Asian bank research and consultancy, Tabbush Report

Daniel Tabbush

Asian bank 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>There are few, if any banks, in Japan that compare with Rakuten's 65% loan growth</li>
<li>The newly listed interbank stands out with exceptional ROE, not from leverage</li>
<li>Credit metrics remain strong, with NPL cover especially high vs peers</li>
</ul>


There are few, if any banks, in Japan that compare with Rakuten's 65% loan growth
The newly listed interbank stands out with exceptional ROE, not from leverage
Credit metrics remain strong, with NPL cover especially high vs peers


Rakuten Bank - In Japan With 65% Loan Growth

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>Despite Rakuten Bank shares’ re-rating, we believe it remains attractive, with its strong balance sheet and its low cost base with undemanding valuations compared to its Asian digital banking peers</li>
<li>Rakuten Bank is well positioned to benefit from the negative interest rate policy exit in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio</li>
<li>It continues to leverage off the Rakuten Group eco-system, as a low cost source of new customers; nearly a third of clients use Rakuten Bank as their primary Japanese bank</li>
</ul>


Despite Rakuten Bank shares’ re-rating, we believe it remains attractive, with its strong balance sheet and its low cost base with undemanding valuations compared to its Asian digital banking peers
Rakuten Bank is well positioned to benefit from the negative interest rate policy exit in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio
It continues to leverage off the Rakuten Group eco-system, as a low cost source of new customers; nearly a third of clients use Rakuten Bank as their primary Japanese bank


Rakuten Bank (5838 JP) Stands Out from the Other Asian Digital Banks

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.</li>
<li>Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.</li>
<li>But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.</li>
</ul>


The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.


Rakuten Bank (5838 JP) - Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS

<ul>
<li>On 31 August, I published <a href="https://www.smartkarma.com/insights/rakuten-bank-5838-4-months-on-volume-decay-and-rb-s-place-among-banks" target="_blank" data-smartkarma-citation="insights:111882" rel="noopener">Rakuten Bank (5838) - 4 Months On, Volume Decay and RB's Place Among Banks</a>. It's up 40.6% since the day after I wrote, reasons unclear.  </li>
<li>TOPIX Banks Index is up 10.4% since then, with post-BOJ meeting price movements indicating a kind of <em>momiai</em>.</li>
<li>For Rakuten Bank, while growth means it may not be "expensive" it is no longer dirt cheap. And I cannot identify the culprit, so time to take profits. </li>
</ul>


On 31 August, I published Rakuten Bank (5838) - 4 Months On, Volume Decay and RB's Place Among Banks. It's up 40.6% since the day after I wrote, reasons unclear.  
TOPIX Banks Index is up 10.4% since then, with post-BOJ meeting price movements indicating a kind of momiai.
For Rakuten Bank, while growth means it may not be "expensive" it is no longer dirt cheap. And I cannot identify the culprit, so time to take profits. 


<ul>
<li>Four months ago, <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a> was IPOed too low, then the price went up. It would appear foreign active ownership is relatively high.</li>
<li>Rakuten Bank stands out with high ROE and earnings growth. Banks stand out because, well, they're going up. </li>
<li>Given expected 5yr earnings growth, Rakuten Bank at current price is probably "wrong." But it has much less "bankness" than most banks, so you have to think about it differently.</li>
</ul>


Four months ago, Rakuten Bank (5838 JP) was IPOed too low, then the price went up. It would appear foreign active ownership is relatively high.
Rakuten Bank stands out with high ROE and earnings growth. Banks stand out because, well, they're going up. 
Given expected 5yr earnings growth, Rakuten Bank at current price is probably "wrong." But it has much less "bankness" than most banks, so you have to think about it differently.


Rakuten Bank (5838) - 4 Months On, Volume Decay and RB's Place Among Banks

Japan

Rakuten Bank, Ltd. operates as an Internet based bank. The Company provides banking services including deposits, loans, exchange transactions, and other services. Rakuten Bank also provides financial services including investment trusts, securities, credit and cash cards, lottery tickets, and others.

Rakuten Bank (5838 JP)

Rakuten Bank - In Japan With 65% Loan Growth

With corporate news of bank integration, see comments from Travis Lundy, it is worthwhile to understand Rakuten Bank's unique position, character,...

Daniel Tabbush