Korea / Special Situations, Clepsydra Capital

Sanghyun Park

Korea / Special Situations

Event-Driven

Orange Life Insurance, Ltd.  / Event-Driven

<p>First, this deal hasn't been finalized yet. But it seems almost certain that <a href="https://www.smartkarma.com/entities/23999" target="_blank" data-smartkarma-citation="entities:23999:1">ING Life Insurance Korea Ltd (079440 KS)</a>, Korea's No. 6 life insurance firm, will go to Shinhan. Cho Yong-byoung, CEO of Shinhan Financial Group, has a press interview on Aug 14 (in local time) and he clearly said that this ING Life acquisition by Shinhan Financial will take place. Just, both parties are still working to finalize specifics including acquisition price.</p><div class="content-caption">(Cho Yong-byoung, CEO of Shinhan Financial Group -…</div>

First, this deal hasn't been finalized yet. But it seems almost certain that ING Life Insurance Korea Ltd (079440 KS), Korea's No. 6 life insurance firm, will go to Shinhan. Cho Yong-byoung, CEO of Shinhan Financial Group, has a press interview on Aug 14 (in local time) and he clearly said that this ING Life acquisition by Shinhan Financial will take place. Just, both parties are still working to finalize specifics including acquisition price.(Cho Yong-byoung, CEO of Shinhan Financial Group -…

4 Key Issues of Shinhan Financial Group Taking Over ING Life Korea

Thematic (Sector/Industry)

<p>Last week was a week of earnings releases for Japan analysts in this Smartkarma community. I have picked up several earnings insights from the Japan side, which I strongly feel you should check out if you already haven't read yet. But my headline insight of the week from Japan side is <a href="https://www.smartkarma.com/profiles/25" target="_blank" data-smartkarma-citation="accounts:25">Travis Lundy</a>'s another thought-provoking piece on his Japan Passive theme: <a href="https://www.smartkarma.com/insights/japan-passive-dovish-meeting-boj-to-buy-less-nikkei-225" target="_blank">JAPAN PASSIVE - Dovish Meeting; BOJ to Buy Less Nikkei 225</a>. As for our Korean insights, we didn't have as many earnings insights as Japan…</p>

Last week was a week of earnings releases for Japan analysts in this Smartkarma community. I have picked up several earnings insights from the Japan side, which I strongly feel you should check out if you already haven't read yet. But my headline insight of the week from Japan side is Travis Lundy's another thought-provoking piece on his Japan Passive theme: JAPAN PASSIVE - Dovish Meeting; BOJ to Buy Less Nikkei 225. As for our Korean insights, we didn't have as many earnings insights as Japan…

Smartkarma's Week That Was in JP/KR: BOJ Again, JP/KR Earnings! & SK Telecom

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

<p>We update with a progress report at Q218 on four South Korean lenders.</p>
<p>This follows on from our insight at Q118. <a href="https://www.smartkarma.com/insights/south-korean-banks-buying-into-a-better-future" target="_blank">https://www.smartkarma.com/insights/south-korean-banks-buying-into-a-better-future</a></p>
<p>Banks in South Korea trade at an average of 6x earnings, a P/Book of 0.5x, and low Franchise valuations by global standards.</p>
<p>EPS is expected to expand by low double-digits in 2018. Add that to the attractive Dividend Yield, and earnings multiples do look attractive.</p>
<p>The risk profiles explain the cheapness of assets. South Korean banks have low Investment Grade-High Yield default ratings.</p>
<p>In addition, the interrelated matter of corporate governance has periodically roiled the market.</p>
<p>However, the fundamental trends at most lenders remain benign. Combining qualitative progression with low valuation results in opportunity. The PH Score™ signals that South Korean banks should outperform.</p>
<div class="content-highlight">
<p>The PH Score™ is a fundamental momentum-quantamental model that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage. Scores lie between 0 and 10, with higher rankings representing more positive signs.</p>
</div>

We update with a progress report at Q218 on four South Korean lenders.
This follows on from our insight at Q118. https://www.smartkarma.com/insights/south-korean-banks-buying-into-a-better-future
Banks in South Korea trade at an average of 6x earnings, a P/Book of 0.5x, and low Franchise valuations by global standards.
EPS is expected to expand by low double-digits in 2018. Add that to the attractive Dividend Yield, and earnings multiples do look attractive.
The risk profiles explain the cheapness of assets. South Korean banks have low Investment Grade-High Yield default ratings.
In addition, the interrelated matter of corporate governance has periodically roiled the market.
However, the fundamental trends at most lenders remain benign. Combining qualitative progression with low valuation results in opportunity. The PH Score™ signals that South Korean banks should outperform.

The PH Score™ is a fundamental momentum-quantamental model that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage. Scores lie between 0 and 10, with higher rankings representing more positive signs.


<p>South Korean banks are cheap globally. They trade on average at a P/Book of 0.5x and a PER of 6x.</p><p>Fundamental trends are highly positive as testified by the financial metric progression revealed by the PH Score™ at Q118. If the business improves, the stock price should follow.</p><p>It is hardly as if the macro and political backdrop have deteriorated either.</p>

South Korean banks are cheap globally. They trade on average at a P/Book of 0.5x and a PER of 6x.Fundamental trends are highly positive as testified by the financial metric progression revealed by the PH Score™ at Q118. If the business improves, the stock price should follow.It is hardly as if the macro and political backdrop have deteriorated either.

South Korean Banks: Buying into a Better Future

<p><a href="https://www.smartkarma.com/entities/16104" target="_blank" data-smartkarma-citation="entities:16104:1">Jb Financial Group Co Ltd (175330 KS)</a></p><table class="table table-striped"><tbody>
<tr>
<td>JB Financial</td>
<td style="text-align: center;">'13</td>
<td style="text-align: center;">'14</td>
<td style="text-align: center;">'15</td>
<td style="text-align: center;">'16</td>
<td style="text-align: center;">'17</td>
<td style="text-align: center;">17 v '16</td>
</tr>
<tr>
<td>CAPITAL ADEQUACY</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
</tr>
<tr>
<td>BIS Ratio</td>
<td style="text-align: center;">12.90%</td>
<td style="text-align: center;">13.12%</td>
<td style="text-align: center;">12.51%</td>
<td style="text-align: center;">12.05%</td>
<td style="text-align: center;">12.16%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>Tier1 Ratio</td>
<td style="text-align: center;">7.24%</td>
<td style="text-align: center;">8.34%</td>
<td style="text-align: center;">8.59%</td>
<td style="text-align: center;">9.20%</td>
<td style="text-align: center;">9.70%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>CET1 Ratio</td>
<td style="text-align: center;">5.88%</td>
<td style="text-align: center;">7.12%</td>
<td style="text-align: center;">7.40%</td>
<td style="text-align: center;">7.92%</td>
<td style="text-align: center;">8.57%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>ASSET QUALITY</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
</tr>
<tr>
<td>Delinquency Ratio</td>
<td style="text-align: center;">1.66%</td>
<td style="text-align: center;">1.14%</td>
<td style="text-align: center;">1.19%</td>
<td style="text-align: center;">1.04%</td>
<td style="text-align: center;">0.87%</td>
<td style="text-align: center;">↓</td>
</tr>
<tr>
<td>NPL Coverage Ratio (New)</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;">72.71%</td>
<td style="text-align: center;">67.92%</td>
<td style="text-align: center;">↓</td>
</tr>
<tr>
<td>NPL Coverage Ratio (Old)</td>
<td style="text-align: center;">82.39%</td>
<td style="text-align: center;">63.00%</td>
<td style="text-align: center;">130.52%</td>
<td style="text-align: center;">144.33%</td>
<td style="text-align: center;">154.57%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>PROFITABILITY</td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
<td style="text-align: center;"> </td>
</tr>
<tr>
<td>ROA</td>
<td style="text-align: center;">0.40%</td>
<td style="text-align: center;">1.71%</td>
<td style="text-align: center;">0.40%</td>
<td style="text-align: center;">0.47%</td>
<td style="text-align: center;">0.56%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>ROE </td>
<td style="text-align: center;">6.59%</td>
<td style="text-align: center;">26.71%</td>
<td style="text-align: center;">6.28%</td>
<td style="text-align: center;">7.17%</td>
<td style="text-align: center;">8.64%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>ROE </td>
<td style="text-align: center;">3.37%</td>
<td style="text-align: center;">41.34%</td>
<td style="text-align: center;">5.72%</td>
<td style="text-align: center;">6.45%</td>
<td style="text-align: center;">7.84%</td>
<td style="text-align: center;">↑</td>
</tr>
<tr>
<td>NIM (Bank, Quarterly)</td>
<td style="text-align: center;">2.</td>
</tr>
</tbody></table>…

Jb Financial Group Co Ltd (175330 KS)

JB Financial
'13
'14
'15
'16
'17
17 v '16


CAPITAL ADEQUACY
 
 
 
 
 
 


BIS Ratio
12.90%
13.12%
12.51%
12.05%
12.16%
↑


Tier1 Ratio
7.24%
8.34%
8.59%
9.20%
9.70%
↑


CET1 Ratio
5.88%
7.12%
7.40%
7.92%
8.57%
↑


ASSET QUALITY
 
 
 
 
 
 


Delinquency Ratio
1.66%
1.14%
1.19%
1.04%
0.87%
↓


NPL Coverage Ratio (New)
 
 
 
72.71%
67.92%
↓


NPL Coverage Ratio (Old)
82.39%
63.00%
130.52%
144.33%
154.57%
↑


PROFITABILITY
 
 
 
 
 
 


ROA
0.40%
1.71%
0.40%
0.47%
0.56%
↑


ROE 
6.59%
26.71%
6.28%
7.17%
8.64%
↑


ROE 
3.37%
41.34%
5.72%
6.45%
7.84%
↑


NIM (Bank, Quarterly)
2.

…

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)

4 Key Issues of Shinhan Financial Group Taking Over ING Life Korea

First, this deal hasn't been finalized yet. But it seems almost certain that ING Life Insurance Korea Ltd (079440 KS), Korea's No. 6 life insurance...

Sanghyun Park

Smartkarma's Week That Was in JP/KR: BOJ Again, JP/KR Earnings! & SK Telecom

Last week was a week of earnings releases for Japan analysts in this Smartkarma community. I have picked up several earnings insights from the...

Sanghyun Park

South Korean Banks: Updating on Value

We update with a progress report at Q218 on four South Korean lenders. This follows on from our insight at Q118....

Paul Hollingworth

South Korean Banks: Buying into a Better Future

South Korean banks are cheap globally. They trade on average at a P/Book of 0.5x and a PER of 6x.Fundamental trends are highly positive as...

Paul Hollingworth

Top PH Scores™ in South Korea

Jb Financial Group Co Ltd (175330 KS)Kwangju Bank (192530 KS)The PH Score™ is a fundamental momentum-quantamental score that scores banks according...

Paul Hollingworth

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