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

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of TWSE Stocks as of Sep 30th which has an aggregated short interest worth USD12.0bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Evergreen Marine, Quanta computer, Cathay Financial, Fubon Financial, Largan Precision.</li>
</ul>


We analyzed the changes in short interest of TWSE Stocks as of Sep 30th which has an aggregated short interest worth USD12.0bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Evergreen Marine, Quanta computer, Cathay Financial, Fubon Financial, Largan Precision.


TWSE Short Interest Weekly (Sep 30th): Evergreen Marine, Quanta, Cathay, Fubon, Largan

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Far Eastern International Bank / Equity Bottom-Up

Far Eastern International Bank Ltd. was founded in 1992 and is headquartered in Taipei, Taiwan. The bank operates 55 branches in Taiwan, as well as an overseas branch in Hong Kong.The bank balances its consumer division (58% of Loans) specializing in mortgages with its corporate business (42% of Loans), backed by Time Deposits funding (64% of Deposits) and to a lesser extent by transaction accounts (36%).The PH Score™ of Far Eastern International Bank is favorable given amelioration in Efficiency, in NIM/Spread, in Capital Adequacy, and in Provisioning. There was though some lightweight erosion in Profitability and some sharp NPL deterioration from a position of relative strength accompanied by a drop in LLRs as a % of NPLs from elevated levels. The PH Score™ though would have been even higher but for a very slight drop on Profitability.Relative to closely matched counterparts by size*, 2845 commands better Capitalisation and Liquidity than its counterparts and has a more diversified Income stream by non-Interest Income/Operating Revenues. However, Profitability, NIM, and Efficiency Ratios, while stable or improving, are below the median as testament to the characteristics of the National System more than anything else.In addition, Earnings Quality could be better given the weight of trading gains within Operating Income.<div class="content-highlight">A FV of 7% and a PBV of 0.74x are not unattractive. These are below thresholds of 10% and 1x, respectively. The Earnings Yield, at 8.3%, is somewhat nondescript. A Dividend Yield of 3.1% is a bonus. The bank commands robust fundamental momentum and value-quality characteristics as measured the PH Score™. Within our universe of global banks, 2845 inhabits the top decile by VFM (Valuation, Fundamentals, and momentum). This is not a gung-ho narrative but relatively low-risk and a stolid unglamorous proposition irrespective of political noise and taking in consideration C-19 dynamics.</div> *Taichung Commercial, Wuxi Rural, Union Bank of Taiwan, O-Bank, Jiangsu Changshu Rural, Luzhou Bank, Jiangsu Zhangjagang Rural, Jiangsu Jiangyin Rural, Jilin Jiutai Rural.

Far Eastern International Bank Ltd. was founded in 1992 and is headquartered in Taipei, Taiwan. The bank operates 55 branches in Taiwan, as well as an overseas branch in Hong Kong.The bank balances its consumer division (58% of Loans) specializing in mortgages with its corporate business (42% of Loans), backed by Time Deposits funding (64% of Deposits) and to a lesser extent by transaction accounts (36%).The PH Score™ of Far Eastern International Bank is favorable given amelioration in Efficiency, in NIM/Spread, in Capital Adequacy, and in Provisioning. There was though some lightweight erosion in Profitability and some sharp NPL deterioration from a position of relative strength accompanied by a drop in LLRs as a % of NPLs from elevated levels. The PH Score™ though would have been even higher but for a very slight drop on Profitability.Relative to closely matched counterparts by size*, 2845 commands better Capitalisation and Liquidity than its counterparts and has a more diversified Income stream by non-Interest Income/Operating Revenues. However, Profitability, NIM, and Efficiency Ratios, while stable or improving, are below the median as testament to the characteristics of the National System more than anything else.In addition, Earnings Quality could be better given the weight of trading gains within Operating Income.A FV of 7% and a PBV of 0.74x are not unattractive. These are below thresholds of 10% and 1x, respectively. The Earnings Yield, at 8.3%, is somewhat nondescript. A Dividend Yield of 3.1% is a bonus. The bank commands robust fundamental momentum and value-quality characteristics as measured the PH Score™. Within our universe of global banks, 2845 inhabits the top decile by VFM (Valuation, Fundamentals, and momentum). This is not a gung-ho narrative but relatively low-risk and a stolid unglamorous proposition irrespective of political noise and taking in consideration C-19 dynamics. *Taichung Commercial, Wuxi Rural, Union Bank of Taiwan, O-Bank, Jiangsu Changshu Rural, Luzhou Bank, Jiangsu Zhangjagang Rural, Jiangsu Jiangyin Rural, Jilin Jiutai Rural.

2845 PH Score™ and VFM Signals Are Positive

Taichung Commercial Bank / Equity Bottom-Up

Following on from <a href="https://www.smartkarma.com/insights/taiwan-banks-trading-thoughts-on-four-names" target="_blank" data-smartkarma-citation="insights:30193">Taiwan Banks: Trading Thoughts on Four Names</a>, we add <a href="https://www.smartkarma.com/entities/hua-nan-financial-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7621:1">Hua Nan Financial Holdings Co Ltd. (2880 TT)</a> to our analysis. We conduct a ranking exercise based on Q119 data that confirms our preference for <a href="https://www.smartkarma.com/entities/taichung-commercial-bank" target="_blank" data-smartkarma-citation="entities:4703:1">Taichung Commercial Bank (2812 TT)</a> over <a href="https://www.smartkarma.com/entities/hua-nan-financial-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7621:1">Hua Nan Financial Holdings Co Ltd. (2880 TT)</a> , <a href="https://www.smartkarma.com/entities/e-sun-financial-holding-co" target="_blank" data-smartkarma-citation="entities:719:1">E.Sun Financial Holding Co (2884 TT)</a> , <a href="https://www.smartkarma.com/entities/far-eastern-intl-bank" target="_blank" data-smartkarma-citation="entities:16585:1">Far Eastern Intl Bank (2845 TT)</a>, and <a href="https://www.smartkarma.com/entities/taiwan-business-bank" target="_blank" data-smartkarma-citation="entities:18958:1">Taiwan Business Bank (2834 TT)</a>. PH Scores (our value-quality gauge) are all high here. Share outperformance of Taiwanese banks has matched positive fundamental trends and attractive valuations.The consolidation tailwind continues to underpin the sector.

Following on from Taiwan Banks: Trading Thoughts on Four Names, we add Hua Nan Financial Holdings Co Ltd. (2880 TT) to our analysis. We conduct a ranking exercise based on Q119 data that confirms our preference for Taichung Commercial Bank (2812 TT) over Hua Nan Financial Holdings Co Ltd. (2880 TT) , E.Sun Financial Holding Co (2884 TT) , Far Eastern Intl Bank (2845 TT), and Taiwan Business Bank (2834 TT). PH Scores (our value-quality gauge) are all high here. Share outperformance of Taiwanese banks has matched positive fundamental trends and attractive valuations.The consolidation tailwind continues to underpin the sector.

Thematic (Sector/Industry)

Taiwan seems to periodically awaken to consolidation noise and initiatives. The Banking Sector is recognised by all and sundry as ripe for rationalisation given its fragmented status. Shares of late have had a consolidation tailwind.We take a look at the Q119 results at <a href="https://www.smartkarma.com/entities/taiwan-business-bank" target="_blank" data-smartkarma-citation="entities:18958:1">Taiwan Business Bank (2834 TT)</a> , <a href="https://www.smartkarma.com/entities/taichung-commercial-bank" target="_blank" data-smartkarma-citation="entities:4703:1">Taichung Commercial Bank (2812 TT)</a> , <a href="https://www.smartkarma.com/entities/e-sun-financial-holding-co" target="_blank" data-smartkarma-citation="entities:719:1">E.Sun Financial Holding Co (2884 TT)</a> and <a href="https://www.smartkarma.com/entities/far-eastern-intl-bank" target="_blank" data-smartkarma-citation="entities:16585:1">Far Eastern Intl Bank (2845 TT)</a>.Overall, we see improvements in Liquidity, Capitalisation, Asset Quality, Profitability, and Efficiency. This explains the high PH Scores on offer. Profitability though has been boosted by sharply reduced Loan Loss Provisions as Asset Quality has improved as well as trading gains. However, the Achilles Heel has been the rampant growth of Interest Expenses on Liabilities which has outpaced Interest Income on Assets. We have seen this in China too. This partly explains the reaching for other aforementioned levers to protect the bottom-line.  We favour Taiwan Business and especially TaichungCommercialBank over E.Sun and FarEastern mainly on account of greater earnings quality. TaiwanBusiness and Taichung (especially) have a better matching of underlying Income to OPEX too.

Taiwan seems to periodically awaken to consolidation noise and initiatives. The Banking Sector is recognised by all and sundry as ripe for rationalisation given its fragmented status. Shares of late have had a consolidation tailwind.We take a look at the Q119 results at Taiwan Business Bank (2834 TT) , Taichung Commercial Bank (2812 TT) , E.Sun Financial Holding Co (2884 TT) and Far Eastern Intl Bank (2845 TT).Overall, we see improvements in Liquidity, Capitalisation, Asset Quality, Profitability, and Efficiency. This explains the high PH Scores on offer. Profitability though has been boosted by sharply reduced Loan Loss Provisions as Asset Quality has improved as well as trading gains. However, the Achilles Heel has been the rampant growth of Interest Expenses on Liabilities which has outpaced Interest Income on Assets. We have seen this in China too. This partly explains the reaching for other aforementioned levers to protect the bottom-line.  We favour Taiwan Business and especially TaichungCommercialBank over E.Sun and FarEastern mainly on account of greater earnings quality. TaiwanBusiness and Taichung (especially) have a better matching of underlying Income to OPEX too.

Taiwan Banks: Trading Thoughts on Four Names

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.

Mega Financial Holding Co., Ltd / Equity Bottom-Up

Across nearly 300 banks in Asia-Pacific the average NPL ratio is 2.47%. In Taiwan banks have essentially no NPLs at just 0.27% of loans.We find it hard to imagine that this will remain the case, especially given their lending to Taiwanese companies doing business in China.The provision and earnings delta for these banks may be some of the most dramatic in Asia, given they are starting from a seemingly pristine loan book.

Across nearly 300 banks in Asia-Pacific the average NPL ratio is 2.47%. In Taiwan banks have essentially no NPLs at just 0.27% of loans.We find it hard to imagine that this will remain the case, especially given their lending to Taiwanese companies doing business in China.The provision and earnings delta for these banks may be some of the most dramatic in Asia, given they are starting from a seemingly pristine loan book.

Taiwan

Far Eastern International Bank provides general commercial banking services. The Bank's services include commercial lending, letter of credit, banker's acceptances, checking and savings accounts, installment and term loans, foreign exchange transactions, marketable securities investments, credit card issuance, trust business, stock brokerage, and underwriting.

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Far Eastern International Bank (2845 TT)

TWSE Short Interest Weekly (Sep 30th): Evergreen Marine, Quanta, Cathay, Fubon, Largan

We analyzed TWSE short interest report for the past week and highlight short interest changes in Evergreen Marine, Quanta computer, Cathay...

Ke Yan, CFA, FRM

2845 PH Score™ and VFM Signals Are Positive

Far Eastern International Bank is making fundamental progress despite some deterioration in Asset Quality from comfortable levels and some discrete...

Paul Hollingworth

Taichung Commercial Bank: Further To Go

Following on from Taiwan Banks: Trading Thoughts on Four Names, we add Hua Nan Financial Holdings Co Ltd. (2880 TT) to our analysis. We conduct a...

Paul Hollingworth

Taiwan Banks: Trading Thoughts on Four Names

Taiwan seems to periodically awaken to consolidation noise and initiatives. The Banking Sector is recognised by all and sundry as ripe for...

Paul Hollingworth

Taiwan's Banks Have Zero NPLs; For Now

Across nearly 300 banks in Asia-Pacific the average NPL ratio is 2.47%. In Taiwan banks have essentially no NPLs at just 0.27% of loans.We find it...

Daniel Tabbush

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