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.

Thematic (Sector/Industry)

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We presume there is some posturing and positioning amongst banks, to be sure no single bank is too out of line and reported rates of growth are similarly poor.  Gone are the days of heady growth, which is no surprise, given the ramp up of bad loans, worsening credit growth and pressure on net interest margins. As we look at a few of China’s banks newly…

China Bank Profit on the Way to Contraction

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks.  Bill-financing frauds seen at both the Agricultural Bank of China, or ABC, and China Citic Bank, or Citic, indicate high operational risks.Since late 2015, the China Banking Regulatory Commission has been strengthening controls by identifying violations, including fraudulent transactions, the use of financing to inflate deposits and loans, and adjustments intended to lower capital charges.  We expect this to negatively affect certain banks with relatively heavy business exposures, including ABC, China Minsheng Bank, or CMBC, and Citic.Analyst: Iris Tan, CFA 

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
​
More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main concerns for 2016 as the signs pointing to a "sudden stop" continue to grow.

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Smartkarma

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

Research Reinvented

Equity Capital Markets

China International Capital Corporation / Equity Capital Markets

CICC launched its IPO this weak, with price range indicating a valuation on par with its peers. As discussed in <a href="http://www.smartkarma.com/insights/cicc-ipo-preview-does-past-glory-warrant-a-forward-premium" target="_blank">our previous IPO preview for CICC</a>, we believe that CICC has been losing its market leadership in business such as investment banking and brokerage.Over the past few days, we have come across further information that is consistent with our view that it is a tough fight for CICC vs. its much larger Chinese domestic peers, in a fragmented market. We ran the deal through our Smartkarma IPO Framework which rates it as borderline. Since CICC is in a commoditized business with many listed peers, we would be inclined to avoid the deal. More details fold below...

CICC launched its IPO this weak, with price range indicating a valuation on par with its peers. As discussed in our previous IPO preview for CICC, we believe that CICC has been losing its market leadership in business such as investment banking and brokerage.Over the past few days, we have come across further information that is consistent with our view that it is a tough fight for CICC vs. its much larger Chinese domestic peers, in a fragmented market. We ran the deal through our Smartkarma IPO Framework which rates it as borderline. Since CICC is in a commoditized business with many listed peers, we would be inclined to avoid the deal. More details fold below...

CICC IPO: Valuation on-par with well capitalized peers, is it well positioned for competition? 

According to media reports, CICC plans to launch its IPO soon&nbsp;to raise approximately US$500-800m.&nbsp;With the IPO launch being imminent we examine the key operation data of CICC and benchmark&nbsp;CICC against its Hong Kong listed peers, from the perspective of 1) operation in different business segments, 2) financials and 3) valuation.We look at history of the company and highlight 1) how political connection plays a key role in CICC's past and 2) how CICC has been losing its halo in some&nbsp;areas of its business.&nbsp;We have also conducted valuation sensitivity analysis, on both forward PER and PBV basis, to arrive at a valuation range for CICC. Despite its status as the first joint venture investment bank in China, we think its shine has faded&nbsp;and we wouldn't buy it, were it to price at a premium over its well capitalized big competitors.&nbsp;

According to media reports, CICC plans to launch its IPO soon&nbsp;to raise approximately US$500-800m.&nbsp;With the IPO launch being imminent we examine the key operation data of CICC and benchmark&nbsp;CICC against its Hong Kong listed peers, from the perspective of 1) operation in different business segments, 2) financials and 3) valuation.We look at history of the company and highlight 1) how political connection plays a key role in CICC's past and 2) how CICC has been losing its halo in some&nbsp;areas of its business.&nbsp;We have also conducted valuation sensitivity analysis, on both forward PER and PBV basis, to arrive at a valuation range for CICC. Despite its status as the first joint venture investment bank in China, we think its shine has faded&nbsp;and we wouldn't buy it, were it to price at a premium over its well capitalized big competitors.&nbsp;

CICC IPO preview:  Does past glory warrant a forward premium?

China

China International Capital Corporation Ltd. (CICC) operates as an international investment bank. The Company provides financial services, including investment banking, capital markets, securities sales and trading, fixed income, asset management, and private equity. China International Capital also offers individual wealth management and research services.

China International Capital Corporation (3908 HK)

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China International Capital Corporation (3908 HK)

China Bank Profit on the Way to Contraction

It is strange to see that so many China banks are reporting nearly identical net profit, close to 0% in their just announced 2015 results. We...

Daniel Tabbush

Tightened Regulations on China's Bill Financing Pose NIM Pressures for Certain Banks

Risks regarding bill-financing business have recently become a new source of concern for Chinese banks. Bill-financing frauds seen at both the...

Morningstar, Inc.

A "Sudden Stop" For China in 2016?

After an intriguing 2015 when the economy surprised to the downside by the stock market performed "relatively" well, China is amongst our main...

John-Paul Smith

CICC IPO: Valuation on-par with well capitalized peers, is it well positioned for competition?

CICC launched its IPO this weak, with price range indicating a valuation on par with its peers. As discussed in our previous IPO preview for CICC,...

Ke Yan, CFA, FRM

CICC IPO preview: Does past glory warrant a forward premium?

According to media reports, CICC plans to launch its IPO soon to raise approximately US$500-800m. With the IPO launch being imminent we examine the...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)