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

Mizuho Financial Group / Equity Bottom-Up

<ul>
<li>We focus on five key factors, namely capital adequacy, credit quality, exposure to government securities, interest rate gearing and valuation with growth metrics for our Japanese banks universe</li>
<li>It is important to note that the relaxation of yield curve control is translating into rising loan yields generally in the BoJ data to September-end 2023</li>
<li>We stick with our positive views on Resona, Mizuho and Concordia; we remove Hachijuni from the buy list and SMFG, replacing the latter with MUFG in the large cap banks</li>
</ul>


We focus on five key factors, namely capital adequacy, credit quality, exposure to government securities, interest rate gearing and valuation with growth metrics for our Japanese banks universe
It is important to note that the relaxation of yield curve control is translating into rising loan yields generally in the BoJ data to September-end 2023
We stick with our positive views on Resona, Mizuho and Concordia; we remove Hachijuni from the buy list and SMFG, replacing the latter with MUFG in the large cap banks


Japanese Banks – Our Main Thoughts Post 2Q23 Results

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>Following yesterday's news release by Reuters that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> could sell up to 10% of <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a>, the deal was officially launched today.</li>
<li>Toyota is the company’s largest shareholder and its largest customer.</li>
<li>We have covered the deal background in our earlier note, <a href="https://www.smartkarma.com/insights/denso-corp-placement-possible-placement-by-toyota-to-raise-us-4-7bn" target="_blank" data-smartkarma-citation="insights:118615" rel="noopener">Denso Corp Placement - Possible Placement by Toyota to Raise US$4.7bn</a>. In this note, we talk about the final terms.</li>
</ul>


Following yesterday's news release by Reuters that Toyota Motor (7203 JP) could sell up to 10% of Denso Corp (6902 JP), the deal was officially launched today.
Toyota is the company’s largest shareholder and its largest customer.
We have covered the deal background in our earlier note, Denso Corp Placement - Possible Placement by Toyota to Raise US$4.7bn. In this note, we talk about the final terms.


Denso Corp Placement - Toyota to Raise US$4.4bn, as Expected

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

AZ-Com Maruwa Holdings / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/az-com-maruwa-holdings" target="_blank" data-smartkarma-citation="entities:17280:1" rel="noopener">AZ-Com Maruwa Holdings (9090 JP)</a> is looking to raise around US$206m in its mixed follow-on offering. </li>
<li>The deal will be a large one to digest, at 129 days of three month ADV, 5.5% dilution and 12.2% of current mcap.</li>
<li>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>



AZ-Com Maruwa Holdings (9090 JP) is looking to raise around US$206m in its mixed follow-on offering. 
The deal will be a large one to digest, at 129 days of three month ADV, 5.5% dilution and 12.2% of current mcap.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


AZ Com Maruwa Placement - Mixed Feelings About the Mixed Offering

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona Group (2168 JP)</a> is massively net cash. And it's ofloading <a href="https://www.smartkarma.com/entities/benefit-one-inc" target="_blank" data-smartkarma-citation="entities:14502:1" rel="noopener">Benefit One Inc (2412 JP)</a>. Though we don't know what the future holds, Pasona is the wrong price.</li>
<li>
<a href="https://www.smartkarma.com/entities/enn-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:316:1" rel="noopener">ENN Energy (2688 HK)</a> controlling shreholder announced it intends to increase it stake. And it's been in the market almost everry day since the interims. </li>
<li>
<a href="https://www.smartkarma.com/entities/zhejiang-expressway-co-h" target="_blank" data-smartkarma-citation="entities:2178:1" rel="noopener">Zhejiang Expressway (576 HK)</a> announced its rights offering. It's at a long-term low price, and about to earn a long-term high net income, and have a long-term high payout ratio</li>
</ul>



Pasona Group (2168 JP) is massively net cash. And it's ofloading Benefit One Inc (2412 JP). Though we don't know what the future holds, Pasona is the wrong price.

ENN Energy (2688 HK) controlling shreholder announced it intends to increase it stake. And it's been in the market almost everry day since the interims. 

Zhejiang Expressway (576 HK) announced its rights offering. It's at a long-term low price, and about to earn a long-term high net income, and have a long-term high payout ratio


Last Week in Event SPACE: Zhejiang, Pasona, ENN Energy, Asahi Group, Azure Minerals

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>ROE is now 24.4% in 1H24 compared with 18.0% last year. ROE consistently rising well, from 15.9% in FY21. </li>
<li>Quarterly net profit up 47% YoY in 2Q24. On an annualized basis, net profit in FY24 can show considerable delta from FY23, a year when returns and profit were good.</li>
<li>Costs are well-contained. SG&amp;A to assets was 23.7% at its recent peak and now it's 20.8%. SG&amp;A to revenue is now 55.5% compared with 65.3% at its recent peak.</li>
</ul>


ROE is now 24.4% in 1H24 compared with 18.0% last year. ROE consistently rising well, from 15.9% in FY21. 
Quarterly net profit up 47% YoY in 2Q24. On an annualized basis, net profit in FY24 can show considerable delta from FY23, a year when returns and profit were good.
Costs are well-contained. SG&amp;A to assets was 23.7% at its recent peak and now it's 20.8%. SG&amp;A to revenue is now 55.5% compared with 65.3% at its recent peak.


SPARX - Sharply Expanding ROE, 1H24 Profit Annualized Surges YoY, FUM Strongly Up, Costs Contained

Japan

Mitsubishi UFJ Financial Group, Inc. (MUFG) is a holding company established through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings. As a financial group, the Company provides a variety of financial and investment services including commercial banking, trust banking, international finance, and assets management services.

Mitsubishi UFJ Financial (MUFG) ADR (MUFG US)

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Mitsubishi UFJ Financial (MUFG) ADR (MUFG US)

Japanese Banks – Our Main Thoughts Post 2Q23 Results

We look to capital ratios, delinquency, exposure to sovereign bonds, interest rate gearing and valuation; buy Resona, Mizuho and Concordia, adding...

Victor Galliano

Denso Corp Placement - Toyota to Raise US$4.4bn, as Expected

Following yesterday's news release by Reuters that Toyota Motor (7203 JP) could sell up to 10% of Denso Corp (6902 JP), the deal was officially...

Sumeet Singh

AZ Com Maruwa Placement - Mixed Feelings About the Mixed Offering

AZ-Com Maruwa Holdings (9090 JP) is looking to raise around US$206m in its mixed follow-on offering. In this note, we will talk about the deal...

Ethan Aw

Last Week in Event SPACE: Zhejiang, Pasona, ENN Energy, Asahi Group, Azure Minerals

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

SPARX - Sharply Expanding ROE, 1H24 Profit Annualized Surges YoY, FUM Strongly Up, Costs Contained

Continuously expanding ROE now to 24%, profit growth at 47% YoY in the quarter, can mean an exceptionally strong full year. Costs are well...

Daniel Tabbush

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