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>The bank is seeing high growth in cash and deposits, with loans in decline, and the composition moving more toward government and corporate loans</li>
<li>ALM does not appear strong, and without any easy way to reduce operating costs, the bank is now seeing cost/income surge to 74%</li>
<li>Credit metrics on surface may appear fine, but the 47% QoQ rise in provision costs, suggests to us provisions were cut too much last year, and now there is normalization</li>
</ul>


The bank is seeing high growth in cash and deposits, with loans in decline, and the composition moving more toward government and corporate loans
ALM does not appear strong, and without any easy way to reduce operating costs, the bank is now seeing cost/income surge to 74%
Credit metrics on surface may appear fine, but the 47% QoQ rise in provision costs, suggests to us provisions were cut too much last year, and now there is normalization


Suruga Bank - Loans Down A Lot, Deposits Up Sharply, Cost/Income Up to 74%, Credit Costs +47% QoQ

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/suruga-bank-ltd" target="_blank" data-smartkarma-citation="entities:6267:1" rel="noopener">Suruga Bank Ltd (8358 JP)</a> today signed an MOU (with board resolution) to form a business and capital alliance with <a href="https://www.smartkarma.com/entities/credit-saison-co-ltd" target="_blank" data-smartkarma-citation="entities:6123:1" rel="noopener">Credit Saison (8253 JP)</a>. </li>
<li>Suruga will sell (post-dilution) 15+% of voting rights to Credit Saison, and buy 4.44% of CreditSaison. Then Suruga will try to buy back the shares it sold to Credit Saison.</li>
<li>A look at the history is instructive, as is a look at the shareholder structure and the change in business model post-2019. Not as easy as it looks. </li>
</ul>



Suruga Bank Ltd (8358 JP) today signed an MOU (with board resolution) to form a business and capital alliance with Credit Saison (8253 JP). 
Suruga will sell (post-dilution) 15+% of voting rights to Credit Saison, and buy 4.44% of CreditSaison. Then Suruga will try to buy back the shares it sold to Credit Saison.
A look at the history is instructive, as is a look at the shareholder structure and the change in business model post-2019. Not as easy as it looks. 


Suruga Bank (8358) To Sell, Then Buy Back 17% of the Bank, but HOW Is Key.

<ul>
<li>Last year, fintech-wannabe <a href="https://www.smartkarma.com/entities/marui-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13604:1" rel="noopener">Marui Group (8252 JP)</a> announced a large buyback as part of its ¥100bn distribution to shareholders in its MTMP, then increased the size</li>
<li>They repurchased ¥26bn of shares. Today they announced the return of ¥50bn this year including a ¥40bn buyback. And having arrived at their optimal balance sheet structure, a new policy.</li>
<li>That's 10% of market cap and 11.6% of shares. And again a delayed start. And as always, shareholder structure matters. In this case a lot.</li>
</ul>


Last year, fintech-wannabe Marui Group (8252 JP) announced a large buyback as part of its ¥100bn distribution to shareholders in its MTMP, then increased the size
They repurchased ¥26bn of shares. Today they announced the return of ¥50bn this year including a ¥40bn buyback. And having arrived at their optimal balance sheet structure, a new policy.
That's 10% of market cap and 11.6% of shares. And again a delayed start. And as always, shareholder structure matters. In this case a lot.


BIGLY Marui Group (8252 JP) Buyback, Backed by Big Dividend Boost

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

Index Rebalance

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> March rebalance ends next week. We highlight the 3 potential inclusions and exclusions for the index.</li>
<li>
<a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920)</a>, <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661)</a> and <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723)</a> remain our top inclusions, while <a href="https://www.smartkarma.com/entities/toyobo-co-ltd" target="_blank" data-smartkarma-citation="entities:6187:1" rel="noopener">Toyobo Co Ltd (3101)</a>, <a href="https://www.smartkarma.com/entities/nippon-light-metal-holdings" target="_blank" data-smartkarma-citation="entities:1485:1" rel="noopener">Nippon Light Metal (5703)</a> and <a href="https://www.smartkarma.com/entities/toho-zinc-co-ltd" target="_blank" data-smartkarma-citation="entities:2796:1" rel="noopener">Toho Zinc (5707)</a> could be deleted.</li>
<li>Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 1x ADV on many index constituents.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) March rebalance ends next week. We highlight the 3 potential inclusions and exclusions for the index.

Lasertec Corp (6920), Oriental Land (4661) and Renesas Electronics (6723) remain our top inclusions, while Toyobo Co Ltd (3101), Nippon Light Metal (5703) and Toho Zinc (5707) could be deleted.
Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 1x ADV on many index constituents.


Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End

<ul>
<li>
<a href="https://www.smartkarma.com/entities/marui-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13604:1" rel="noopener">Marui Group (8252 JP)</a> was a long-suffering Japanese retailer with generally sub-standard locations and "different" customer base, and much of its income came from consumer credit. </li>
<li>Since a decade ago, helped by the rise of foreign tourism income, Marui has been redeveloping itself. <a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a>'s insights are a great help to understanding the background. </li>
<li>They are aiming at non-stuff retailing. Friday saw earnings, cancellation of the yutai program, a slight div hike, and an increase in the already large buyback program. It's interesting!</li>
</ul>



Marui Group (8252 JP) was a long-suffering Japanese retailer with generally sub-standard locations and "different" customer base, and much of its income came from consumer credit. 
Since a decade ago, helped by the rise of foreign tourism income, Marui has been redeveloping itself. Michael Causton's insights are a great help to understanding the background. 
They are aiming at non-stuff retailing. Friday saw earnings, cancellation of the yutai program, a slight div hike, and an increase in the already large buyback program. It's interesting!


Marui (8252 JP) - Increases Size of Delayed-Start Buyback, Cuts Yutai

Japan

Credit Saison Co., Ltd. is a consumer credit company.  The Company provides financial services such as credit cards, consumer installment credits, loan guarantees, loans, consignment operations, and leases.

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Credit Saison (8253 JP)

Suruga Bank - Loans Down A Lot, Deposits Up Sharply, Cost/Income Up to 74%, Credit Costs +47% QoQ

Cash is up a lot but loans are down a lot with sharply higher deposits, not the best ALM. Cost/income ratio is now 74%, not easy to cut costs...

Daniel Tabbush

Suruga Bank (8358) To Sell, Then Buy Back 17% of the Bank, but HOW Is Key.

Suruga Bank (8358) today announced a business/capital alliance with Credit Saison, and a big buyback to offset the dilution. No accretion here...

Travis Lundy

BIGLY Marui Group (8252 JP) Buyback, Backed by Big Dividend Boost

Marui is doing another big buyback. This time more bigly than last year's bigly buyback. And the dividend was upped 67%. Lots of shareholder...

Travis Lundy

Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End

With a week left in the review period, we revisit the potential NKY changes in March & highlight top add/delete candidates. There will be a large...

Brian Freitas

Marui (8252 JP) - Increases Size of Delayed-Start Buyback, Cuts Yutai

Marui Group (8252) had a 2.5month delay to the start of its buyback program, but announced a revision in size (upward) Friday with earnings. It...

Travis Lundy

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