Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Mizuho Financial Group / Equity Bottom-Up

<ul>
<li>The Financial System Report published on April 18th focuses on the key Japanese bank issues, including the prospect of domestic rate hikes</li>
<li>We focus primarily on the key take-aways from the BoJ report, in particular with relation to potential rate hikes; our key picks appear to be better geared than the average</li>
<li>We highlight Resona, Mizuho and Concordia in the bigger caps, with positive views on Suruga, Gunma and Tokyo Kiraboshi in the regional banks</li>
</ul>


The Financial System Report published on April 18th focuses on the key Japanese bank issues, including the prospect of domestic rate hikes
We focus primarily on the key take-aways from the BoJ report, in particular with relation to potential rate hikes; our key picks appear to be better geared than the average
We highlight Resona, Mizuho and Concordia in the bigger caps, with positive views on Suruga, Gunma and Tokyo Kiraboshi in the regional banks


Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report

<ul>
<li>The Japanese banks’ share prices have barely moved following the Bank of Japan’s exit from negative interest rates; is it largely discounted or does the continued accommodative stance instil caution? </li>
<li>Japanese banks will benefit from 100% of their deposits at the BoJ earning 0.1%, as opposed to 40% of bank deposits which was the case up to the 20th March</li>
<li>We believe our positive recommendations are all geared into higher domestic interest rates; we highlight Resona, Mizuho and Suruga in this report for their high cash and at bank balances</li>
</ul>


The Japanese banks’ share prices have barely moved following the Bank of Japan’s exit from negative interest rates; is it largely discounted or does the continued accommodative stance instil caution? 
Japanese banks will benefit from 100% of their deposits at the BoJ earning 0.1%, as opposed to 40% of bank deposits which was the case up to the 20th March
We believe our positive recommendations are all geared into higher domestic interest rates; we highlight Resona, Mizuho and Suruga in this report for their high cash and at bank balances


Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

Tokyo Kiraboshi Financial Group / Equity Bottom-Up

Tokyo Kiraboshi Financial Group (7173 JP)

<ul>
<li>We explore twelve Japanese regional banks to look for key beneficiaries of the improving interest rate outlook, along with valuations, credit quality and capital adequacy</li>
<li>The global interest rate outlook is in some flux, with the Fed’s and ECB’s prospects of near-term easing being tempered; this should support Japanese JGB yields and domestic bank valuations</li>
<li>We are positive on three banks that are big beneficiaries of rising domestic interest rates; top pick Tokyo Kiraboshi Financial, Gunma Bank and higher risk option Suruga Bank</li>
</ul>


We explore twelve Japanese regional banks to look for key beneficiaries of the improving interest rate outlook, along with valuations, credit quality and capital adequacy
The global interest rate outlook is in some flux, with the Fed’s and ECB’s prospects of near-term easing being tempered; this should support Japanese JGB yields and domestic bank valuations
We are positive on three banks that are big beneficiaries of rising domestic interest rates; top pick Tokyo Kiraboshi Financial, Gunma Bank and higher risk option Suruga Bank


Japanese Regional Banks – Three Key Positive Picks

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>
<a href="https://www.smartkarma.com/entities/gunma-bank-ltd" target="_blank" data-smartkarma-citation="entities:15777:1" rel="noopener">Gunma Bank (8334 JP)</a> announced a share exchange offer by DHFG at 1.125 DHFG shares per Gunma share, a 84.5% and 4.9% premium to the undisturbed and last close, respectively.</li>
<li>The share exchange will require the approval of Gunma and DHFG shareholders at the EGM on 23 December. The new integrated holding company will be called Gunma Niigata Financial Group. </li>
<li>The two votes should pass as the share exchange ratio is fair based on historical average price ratios and peer multiples. </li>
</ul>



Gunma Bank (8334 JP) announced a share exchange offer by DHFG at 1.125 DHFG shares per Gunma share, a 84.5% and 4.9% premium to the undisturbed and last close, respectively.
The share exchange will require the approval of Gunma and DHFG shareholders at the EGM on 23 December. The new integrated holding company will be called Gunma Niigata Financial Group. 
The two votes should pass as the share exchange ratio is fair based on historical average price ratios and peer multiples. 


Gunma Bank (8334 JP): Daishi Hokuetsu (7327 JP)’s Fair Share Exchange Ratio

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>One year after <a href="https://www.smartkarma.com/entities/gunma-bank-ltd" target="_blank" data-smartkarma-citation="entities:15777:1" rel="noopener">Gunma Bank (8334 JP)</a> and <a href="https://www.smartkarma.com/entities/daishi-hokuetsu-financial-group" target="_blank" data-smartkarma-citation="entities:27533:1" rel="noopener">Daishi Hokuetsu Financial Group (7327 JP)</a> were reported to be in integration talks (discussed <a href="https://www.smartkarma.com/insights/gunma-bank-8334-and-dhfg-7327-in-integration-talks-guess-the-ratio-is-efficiency-vs-value" target="_blank" rel="noopener">here</a>), we have integration plans and a merger ratio.</li>
<li>This had been reported Friday 14 March in the Nikkei. The ratio was 0.8271. Monday it traded 0.8726. The BVPS ratio is 1.303. EPS ratio? 1.076. 3mo/6mo price ratios? 0.933/0.928. </li>
<li>So of course, they settled on 0.8888. It was, indeed, "efficiency vs value" and efficiency won. Gunma will form Gunma Niigata Financial Group (GNFG) on April 1 2027. </li>
</ul>


One year after Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP) were reported to be in integration talks (discussed here), we have integration plans and a merger ratio.
This had been reported Friday 14 March in the Nikkei. The ratio was 0.8271. Monday it traded 0.8726. The BVPS ratio is 1.303. EPS ratio? 1.076. 3mo/6mo price ratios? 0.933/0.928. 
So of course, they settled on 0.8888. It was, indeed, "efficiency vs value" and efficiency won. Gunma will form Gunma Niigata Financial Group (GNFG) on April 1 2027. 


[Japan M&A] Gunma Bank Gunma Bank (8334) And DHFG (7327) Finalise Ratio for End-Mar27 Integration

Japan

The Gunma Bank, Ltd. is a regional bank based in Gunma Prefecture.  The Bank provides banking services such as deposits, loans, and foreign exchange transaction.  The Gunma Bank also provides financial services such as leasing, credit cards, letter of credit, and investment advisory, and develops information systems.

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Gunma Bank (8334 JP)

Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report

The BoJ's FSR focuses on issues like potential domestic rate hikes. Key picks are Resona, Mizuho, and Concordia in big caps, the positive regional...

Victor Galliano

Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Victor Galliano

Japanese Regional Banks – Three Key Positive Picks

The rising interest rate outlook in Japan benefits regional banks; our top picks, based on interest rate gearing and other key factors, are Tokyo...

Victor Galliano

[Japan M&A] Gunma Bank Gunma Bank (8334) And DHFG (7327) Finalise Ratio for End-Mar27 Integration

Niigata-based regional Daishi Hokuetsu FG and Gunma-based Gunma Bank have agreed on their integration and merger ratio. The cheap bank loses out....

Travis Lundy

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52-week Range

Market Cap (USDm)

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Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report

​The BoJ's FSR focuses on issues like potential domestic rate hikes. Key picks are Resona, Mizuho, and Concordia in big caps, the positive regional...

Victor Galliano

Japanese Banks – Cash Balances and the BoJ’s Negative Interest Rate Policy Exit

​Japanese banks' share prices mark time post-BoJ's exit from negative interest rates, due to BoJ'S continued accommodative stance. We highlight...

Victor Galliano

Japanese Regional Banks – Three Key Positive Picks

The rising interest rate outlook in Japan benefits regional banks; our top picks, based on interest rate gearing and other key factors, are Tokyo...

Victor Galliano