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>The Korean government has introduced policies ahead of April's elections, with a recent notable announcement addressing the "Korea Discount" by enhancing low PBR stock valuations.</li>
<li>A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.</li>
<li>Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, &amp; DL E&amp;C.</li>
</ul>


The Korean government has introduced policies ahead of April's elections, with a recent notable announcement addressing the "Korea Discount" by enhancing low PBR stock valuations.
A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.
Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, &amp; DL E&amp;C.


Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

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 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

<ul>
<li>In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds</li>
<li>NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most</li>
<li>Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist</li>
</ul>


In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds
NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most
Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist


South Korean Banks Screen; Stick with Hana Financial (086790 KS)

<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

Thematic (Sector/Industry)

<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

South Korea

Industrial Bank of Korea(IBK) is a policy bank providing development finance and related banking services to support small and medium-sized enterprises in Korea. The Bank provides loans, discount bills, trade finance, deposits, foreign exchange, and payment guarantees. The company also offers services such as credit cards, insurance and smart-phone banking.

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

Industrial Bank of Korea (IBK LX)

Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

You'll find the Excel file with targeted names related to low PBR attached below in the DISCUSSION Section. I screened based on estimated consensus...

Sanghyun Park

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

South Korean Banks Screen; Stick with Hana Financial (086790 KS)

In South Korean banks, we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to the latter's fast...

Victor Galliano

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 Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Identifying Specific Implementation Plans for Korea's Low-PBR Improvement Policy

You'll find the Excel file with targeted names related to low PBR attached below in the DISCUSSION Section. I screened based on estimated consensus...

Sanghyun Park

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

South Korean Banks Screen; Stick with Hana Financial (086790 KS)

In South Korean banks, we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to the latter's fast...

Victor Galliano

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

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...