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>Our weighted metrics of share valuations, capital adequacy and credit quality feed into an investment valuation matrix; we look for opportunities where the risks are well discounted in current valuations</li>
<li>We stick with Hana Financial for its attractive valuations, PEG and equity risk premia; there is potential for management to deliver on its Value-Up plan over the medium term</li>
<li>Woori is the stand-out in terms of our matrix; this is based on valuation, PEG ratio, credit quality and its improving pre- and post-provision returns along with efficiency ratio</li>
</ul>


Our weighted metrics of share valuations, capital adequacy and credit quality feed into an investment valuation matrix; we look for opportunities where the risks are well discounted in current valuations
We stick with Hana Financial for its attractive valuations, PEG and equity risk premia; there is potential for management to deliver on its Value-Up plan over the medium term
Woori is the stand-out in terms of our matrix; this is based on valuation, PEG ratio, credit quality and its improving pre- and post-provision returns along with efficiency ratio


Korean Banks; Positive Fundamental and Share Price Trends for Hana (086790 KS) And Woori (316140 KS)

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>On 4 February, Hana Financial (086790 KS) announced a share buyback and cancellation of 400 billion won worth of treasury shares, representing 2.3% of its market cap. </li>
<li><em><strong>Hana Financial plans to achieve a total shareholder return ratio of 50% by 2027. Its total shareholder return ratio increased to 37.8% in 2024, up 4.8% YoY. </strong></em></li>
<li>Hana Financial's total cash dividend per common share is 3,600 won in 2024 (up 5.9% YoY). Hana Financial's total shareholder return ratio increased to 37.8% in 2024, up 4.8% YoY. </li>
</ul>


On 4 February, Hana Financial (086790 KS) announced a share buyback and cancellation of 400 billion won worth of treasury shares, representing 2.3% of its market cap. 
Hana Financial plans to achieve a total shareholder return ratio of 50% by 2027. Its total shareholder return ratio increased to 37.8% in 2024, up 4.8% YoY. 
Hana Financial's total cash dividend per common share is 3,600 won in 2024 (up 5.9% YoY). Hana Financial's total shareholder return ratio increased to 37.8% in 2024, up 4.8% YoY. 


Hana Financial: Share Buyback and Cancellation of 400 Billion Won + 50% Total Shareholder Return

<ul>
<li>Profitability ratio trends were mixed in 3Q24, with most of the South Korean banks seeing improved post-provision returns to September-end, helped by generally lower cost of risk trends</li>
<li>Hana Financial remains our big-cap pick for its attractive valuations, PEG and equity risk premia; there is potential for its inclusion in a planned Value-Up index rebalancing scheduled for December</li>
<li>Among the smaller caps, Woori stands out in terms of valuation, PEG ratio, credit quality and it has registered improving pre- provision profitability and efficiency ratio</li>
</ul>


Profitability ratio trends were mixed in 3Q24, with most of the South Korean banks seeing improved post-provision returns to September-end, helped by generally lower cost of risk trends
Hana Financial remains our big-cap pick for its attractive valuations, PEG and equity risk premia; there is potential for its inclusion in a planned Value-Up index rebalancing scheduled for December
Among the smaller caps, Woori stands out in terms of valuation, PEG ratio, credit quality and it has registered improving pre- provision profitability and efficiency ratio


South Korean Banks; Hana Financial (086790 KS) And Woori (316140 KS) Remain Our Key Positive Picks

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

Korea Stock Exchange KOSPI 200 / Event-Driven

<ul>
<li>Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. </li>
<li>Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.</li>
<li>There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.</li>
</ul>


Since short selling was banned in November 2023, short interest has plunged in Korea as shorts were covered. Markets have not done much over the last 16 months though. 
Foreign investor holdings have dropped from 32.05% in July to 28.57%. The top 25 stocks bought by foreign investors outperformed the top 25 stocks sold by 128% in 16 months.
There will be trade opportunities across indices, pref/ords, index migrations and deletions, potential market upgrades and overvalued stocks being sold.


Korea: Short Selling Is Back in March; Trade Ideas

<ul>
<li>Hana Financial, along with KB Financial did not make the cut for the Korea Value-up index announced on the 24th September; Hana apparently fell short of the PBV ratio threshold</li>
<li>Despite being excluded from the Value-up Index, Hana remains our core South Korean bank pick for its attractive valuations, low PEG, solid core capital ratio and strong credit quality credentials</li>
<li>We believe Hana stands out positively on fundamentals and return trends versus its peers, and there is also potential for its inclusion in a planned rebalancing scheduled in December</li>
</ul>


Hana Financial, along with KB Financial did not make the cut for the Korea Value-up index announced on the 24th September; Hana apparently fell short of the PBV ratio threshold
Despite being excluded from the Value-up Index, Hana remains our core South Korean bank pick for its attractive valuations, low PEG, solid core capital ratio and strong credit quality credentials
We believe Hana stands out positively on fundamentals and return trends versus its peers, and there is also potential for its inclusion in a planned rebalancing scheduled in December


Hana Financial (086790 KS); Error of Omission from the Value-Up Index?

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)

South Korean Banks; Hana Financial (086790 KS) And Woori (316140 KS) Remain Our Key Positive Picks

Among South Korean banks, Hana and Woori stand out; attractively valued Hana has potential for inclusion in a planned Value-Up index rebalancing,...

Victor Galliano

Korea: Short Selling Is Back in March; Trade Ideas

Short selling in Korea commences from Monday. There will be a lot of interest in shorting stocks/sectors depending on how they have performed since...

Brian Freitas