Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Hokuhoku made a somewhat startling buyback announcement in late December and the shares jumped.</li>
<li>Then they bought back almost nothing in January, and bought back 17.4% of traded volume in February.</li>
<li>There is a lot left over and Hokuhoku remains one of the cheapest regional banks out there.</li>
</ul>


Hokuhoku made a somewhat startling buyback announcement in late December and the shares jumped.
Then they bought back almost nothing in January, and bought back 17.4% of traded volume in February.
There is a lot left over and Hokuhoku remains one of the cheapest regional banks out there.


Hokuhoku Financial (8377 JP) - Buyback Dynamics For March... 👀

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

SBI Sumishin Net Bank  / Equity Capital Markets

<ul>
<li>SBI Sumishin Net Bank (SSNB) will be looking to raise around US$1.1bn in its upcoming IPO.</li>
<li>SSNB is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group, a financial services firm. </li>
<li>The deal, if successful, would be Japan’s first online-only bank to go public. In this note, we will talk about our earnings forecast and throughts in valuations.</li>
</ul>


SBI Sumishin Net Bank (SSNB) will be looking to raise around US$1.1bn in its upcoming IPO.
SSNB is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group, a financial services firm. 
The deal, if successful, would be Japan’s first online-only bank to go public. In this note, we will talk about our earnings forecast and throughts in valuations.


SBI Sumishin Net Bank Pre-IPO - Earnings Forecast and Thoughts on Valuations

<ul>
<li>The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.</li>
<li>The Nikkei Index Team in July 2021 <a href="https://indexes.nikkei.co.jp/nkave/archives/news/20210705E_1.pdf" target="_blank" rel="noopener">announced</a> a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  </li>
<li>At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.</li>
</ul>


The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.


Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/suruga-bank-ltd" target="_blank" data-smartkarma-citation="entities:6267:1" rel="noopener">Suruga Bank Ltd (8358 JP)</a>has raised its interim guidance for 1H FY3/2022 consolidated net profits for the second time in three months: this time by +78% to ¥17.8 billion, or ¥76.86/share.  Credit costs, initially estimated at ¥2 billion for 1H FY3/2022, are now likely to be negative: a write-back to profits of ‘surplus’ loan loss reserves of as much as ¥6.6 billion, suggesting further progress in cleaning up the balance-sheet after the catastrophic ‘share house’ scandal.  This is significant: back in May this year, Suruga was forecasting an interim net loss of ¥2.3 billion because of further precautionary provisioning expenses.Suruga Bank remains one of the most heavily traded Japanese bank stocks and is regularly one of the Top 5 Japanese bank stocks in terms of daily trading volume behind only the three megabanks and <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a>. It is currently trading on a remarkably low PER versus peers of 4.1x (assuming 2H FY3/2022 consolidated net profits are at least ¥8 billion, producing a FY3/2022 EPS of ¥122.2/share or better) and an undemanding PBR of 0.37x.Risks remain, of course, and we continue to warn that this is a stock for players of the Long Game only.  The intended disposal of the 18.5% stake in Suruga held by its largest shareholder, <a href="https://www.smartkarma.com/entities/nojima-corp" target="_blank" data-smartkarma-citation="entities:9655:1" rel="noopener">Nojima Corp (7419 JP)</a>, remains an unresolved issue. Nevertheless, the positives continue to increase while the negatives continue to diminish, and the shares are significantly outperforming the Topix Banks Index for the first time in many months.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/240/048/original/8358-Suruga-2021-1105-8358vsTPNBNK-CY2021.jpg?1636249764" class="editor-image img-responsive" data-smartkarma-image-id="240048"></figure></section>

Suruga Bank Ltd (8358 JP)has raised its interim guidance for 1H FY3/2022 consolidated net profits for the second time in three months: this time by +78% to ¥17.8 billion, or ¥76.86/share.  Credit costs, initially estimated at ¥2 billion for 1H FY3/2022, are now likely to be negative: a write-back to profits of ‘surplus’ loan loss reserves of as much as ¥6.6 billion, suggesting further progress in cleaning up the balance-sheet after the catastrophic ‘share house’ scandal.  This is significant: back in May this year, Suruga was forecasting an interim net loss of ¥2.3 billion because of further precautionary provisioning expenses.Suruga Bank remains one of the most heavily traded Japanese bank stocks and is regularly one of the Top 5 Japanese bank stocks in terms of daily trading volume behind only the three megabanks and Resona Holdings (8308 JP). It is currently trading on a remarkably low PER versus peers of 4.1x (assuming 2H FY3/2022 consolidated net profits are at least ¥8 billion, producing a FY3/2022 EPS of ¥122.2/share or better) and an undemanding PBR of 0.37x.Risks remain, of course, and we continue to warn that this is a stock for players of the Long Game only.  The intended disposal of the 18.5% stake in Suruga held by its largest shareholder, Nojima Corp (7419 JP), remains an unresolved issue. Nevertheless, the positives continue to increase while the negatives continue to diminish, and the shares are significantly outperforming the Topix Banks Index for the first time in many months.

Suruga Bank (8358 JP):  The Sun Also Rises

Among the recent flurry of Japanese regional bank upward revisions to FY3/2021 earnings guidance, one of the most interesting was released by <a href="https://www.smartkarma.com/entities/suruga-bank-ltd" target="_blank" data-smartkarma-citation="entities:6267:1" rel="noopener">Suruga Bank Ltd (8358 JP)</a>.  Initial FY3/2021 guidance back in May 2020 suggested consolidated net profits might fall as much as 76% YoY to just ¥6bn, with a ¥3.5bn net loss in 1H FY3/2021 due to further precautionary provisioning.  Since then, the bank has issued no less than three amendments to guidance, all of them upward revisions.  The latest guidance suggests that FY3/2021 consolidated net profits may now come in around ¥21.0 billion: more than three times initial forecasts thanks to lower credit costs and further progress in cleaning up after the catastrophic ‘share house’ scandal.The new management team is focusing on a business model that includes more corporate business, aiming to stabilise and diversify revenues.  Revenues are indeed growing, profits have recovered to FY3/2013 levels, and yet the stock price is currently at the same level as when we wrote our previous Smartkarma Insight on Suruga Bank <a href="https://www.smartkarma.com/insights/suruga-bank-8358-jp-one-step-back-but-several-steps-forward" target="_blank" data-smartkarma-citation="insights:40677" rel="noopener">Suruga Bank (8358 JP):  One Step Back, but Several Steps Forward</a> in late June 2020.  The market remains unconvinced.Suruga Bank remains one of the most heavily traded Japanese bank stocks and is regularly one of the Top 5 Japanese bank stocks in terms of daily trading volume behind only the three megabanks and <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a>. It is currently trading on a remarkably low PER versus peers of 4.3x (using the bank’s revised FY3/2021 guidance) and an undemanding PBR of 0.34x.We continue to believe that Suruga Bank’s stock price remains mispriced to the already-evident improvement in its fortunes.  Risks remain, of course, and we continue to warn that this is a stock for players of the Long Game only.  The stock remains a pariah for many foreign investors, regardless of its current low valuations.  Nevertheless, the positives are increasing while the negatives are gradually starting to diminish.

Among the recent flurry of Japanese regional bank upward revisions to FY3/2021 earnings guidance, one of the most interesting was released by Suruga Bank Ltd (8358 JP).  Initial FY3/2021 guidance back in May 2020 suggested consolidated net profits might fall as much as 76% YoY to just ¥6bn, with a ¥3.5bn net loss in 1H FY3/2021 due to further precautionary provisioning.  Since then, the bank has issued no less than three amendments to guidance, all of them upward revisions.  The latest guidance suggests that FY3/2021 consolidated net profits may now come in around ¥21.0 billion: more than three times initial forecasts thanks to lower credit costs and further progress in cleaning up after the catastrophic ‘share house’ scandal.The new management team is focusing on a business model that includes more corporate business, aiming to stabilise and diversify revenues.  Revenues are indeed growing, profits have recovered to FY3/2013 levels, and yet the stock price is currently at the same level as when we wrote our previous Smartkarma Insight on Suruga Bank Suruga Bank (8358 JP):  One Step Back, but Several Steps Forward in late June 2020.  The market remains unconvinced.Suruga Bank remains one of the most heavily traded Japanese bank stocks and is regularly one of the Top 5 Japanese bank stocks in terms of daily trading volume behind only the three megabanks and Resona Holdings (8308 JP). It is currently trading on a remarkably low PER versus peers of 4.3x (using the bank’s revised FY3/2021 guidance) and an undemanding PBR of 0.34x.We continue to believe that Suruga Bank’s stock price remains mispriced to the already-evident improvement in its fortunes.  Risks remain, of course, and we continue to warn that this is a stock for players of the Long Game only.  The stock remains a pariah for many foreign investors, regardless of its current low valuations.  Nevertheless, the positives are increasing while the negatives are gradually starting to diminish.

Suruga Bank (8358 JP):  Doubling Up Rather Than Doubling Down

Japan

Suruga Bank Ltd. is a Shizuoka based regional bank mainly operating in the Kanto area (central eastern part of Japan) including Tokyo.  The Bank provides deposits, loans, and foreign exchange transactions.  The Suruga Bank also provides financial services such as leasing, letter of credit, and credit cards services.

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Suruga Bank Ltd (8358 JP)

Hokuhoku Financial (8377 JP) - Buyback Dynamics For March... 👀

Hokuhoku Financial share buyback picked up pace in Feb but needs a lot more pace in March to complete. Expect a ToSTNeT-3 buyback tranche. And more...

Travis Lundy

SBI Sumishin Net Bank Pre-IPO - Earnings Forecast and Thoughts on Valuations

SBI Sumishin Net Bank (SSNB) will be looking to raise around US$1.1bn in its upcoming IPO. In this note, we talk about our earnings forecast and...

Sumeet Singh

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

There is likely to be one Nikkei 225 Change around the end of Q1 2022. There may be more. We will know more on 11 Jan 2022 how many deletions are...

Travis Lundy

Suruga Bank (8358 JP): The Sun Also Rises

Suruga Bank (8358 JP) has raised its interim guidance for the second time in three months to ¥17.8 billion, or ¥76.86/share. The stock is...

J. Brian Waterhouse

Suruga Bank (8358 JP): Doubling Up Rather Than Doubling Down

We believe that Suruga Bank’s stock price remains mispriced to the already-evident improvement in its fortunes. Nevertheless, we warn that this is...

J. Brian Waterhouse

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