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

<ul>
<li>The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank</li>
<li>We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned</li>
<li>We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG</li>
</ul>


The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank
We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned
We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG


Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ammb-holdings-bhd" target="_blank" data-smartkarma-citation="entities:137:1" rel="noopener">AMMB Holdings (AMM MK)</a> and <a href="https://www.smartkarma.com/entities/ql-resources-bhd" target="_blank" data-smartkarma-citation="entities:11221:1" rel="noopener">Ql Resources (QLG MK)</a> could replace <a href="https://www.smartkarma.com/entities/hartalega-holdings-bhd" target="_blank" data-smartkarma-citation="entities:10230:1" rel="noopener">Hartalega Holdings (HART MK)</a> and <a href="https://www.smartkarma.com/entities/top-glove-corp-bhd" target="_blank" data-smartkarma-citation="entities:20759:1" rel="noopener">Top Glove Corp (TOPG MK)</a> at the December rebalance.</li>
<li>One way turnover is estimated at 2.87% and the impact of passive flows is larger on the potential adds as compared to the potential deletes.</li>
<li>
<a href="https://www.smartkarma.com/entities/westports-holdings-bhd" target="_blank" data-smartkarma-citation="entities:3954:1" rel="noopener">Westports Holdings (WPRTS MK)</a> is a close add and there could be changes over the next few months as we approach the end of the review period.</li>
</ul>



AMMB Holdings (AMM MK) and Ql Resources (QLG MK) could replace Hartalega Holdings (HART MK) and Top Glove Corp (TOPG MK) at the December rebalance.
One way turnover is estimated at 2.87% and the impact of passive flows is larger on the potential adds as compared to the potential deletes.

Westports Holdings (WPRTS MK) is a close add and there could be changes over the next few months as we approach the end of the review period.


KLCI Index Rebalance Preview: The Gloves Could Come Off

<ul>
<li>The six Malaysian banks have healthy capital adequacy ratios, healthy credit quality and adequate NPL coverage; increased tourism should support GDP, positive cost of risk trends and loan growth demand</li>
<li>We like RHB, with its attractive post-provision profitability and sound cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG</li>
<li>We also like big-cap Maybank with its reasonable valuations; combined with a prospective earnings recovery due to contained risk costs, this could drive a re-rating, after lacklustre share returns</li>
</ul>


The six Malaysian banks have healthy capital adequacy ratios, healthy credit quality and adequate NPL coverage; increased tourism should support GDP, positive cost of risk trends and loan growth demand
We like RHB, with its attractive post-provision profitability and sound cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG
We also like big-cap Maybank with its reasonable valuations; combined with a prospective earnings recovery due to contained risk costs, this could drive a re-rating, after lacklustre share returns


Malaysian Banks Screener; RHB Bank Is Our Top Pick

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Press Metal Aluminium Holdin / Equity Capital Markets

<ul>
<li>Press Metal Aluminum Holdings (PMAH) aims to raise around US$233m via a primary placement.</li>
<li>The stock has been doing well on the back of buoyant Aluminum prices over the past few months.</li>
<li>In this note, we will run the deal through our ECM framework and talk about the recent updates.</li>
</ul>


Press Metal Aluminum Holdings (PMAH) aims to raise around US$233m via a primary placement.
The stock has been doing well on the back of buoyant Aluminum prices over the past few months.
In this note, we will run the deal through our ECM framework and talk about the recent updates.


Press Metals Aluminum Holdings Placement - Well Flagged Deal, Stock Has Done Well

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Malaysia was a standout at Q221 in terms of positive value-quality trends. Fundamental progression was strong at CIMB, Malaysia Building Society, Hong Leong, Malayan Banking, and RHB.According to our model PH Score™ and our VFM model, RHB especially catches our attention. RHB ranks in the top quartile globally of our VFM (Valuation, Fundamentals, Momentum) universe. On a LTM basis, the bank's PH Score™ of 9.0 reflects progression in Profitability, in NIM, in Efficiency, in headline Asset Quality, in Liquidity and in Provisioning as well as the reasonable valuation variable though Common Equity/Assets eroded somewhat in contrast to other key Capitalisation ratios.<div class="content-highlight">A FV of 10% and a PBV of 0.77x are not unattractive. The bank has an Earnings Yield of 11.6%, a Dividend Yield of 4.27%, and a Total Return Ratio of 1.1x.  </div>RHB dedicates itself to consumer (53.4% of credit) and corporate lending. The Retail segment includes an elevated exposure to mortgages. By Operating Income, the bank is balanced between Retail and CBIB/Business Banking and Treasury/Global Markets with some modest international activity. Time Deposits represent 70.7% of Deposits while Transaction Accounts contribute 22.5%. The bank takes in money &lt;1year and lends out at 5+ years for two-thirds of its loan book.Caveats. Malaysia faces continued pressure on its fiscal settings (as elsewhere) given its near-term economic outlook (reducing GDP forecasts) amid a worsened domestic C-19 situation and a still fluid political backdrop. Delayed economic recovery, repeated moratorium distortion and government intervention in earnings/operation risk eroding somewhat buffers built up before the pandemic. The proposed interest waiver to protect low-income borrowers is a risk to earnings forecasts moving forward amid a backdrop of a higher system NPL ratio (from 1.7% currently to perhaps 3% next year) and an estimated jump in Credit Costs of some 50bps.

Malaysia was a standout at Q221 in terms of positive value-quality trends. Fundamental progression was strong at CIMB, Malaysia Building Society, Hong Leong, Malayan Banking, and RHB.According to our model PH Score™ and our VFM model, RHB especially catches our attention. RHB ranks in the top quartile globally of our VFM (Valuation, Fundamentals, Momentum) universe. On a LTM basis, the bank's PH Score™ of 9.0 reflects progression in Profitability, in NIM, in Efficiency, in headline Asset Quality, in Liquidity and in Provisioning as well as the reasonable valuation variable though Common Equity/Assets eroded somewhat in contrast to other key Capitalisation ratios.A FV of 10% and a PBV of 0.77x are not unattractive. The bank has an Earnings Yield of 11.6%, a Dividend Yield of 4.27%, and a Total Return Ratio of 1.1x.  RHB dedicates itself to consumer (53.4% of credit) and corporate lending. The Retail segment includes an elevated exposure to mortgages. By Operating Income, the bank is balanced between Retail and CBIB/Business Banking and Treasury/Global Markets with some modest international activity. Time Deposits represent 70.7% of Deposits while Transaction Accounts contribute 22.5%. The bank takes in money &lt;1year and lends out at 5+ years for two-thirds of its loan book.Caveats. Malaysia faces continued pressure on its fiscal settings (as elsewhere) given its near-term economic outlook (reducing GDP forecasts) amid a worsened domestic C-19 situation and a still fluid political backdrop. Delayed economic recovery, repeated moratorium distortion and government intervention in earnings/operation risk eroding somewhat buffers built up before the pandemic. The proposed interest waiver to protect low-income borrowers is a risk to earnings forecasts moving forward amid a backdrop of a higher system NPL ratio (from 1.7% currently to perhaps 3% next year) and an estimated jump in Credit Costs of some 50bps.

RHB: A Standout Globally Within an Improving Value-Quality Market

Malaysia

RHB Bank BHD provides banking services. The Company offers commercial and consumer banking, corporate and investment banking, and international banking services. RHB also provides savings accounts, foreign currency accounts, home and travel insurance, and investment planning.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

RHB Bank Bhd (RHBBANK MK)

Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

We add CIMB to the buy list, keep RHB and we remove Maybank; CIMB has positive post-provision return trends and undemanding valuations; RHB has...

Victor Galliano

KLCI Index Rebalance Preview: The Gloves Could Come Off

AMMB and QL Resources could replace Hartalega and Top Glove in the KLCI at the December rebalance. Westports is a close add, while Top Glove needs...

Brian Freitas

Malaysian Banks Screener; RHB Bank Is Our Top Pick

From our Malaysian banks screener report, we like RHB for its attractive post-provision returns and undemanding multiples, and Maybank for its...

Victor Galliano

Press Metals Aluminum Holdings Placement - Well Flagged Deal, Stock Has Done Well

Press Metal Aluminum Holdings (PMAH) aims to raise around US$233m via a primary placement. In this note, we will run the deal through our ECM...

Sumeet Singh

RHB: A Standout Globally Within an Improving Value-Quality Market

RHB is one of a handful of selective Malaysian banks which show positive value-quality trends. Trends are good though we are mindful of government...

Paul Hollingworth

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)