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

Kyoto Financial Group  / Equity Bottom-Up

<ul>
<li>Kyoto Financial has equity holdings relative to market cap of 135%, well above its larger cap Japanese peer banks, and amounting to a market value of over JPY1.1trillion</li>
<li>Management has stated that it is targeting JPY100bn+ of disposals in terms of market value by March 2029, but we believe that the market expected more</li>
<li>Sizeable disposals of equity holdings is Kyoto’s primary source of prospective shareholder value creation; aside from this, its fundamental attractions are limited and so we downgrade Kyoto to a neutral</li>
</ul>


Kyoto Financial has equity holdings relative to market cap of 135%, well above its larger cap Japanese peer banks, and amounting to a market value of over JPY1.1trillion
Management has stated that it is targeting JPY100bn+ of disposals in terms of market value by March 2029, but we believe that the market expected more
Sizeable disposals of equity holdings is Kyoto’s primary source of prospective shareholder value creation; aside from this, its fundamental attractions are limited and so we downgrade Kyoto to a neutral


Kyoto Financial Group (5844 JP): Disposals Plan for Equity Holdings Warrants More Ambitious Target

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Kawasaki Heavy Industries / Equity Bottom-Up

<ul>
<li>Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. </li>
<li>The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  </li>
<li>Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. </li>
</ul>


Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. 
The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  
Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. 


Best Outright and Pair Trades for an Ishiba-Led LDP

<ul>
<li>Kyoto Financial’s president has hinted at increasing disposals in strategic equity holdings; the prior target was a JPY100bn reduction in holdings by March 2029, now there is talk of JPY200-300bn</li>
<li>We estimate Kyoto Financial’s equity holdings relative to market cap at 140%+, well above its peer banks; yet, until very recently, the president had been against meaningfully reducing equity holdings</li>
<li>The president’s change of view leads us to upgrade Kyoto Financial to a buy; the change in outlook means that there is real potential to extract value for shareholders</li>
</ul>


Kyoto Financial’s president has hinted at increasing disposals in strategic equity holdings; the prior target was a JPY100bn reduction in holdings by March 2029, now there is talk of JPY200-300bn
We estimate Kyoto Financial’s equity holdings relative to market cap at 140%+, well above its peer banks; yet, until very recently, the president had been against meaningfully reducing equity holdings
The president’s change of view leads us to upgrade Kyoto Financial to a buy; the change in outlook means that there is real potential to extract value for shareholders


Kyoto Financial Group (TSE:5844) – Positive Shift in C-Suite Outlook

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)

<ul>
<li>We look at which Japan banks have the most cash which can see a major boost to returns. </li>
<li>Banks with lower margins can see a higher net interest income pick up from rising rates. </li>
<li>Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.</li>
</ul>


We look at which Japan banks have the most cash which can see a major boost to returns. 
Banks with lower margins can see a higher net interest income pick up from rising rates. 
Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.


Japan - Rising Rates: Focus On Banks With High Cash And Low Margins

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

<ul>
<li>Yesterday, Reuters reported that multiple Toyota Group companies would sell ~10% of <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> worth ¥700bn in a secondary share sale by year-end.</li>
<li>The sellers would be Toyota, selling down to just over 20%, Toyota Industries (6201) (selling down a bit more than half, and <a href="https://www.smartkarma.com/entities/aisin-seiki-co-ltd" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin Seiki (7259 JP)</a> selling its 2% stake. </li>
<li>Denso would buy back shares. This whole thing is both interesting and complicated so I discuss the interesting complications below. It <em>looks</em> bigger than it probably is.</li>
</ul>


Yesterday, Reuters reported that multiple Toyota Group companies would sell ~10% of Denso Corp (6902 JP) worth ¥700bn in a secondary share sale by year-end.
The sellers would be Toyota, selling down to just over 20%, Toyota Industries (6201) (selling down a bit more than half, and Aisin Seiki (7259 JP) selling its 2% stake. 
Denso would buy back shares. This whole thing is both interesting and complicated so I discuss the interesting complications below. It looks bigger than it probably is.


Huge Denso (6902) Secondary Sale by Toyota Group - Admiral Ackbar Says "It's A Trap!"

Japan

Kyoto Financial Group, Inc. offers financial services. The Company provides commodity securities transaction, securities investment, trust, credit guarantee, banking related services, and other services. Kyoto Financial Group also operates real estate management and leasing, economic research, and other businesses.

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Kyoto Financial Group (5844 JP)