Japan Experts, Extraordinary Performance, Astris Advisory Japan

Astris Advisory Japan

Our Corporate Advisory service is designed to give clients access to a wider range of investors. These include Japan specialists as well as global investors. The goal is to help achieve a fair equity valuation.

Japan Experts, Extraordinary Performance

Equity Bottom-Up

Kyoto Financial Group  / Equity Bottom-Up

<ul><li>A long tail of earnings growth – Although investor attention on Kyoto FG centers on its significant equity holdings in Kyoto-based companies and the unwinding of those positions we believe the more important story is the improving operating trend at the underlying bank which we think is underappreciated and offers a long tail of earnings growth that is unique among Japan's regional banks as its fixed-rate loan book gradually reprices.</li><li>The equity portfolio is an additional kicker, providing shareholder return optionality well above peers as it is monetized, and together we think they warrant a premium valuation for what the Bank offers.</li><li>Conservative targets, strong start – The new MTP targets net income of ¥90bn+ by FY3/29 (~2x FY3/26 excluding the gain on Nintendo shares), alongside ROE of 8%+, OHR in the 40% range, ¥300bn+ of shareholding reduction, and a total payout of 50%+.</li></ul>

A long tail of earnings growth – Although investor attention on Kyoto FG centers on its significant equity holdings in Kyoto-based companies and the unwinding of those positions we believe the more important story is the improving operating trend at the underlying bank which we think is underappreciated and offers a long tail of earnings growth that is unique among Japan's regional banks as its fixed-rate loan book gradually reprices.The equity portfolio is an additional kicker, providing shareholder return optionality well above peers as it is monetized, and together we think they warrant a premium valuation for what the Bank offers.Conservative targets, strong start – The new MTP targets net income of ¥90bn+ by FY3/29 (~2x FY3/26 excluding the gain on Nintendo shares), alongside ROE of 8%+, OHR in the 40% range, ¥300bn+ of shareholding reduction, and a total payout of 50%+.

Kyoto Financial Group (5844 JP) - Much More Upside Beyond Equity Monetization