Director, Head of Research, Smartkarma

Pranav Rao

Director, Head of Research

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

<ul>
<li>Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,000+ insights published in the past two weeks on Smartkarma</li>
<li>In this cut, we compare Japanese insurers versus banks, look at the Chinese EV sector and explore how tariff hikes benefit Asian port operators</li>
<li>Want to dig deeper? Comment or message with the themes you’d like to see highlighted next</li>
</ul>


Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,000+ insights published in the past two weeks on Smartkarma
In this cut, we compare Japanese insurers versus banks, look at the Chinese EV sector and explore how tariff hikes benefit Asian port operators
Want to dig deeper? Comment or message with the themes you’d like to see highlighted next


Curator's Cut: Japan Insurers Vs Banks, the State of the Chinese EV Sector & Asian Ports in Focus

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>So far, 10 regional banks have upgraded guidance since Q1 results. One of them (Iyogin) twice. The average gain is +71.7% vs original H1 guidance (if we count Iyogin once).</li>
<li>This week will be the big push for new guidance ahead of a flood earnings reports the following week. Election results will cause concern, and the BOJ meets Thursday.</li>
<li>I expect a move in December (positive for banks), but it may be US Fed and $/¥-dependent. In the meantime banks enjoy tailwinds.</li>
</ul>


So far, 10 regional banks have upgraded guidance since Q1 results. One of them (Iyogin) twice. The average gain is +71.7% vs original H1 guidance (if we count Iyogin once).
This week will be the big push for new guidance ahead of a flood earnings reports the following week. Election results will cause concern, and the BOJ meets Thursday.
I expect a move in December (positive for banks), but it may be US Fed and $/¥-dependent. In the meantime banks enjoy tailwinds.


Japan 2024 H1 Bank Guidance: Interest/Fees ⬆︎, Expenses/Credit Costs⬇︎ - Opportunity Good Still

<ul>
<li>40% of Banks outside the Top 7 (none of which offered H1 guidance) in the TOPIX Banks Index have now changed H1 guidance or reported H1. 2 reported both up.</li>
<li>92% of the others have revised up H1 net income guidance a weighted average of 47%. Net Interest Income, Corporate fees/comms are up, expenses and credit costs are down.</li>
<li>Big tables with data, reasons for guidance changes, and buyback history of each presented below.</li>
</ul>


40% of Banks outside the Top 7 (none of which offered H1 guidance) in the TOPIX Banks Index have now changed H1 guidance or reported H1. 2 reported both up.
92% of the others have revised up H1 net income guidance a weighted average of 47%. Net Interest Income, Corporate fees/comms are up, expenses and credit costs are down.
Big tables with data, reasons for guidance changes, and buyback history of each presented below.


Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down - Opportunity Abounds, Still

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Late on Christmas Day, news leaked out into the financial media that regional bank <a href="https://www.smartkarma.com/entities/fukui-bank-ltd" target="_blank" data-smartkarma-citation="entities:9011:1" rel="noopener">Fukui Bank (8362 JP)</a> may be in advanced negotiations with unlisted secondary regional bank Fukuho Bank to take it over, initially as a majority-owned subsidiary.  Both banks are from Fukui Prefecture in the Hokuriku Region facing the Sea of Japan.  With a combined market share in Fukui Prefecture of around 36% for deposits and 49% for loans, the banks would likely need to invoke the exemptions under the recently approved law permitting banks from the same prefecture to merge without falling afoul of Japan’s anti-monopoly laws.While Fukui Bank’s share price has outperformed the Topix Banks Index in CY2020, this is damning the stock with faint praise.  Foreign investors would be well advised to steer clear.  This is not a run-of-the-mill case of a strong local bank absorbing a smaller, weaker rival.  Far from it.  Both banks have a long history of credit problems, erratic profitability and weakening performance ratios.While the takeover would no doubt have the blessing of the Suga Administration which has been actively promoting a reduction in the number of regional banks, it is difficult to see the economic rationale for the takeover.  Skeptics might suggest this is little more than an opportunity for the banks  -  should they eventually decide to go for a full merger  -  to revalue their head offices, generate one-time ‘windfall profits’ to artificially boost capital and thereby allow Fukuho Bank to repay the ¥6 billion in public funds that it still owes.  And then?  The risk for investors is a reversion by both banks to sub-par operational performance.Caveat Emptor! (May the Buyer Beware!) remains our advice to foreign investors considering investing in the Japanese banking sector in CY2021.

Late on Christmas Day, news leaked out into the financial media that regional bank Fukui Bank (8362 JP) may be in advanced negotiations with unlisted secondary regional bank Fukuho Bank to take it over, initially as a majority-owned subsidiary.  Both banks are from Fukui Prefecture in the Hokuriku Region facing the Sea of Japan.  With a combined market share in Fukui Prefecture of around 36% for deposits and 49% for loans, the banks would likely need to invoke the exemptions under the recently approved law permitting banks from the same prefecture to merge without falling afoul of Japan’s anti-monopoly laws.While Fukui Bank’s share price has outperformed the Topix Banks Index in CY2020, this is damning the stock with faint praise.  Foreign investors would be well advised to steer clear.  This is not a run-of-the-mill case of a strong local bank absorbing a smaller, weaker rival.  Far from it.  Both banks have a long history of credit problems, erratic profitability and weakening performance ratios.While the takeover would no doubt have the blessing of the Suga Administration which has been actively promoting a reduction in the number of regional banks, it is difficult to see the economic rationale for the takeover.  Skeptics might suggest this is little more than an opportunity for the banks  -  should they eventually decide to go for a full merger  -  to revalue their head offices, generate one-time ‘windfall profits’ to artificially boost capital and thereby allow Fukuho Bank to repay the ¥6 billion in public funds that it still owes.  And then?  The risk for investors is a reversion by both banks to sub-par operational performance.Caveat Emptor! (May the Buyer Beware!) remains our advice to foreign investors considering investing in the Japanese banking sector in CY2021.

Fukui Bank (8362 JP):  On Santa's List: Fukuho-Ho-Ho !

Japan

The Juroku Bank, Ltd. is a regional bank based in Gifu prefecture.  The Bank provides banking services such as deposits, loans, foreign exchange transactions, and securities investments.  The Juroku Bank also provides financial services such as leasing, credit cards, letter of credit, and loans.

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Juroku Financial Group (7380 JP)

Curator's Cut: Japan Insurers Vs Banks, the State of the Chinese EV Sector & Asian Ports in Focus

This Curator's Cut issue compares Japanese insurers vs banks amidst rising yields, the state of the Chinese EV sector and how Asian port operators...

Pranav Rao

Japan 2024 H1 Bank Guidance: Interest/Fees ⬆︎, Expenses/Credit Costs⬇︎ - Opportunity Good Still

10 of about 70 Japanese regional banks have revised guidance for the H1 to end-Sep 2024. The average gain is near 70% vs previous guidance. That's...

Travis Lundy

Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down - Opportunity Abounds, Still

The macro backdrop for Japanese banks is pretty good. Business restructuring efforts are bearing fruit. Global macro is adding fees. Stocks are up,...

Travis Lundy

Fukui Bank (8362 JP): On Santa's List: Fukuho-Ho-Ho !

On Christmas Day, it was reported that Fukui Bank (8362 JP) may be in negotiations with Fukuho Bank to take it over as a majority-owned...

J. Brian Waterhouse

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Curator's Cut: Japan Insurers Vs Banks, the State of the Chinese EV Sector & Asian Ports in Focus

​This Curator's Cut issue compares Japanese insurers vs banks amidst rising yields, the state of the Chinese EV sector and how Asian port operators...

Pranav Rao

Japan 2024 H1 Bank Guidance: Interest/Fees ⬆︎, Expenses/Credit Costs⬇︎ - Opportunity Good Still

10 of about 70 Japanese regional banks have revised guidance for the H1 to end-Sep 2024. The average gain is near 70% vs previous guidance. That's...

Travis Lundy

Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down - Opportunity Abounds, Still

The macro backdrop for Japanese banks is pretty good. Business restructuring efforts are bearing fruit. Global macro is adding fees. Stocks are up,...

Travis Lundy

Fukui Bank (8362 JP): On Santa's List: Fukuho-Ho-Ho !

On Christmas Day, it was reported that Fukui Bank (8362 JP) may be in negotiations with Fukuho Bank to take it over as a majority-owned...

J. Brian Waterhouse

This Curator's Cut issue compares Japanese insurers vs banks amidst rising yields, the state of the Chinese EV sector and how Asian port operators...