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>Hana Financial Group reported a loss in its China banking business in 9MQ22</li>
<li>Hana Bank (China) recorded credit costs at KRW119bn or 20% of group total</li>
<li>Off balance sheet commitments in China appear to be moving on balance sheet </li>
</ul>


Hana Financial Group reported a loss in its China banking business in 9MQ22
Hana Bank (China) recorded credit costs at KRW119bn or 20% of group total
Off balance sheet commitments in China appear to be moving on balance sheet 


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.

<ul>
<li>Six of the seven South Korean banks screen favourably on valuation versus returns metrics to June 2022; we like KB Financial, whilst Woori Financial is a wait and see story</li>
<li>KB has undemanding valuations, and one of the lowest PEG ratios; it delivers steady pre-provision returns, has sound core capital ratio of close to 13% and healthy credit quality ratios</li>
<li>Woori Financial and potentially KakaoBank are two names to review post 3Q22 results, with Woori and KakaoBank having seen their 2Q22 cost of risk rise sharply; we seek positive catalysts</li>
</ul>


Six of the seven South Korean banks screen favourably on valuation versus returns metrics to June 2022; we like KB Financial, whilst Woori Financial is a wait and see story
KB has undemanding valuations, and one of the lowest PEG ratios; it delivers steady pre-provision returns, has sound core capital ratio of close to 13% and healthy credit quality ratios
Woori Financial and potentially KakaoBank are two names to review post 3Q22 results, with Woori and KakaoBank having seen their 2Q22 cost of risk rise sharply; we seek positive catalysts


South Korean Banks Screener; KB Financial Is Our Core Pick

Woori Financial Group  / Equity Bottom-Up

<ul>
<li>Woori is the fastest growing major bank in Korea, not positive into a downturn</li>
<li>Credit metrics look poor in granular data on loans and in credit costs</li>
<li>Capital levels are relatively low, while funding mix is worsening</li>
</ul>


Woori is the fastest growing major bank in Korea, not positive into a downturn
Credit metrics look poor in granular data on loans and in credit costs
Capital levels are relatively low, while funding mix is worsening


Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<ul>
<li>We believe that there is a relatively high probability that the Korean government will lower the highest corporate tax rate bracket from 25% to 22% starting next year.</li>
<li>A 3% change in corporate tax rate should result in about 4% higher net profit for Korean companies.</li>
<li>Among the top 30 companies in Korea, we believe the companies with the biggest impact on lowering their tax rates include LG Electronics, Naver, Kakao Corp, SK Innovation, and KT&amp;G. </li>
</ul>


We believe that there is a relatively high probability that the Korean government will lower the highest corporate tax rate bracket from 25% to 22% starting next year.
A 3% change in corporate tax rate should result in about 4% higher net profit for Korean companies.
Among the top 30 companies in Korea, we believe the companies with the biggest impact on lowering their tax rates include LG Electronics, Naver, Kakao Corp, SK Innovation, and KT&amp;G. 


Lower Corporate Tax Rate in Korea Could Be an Extra Alpha Kicker

Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.</li>
<li>Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.</li>
<li>The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.</li>
</ul>


The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.
Compared to the last rebalancing, where we had Kakao Bank's inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.
The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.


KRX Banks Index (KODEX ETF): September Rebalancing Preview

South Korea

Hana Financial Group Inc., in accordance with Financial Holding Companies Act, was established on December 1, 2005, through stock transfer with the former shareholders of its subsidiaries in order to provide management services and financing to associated companies.

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Hana Financial (086790 KS)

Hana - Granular Data On China

Granular data from Hana Bank (China) suggests major deterioration there, and there appears to be off-balance sheet commitments that are moving on...

Daniel Tabbush

South Korean Banks Screener; KB Financial Is Our Core Pick

Of the seven South Korean banks, we like KB Financial for its attractive valuations, and low PEG ratio; it delivers steady pre-provision returns,...

Victor Galliano

Woori - Plenty to Worry About

Woori is the fastest growing back in recent years, so there is greater risk of unseasoned loans turning bad. The bank is less well provisioned, and...

Daniel Tabbush

Lower Corporate Tax Rate in Korea Could Be an Extra Alpha Kicker

We believe that there is a relatively high probability that the Korean government will lower the highest corporate tax rate bracket from 25% to 22%...

Douglas Kim

KRX Banks Index (KODEX ETF): September Rebalancing Preview

This post previews the upcoming rebalancing of the KRX Banks Index, one of the KRX-owned thematic indexes with a meaningful AUM despite a small...

Sanghyun Park

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