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 Capital Markets

<ul>
<li>The sharp run-up in the share price since its IPO does not, in our view, mean that Rakuten Bank’s rally is done; there is further fundamental justification for a re-rating</li>
<li>Rakuten Bank trades on a LTM PE multiple of 14.4x, LTM PBV ratio of 1.6x and an ROE of 13.2%, which is the best return of our neobank peers</li>
<li>Relative to its peer group, Rakuten Bank has premium long-run growth prospects; conservatively estimating Rakuten Bank’s growth (8% pa), implies a PEG ratio in the range of 1.2x to 1.3x</li>
</ul>


The sharp run-up in the share price since its IPO does not, in our view, mean that Rakuten Bank’s rally is done; there is further fundamental justification for a re-rating
Rakuten Bank trades on a LTM PE multiple of 14.4x, LTM PBV ratio of 1.6x and an ROE of 13.2%, which is the best return of our neobank peers
Relative to its peer group, Rakuten Bank has premium long-run growth prospects; conservatively estimating Rakuten Bank’s growth (8% pa), implies a PEG ratio in the range of 1.2x to 1.3x


Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations

<ul>
<li>Rakuten Bank’s IPO will add an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention</li>
<li>On efficiency metrics, Rakuten Bank scores well versus its key domestic peers as well as global comparables; Rakuten Group companies act as a key conduit for new clients</li>
<li>At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE</li>
</ul>


Rakuten Bank’s IPO will add an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention
On efficiency metrics, Rakuten Bank scores well versus its key domestic peers as well as global comparables; Rakuten Group companies act as a key conduit for new clients
At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE


Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe

Equity Bottom-Up

<ul>
<li>We believe that the Japanese-US trade deal helps to decrease uncertainty on monetary policy, with a potential rate rise in the near term improving the outlook for Japanese banks</li>
<li>We remove our short on Rakuten Bank, as it is one of the beneficiaries of a near term potential rise in benchmark rates going forward</li>
<li>In terms of PBV ratio, Seven Bank still trades at a 70%+ discount to Rakuten Bank’s PBV but the latter is impacted by the near-term interest rate outlook change</li>
</ul>


We believe that the Japanese-US trade deal helps to decrease uncertainty on monetary policy, with a potential rate rise in the near term improving the outlook for Japanese banks
We remove our short on Rakuten Bank, as it is one of the beneficiaries of a near term potential rise in benchmark rates going forward
In terms of PBV ratio, Seven Bank still trades at a 70%+ discount to Rakuten Bank’s PBV but the latter is impacted by the near-term interest rate outlook change


Upgrading Rakuten Bank (TSE: 5838) To a Hold

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>I tally 40 - mostly firm, mostly Asia-Pac - arb transactions currently being discussed and analysed on Smartkarma.</li>
<li>Two new deals were discussed on Smartkarma this week: <a href="https://www.smartkarma.com/entities/dd-group-co-ltd" target="_blank" data-smartkarma-citation="entities:1439:1" rel="noopener">DD Group (3073 JP)</a>'s MBO and the <a href="https://www.smartkarma.com/entities/hanil-cement-co-ltd-new" target="_blank" data-smartkarma-citation="entities:27447:1" rel="noopener">Hanil Cement Co Ltd/New (300720 KS)</a>/<a href="https://www.smartkarma.com/entities/hanil-hyundai-cement-co-ltd" target="_blank" data-smartkarma-citation="entities:14406:1" rel="noopener">Hanil Hyundai Cement (006390 KS)</a> merger.</li>
<li>Key updates/news took place on <a href="https://www.smartkarma.com/entities/pointsbet-holdings-ltd" target="_blank" data-smartkarma-citation="entities:29102:1" rel="noopener">PointsBet Holdings (PBH AU)</a>, <a href="https://www.smartkarma.com/entities/adriatic-metals-plc" target="_blank" data-smartkarma-citation="entities:30797:1" rel="noopener">Adriatic Metals PLC (ADT AU)</a>, <a href="https://www.smartkarma.com/entities/abacus-storage-king" target="_blank" data-smartkarma-citation="entities:39857:1" rel="noopener">Abacus Storage King (ASK AU)</a>, <a href="https://www.smartkarma.com/entities/new-world-resources-ltd" target="_blank" data-smartkarma-citation="entities:9712:1" rel="noopener">New World Resources (NWC AU)</a>, and <a href="https://www.smartkarma.com/entities/zeekr-intelligent-technology-holding" target="_blank" data-smartkarma-citation="entities:36785:1" rel="noopener">ZEEKR (ZK US)</a>.</li>
</ul>


I tally 40 - mostly firm, mostly Asia-Pac - arb transactions currently being discussed and analysed on Smartkarma.
Two new deals were discussed on Smartkarma this week: DD Group (3073 JP)'s MBO and the Hanil Cement Co Ltd/New (300720 KS)/Hanil Hyundai Cement (006390 KS) merger.
Key updates/news took place on PointsBet Holdings (PBH AU), Adriatic Metals PLC (ADT AU), Abacus Storage King (ASK AU), New World Resources (NWC AU), and ZEEKR (ZK US).


(Mostly) Asia-Pac M&A: ZEEKR, DD Group, Hanil Cement, Adriatic Metals, Abacus Storage, PointsBet

<ul>
<li>The benefits of <a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a> China Medical System (867 HK)'s secondary listing on the SGX are more apparent than real. </li>
<li>Should <a href="https://www.smartkarma.com/entities/meituan" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> continue its Brazil market launch, <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus NV (PRX NA)</a> will have little reason to continue to hold on to its Meituan stake.</li>
<li>Look for value to be realised for Japanese banks with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.</li>
</ul>


The benefits of China Medical System (867 HK) China Medical System (867 HK)'s secondary listing on the SGX are more apparent than real. 
Should Meituan (3690 HK) continue its Brazil market launch, Prosus NV (PRX NA) will have little reason to continue to hold on to its Meituan stake.
Look for value to be realised for Japanese banks with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.


Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

Japan

SBI Sumishin Net Bank, Ltd. offers general banking services. The Company provides transfer accounts, deposits, currency savings, mortgages, net loans, investment trusts, insurance products, and other banking services. SBI Sumishin Net Bank offers services to individuals and businesses.

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SBI Sumishin Net Bank (7163 JP)

Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations

Rakuten Bank’s mix of relative value metrics and premium growth potential are clear positive drivers for its further re-rating potential; company...

Victor Galliano

Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe

Rakuten Bank's IPO is priced to go; issue price PBV ratio implies an attractive 25% discount to core Japanese peer SBI Sumishin Net Bank, for...

Victor Galliano

Upgrading Rakuten Bank (TSE: 5838) To a Hold

Japanese-US trade deal, decreasing economic uncertainty, could drive BoJ to raise rates in the near term; this would benefit Rakuten Bank and...

Victor Galliano

(Mostly) Asia-Pac M&A: ZEEKR, DD Group, Hanil Cement, Adriatic Metals, Abacus Storage, PointsBet

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations

Rakuten Bank’s mix of relative value metrics and premium growth potential are clear positive drivers for its further re-rating potential; company...

Victor Galliano

Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe

Rakuten Bank's IPO is priced to go; issue price PBV ratio implies an attractive 25% discount to core Japanese peer SBI Sumishin Net Bank, for...

Victor Galliano

Upgrading Rakuten Bank (TSE: 5838) To a Hold

​Japanese-US trade deal, decreasing economic uncertainty, could drive BoJ to raise rates in the near term; this would benefit Rakuten Bank and...

Victor Galliano

(Mostly) Asia-Pac M&A: ZEEKR, DD Group, Hanil Cement, Adriatic Metals, Abacus Storage, PointsBet

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Japanese-US trade deal, decreasing economic uncertainty, could drive BoJ to raise rates in the near term; this would benefit Rakuten Bank and...