Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<ul>
<li>It was reported in numerous local media that Viva Republica has sent several RFPs to several large domestic securities companies to be underwriters of a potential IPO in 2024. </li>
<li>Viva Republica is one of the largest Korean fintech companies. Market value of Viva Republica is estimated at more than 9 trillion won.</li>
<li>E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing of Viva Republica. </li>
</ul>


It was reported in numerous local media that Viva Republica has sent several RFPs to several large domestic securities companies to be underwriters of a potential IPO in 2024. 
Viva Republica is one of the largest Korean fintech companies. Market value of Viva Republica is estimated at more than 9 trillion won.
E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing of Viva Republica. 


Key Beneficiaries of a Potential Viva Republica IPO in 2024

Equity Bottom-Up

<ul>
<li>The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean banks in 2024. </li>
<li>On average, if H-Index declines below 5,699, then the majority of the investors on these H-Index could start to incur major losses starting 1Q 2024. </li>
<li>Amid challenges of lower interest rates expectations and higher losses from ELS products, major Korean banks could be more hesitant on share buybacks and increasing their dividends in 1H 2024.</li>
</ul>


The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean banks in 2024. 
On average, if H-Index declines below 5,699, then the majority of the investors on these H-Index could start to incur major losses starting 1Q 2024. 
Amid challenges of lower interest rates expectations and higher losses from ELS products, major Korean banks could be more hesitant on share buybacks and increasing their dividends in 1H 2024.


ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024

<ul>
<li>The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. </li>
<li>The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). </li>
<li>Major Korean banks may need a <em>"Hail Mary"</em> pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. </li>
</ul>


The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. 
The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). 
Major Korean banks may need a "Hail Mary" pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. 


ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion Won for Major Korean Banks in 2024

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.

<ul>
<li>In our latest South Korean banks screener; we switch from Hana Financial to KB Financial as our preferred Korean banks pick</li>
<li>NPLs and precautionary quality credits continue on a rising trend, whilst KB has controlled its NPL ratio and precautionary ratio better than most to 3Q23</li>
<li>KB has a low PBV ratio relative to its ROE, rising post-provision returns, a healthy CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist</li>
</ul>


In our latest South Korean banks screener; we switch from Hana Financial to KB Financial as our preferred Korean banks pick
NPLs and precautionary quality credits continue on a rising trend, whilst KB has controlled its NPL ratio and precautionary ratio better than most to 3Q23
KB has a low PBV ratio relative to its ROE, rising post-provision returns, a healthy CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist


S Korean Banks Screen; KB Financial (105560 KS) Most Compelling on Valuations, Return Trends & PEG

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.

<ul>
<li>Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction</li>
<li>Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23</li>
<li>Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.</li>
</ul>


Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction
Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23
Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.


KakaoBank - Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Hana Financial (086790 KS)

Key Beneficiaries of a Potential Viva Republica IPO in 2024

E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing...

Douglas Kim

ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024

The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean...

Douglas Kim

S Korean Banks Screen; KB Financial (105560 KS) Most Compelling on Valuations, Return Trends & PEG

KB Financial is our preferred pick for S Korean banks due to good control of NPL & precautionary ratios, low PBV ratio, rising returns, and strong...

Victor Galliano

KakaoBank - Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc

Major net interest income pressure, NIM down sharply in past 6 months. Operating costs not supporting ROA. Credit metrics worsening: LLP from 10%...

Daniel Tabbush

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Key Beneficiaries of a Potential Viva Republica IPO in 2024

E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing...

Douglas Kim

ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024

The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean...

Douglas Kim

ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion Won for Major Korean Banks in 2024

The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products.

Douglas Kim

S Korean Banks Screen; KB Financial (105560 KS) Most Compelling on Valuations, Return Trends & PEG

​KB Financial is our preferred pick for S Korean banks due to good control of NPL & precautionary ratios, low PBV ratio, rising returns, and strong...

Victor Galliano

KakaoBank - Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc

Major net interest income pressure, NIM down sharply in past 6 months. Operating costs not supporting ROA. Credit metrics worsening: LLP from 10%...

Daniel Tabbush

KB Financial is our preferred pick for S Korean banks due to good control of NPL & precautionary ratios, low PBV ratio, rising returns, and strong...