Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Thursday post-close, HS announced Q1 earnings, and Khan Bank Q2 earnings. Both magnificent. Book Value is up HUGE, and combined HS Q1-Khan Q2 is ¥7.7bn - 20% of mkt cap.</li>
<li>On Friday 29 July, HS Holdings (8699 JP) announced it had sold HS Debt Collection Agency - the last "earning asset" except for the 55% stake in Khan Bank. </li>
<li>This lifts shadow book value even higher... Deep value with a catalyst. BUT... in an otherwise unannounced postscript to Q1 earnings, HS announced it bought a stake in a... pawnshop?
</li>
</ul>


Thursday post-close, HS announced Q1 earnings, and Khan Bank Q2 earnings. Both magnificent. Book Value is up HUGE, and combined HS Q1-Khan Q2 is ¥7.7bn - 20% of mkt cap.
On Friday 29 July, HS Holdings (8699 JP) announced it had sold HS Debt Collection Agency - the last "earning asset" except for the 55% stake in Khan Bank. 
This lifts shadow book value even higher... Deep value with a catalyst. BUT... in an otherwise unannounced postscript to Q1 earnings, HS announced it bought a stake in a... pawnshop?



HS Holdings (8699 JP) - Huge Q1, Even Better Q2 Ahead, The 2nd To Last Asset Sale... And a Pawnshop?

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 the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ's 2% inflation target being hit; JGB 10Y yields rose as a result</li>
<li>This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals</li>
<li>We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks</li>
</ul>


In the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ's 2% inflation target being hit; JGB 10Y yields rose as a result
This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals
We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks


Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

<ul>
<li>On 5 December, <a href="https://www.smartkarma.com/entities/tomony-holdings-inc" target="_blank" data-smartkarma-citation="entities:17118:1" rel="noopener">Tomony Holdings (8600 JP)</a> - a holding company for two regional banks based in Tokushima Prefecture and Kagawa Prefecture - announced (gasp!) a NEW SHARE OFFERING. </li>
<li>It offered 28mm shares + 4.2mm greenshoe - a share count increase of 20%. At 0.27x book. This IS unusual. Especially when banks are being asked to produce better ROC. </li>
<li>The deal priced at ¥366. We're there now. Banks have been sold. It is worth looking at where we are and what could happen next. It's cheap.</li>
</ul>


On 5 December, Tomony Holdings (8600 JP) - a holding company for two regional banks based in Tokushima Prefecture and Kagawa Prefecture - announced (gasp!) a NEW SHARE OFFERING. 
It offered 28mm shares + 4.2mm greenshoe - a share count increase of 20%. At 0.27x book. This IS unusual. Especially when banks are being asked to produce better ROC. 
The deal priced at ¥366. We're there now. Banks have been sold. It is worth looking at where we are and what could happen next. It's cheap.


Tomony Holdings (8600 JP) - Regional Bank NEW SHARE Issue - Not What You Want To See, But Buy Anyway

<ul>
<li>40% of Banks outside the Top 7 (none of which offered H1 guidance) in the TOPIX Banks Index have now changed H1 guidance or reported H1. 2 reported both up.</li>
<li>92% of the others have revised up H1 net income guidance a weighted average of 47%. Net Interest Income, Corporate fees/comms are up, expenses and credit costs are down.</li>
<li>Big tables with data, reasons for guidance changes, and buyback history of each presented below.</li>
</ul>


40% of Banks outside the Top 7 (none of which offered H1 guidance) in the TOPIX Banks Index have now changed H1 guidance or reported H1. 2 reported both up.
92% of the others have revised up H1 net income guidance a weighted average of 47%. Net Interest Income, Corporate fees/comms are up, expenses and credit costs are down.
Big tables with data, reasons for guidance changes, and buyback history of each presented below.


Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down - Opportunity Abounds, Still

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Thematic (Sector/Industry)

On Friday 1 October 2020, three new regional bank holding companies will be created and listed the same day on the Tokyo Stock Exchange.  The establishment of a regional bank holding company in Japan is not new news, but these three will in future set up entirely non-financial subsidiaries as a means of broadening group revenues and profitability.  This is a notable change in bank thinking.Japanese financial authorities have been keen to encourage regional banks to merge in the belief that a reduction in the number of banks will lead to greater efficiencies and a greater willingness to lend, but this has had very mixed results.  What the financial authorities have so far failed to do has been to encourage the banks to adopt a radically differentiated business model, or seriously address the issue of proper risk asset pricing, or improve operating margins, or enhance shareholder returns.  This may be about to change. The kiki-kan  危機感 or ‘sense of crisis’ that appears to be the necessary catalyst to get Japanese banks to abandon their habitual ‘business as usual’ approach and take decisive action, may be finally emerging among the Japanese regional banking fraternity.It’s about time.

On Friday 1 October 2020, three new regional bank holding companies will be created and listed the same day on the Tokyo Stock Exchange.  The establishment of a regional bank holding company in Japan is not new news, but these three will in future set up entirely non-financial subsidiaries as a means of broadening group revenues and profitability.  This is a notable change in bank thinking.Japanese financial authorities have been keen to encourage regional banks to merge in the belief that a reduction in the number of banks will lead to greater efficiencies and a greater willingness to lend, but this has had very mixed results.  What the financial authorities have so far failed to do has been to encourage the banks to adopt a radically differentiated business model, or seriously address the issue of proper risk asset pricing, or improve operating margins, or enhance shareholder returns.  This may be about to change. The kiki-kan  危機感 or ‘sense of crisis’ that appears to be the necessary catalyst to get Japanese banks to abandon their habitual ‘business as usual’ approach and take decisive action, may be finally emerging among the Japanese regional banking fraternity.It’s about time.

Japanese Regional Banks:  Dancing On Their Own

Japan

Tokyo Kiraboshi Financial Group, Inc. operates banks. The Company mainly offers financial services. Tokyo Kiraboshi Financial Group provides services in Japan.

Tokyo Kiraboshi Financial Group (7173 JP)

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Tokyo Kiraboshi Financial Group (7173 JP)

HS Holdings (8699 JP) - Huge Q1, Even Better Q2 Ahead, The 2nd To Last Asset Sale... And a Pawnshop?

HS Holdings (8699) reports great Q1, even better incoming Q2 (mostly known already), and sells the last remaining financial asset. All good. THEN...

Travis Lundy

Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

BoJ's inflation target of 2% looks increasingly like it will be reached will should drive the shift from negative interest rate policy, boosting...

Victor Galliano

Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down - Opportunity Abounds, Still

The macro backdrop for Japanese banks is pretty good. Business restructuring efforts are bearing fruit. Global macro is adding fees. Stocks are up,...

Travis Lundy

Japanese Regional Banks: Dancing On Their Own

The ‘sense of crisis’ that Japanese banks need to abandon their habitual ‘business as usual’ approach and take decisive action may be finally...

J. Brian Waterhouse

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HS Holdings (8699 JP) - Huge Q1, Even Better Q2 Ahead, The 2nd To Last Asset Sale... And a Pawnshop?

HS Holdings (8699) reports great Q1, even better incoming Q2 (mostly known already), and sells the last remaining financial asset. All good. THEN...

Travis Lundy

Bank of Japan Meeting Signals– Our Take on the Implications for Japanese Banks

BoJ's inflation target of 2% looks increasingly like it will be reached will should drive the shift from negative interest rate policy, boosting...

Victor Galliano

Tomony Holdings (8600 JP) - Regional Bank NEW SHARE Issue - Not What You Want To See, But Buy Anyway

High-ish ROE Tomony Holdings just priced a large, dilutive equity offering to raise equity at 0.27x book to make more loans. Or so they say. I...

Travis Lundy

Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down - Opportunity Abounds, Still

The macro backdrop for Japanese banks is pretty good. Business restructuring efforts are bearing fruit. Global macro is adding fees. Stocks are up,...

Travis Lundy

Japanese Regional Banks: Dancing On Their Own

The ‘sense of crisis’ that Japanese banks need to abandon their habitual ‘business as usual’ approach and take decisive action may be finally...

J. Brian Waterhouse