In today’s briefing:
- Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)
- Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking
- Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
- Industrivärden: Q1 Results and Discount to NAV
- Prudential PLC: Initiation of Coverage – Expansion In Emerging Markets & Other Drivers
- Q1 Liquidity Ranking for Crypto Assets
- Ally Financial: Comparisons To The Recently Failed Banks Are Inappropriate
Rakuten Bank (5838) IPO – New Price Is One To Take (Part 1)
- Rakuten Bank (5838 JP) has priced at a new range of ¥1,300-1,400/share, down from ¥1,630-1,930/share. That lowers TTM PER and PBR to well below where SBI Sumishin was priced.
- This will now be universally recognised by pre-IPO analysts as a raging buy. Even at the top end. Important considerations: Rakuten parent TAM, growth, index inclusions, etc.
- There are OTHER important considerations going forward which show themselves in the documents.
Rakuten Bank IPO Valuation: A Deep Value Play in Japanese Banking
- Rakuten Bank announced its IPO price range at ¥1,300-1,400 per share, which is 20-29% lower than the initially indicated price range at the time of filling of the IPO prospectus.
- The new price puts Rakuten Bank (5838 JP) on 4.9-5.3x FY+2 PE, which is the lowest in Japan’s banking sector.
- Japanese banks usually trade at a price-to-book of 0.2x per 1% ROE. This indicates that Rakuten Bank, which is priced at 1.0-1.1x, may deserve a fair price-to-book of over 2.0x.
Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
- Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC – Mongolia’s largest bank – would IPO this month.
- This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
- There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.
Industrivärden: Q1 Results and Discount to NAV
- Industrivarden AB (INDUA SS) is resilient: NAV on 31 March was SEK 138.3 billion, or SEK 320/share, an increase q-o-q of SEK 27/share, +9%, with some minor additions to the portfolio.
- The balance sheet is strong, with a debt/equities ratio kept at 4%. A+ rating was confirmed on 27 March. 5-year total return was 67.5% vs. 66% for the OMX30.
- The discount to NAV of C shares is 8.1% (vs. 10.7% average over the last 8 years). During Q1 the discount has tightened from 13.6% on 31 December.
Prudential PLC: Initiation of Coverage – Expansion In Emerging Markets & Other Drivers
- 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.
Q1 Liquidity Ranking for Crypto Assets
- Last quarter I published the first liquidity ranking system for crypto assets, comparing each asset’s liquidity ranking to its market cap and investigating which token’s market cap is the most misleading from a liquidity standpoint.
- Liquidity has arguably never been at more of a premium than right now in crypto, with USD payment rails being shut down and market makers pulling orders from exchanges.
- With market depth at 10 month lows, price volatility has picked up and so it is essential investors can accurately evaluate the liquidity of each individual asset to gain an understanding of how much short term volatility to expect.
Ally Financial: Comparisons To The Recently Failed Banks Are Inappropriate
- Ally Financial has emerged as a potential target after the recent events in the banking sector.
- There are certain macroeconomic risks involved, but the company has changed dramatically over the past decade.
- There are also major differences between the recently failed banks and Ally Financial that need to be considered, according to the company.
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