Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>The 200 largest weighted companies in the GEM index reported average EPS growth of +6.3%y/y for 1Q23-to-date, slightly down from the +7.5% reported for 4Q22.</li>
<li>Only 51% of companies delivered positive sales surprises, whilst 60% delivered positive EPS surprises, an increase from the trend seen over the past year.</li>
<li>Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.</li>
</ul>


The 200 largest weighted companies in the GEM index reported average EPS growth of +6.3%y/y for 1Q23-to-date, slightly down from the +7.5% reported for 4Q22.
Only 51% of companies delivered positive sales surprises, whilst 60% delivered positive EPS surprises, an increase from the trend seen over the past year.
Historically, there has been a significant difference in relative share price performance between the largest positive versus negative surprise generators, for 3 months after the reporting date.


Global Emerging Markets: Reporting Season Summary, 1Q2023

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)

<ul>
<li>Daewoo Shipping &amp; Marine Engineering early in May 2023 agreed to takeover by Hanwah Group</li>
<li>Hanwah Ocean, the re-named entity, reported financial stress for years, a lumpy NPL for banks</li>
<li>C&amp;P CIQ data suggests that all four major Korean banks are creditors to Hanwah Ocean</li>
</ul>


Daewoo Shipping &amp; Marine Engineering early in May 2023 agreed to takeover by Hanwah Group
Hanwah Ocean, the re-named entity, reported financial stress for years, a lumpy NPL for banks
C&amp;P CIQ data suggests that all four major Korean banks are creditors to Hanwah Ocean


Korea's Large Banks & Hanwah Ocean - Credit Reversals or Overhang?

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

<ul>
<li>In our latest South Korean banks screener; we stick with quality play Hana Financial and deep value Industrial Bank of Korea, despite rising credit quality headwinds</li>
<li>We introduce delinquency ratio charts that show that NPLs and other poor quality credits are on a rising trend, yet most banks have healthy NPL provisions coverage</li>
<li>Hana has a low PBV ratio relative to its premium ROE and an undemanding PEG; Industrial Bank of Korea has attractive multiples, PEG ratio and near top returns versus peers</li>
</ul>


In our latest South Korean banks screener; we stick with quality play Hana Financial and deep value Industrial Bank of Korea, despite rising credit quality headwinds
We introduce delinquency ratio charts that show that NPLs and other poor quality credits are on a rising trend, yet most banks have healthy NPL provisions coverage
Hana has a low PBV ratio relative to its premium ROE and an undemanding PEG; Industrial Bank of Korea has attractive multiples, PEG ratio and near top returns versus peers


South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

<ul>
<li>We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising delinquencies.</li>
<li>The major reasons for higher loans and cards delinquency ratios include higher interest rate burdens, higher inflation rates, inverted yield curve, weakening economy, and pressures on disposable income.</li>
<li>The delinquency ratios of the largest nine banks in Korea all worsened in 1Q 2023 (for both banks and credit cards).</li>
</ul>


We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising delinquencies.
The major reasons for higher loans and cards delinquency ratios include higher interest rate burdens, higher inflation rates, inverted yield curve, weakening economy, and pressures on disposable income.
The delinquency ratios of the largest nine banks in Korea all worsened in 1Q 2023 (for both banks and credit cards).


Korean Banks: Sharp Rise in Delinquency Ratios in 1Q 2023 & Inverted Yield Curve

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&amp;G Corporation are predicted to be excluded.</li>
<li>The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.</li>
<li>We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.</li>
</ul>


Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&amp;G Corporation are predicted to be excluded.
The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.


Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

South Korea

Hana Financial Group Inc., in accordance with Financial Holding Companies Act, was established on December 1, 2005, through stock transfer with the former shareholders of its subsidiaries in order to provide management services and financing to associated companies.

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Hana Financial (086790 KS)

Global Emerging Markets: Reporting Season Summary, 1Q2023

In this quarterly insight, we analyse recent GEM reporting trends with reference to Sales and EPS growth, size and percentage of positive...

Wium Malan, CFA

Korea's Large Banks & Hanwah Ocean - Credit Reversals or Overhang?

Hanwah Ocean recapitalization may suggest NPL benefits for Korea's largest banks, but other deterioration can overshadow this one single exposure....

Daniel Tabbush

South Korea Banks Screen; Focus on Hana Financial (086790 KS) & Industrial Bank of Korea (024110 KS)

Despite worsening sector NPL trends, we like Hana for attractive valuations to its premium ROE and an undemanding PEG; Industrial Bank of Korea has...

Victor Galliano

Korean Banks: Sharp Rise in Delinquency Ratios in 1Q 2023 & Inverted Yield Curve

We believe that the nine Korean banks (on average) are likely to continue to underperform KOSPI in the next 6-12 months due to the continued rising...

Douglas Kim

Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

This post presents a Long Short basket trade idea on the four potential constituent changes in the KODEX Top 5 Plus TR ETF rebalancing in June.

Sanghyun Park

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