Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A Nikkei article Friday morning suggested that <a href="https://www.smartkarma.com/entities/shizuoka-financial-group-inc" target="_blank" data-smartkarma-citation="entities:36610:1" rel="noopener">Shizuoka Financial Group (5831 JP)</a> would integrate <a href="https://www.smartkarma.com/entities/bank-of-nagoya-ltd" target="_blank" data-smartkarma-citation="entities:6348:1" rel="noopener">Bank Of Nagoya (8522 JP)</a> in 2028 putting it into the top 5 regionals in Japan.</li>
<li>This comes a day after DHFG (7327 JP) and Gunma Bank (8334 JP) announced terms of their integration, following a year of discussions. Both Shizugin (+6.5%) and NagoyaBk (+15.1%) popped.</li>
<li>Expect a merger ratio to come in a year, with the merger coming in two. It's a long slog of "Guess The Ratio". Not worth a bet here.</li>
</ul>


A Nikkei article Friday morning suggested that Shizuoka Financial Group (5831 JP) would integrate Bank Of Nagoya (8522 JP) in 2028 putting it into the top 5 regionals in Japan.
This comes a day after DHFG (7327 JP) and Gunma Bank (8334 JP) announced terms of their integration, following a year of discussions. Both Shizugin (+6.5%) and NagoyaBk (+15.1%) popped.
Expect a merger ratio to come in a year, with the merger coming in two. It's a long slog of "Guess The Ratio". Not worth a bet here.


[Japan M&A] Shizuoka FG (5831) And Nagoya Bank (8522) Talk 2028 Merger; Don't Guess The Ratio Here

Director, Head of Research, Smartkarma

Pranav Rao

Director, Head of Research

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<ul>
<li>Welcome to Curator’s Cut - a fortnightly roundup of standout themes from the 1,300+ insights published on Smartkarma.</li>
<li>In this cut, we review the outlook for energy markets amid the Persian Gulf conflict, highlight coverage of gold miners large and small, and identify opportunities in Japanese financials.</li>
<li>Want to dig deeper? Comment or message with the themes you’d like to see highlighted next.</li>
</ul>


Welcome to Curator’s Cut - a fortnightly roundup of standout themes from the 1,300+ insights published on Smartkarma.
In this cut, we review the outlook for energy markets amid the Persian Gulf conflict, highlight coverage of gold miners large and small, and identify opportunities in Japanese financials.
Want to dig deeper? Comment or message with the themes you’d like to see highlighted next.


Curator's Cut: Crude Reality, Reshuffling Gold Miners & Banking on Japanese Fintech

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 December BoJ rate hike, the sector interest rate spreads continuing to widen and the JGB yield curve steepening further are positive for Japanese banks’ return prospects</li>
<li>We focus on three core factors; the banks’ gearing to higher domestic interest rates, the value of banks’ cross-holdings to market capitalization and each bank’s valuations relative to returns</li>
<li>We believe that a key driver is Japan’s interest rate normalisation; we keep our top pick Resona Holdings on the buy list, whilst also adding Shizuoka and Yokohama Financial</li>
</ul>


The December BoJ rate hike, the sector interest rate spreads continuing to widen and the JGB yield curve steepening further are positive for Japanese banks’ return prospects
We focus on three core factors; the banks’ gearing to higher domestic interest rates, the value of banks’ cross-holdings to market capitalization and each bank’s valuations relative to returns
We believe that a key driver is Japan’s interest rate normalisation; we keep our top pick Resona Holdings on the buy list, whilst also adding Shizuoka and Yokohama Financial


Japanese Bigger Cap Banks – Interest Rate Normalisation Drives the Bull Case

<ul>
<li>Along with political turbulence, expectations of a near term BoJ rate hike may be diminishing; nonetheless, we believe that these rate hikes will, at worst, be delayed and not derailed</li>
<li>We take profits on Mizuho in big caps and on Hirogin Holdings in mid-caps, downgrading these names from buy to neutral whilst generally retaining banks with higher levels of cross-holdings</li>
<li>We maintain the following Japanese banks on buy ratings; in the big-caps, we keep Resona and Shizuoka and in the mid-caps we stick with Iyogin Holdings, Hokuhoku and Hachijuni</li>
</ul>


Along with political turbulence, expectations of a near term BoJ rate hike may be diminishing; nonetheless, we believe that these rate hikes will, at worst, be delayed and not derailed
We take profits on Mizuho in big caps and on Hirogin Holdings in mid-caps, downgrading these names from buy to neutral whilst generally retaining banks with higher levels of cross-holdings
We maintain the following Japanese banks on buy ratings; in the big-caps, we keep Resona and Shizuoka and in the mid-caps we stick with Iyogin Holdings, Hokuhoku and Hachijuni


Japanese Banks – We Clip Our Key Positive Picks in the Big-Caps and Mid-Caps

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

Japan

Shizuoka Financial Group, Inc. offers banking services. The Company provides deposits, loans, fund management, domestic settlement, and other services. Shizuoka Financial Group provides its services throughout Japan.

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Shizuoka Financial Group (5831 JP)

[Japan M&A] Shizuoka FG (5831) And Nagoya Bank (8522) Talk 2028 Merger; Don't Guess The Ratio Here

On Friday, Shizuoka FG and Bank of Nagoya announced talks towards an April 2028 merger. They both popped. BN more. They already have an Alliance....

Travis Lundy

Curator's Cut: Crude Reality, Reshuffling Gold Miners & Banking on Japanese Fintech

This Curator's Cut highlights energy market outlook, gold miners coverage, and opportunities in Japanese financials from Smartkarma insights....

Pranav Rao

Japanese Bigger Cap Banks – Interest Rate Normalisation Drives the Bull Case

Japanese banks benefit from further steps to interest rate normalisation; our buy picks are Resona Holdings, Shizuoka, Yokohama due to gearing to...

Victor Galliano

Japanese Banks – We Clip Our Key Positive Picks in the Big-Caps and Mid-Caps

With easier-for-longer monetary policy in Japan being a growing risk, we keep buys on select big and mid-cap banks with big equity cross-holdings,...

Victor Galliano

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

Kyoto's planned equity holdings disposals are key to shareholder value creation, but company targets may not meet market expectations, and its...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Japan M&A] Shizuoka FG (5831) And Nagoya Bank (8522) Talk 2028 Merger; Don't Guess The Ratio Here

On Friday, Shizuoka FG and Bank of Nagoya announced talks towards an April 2028 merger. They both popped. BN more. They already have an Alliance....

Travis Lundy

Curator's Cut: Crude Reality, Reshuffling Gold Miners & Banking on Japanese Fintech

​This Curator's Cut highlights energy market outlook, gold miners coverage, and opportunities in Japanese financials from Smartkarma insights....

Pranav Rao

Japanese Bigger Cap Banks – Interest Rate Normalisation Drives the Bull Case

​Japanese banks benefit from further steps to interest rate normalisation; our buy picks are Resona Holdings, Shizuoka, Yokohama due to gearing to...

Victor Galliano

Japanese Banks – We Clip Our Key Positive Picks in the Big-Caps and Mid-Caps

​With easier-for-longer monetary policy in Japan being a growing risk, we keep buys on select big and mid-cap banks with big equity cross-holdings,...

Victor Galliano

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

​Kyoto's planned equity holdings disposals are key to shareholder value creation, but company targets may not meet market expectations, and its...

Victor Galliano

This Curator's Cut highlights energy market outlook, gold miners coverage, and opportunities in Japanese financials from Smartkarma insights....

Japanese banks benefit from further steps to interest rate normalisation; our buy picks are Resona Holdings, Shizuoka, Yokohama due to gearing to...

With easier-for-longer monetary policy in Japan being a growing risk, we keep buys on select big and mid-cap banks with big equity cross-holdings,...

Kyoto's planned equity holdings disposals are key to shareholder value creation, but company targets may not meet market expectations, and its...