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>Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; <a href="https://www.smartkarma.com/entities/public-bank-berhad" target="_blank" data-smartkarma-citation="entities:583:1" rel="noopener">PB Bank</a> and <a href="https://www.smartkarma.com/entities/malayan-banking-bhd" target="_blank" data-smartkarma-citation="entities:600:1" rel="noopener">Maybank</a> are quality but seem fully valued by comparison</li>
<li>RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples</li>
<li>CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned</li>
</ul>


Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; PB Bank and Maybank are quality but seem fully valued by comparison
RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples
CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned


Malaysian Banks December 2022 Results Screener; Sticking with Buys on CIMB and RHB

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>Far too much volatility in credit costs, making clarity on earnings difficult</li>
<li>All core fee income items down sharply in quarter, credit cost delta main driver</li>
<li>Despite good lending growth, there is little to show for it in ROA and core income</li>
</ul>


Far too much volatility in credit costs, making clarity on earnings difficult
All core fee income items down sharply in quarter, credit cost delta main driver
Despite good lending growth, there is little to show for it in ROA and core income


<ul>
<li>The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank</li>
<li>We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned</li>
<li>We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG</li>
</ul>


The six Malaysian banks screen favourably on balance sheet and returns metrics to June 2022; we add CIMB to the buy list, keep RHB and we remove Maybank
We add CIMB with its positive post-provision return trends and further potential which combine constructively with CIMB’s undemanding valuations versus the peer group; its high NPL ratio is fully provisioned
We stick with RHB, with its attractive post-provision profitability and positive cost of risk trends, whilst also trading on attractive multiples versus peers and on a relatively low PEG


Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Regional rebalance occurring among active EM funds. Out of EMEA and the major Asian nations and in to ASEAN, MENA and South America.</li>
<li>ASEAN reversal shows EM investors moving from underweight to overweight since late 2021, driven by a record ownership and a rising number of funds positioned overweight the benchmark.</li>
<li>Indonesia and Thailand the key drivers and to a lesser extent Malaysia.   The Philippines has been notably absent from the move higher, whilst Singapore allocations fell over the same period.</li>
</ul>


Regional rebalance occurring among active EM funds. Out of EMEA and the major Asian nations and in to ASEAN, MENA and South America.
ASEAN reversal shows EM investors moving from underweight to overweight since late 2021, driven by a record ownership and a rising number of funds positioned overweight the benchmark.
Indonesia and Thailand the key drivers and to a lesser extent Malaysia.   The Philippines has been notably absent from the move higher, whilst Singapore allocations fell over the same period.


<ul>
<li>As concerns over China persist, Asia Ex-Japan managers are becoming more constructive on the ASEAN Region and appear amenable to increasing allocations.</li>
<li>Indonesia and Singapore are the largest country allocations, Indonesia/Vietnam the key overweights and Malaysia/Thailand the key underweights. Only 20.4% of managers have any Malaysia exposure at all.</li>
<li>Sea Ltd and Bank Central Asia are the key overweights in the region.  Recent activity has favoured Cisarua Mountain Dairy, Central Pattana Pub and Telekomunikasi Indonesia.</li>
</ul>


As concerns over China persist, Asia Ex-Japan managers are becoming more constructive on the ASEAN Region and appear amenable to increasing allocations.
Indonesia and Singapore are the largest country allocations, Indonesia/Vietnam the key overweights and Malaysia/Thailand the key underweights. Only 20.4% of managers have any Malaysia exposure at all.
Sea Ltd and Bank Central Asia are the key overweights in the region.  Recent activity has favoured Cisarua Mountain Dairy, Central Pattana Pub and Telekomunikasi Indonesia.


ASEAN Reversal.  Asia Ex-Japan Managers Raise Allocations

Malaysia

Public Bank Berhad provides a range of banking and financial services which include leasing and factoring, stock and futures broking, financing for the purchase of licensed public vehicles, and other financial services. The Group's overseas operations include branches in Hong Kong, Sri Lanka, Laos, Cambodia, and Vietnam.

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Public Bank (PBK MK)

Malaysian Banks December 2022 Results Screener; Sticking with Buys on CIMB and RHB

We keep RHB Bank and CIMB on the buy list for attractive PE multiples and PBV ratios as well as their improving return trends; PB Bank and Maybank...

Victor Galliano

RHB - Volatility

RHB's credit costs are characterized by a high degree of volatility, which is not something that we view as positive. Reversals hardly repeat...

Daniel Tabbush

Malaysian Banks June 2022 Screener; CIMB Is Our New Value Pick

We add CIMB to the buy list, keep RHB and we remove Maybank; CIMB has positive post-provision return trends and undemanding valuations; RHB has...

Victor Galliano

EM Funds Raise ASEAN Allocations

Regional rebalance occurring among active EM funds. Out of EMEA and the major Asian nations and in to ASEAN, MENA and South America.

Steven Holden

ASEAN Reversal. Asia Ex-Japan Managers Raise Allocations

As concerns over China persist, Asia Ex-Japan managers are becoming more constructive on the ASEAN Region and appear amenable to increasing...

Steven Holden

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