroup has released its fourth quarter earnings for 2024, showcasing a notable rise in net income by almost 40% to $12.7 billion for the full...

Baptista Research

Citigroup Inc (C) - Wednesday, Sep 18, 2024

Investors are disappointed with Citigroup's lackluster profitability compared to other large US banks, leading to a low valuation of 0.65x TBV

Value Investors Club

HSBC - Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More

HSBC still carries its 19% investment in BoCom at a very high value compared with the market value and with a far weaker China outlook, we are not...

Daniel Tabbush

Ally Financial - Suggests Large Fed Cut, Credit Cost Guidance Worsening, Fringe Finco View Can Lead

New disclosure, comments, guidance from Ally Financial show a major deterioration in credit metrics now, in coming months, which can mean a larger...

Daniel Tabbush

US Banks - NYCB Credit Costs Are Much Higher than in the Early 1990s

US CRE loan risk is clearest now with the NYCB charge taken in 4Q23, putting its credit costs now well higher than the recessionary period in...

Daniel Tabbush

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