Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Challenging Result: Oversea Chinese Banking Corp. (OCBC.SP) [OCBC] reported 2Q21 net profit of SGD 1.2 bn, a SGD 341 mn (22.7%) decrease on a linked quarter basis. OCBC’s bottom-line weakness was primarily attributable to two factors: 1) SGD 71 mn (44.1%) increase in the loss provision, which is well justified given the re-acceleration in net new NPL growth; and 2) SGD 362 mn (24.6%) decrease in overall fee revenues, driven primarily by weaker attributable Great Eastern (GE.SP) earnings which likely will be here to stay; and  *Credit Breaking Down After Reprieve:  By our calculation, we find that net new NPL growth has re-acclerated to SGD 771 mn or 78.3% on an annualized basis versus a negative SGD 78 mn or 8.0% for 1Q21. Given the increase in net new NPLs, reserve would appear to now be wanting by SGD 3.1 bn or just under three quarters of bottom-line results.

*Challenging Result: Oversea Chinese Banking Corp. (OCBC.SP) [OCBC] reported 2Q21 net profit of SGD 1.2 bn, a SGD 341 mn (22.7%) decrease on a linked quarter basis. OCBC’s bottom-line weakness was primarily attributable to two factors: 1) SGD 71 mn (44.1%) increase in the loss provision, which is well justified given the re-acceleration in net new NPL growth; and 2) SGD 362 mn (24.6%) decrease in overall fee revenues, driven primarily by weaker attributable Great Eastern (GE.SP) earnings which likely will be here to stay; and  *Credit Breaking Down After Reprieve:  By our calculation, we find that net new NPL growth has re-acclerated to SGD 771 mn or 78.3% on an annualized basis versus a negative SGD 78 mn or 8.0% for 1Q21. Given the increase in net new NPLs, reserve would appear to now be wanting by SGD 3.1 bn or just under three quarters of bottom-line results.

Oversea Chinese Banking Corp. – Re-Accelerating Credit Risk

*Credibility Gap Widens: LIC Housing Finance (LICHF.IN) [LIC] reported FY 1Q22 bottom-line results of INR 1.5 bn, declining INR 2.5 bn (61.5%) linked quarter. Negative operating jaws, were the culprit, as costs increased INR 469 mn (21.1%) whilst revenues declined INR 2.6 bn (16.7%); and*Very Negative Credit Delta: Despite the limited NCOs, net new NPLs at LIC still skyrocketed INR 44.7 bn or 190.3% on an annualized basis linked quarter significantly accelerating from a very high INR 12.6 bn (62.0%) during FY 4Q21. By our calculation, if the large blip in credit continues, LIC management ought to think about adding another INR 158 bn to the reserve – which amounts to 78% of stated equity at just 50% cover of NPLs.

*Credibility Gap Widens: LIC Housing Finance (LICHF.IN) [LIC] reported FY 1Q22 bottom-line results of INR 1.5 bn, declining INR 2.5 bn (61.5%) linked quarter. Negative operating jaws, were the culprit, as costs increased INR 469 mn (21.1%) whilst revenues declined INR 2.6 bn (16.7%); and*Very Negative Credit Delta: Despite the limited NCOs, net new NPLs at LIC still skyrocketed INR 44.7 bn or 190.3% on an annualized basis linked quarter significantly accelerating from a very high INR 12.6 bn (62.0%) during FY 4Q21. By our calculation, if the large blip in credit continues, LIC management ought to think about adding another INR 158 bn to the reserve – which amounts to 78% of stated equity at just 50% cover of NPLs.

LIC Housing Finance – Unmitigated Disaster

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)

There are stark differences in how loan loss provisioning levels have changed since late 2019 to early 2021. This can have implications for relative credit costs during FY21. STAN does not fare well, Mizuho looks best.

There are stark differences in how loan loss provisioning levels have changed since late 2019 to early 2021. This can have implications for relative credit costs during FY21. STAN does not fare well, Mizuho looks best. 

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

PropertyGuru and Bridgetown 2 announced, on 23rd Jul 2021, that they have entered into a business combination agreement which will see PropertyGuru go public in the US. The transaction will value PropertyGuru at an EV of US$1.35bn and equity value of US$1.78bn.We have looked at the company’s prior listing attempt when it tried to list in Australia in 2019. In this note, we will comment on the current listing arrangement.Link to our previous notes:<ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/propertyguru-ipo-powered-by-singapore-recharged-by-vietnam-but-dragged-down-by-others" target="_blank" rel="noopener">PropertyGuru IPO - Powered by Singapore, Recharged by Vietnam but Dragged Down by Others</a></li>
<li><a href="https://www.smartkarma.com/insights/propertyguru-ipo-sotp-leaves-one-well-short-of-the-low-end" target="_blank" rel="noopener">PropertyGuru IPO - SOTP Leaves One Well Short of the Low-End</a></li>
<li><a href="https://www.smartkarma.com/insights/propertyguru-ipo-agents-q-a-shows-its-stranglehold-in-s-pore-throws-up-some-interesting-nuggets" target="_blank" rel="noopener">PropertyGuru IPO - Agents Q&amp;A Shows Its Stranglehold in S’pore; Throws up Some Interesting Nuggets</a></li>
</ul>

PropertyGuru and Bridgetown 2 announced, on 23rd Jul 2021, that they have entered into a business combination agreement which will see PropertyGuru go public in the US. The transaction will value PropertyGuru at an EV of US$1.35bn and equity value of US$1.78bn.We have looked at the company’s prior listing attempt when it tried to list in Australia in 2019. In this note, we will comment on the current listing arrangement.Link to our previous notes:
PropertyGuru IPO - Powered by Singapore, Recharged by Vietnam but Dragged Down by Others
PropertyGuru IPO - SOTP Leaves One Well Short of the Low-End
PropertyGuru IPO - Agents Q&amp;A Shows Its Stranglehold in S’pore; Throws up Some Interesting Nuggets


PropertyGuru/Bridgetown 2 SPAC Listing/Merger - Second Time Lucky - Some Food for Thought

*Earnings Appear Overstated: Bajaj Finance (BAF.IN) [Bajaj] posted FY 1Q22 results of INR 10.2 bn, declining INR 3.4 bn (25.6%) linked quarter driven by weakness in Consumer Financing. The loss provision increase of INR 5.2 bn (42.2%), which - despite the growth - still did not keep up with the pace of stated NPA growth; and *Time To Man Up:  The day of reckoning is coming for Bajaj as net new NPLs amounted to INR 193 bn at FY 1Q22 – increasing at 281.3% on an annualized basis. By our calculation, reserves (much of the portfolio is weak consumer credits) need to increase INR 157 bn - representing nearly three years of PBT and over 50% of shareholder’s equity. In other words, Bajaj needs to man up and start reporting losses – this is a troubled financial institution.

*Earnings Appear Overstated: Bajaj Finance (BAF.IN) [Bajaj] posted FY 1Q22 results of INR 10.2 bn, declining INR 3.4 bn (25.6%) linked quarter driven by weakness in Consumer Financing. The loss provision increase of INR 5.2 bn (42.2%), which - despite the growth - still did not keep up with the pace of stated NPA growth; and *Time To Man Up:  The day of reckoning is coming for Bajaj as net new NPLs amounted to INR 193 bn at FY 1Q22 – increasing at 281.3% on an annualized basis. By our calculation, reserves (much of the portfolio is weak consumer credits) need to increase INR 157 bn - representing nearly three years of PBT and over 50% of shareholder’s equity. In other words, Bajaj needs to man up and start reporting losses – this is a troubled financial institution.

Singapore

DBS Group Holdings Limited and its subsidiaries provide a variety of financial services.  The Company offers services including mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory and brokerage .  DBS Group also acts as the primary dealer in Singapore government securities.

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

DBS (DBS SP)

Oversea Chinese Banking Corp. – Re-Accelerating Credit Risk

OVERSEA CHINESE BANKING: OCBC reported a QOQ 2Q21 net profit decline of 22.7% driven by higher provisions and weaker associate income. Net new NPLs...

Thomas J. Monaco

LIC Housing Finance – Unmitigated Disaster

LIC HOUSING: LIC's FY 1Q22 bottom-line results declined 61.5% linked quarter due to negative operating jaws. Net new NPLs skyrocketed 190.3%...

Thomas J. Monaco

Banks – Provisioning

There are stark differences in how provisioning levels changed since 4Q29 to early 2021. This can have implications for relative credit costs...

Daniel Tabbush

PropertyGuru/Bridgetown 2 SPAC Listing/Merger - Second Time Lucky - Some Food for Thought

PropertyGuru and Bridgetown 2 announced, that they have merge to take PropertyGuru go public in the US. The transaction will value PropertyGuru at...

Sumeet Singh

Bajaj Finance – Just BAFfling

BAJAJ FINANCE: Bajaj posted a QOQ FY 1Q22 results decline 25.6% driven by credit weakness in Consumer. Net new NPLs increased at 281% annualized...

Thomas J. Monaco

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)