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>
<a href="https://www.smartkarma.com/entities/seven-bank-ltd" target="_blank" data-smartkarma-citation="entities:16063:1" rel="noopener">Seven Bank Ltd (8410 JP)</a> is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.</li>
<li>Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts</li>
<li>Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines. </li>
</ul>



Seven Bank Ltd (8410 JP) is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.
Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts
Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines. 


Seven Bank - Assets 39x Loans | Strong 7% Loan Growth | ATM Transactions +8% | Retail Accounts +9%

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

Event-Driven

<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

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>Rakuten Bank is a clear beneficiary of the steepening yield curve in Japan, with its low LDR and healthy capital ratio</li>
<li>Rakuten Bank’s LTM PE multiple of 11.4x, LTM PBV ratio of 1.5x and ROE of 13.8% makes it the best ROE to PBV ratio bank among its digital peers</li>
<li>Rakuten Bank is also the lowest cost to serve Japanese digital bank; it is narrowing the PBV ratio discount gap with SBI Sumishin</li>
</ul>


Rakuten Bank is a clear beneficiary of the steepening yield curve in Japan, with its low LDR and healthy capital ratio
Rakuten Bank’s LTM PE multiple of 11.4x, LTM PBV ratio of 1.5x and ROE of 13.8% makes it the best ROE to PBV ratio bank among its digital peers
Rakuten Bank is also the lowest cost to serve Japanese digital bank; it is narrowing the PBV ratio discount gap with SBI Sumishin


Rakuten Bank (5838 JP) – At a Valuation Inflection Point

Japan

Seven Bank, Ltd. provides banking services mainly through Automated Teller Machine (ATM) across Japan. The bank cooperates with affiliated financial institutions to establish the nationwide ATM network and provide remote banking services, including deposits and loans.

Seven Bank Ltd (8410 JP)

Seven Bank - Assets 39x Loans | Strong 7% Loan Growth | ATM Transactions +8% | Retail Accounts +9%

Highly geared toward change in negative rates on BOJ deposits. Good growth in ATMs outstanding, ATM transactions (especially overseas), and in...

Daniel Tabbush

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

With BOJ shifting its interest rate policy there can be vast differences with banks that have high cash holdings and banks with relatively low...

Daniel Tabbush

Rakuten Bank (5838) One Month Later

Rakuten Bank (5838) - 4wks ago it was cheap to peers. Now it is expensive to peers after outperforming 30% in 3wks. Time to take profits. Not a...

Travis Lundy

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

Since the day after Rakuten Bank's IPO, the Banks Index is +25%, and Rakuten Bank's guided growth to March 2024 is well above TPNBNK average. But...

Travis Lundy

Rakuten Bank (5838 JP) – At a Valuation Inflection Point

Rakuten Bank benefits from yield curve steepening in Japan, with its low LDR and healthy capital ratio; it is the lowest cost to serve Japanese...

Victor Galliano