Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Based in Shimane Prefecture, in the Chugoku region of western Honshu, <a href="https://www.smartkarma.com/entities/6515" target="_blank" data-smartkarma-citation="entities:6515:1">San In Godo Bank (8381 JP)</a>  is unique among Japan’s 64 regional banks in being the Designated Financial Institution (DFI) for not just one but two prefectures: Shimane and neighbouring Tottori.  Long-considered a sleepy, conservatively-run bank from a backwater prefecture, San’In Godo Bank has quietly expanded its franchise over the last 20 years and now operates in seven prefectures including Hiroshima, Okayama and Hyogo prefectures in addition to its home market of Shimane and Tottori prefectures.
Trading on a PER of 10.6x (using the bank’s FY3/2019 guidance) and a PBR of 0.39x, the stock is inexpensive against the rest of the market but mid-priced against peers in a sub-sector that has for long seemed suspiciously underpriced. The stock is down just over 11% within the last six months, so has marginally outperformed against most other Japanese bank stocks in an otherwise difficult market, and may be forming a base at current levels.  For small-cap funds looking for exposure to the Japanese financial sector at a reasonable price, we believe this stock is worth considering.

Based in Shimane Prefecture, in the Chugoku region of western Honshu, San In Godo Bank (8381 JP)  is unique among Japan’s 64 regional banks in being the Designated Financial Institution (DFI) for not just one but two prefectures: Shimane and neighbouring Tottori.  Long-considered a sleepy, conservatively-run bank from a backwater prefecture, San’In Godo Bank has quietly expanded its franchise over the last 20 years and now operates in seven prefectures including Hiroshima, Okayama and Hyogo prefectures in addition to its home market of Shimane and Tottori prefectures.
Trading on a PER of 10.6x (using the bank’s FY3/2019 guidance) and a PBR of 0.39x, the stock is inexpensive against the rest of the market but mid-priced against peers in a sub-sector that has for long seemed suspiciously underpriced. The stock is down just over 11% within the last six months, so has marginally outperformed against most other Japanese bank stocks in an otherwise difficult market, and may be forming a base at current levels.  For small-cap funds looking for exposure to the Japanese financial sector at a reasonable price, we believe this stock is worth considering.

San'In Godo Bank (8381 JP): From Out of the Shadows

Japan

The Tottori Bank Ltd is a regional bank based in Tottori prefecture. The Bank provides banking services such as deposits, loans, and foreign exchange transaction.  The Tottori Bank also provides financial services such as leasing, credit cards, and venture capital business.

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Tottori Bank (8383 JP)

San'In Godo Bank (8381 JP): From Out of the Shadows

Based in Shimane Prefecture, in the Chugoku region of western Honshu, San In Godo Bank (8381 JP) is unique among Japan’s 64 regional banks in...

J. Brian Waterhouse

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