Daily Brief Financials: Open House, Lloyds Banking Group PLC, Prudential Financial, EML Payments Limited, EURO/US DOLLAR, Schwab (Charles) and more

• Open House (3288-JP) is a niche homebuilder in Japan that has a special expertise in building/selling cheap detached homes in urban cities.
• It participates in many segments of the residential property market, though earns the lions share (~60-65%) of its profits from the single-family homes business.
• Despite its relatively modest profile in the investment community, the company has a ~US$4bn capitalization. It trades at ~1.3x 2023e P/B and ~6.8x P/E.

• This is our first report on Lloyds Banking Group PLC ADR, one of the largest UK-based retail and commercial banking service providers.
• During the year, commercial banking balances have increased, driven by attractive corporate, institutional, and FX growth possibilities.
• We initiate coverage on the stock of Lloyds Banking Group PLC ADR with a ‘Hold’ rating.

• This is our first report on Prudential, a major provider of life and health insurance.
• Prudential had a very strong quarter with 19% sales growth.
• Despite slower revenue recognition in the life insurance market, the company has been witnessing strong cash flows and returned over $800 million to shareholders in the latest quarter.

EML Payments’ H123 results reflected the changing mix of revenue (lower establishment fees and breakage, higher interest income), the effect of the ongoing remediation of regulatory issues in the European and UK PFS businesses and the restructuring of the group. With the Irish regulator raising additional concerns post results and applying a more stringent growth cap to EML’s Irish subsidiary, PFS Card Services Ireland Limited (PCSIL), the board has initiated a strategic review of the business.

• While the market has aggressively moved the US rates and the rate expectations lower, the European rates are pricing in higher for longer, with a rate hike possibility still on the cards.
• In the current market environment, the Dollar crosses are driven by rate differential and sentiment rather than growth differential and geopolitical risk of the Ukraine war.
• The Cross rate and the 13-day RSI are overlaid with two standard deviations Bollinger Bands to plot the mean reversion boundaries.

• Charles Schwab is due to release its first-quarter 2023 earnings report on Monday.
• The firm’s sell-side trading activities remain in decline.
• The company’s elevated price-to-book multiple is a severe concern as slowing growth, a goodwill build-up, and recent impairment losses provide structural problems.