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

Kyoto Financial Group  / Equity Bottom-Up

<ul>
<li>Kyoto Financial’s president has hinted at increasing disposals in strategic equity holdings; the prior target was a JPY100bn reduction in holdings by March 2029, now there is talk of JPY200-300bn</li>
<li>We estimate Kyoto Financial’s equity holdings relative to market cap at 140%+, well above its peer banks; yet, until very recently, the president had been against meaningfully reducing equity holdings</li>
<li>The president’s change of view leads us to upgrade Kyoto Financial to a buy; the change in outlook means that there is real potential to extract value for shareholders</li>
</ul>


Kyoto Financial’s president has hinted at increasing disposals in strategic equity holdings; the prior target was a JPY100bn reduction in holdings by March 2029, now there is talk of JPY200-300bn
We estimate Kyoto Financial’s equity holdings relative to market cap at 140%+, well above its peer banks; yet, until very recently, the president had been against meaningfully reducing equity holdings
The president’s change of view leads us to upgrade Kyoto Financial to a buy; the change in outlook means that there is real potential to extract value for shareholders


Kyoto Financial Group (TSE:5844) – Positive Shift in C-Suite Outlook

<ul>
<li>We introduce our Japanese big cap banks scorecard; from this, we pick Resona, Mizuho and SMFG with our wildcard being Shizuoka</li>
<li>The scorecard metrics measure leverage to higher interest rates, LDRs, levels of cash balances, bond exposures, cross-holdings and valuations; from this, we derive a weighted ranking for each bank</li>
<li>We remove Concordia from our buy list; we prefer Shizuoka for its better leverage to rising rates and high ratio of cross-holdings to market capitalization with a holdings reduction plan</li>
</ul>


We introduce our Japanese big cap banks scorecard; from this, we pick Resona, Mizuho and SMFG with our wildcard being Shizuoka
The scorecard metrics measure leverage to higher interest rates, LDRs, levels of cash balances, bond exposures, cross-holdings and valuations; from this, we derive a weighted ranking for each bank
We remove Concordia from our buy list; we prefer Shizuoka for its better leverage to rising rates and high ratio of cross-holdings to market capitalization with a holdings reduction plan


Japanese Big Cap Banks – Three Scorecard Stand-Outs, and One Wildcard

Equity Derivatives Broker - Delta One Japan, Vantage Capital Markets Japan

François-Xavier Pustoc'h

Equity Derivatives Broker - Delta One Japan

Independent Financial Broker

Vantage Capital Markets Japan

We provide world class financial solutions to our extensive institutional client base including rapidly growing corporations, leading investment banks, commercial banks, asset managers, private equity funds, family offices and hedge funds.

Our services include capital market offerings and placements, wholesale brokerage and execution of cash and derivative products (both listed and OTC) across a range of asset classes.

VCM has offices in London, Hong Kong, Tokyo and Dubai from where we service our global client base. Our strength lies in the experience and quality of our teams, supported by excellent operations and infrastructure.

Event-Driven

<ul>
<li>Rebalancing Candidates ADD: Kokusai Electric Corp (6525.T): High Liquidity Group<br>TOP 75, BayCurrent Inc (6532.T), Shift Inc (3697.T)</li>
<li>Rebalancing Candidates DEL: Mitsubishi Logistics Corp. (9301.T), Okuma Corp.<br>(6103.T), Tokuyama Corp (4043.T)</li>
<li>Capping Ratio: Fast Retailing Co Ltd (9983.T)’s Price Adjustment Factor from 2.7 to<br>2.4</li>
</ul>


Rebalancing Candidates ADD: Kokusai Electric Corp (6525.T): High Liquidity Group TOP 75, BayCurrent Inc (6532.T), Shift Inc (3697.T)
Rebalancing Candidates DEL: Mitsubishi Logistics Corp. (9301.T), Okuma Corp. (6103.T), Tokuyama Corp (4043.T)
Capping Ratio: Fast Retailing Co Ltd (9983.T)’s Price Adjustment Factor from 2.7 to 2.4


Nikkei 225 Stock Average Rebalancing – January 2025

<ul>
<li>BoJ raised rates to 0.5% at its January policy meeting and BoJ Governor Kazuo Ueda hinted at more rate hikes; BoJ’s new Outlook Report forecasts higher core inflation in 2025</li>
<li>We reiterate our core recommendations Resona and Mizuho for their leverage to higher interest rates, their low LDRs, their high levels of cash at the BoJ and their modest valuation</li>
<li>We also keep our buys on Concordia and Shizuoka, for their leverage to higher interest rates and LDRs below 90%, along with their attractive valuations highlighted by low PEGs</li>
</ul>


BoJ raised rates to 0.5% at its January policy meeting and BoJ Governor Kazuo Ueda hinted at more rate hikes; BoJ’s new Outlook Report forecasts higher core inflation in 2025
We reiterate our core recommendations Resona and Mizuho for their leverage to higher interest rates, their low LDRs, their high levels of cash at the BoJ and their modest valuation
We also keep our buys on Concordia and Shizuoka, for their leverage to higher interest rates and LDRs below 90%, along with their attractive valuations highlighted by low PEGs


Japanese Big Cap Banks – Revisiting Interest Rate Sensitivities

Research and consultancy, Tabbush Report

Daniel Tabbush

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.

<ul>
<li>Chiba Bank shows good gains in net interest income through 1H25 YoY </li>
<li>There should be more of this with rising BOJ rates during 2H25.</li>
<li>Flow through to net profit can be strong, given credit metrics.</li>
</ul>


Chiba Bank shows good gains in net interest income through 1H25 YoY 
There should be more of this with rising BOJ rates during 2H25.
Flow through to net profit can be strong, given credit metrics.


Chiba Bank - Net Interest Income Up, Expect More with BOJ Hike, Credit Metrics Allow Flow Through

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)

Kyoto Financial Group (TSE:5844) – Positive Shift in C-Suite Outlook

Kyoto Financial plans to double or triple disposals in equity holdings, which could equate to 40%+ of market cap; we upgrade to a buy rating,...

Victor Galliano

Japanese Big Cap Banks – Three Scorecard Stand-Outs, and One Wildcard

Introducing Japanese big cap banks scorecard: Resona, Mizuho, SMFG top picks with Shizuoka as the wildcard; metrics measure leverage, LDRs, cash...

Victor Galliano

Nikkei 225 Stock Average Rebalancing – January 2025

As per the “Periodic Review” conducted twice a year by Nikkei Inc. (Nikkei), the constituents of Nikkei 225 will be reviewed and changed at the end...

Vantage Capital Markets Japan

Japanese Big Cap Banks – Revisiting Interest Rate Sensitivities

BoJ raises rates to 0.5% and hints at more hikes, forecasting higher inflation in 2025. Buy Resona, Mizuho, Concordia, and Shizuoka due primarily...

Victor Galliano

Chiba Bank - Net Interest Income Up, Expect More with BOJ Hike, Credit Metrics Allow Flow Through

Chiba Bank already showing good net interest income gains, and more is likely with rate hike from BOJ, credit metrics appear strong, so better core...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Kyoto Financial Group (TSE:5844) – Positive Shift in C-Suite Outlook

​Kyoto Financial plans to double or triple disposals in equity holdings, which could equate to 40%+ of market cap; we upgrade to a buy rating,...

Victor Galliano

Japanese Big Cap Banks – Three Scorecard Stand-Outs, and One Wildcard

​Introducing Japanese big cap banks scorecard: Resona, Mizuho, SMFG top picks with Shizuoka as the wildcard; metrics measure leverage, LDRs, cash...

Victor Galliano

Nikkei 225 Stock Average Rebalancing – January 2025

As per the “Periodic Review” conducted twice a year by Nikkei Inc. (Nikkei), the constituents of Nikkei 225 will be reviewed and changed at the end...

Vantage Capital Markets Japan

Japanese Big Cap Banks – Revisiting Interest Rate Sensitivities

​BoJ raises rates to 0.5% and hints at more hikes, forecasting higher inflation in 2025. Buy Resona, Mizuho, Concordia, and Shizuoka due primarily...

Victor Galliano

Chiba Bank - Net Interest Income Up, Expect More with BOJ Hike, Credit Metrics Allow Flow Through

Chiba Bank already showing good net interest income gains, and more is likely with rate hike from BOJ, credit metrics appear strong, so better core...

Daniel Tabbush

Kyoto Financial plans to double or triple disposals in equity holdings, which could equate to 40%+ of market cap; we upgrade to a buy rating,...

Introducing Japanese big cap banks scorecard: Resona, Mizuho, SMFG top picks with Shizuoka as the wildcard; metrics measure leverage, LDRs, cash...

BoJ raises rates to 0.5% and hints at more hikes, forecasting higher inflation in 2025. Buy Resona, Mizuho, Concordia, and Shizuoka due primarily...