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.

Equity Bottom-Up

China’s <a href="https://www.smartkarma.com/entities/27174" target="_blank" data-smartkarma-citation="entities:27174:1">Jiangxi Bank Co Ltd (1916 HK; "JBCL")</a> is the newest bank to list from the Mainland on the Hong Kong market. It is clear from its most recent full year financials that there may be disappointment with asset quality, and possibly more thanpeer banks. JBCL chose to lower its credit costs by 29% last year, despite its 17% higher level of non-performing loans (NPLs), which is only understandable in the context of trying to raise capital. What makes this imprudent behavior worse, is that JBCL…

China’s Jiangxi Bank Co Ltd (1916 HK; "JBCL") is the newest bank to list from the Mainland on the Hong Kong market. It is clear from its most recent full year financials that there may be disappointment with asset quality, and possibly more thanpeer banks. JBCL chose to lower its credit costs by 29% last year, despite its 17% higher level of non-performing loans (NPLs), which is only understandable in the context of trying to raise capital. What makes this imprudent behavior worse, is that JBCL…

Jiangxi Bank – Flattered Credit Costs Before IPO with Highest Asset Expansion of Peers

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Jiangxi Bank, a Chinese city commercial bank, has filed a draft prospectus for a Hong Kong IPO. Jiangxi Bank has superior growth and profitability metrics in comparison to its peer group of city commercial banks. Jiangxi Bank’s strong profitability is due to its high net interest margin (NIM). However, this is tempered by asset quality indicators which are worse than its peer group. Our overall view is that the IPO should be offered at a rating which is at best, in line with its peers due to the following factors:<ol><li>While the average city commercial banks' net profit growth declined from 14% in 2016 to 9% in H117, Jiangxi Bank’s net profit growth substantially increased from 117% in 2016 to 124% in the first nine months of 2017. The net profit growth was driven by asset growth with Jiangxi Bank’s total assets growing twice the rate of the average city commercial bank.</li><li>However, since 2015, Jiangxi’s non-performing loan (NPL) ratio is higher than the average city commercial bank's NPL ratio. In 2016, Jiangxi’s Bank NPL ratio was 20 basis points higher than the average city commercial bank.</li><li>Markedly, a lead indicator for future NPLs paints a worrying picture. Jiangxi Bank’s special mention loan ratio is high even though it declined from 9.7% in 2015 to 4.0% in the first nine months of 2017. In contrast, the average city commercial bank's ratio decreased from 2.7% in 2015 to 2.4% in 1H17.</li></ol>We will provide a view of valuation once the IPO price range is announced.

Jiangxi Bank, a Chinese city commercial bank, has filed a draft prospectus for a Hong Kong IPO. Jiangxi Bank has superior growth and profitability metrics in comparison to its peer group of city commercial banks. Jiangxi Bank’s strong profitability is due to its high net interest margin (NIM). However, this is tempered by asset quality indicators which are worse than its peer group. Our overall view is that the IPO should be offered at a rating which is at best, in line with its peers due to the following factors:While the average city commercial banks' net profit growth declined from 14% in 2016 to 9% in H117, Jiangxi Bank’s net profit growth substantially increased from 117% in 2016 to 124% in the first nine months of 2017. The net profit growth was driven by asset growth with Jiangxi Bank’s total assets growing twice the rate of the average city commercial bank.However, since 2015, Jiangxi’s non-performing loan (NPL) ratio is higher than the average city commercial bank's NPL ratio. In 2016, Jiangxi’s Bank NPL ratio was 20 basis points higher than the average city commercial bank.Markedly, a lead indicator for future NPLs paints a worrying picture. Jiangxi Bank’s special mention loan ratio is high even though it declined from 9.7% in 2015 to 4.0% in the first nine months of 2017. In contrast, the average city commercial bank's ratio decreased from 2.7% in 2015 to 2.4% in 1H17.We will provide a view of valuation once the IPO price range is announced.

Jiangxi Bank IPO Preview: Strong Growth Offset by Weak Asset Quality

China

Jiangxi Bank Co., Ltd. operates as a commercial bank. The Bank offers public deposits, loans, domestic settlement, foreign exchange, notes discounting, government bonds underwriting, credit guarantee, and Internet banking services. Jiangxi Bank provides services for enterprises and individuals.

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Jiangxi Bank (NCCZ CH)

Jiangxi Bank – Flattered Credit Costs Before IPO with Highest Asset Expansion of Peers

China’s Jiangxi Bank Co Ltd (1916 HK; "JBCL") is the newest bank to list from the Mainland on the Hong Kong market. It is clear from its most...

Daniel Tabbush

Jiangxi Bank IPO Preview: Strong Growth Offset by Weak Asset Quality

Jiangxi Bank, a Chinese city commercial bank, has filed a draft prospectus for a Hong Kong IPO. Jiangxi Bank has superior growth and profitability...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)