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)

There are hundreds of banks in Japan. Most only focus on the so-called mega banks. Of course our fellow Smartkarma analyst <a href="https://www.smartkarma.com/profiles/1459" target="_blank" data-smartkarma-citation="accounts:1459">J. Brian Waterhouse</a> is an exception, writing comprehensive and colored research on the many perhaps, forgotten and lessor-known regional banks in Japan. As we troll through the names, two exceptionally small names stand out. But not in a good way.

There are hundreds of banks in Japan. Most only focus on the so-called mega banks. Of course our fellow Smartkarma analyst J. Brian Waterhouse is an exception, writing comprehensive and colored research on the many perhaps, forgotten and lessor-known regional banks in Japan. As we troll through the names, two exceptionally small names stand out. But not in a good way. 

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/837/original/2019-01-18_11-35-42.png?1547778954" class="editor-image img-responsive" data-smartkarma-image-id="75837"></figure>
Source: Japan Analytics
</div>
RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. This insight updates our list of overbought and oversold companies, reviews the best and worst performing companies by RPS over the last two months and adds some specific comments on stocks on each category.
RPS STATISTICS - The Company 'outlier' thresholds are set to "+4" for overbought and "-2" for oversold.  Currently, of the 3,686 listed companies for which monthly data is available, 91 companies are 'Overbought', and 120 are 'Oversold' - 2.5% and 3.2%, respectively of the total. For companies with a market capitalisation of over ¥100b, there are 35 'Overbought' and 24 'Oversold' companies. 
RPS 'TOPS' - In the last two years, 445 companies have achieved an RPS of '4' or more. 80% have seen their RPS fall to below '4' within the following two months. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 63% - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last two months have been <a href="https://www.smartkarma.com/entities/8225" target="_blank" data-smartkarma-citation="entities:8225:1">Descente (8114 JP)</a>,  <a href="https://www.smartkarma.com/entities/4908" target="_blank" data-smartkarma-citation="entities:4908:1">Ariake Japan (2815 JP)</a>, <a href="https://www.smartkarma.com/entities/15862" target="_blank" data-smartkarma-citation="entities:15862:1">Fancl (4921 JP)</a>, <a href="https://www.smartkarma.com/entities/13435" target="_blank" data-smartkarma-citation="entities:13435:1">Bandai Namco (7832 JP)</a>, <a href="https://www.smartkarma.com/entities/13475" target="_blank" data-smartkarma-citation="entities:13475:1">Don Quijote (7532 JP)</a>, and <a href="https://www.smartkarma.com/entities/1492" target="_blank" data-smartkarma-citation="entities:1492:1">Gmo Payment Gateway (3769 JP)</a>.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/838/original/2019-01-18_11-36-19.png?1547778995" class="editor-image img-responsive" data-smartkarma-image-id="75838"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/839/original/2019-01-18_11-37-01.png?1547779035" class="editor-image img-responsive" data-smartkarma-image-id="75839"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/840/original/2019-01-18_11-37-37.png?1547779070" class="editor-image img-responsive" data-smartkarma-image-id="75840"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/841/original/2019-01-18_11-38-07.png?1547779100" class="editor-image img-responsive" data-smartkarma-image-id="75841"></figure>
<div class="content-caption">
Source: Japan Analytics
</div>
RPS 'BOTTOMS' - 296 companies have seen their RPS fall to '-2' or below in the last two years. 58% have seen their RPS recover to above '-2' within three to six months. For larger capitalisation companies, the numbers are 72 companies and 67%. Some recent examples of positive RPS mean reversion in the last two months have been <a href="https://www.smartkarma.com/entities/22772" target="_blank" data-smartkarma-citation="entities:22772:1">LINE Corp (3938 JP)</a> - a 'contrarians only' selection in our last <a href="https://www.smartkarma.com/insights/japan-relative-price-score-update-overbought-and-oversold-companies" target="_blank" data-smartkarma-citation="insights:25849">Insight</a>, and <a href="https://www.smartkarma.com/entities/15457" target="_blank" data-smartkarma-citation="entities:15457:1">Tokyo Electric Power (9501 JP)</a>.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/842/original/2019-01-18_11-39-56.png?1547779218" class="editor-image img-responsive" data-smartkarma-image-id="75842"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/843/original/2019-01-18_11-42-06.png?1547779350" class="editor-image img-responsive" data-smartkarma-image-id="75843"></figure>
<div class="content-caption">Source: Japan Analytics</div>
<div class="content-highlight">
In the DETAIL section below we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the largest two-month positive and negative changes in RPS.
NB - All data is as of January 17th close.
</div>



Source: Japan Analytics

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. This insight updates our list of overbought and oversold companies, reviews the best and worst performing companies by RPS over the last two months and adds some specific comments on stocks on each category.
RPS STATISTICS - The Company 'outlier' thresholds are set to "+4" for overbought and "-2" for oversold.  Currently, of the 3,686 listed companies for which monthly data is available, 91 companies are 'Overbought', and 120 are 'Oversold' - 2.5% and 3.2%, respectively of the total. For companies with a market capitalisation of over ¥100b, there are 35 'Overbought' and 24 'Oversold' companies. 
RPS 'TOPS' - In the last two years, 445 companies have achieved an RPS of '4' or more. 80% have seen their RPS fall to below '4' within the following two months. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 63% - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last two months have been Descente (8114 JP),  Ariake Japan (2815 JP), Fancl (4921 JP), Bandai Namco (7832 JP), Don Quijote (7532 JP), and Gmo Payment Gateway (3769 JP).





Source: Japan Analytics

RPS 'BOTTOMS' - 296 companies have seen their RPS fall to '-2' or below in the last two years. 58% have seen their RPS recover to above '-2' within three to six months. For larger capitalisation companies, the numbers are 72 companies and 67%. Some recent examples of positive RPS mean reversion in the last two months have been LINE Corp (3938 JP) - a 'contrarians only' selection in our last Insight, and Tokyo Electric Power (9501 JP).


Source: Japan Analytics

In the DETAIL section below we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the largest two-month positive and negative changes in RPS.
NB - All data is as of January 17th close.


Japan: Relative Price Scores - Overbought and Oversold Companies - Calling 'Tops' & 'Bottoms'

Global Gaming and Casinos Industry Specialist, Casino Business Review LLC

Howard J Klein

Global Gaming and Casinos Industry Specialist

<ul><li>Offerings of equities and convertible bonds totaled 720 billion yen over the first nine months of '16 and the trend continues unabated. Its the lowest level of new offerings in four years.</li><li>Meanwhile, stock buybacks have soared to a record 4.35 trillion yen (USD$41.8 bn)--the most in history presumably to shore up capital efficiency.</li><li>Opponents in principle claim buybacks inhibit growth, and investment and also impede wage growth which in turn, keeps spending sluggish.</li><li>Do Japan's persistent low GDP numbers reflect some of this corporate policy strategies? Does the same phenomenon apply to the US? </li></ul>

Offerings of equities and convertible bonds totaled 720 billion yen over the first nine months of '16 and the trend continues unabated. Its the lowest level of new offerings in four years.Meanwhile, stock buybacks have soared to a record 4.35 trillion yen (USD$41.8 bn)--the most in history presumably to shore up capital efficiency.Opponents in principle claim buybacks inhibit growth, and investment and also impede wage growth which in turn, keeps spending sluggish.Do Japan's persistent low GDP numbers reflect some of this corporate policy strategies? Does the same phenomenon apply to the US? 

Could Japan's Aggressive Stock Buyback Spree Slow an Economic Rebound?

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

On Jan. 19, <a href="https://www.smartkarma.com/entities/637" target="_blank" data-smartkarma-citation="entities:637:1">Toshiba Corp (6502 JP)</a> reported that it will likely book a combined noncash charge of up to JPY 700 billion, mainly for goodwill impairments on the U.S. nuclear business acquisition through its U.S. subsidiary, Westinghouse. The scale of impairment significantly exceeded the market expectation at the end of last year, as it is likely to push Toshiba’s thin net equity position of JPY 360 billion into a deficit, with potential delisting from the Tokyo Stock Exchange in sight.As the second-largest diversified industry group after Hitachi, Toshiba maintains a membership status within the Mitsui “zaibatsu” group, a cross-industry alliance of leading domestic companies dating back to the 16th century. According to a press report, as of the end of September 2016, Toshiba maintains a total of JPY 798.7 billion in loans outstanding, consisting of: (1) JPY 110 billion for Sumitomo Mitsui Banking Corporation (<a href="https://www.smartkarma.com/entities/217" target="_blank" data-smartkarma-citation="entities:217:1">Sumitomo Mitsui Financial Group (8316 JP)</a>); (2) JPY 110 billion for Mizuho Bank (<a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial Group Inc (8411 JP)</a>); (3) JPY 102 billion for Bank of Tokyo Mitsubishi UFJ and Mitsubishi UFJ Trust (<a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ Financial Gro (8306 JP)</a>); and (4) JPY 75 billion for Sumitomo Mitsui Trust Bank (<a href="https://www.smartkarma.com/entities/19450" target="_blank" data-smartkarma-citation="entities:19450:1">Sumitomo Mitsui Trust Holdings (8309 JP)</a>).Anlayst: Mari Kumagai

On Jan. 19, Toshiba Corp (6502 JP) reported that it will likely book a combined noncash charge of up to JPY 700 billion, mainly for goodwill impairments on the U.S. nuclear business acquisition through its U.S. subsidiary, Westinghouse. The scale of impairment significantly exceeded the market expectation at the end of last year, as it is likely to push Toshiba’s thin net equity position of JPY 360 billion into a deficit, with potential delisting from the Tokyo Stock Exchange in sight.As the second-largest diversified industry group after Hitachi, Toshiba maintains a membership status within the Mitsui “zaibatsu” group, a cross-industry alliance of leading domestic companies dating back to the 16th century. According to a press report, as of the end of September 2016, Toshiba maintains a total of JPY 798.7 billion in loans outstanding, consisting of: (1) JPY 110 billion for Sumitomo Mitsui Banking Corporation (Sumitomo Mitsui Financial Group (8316 JP)); (2) JPY 110 billion for Mizuho Bank (Mizuho Financial Group Inc (8411 JP)); (3) JPY 102 billion for Bank of Tokyo Mitsubishi UFJ and Mitsubishi UFJ Trust (Mitsubishi UFJ Financial Gro (8306 JP)); and (4) JPY 75 billion for Sumitomo Mitsui Trust Bank (Sumitomo Mitsui Trust Holdings (8309 JP)).Anlayst: Mari Kumagai

Minimal Impact From Larger Credit Loss on Toshiba; Maintaining FVE for Major Japanese Banks

Four major banks under our coverage reported better-than-expected results, indicating an inflection point in their earning structure. In aggregate, of four major banks under our coverage, the numbers are similarly down across most metrics. On average, net income fell 11% from the year-ago period with operating income decreasing 19% from the year ago period. Momentum in trading and commission, both tracking the midcycle average, failed to offset lower net interest income, down 13% from the year-ago period to JPY 2,072 billion for the three major banks. Management for three major banks did not object to market consensus of JPY 300 billion negative earning impacts since the implementation of Bank of Japan's negative interest rate policy earlier this year. Management also maintained their full-year net profit forecast unchanged, citing their cautious stance after the election results. However, they also mentioned that further downside from the policy implementation is likely to be limited after the BoJ is transitioning its policy to control the yield curve instead.Our top pick will be <a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi Ufj Financial Gro (8306 JP)</a> as it is best-positioned to benefit from its underappreciated global business exposure with about a quarter of its earning assets tied to U.S. markets. This excludes a 23% lucrative equity investment in Morgan Stanley. We will revise our fair value estimates with a detailed earnings note on each respective bank in coming weeks.Analyst: Mari Kumagai

Four major banks under our coverage reported better-than-expected results, indicating an inflection point in their earning structure. In aggregate, of four major banks under our coverage, the numbers are similarly down across most metrics. On average, net income fell 11% from the year-ago period with operating income decreasing 19% from the year ago period. Momentum in trading and commission, both tracking the midcycle average, failed to offset lower net interest income, down 13% from the year-ago period to JPY 2,072 billion for the three major banks. Management for three major banks did not object to market consensus of JPY 300 billion negative earning impacts since the implementation of Bank of Japan's negative interest rate policy earlier this year. Management also maintained their full-year net profit forecast unchanged, citing their cautious stance after the election results. However, they also mentioned that further downside from the policy implementation is likely to be limited after the BoJ is transitioning its policy to control the yield curve instead.Our top pick will be Mitsubishi Ufj Financial Gro (8306 JP) as it is best-positioned to benefit from its underappreciated global business exposure with about a quarter of its earning assets tied to U.S. markets. This excludes a 23% lucrative equity investment in Morgan Stanley. We will revise our fair value estimates with a detailed earnings note on each respective bank in coming weeks.Analyst: Mari Kumagai

1H16 Better-Than-Expected Results Suggest Earnings Inflection Points; Positive For Japanese Banks

Japan

The Hokkoku Bank, Ltd. is a regional bank based in Ishikawa prefecture.  The Bank provides banking services such as deposits, loans, and foreign exchange transactions.  Hokkoku Bank also provides other financial services including securities brokerage, letter of credit, lease, credit cards, and real estate services.

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Hokkoku Financial Holdings (7381 JP)

Japan's Banks – Ugly Ducklings

There are hundreds of banks in Japan. Most only focus on the so-called mega banks. Of course our fellow Smartkarma analyst J. Brian Waterhouse is...

Daniel Tabbush

Japan: Relative Price Scores - Overbought and Oversold Companies - Calling 'Tops' & 'Bottoms'

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the...

Campbell Gunn

Could Japan's Aggressive Stock Buyback Spree Slow an Economic Rebound?

Offerings of equities and convertible bonds totaled 720 billion yen over the first nine months of '16 and the trend continues unabated. Its the...

Howard J Klein

Minimal Impact From Larger Credit Loss on Toshiba; Maintaining FVE for Major Japanese Banks

On Jan. 19, Toshiba Corp (6502 JP) reported that it will likely book a combined noncash charge of up to JPY 700 billion, mainly for goodwill...

Morningstar, Inc.

1H16 Better-Than-Expected Results Suggest Earnings Inflection Points; Positive For Japanese Banks

Four major banks under our coverage reported better-than-expected results, indicating an inflection point in their earning structure. In aggregate,...

Morningstar, Inc.

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