Brief Japan: Japan: Fortnightly Update – Nidec Leads the Way and more

In this briefing:

1. Japan: Fortnightly Update – Nidec Leads the Way
2. Tokyo Kiraboshi Financial Group (7173 JP): All That Glitters Is Neither Gold Nor Star Quality
3. Last Week in Event SPACE: Xiaomi, NTT, Capitaland, Panalpina, Celgene/Bristol Myers, Amorepacific
4. Global Banks: Why Buy High Into Popular and Fashionable Banks and Markets? Be Contrarian and Buy Low

1. Japan: Fortnightly Update – Nidec Leads the Way

“I’ve been a manager for almost half a century, but this is the first time I’ve seen such a large single-month drop in orders for us. What we witnessed in November and December was just extraordinary.”

Nidec CEO – Shigenobu Nagamori

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Source: Japan Analytics

BEAR MARKET RALLY ON CUE – The bear market rally we envisaged has seen the Market Composite recover by nearly 5% this year and 10% from the Christmas Day low of ¥533t. Seven of the last nine trading days have been ‘up’, and the Bank of Japan dutifully intervened on one of the two ‘down’ days – January 16th. The US dollar has also retraced three-quarters of the ¥6.5 decline from December 26th to January as concerns over US-China relations temporarily subsided.   

5D RSI @75 – The 5-day Relative Strength Index is now at a level that suggests the bulk of this initial move is complete, and a consolidation can be expected in the weeks ahead as the majority of third-quarter earnings are released – particularly if, as we discuss further below, Nidec (6594 JP) has set a trend.

Source: Japan Analytics

VALUE TRADED RATIO – After reaching a three-month high of 64bps on 21st December, the Value Traded Ratio (value traded/total market value) has returned to below-trend levels for the last two days – another indicator of a coming pause in the uptrend.   

% ABOVE MOVING AVERAGE – The percentage of stocks trading above a weighted sum of five periods of moving averages has recovered to above ’20’ as measured by market value, although the stock count percentage is still below that level. We expect the pattern of 2016 to be replayed here, which suggests an ultimate ‘low’ in the summer of 2019. 

Source: Japan Analytics

TORAKU > 80 – On a further positive note, on Friday the 25-day Toraku advance-decline indicator finally recovered to above the ’80’ level, indicating that the December 25th ‘low’ is unlikely to be breached in the short term.

THE NIDEC CANARY – Despite the market’s nonchalant reaction to Nidec’s downward revision, the company’s revised forecasts have broader implications. For the first time since March 2017, forecasts for our Market Composite for Operating Income are now lower than the trailing-twelve-month (TTM) Operating Income. Also, the ‘gap’ between forecast Net Income and TTM Net Income is now ¥2.9t – the largest such gap in over ten years. Mr. Market is suggesting that Japanese corporate profits are due to fall by 18% on average, to the level last reached in the first quarter of 2017 – implying bottom-line declines of up to 50% for some key ‘global’ sectors such as Autos, Machinery, Chemicals, Electrical Equipment and Technology Hardware, which together comprise one-third of aggregate Net Income.

LEADING OR LAGGING? – Our cap-weighted Results & Revision Score bottomed at -2.55 in December 2016 and reached a two-decade high on 16th November 2017, two months before the market peak in January 2018. Since October last year, the market has been leading on the downside.  If we are to repeat the relatively-mild cyclical downturn of 2016, the Results & Revision Score will turn negative at the time of the full-year results and forecasts for the new fiscal year, which, for the majority of companies, will be released in May. We expect the market to retest the lows of April 2017 and December 2018 around that time. 

In the DETAIL section below, we will review Sector performance over the last two weeks, and, in addition to our regular roundup of results, revisions and stock performance including brief comments on Nidec (6594 JP), Yaskawa Electric (6506 JP), Fancl (4921 JP), Shiseido (4911 JP), Kose (4922 JP), Familymart Uny (8028 JP), Fast Retailing (9983 JP), Olympus (7733 JP), Lixil (5938 JP), Nippon Paint (4612 JP), Hoya (7741 JP), Keyence (6861 JP), and Technopro (6028 JP) .

2. Tokyo Kiraboshi Financial Group (7173 JP): All That Glitters Is Neither Gold Nor Star Quality

Since our bearish Insight on Tokyo Kiraboshi Financial Group (7173 JP) issued in November 2018, Tokyo Kiraboshi FG (7173 JP): Shooting Star, the stock’s subsequent performance has fully justified our pessimism, with the share price finishing CY2018 down 47.7% year-on-year (YoY).  Having touched a low of ¥1,504 on Christmas Day, the shares have recovered 10.1% to ¥1,656 as of Friday’s close: slightly better than the Topix Bank Index, which closed on Friday at 154.44, up 9.0% over the same period.  Trading on a forward-looking price/earnings multiple of 12.5x (using the bank’s current FY3/2019 guidance) and a price/book ratio of 0.21x, TKFG looks cheap. This is deceptive. Adjusting the group’s earnings per share (EPS) for the ¥55 billion (US$507 million) in two still-outstanding preference share issues pushes the PER to over 18x: hardly a bargain.  Meanwhile, the group’s RoA and RoE ratios are woefully low, loan growth has collapsed since end-March 2018, deposits have fallen alarmingly, and main bank subsidiary Kiraboshi Bank is struggling to keep its net return on funds deployed (NRFD) in positive territory.  A stock best avoided.

3. Last Week in Event SPACE: Xiaomi, NTT, Capitaland, Panalpina, Celgene/Bristol Myers, Amorepacific

Last Week in Event SPACE …

• Do not buy Xiaomi Corp (1810 HK) as there is a LOT of overhang still to come. 
• Indications are a total of ¥550-650bn of buybacks in NTT (Nippon Telegraph & Telephone) (9432 JP) over the next two years, and ¥300-400bn in buybacks from NTT Docomo Inc (9437 JP) in perhaps a slightly shorter period. But the timing is tough to bet on. 
• The Capitaland Ltd (CAPL SP)/ASB deal creates Asia’s largest diversified real estate group.
• The play here is to expect a better bid for Panalpina Welttransport (PWTN SW).

• In an industry that has had more than its share of broken deals, ugly headline risk, political noise and activists, the Bristol Myers Squibb Co (BMY US) and Celgene Corp (CELG US) deal looks attractive.

• The timing looks ripe for an Amorepacific Corp (090430 KS) set-up.

• Plus CCASS and expected upcoming events for key M&A transactions.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events – or SPACE – in the past week)

Xiaomi Corp (1810 HK) (Mkt Cap: $30bn; Liquidity: $79mn)

After 6.5bn+ shares came off lockup last week (by Travis Lundy’s estimate), Xiaomi made a placement equal to about 1% of shares outstanding at a sharp discount to the close. This follows a block of 120mm shares last Thursday at HK$8.80 (at a 13+% discount); Apoletto reported a distribution (sale) of 594+mm shares on January 9th to reduce their total position across all funds from 9.25% to 4.99%; and there was a block placement launched earlier in the week for 231mm shares for sale between HK$9.28 and HK$9.60.

• While as much as 1bn shares may have already transacted (assuming most of the 594mm shares distributed by Apoletto have been sold in the market), there were ~6.5 billion shares which could be sold and an additional 1bn+ of additional conversions designed to be sold.
• In another 6 months, there will be another 4bn+ shares which come off LockUp.  In total, that is up to 10-11bn shares coming off lockup between a week ago and 6 months from now. That is four times the total IPO size, and 70-80% of the total position coming off lock-up has an average in-price of HK$2.00 or less. Apoletto’s average in-price was HK$9.72. 
• Travis is also skeptical that the company’s capital deserves a premium to peers, and is not entirely convinced that the pre-IPO profit forecasts are going to be met in the medium-term. In the meantime, a lot of the current capital structure base is looking to get out.
• Nota Bene: Bloomberg’s 3bn-shares-to-come-off-lockup number was confirmed by Travis (the day he published the piece linked below) with the people who tallied the info for the CACS function. They had neglected to count a certain group of shareholders. The actual number will be well north of 6 billion shares. 

(link to Travis’ insight: Early Investors Say “Xiaomi The Money” Post LockUp Expiry)

NTT (Nippon Telegraph & Telephone) (9432 JP) (Mkt Cap: $80bn; Liquidity: $185mn)

After the close of trading on the 15 January,  NTT announced it had repurchased 3.395mm shares for ¥15.349bn in the first 7 trading days of the month, purchasing 10.9% of the volume traded. This announcement was bang in line with Travis’ insight the prior day, where he anticipated the buybacks would soon be done.

• The push to buy shares on-market at NTT vs off-market at NTT Docomo has had some effect but not a huge effect. The NTT/Docomo price ratio is a bit more than 5% off its late October 2018 lows prior to the “Docomo Shock”, but the ratio is off highs. Off the lows, the Stub Trade has done really well. 

• NTT DoCoMo bought back ¥600bn of shares from NTT at the end of 2018. That means NTT DoCoMo could buy back perhaps ¥300-400bn of shares from the market over the next year or so before ‘feeling the need’ to buy back shares from NTT again. NTT will likely buy back at least ¥160bn of NTT shares from the government in FY19 starting April 1st, which means there will be room to buy back another ¥100bn from the government before not having any more room to do so.

• There could be an NTT buyback from the market in FY2019, and one should expect that for the company to buy back shares from the government again, if NTT follows the pattern shown to date, there should be another ¥400-500bn of buybacks from the market over the next two years, and if EPS threatens a further fall on NTT DoCoMo earnings weakness, NTT might boost the buyback to make up for that. 

• The very large sale by NTT of NTT Docomo shares this past December will free up a significant amount of Distributable Capital Surplus.
• On a three-year basis, Travis would rather own NTT than NTT Docomo. But he expects the drift on the ratio will not be overwhelming unless NTT does “something significant”.

(link to Travis’ insight: NTT Buyback Almost Done)  

Capitaland Ltd (CAPL SP) (Mkt Cap: $10.4bn; Liquidity: $16mn)

Singaporean real-estate group Capitaland has entered into a SPA to buy Ascendas-Singbridge (ASB) from its controlling shareholder, Temasek. The proposed acquisition values ASB at an enterprise value of S$10.9bn and equity value of S$6.0bn. Capitaland will fund the acquisition through 50% cash and 50% in shares (862.3mn shares @$3.25/share – ~17% dilution). Capitaland-ASB will have a pro-forma AUM of S$116bn, making it the largest real estate investment manager in Asia and the ninth largest global real estate manager.

(link to Arun George’s insight: Capitaland (CAPL SP): Transformational Acquisition at a Premium)

Yungtay Engineering (1507 TT) (Mkt Cap: $792bn; Liquidity: $1mn)

Hitachi Ltd (6501 JP) announced it had received approvals from the relevant government authorities, and its Tender Offer for Yungtay (at TWD 60/share) has now launched.  The Tender Offer will go through March 7th 2019 with the target of reaching 100% ownership. Son of the founder, former CEO, and Honorary Chairman Hsu Tso-Li (Chou-Li) of Yungtay has agreed to tender his 4.27% holding. The main difference between the offer details as discussed in Going Up! Hitachi Tender for Yungtay Engineering (1507 TT) back in October, is a minimum threshold for success of reaching just over one-third of the shares outstanding, with a minimum to buy of 88,504,328 shares (21.66%, including the 4.27% to be tendered by Hsu Tso-Li).

• This deal looks pretty straightforward, but the stock has been trading reasonably tight to terms, with annualized spreads on a reasonable expectation of closing date in the 3.5-4.5% annualized range for a decent part of December, rising into early January before seeing a jump in price and drop in annualized on the second trading day of the year. This shows some expectation of a fight and a bump. 
• To avoid that fight and bump – the Baojia Group, which supported Hsu Tso-Ming’s board revolt last summer (discussed in the previous insight), has reportedly accumulated a 10% stake –  Hitachi has lowered its minimum threshold to complete the deal to get to one-third plus a share. Given that it controls 11.7% itself as the largest shareholder, and has another 4.3% from the chairman in the bag, that means it needs about 17.3% of the remaining 84% to be successful. 
• Because the minimum is only about 21% of the float, this deal has quite decent odds of getting up unless someone makes a more serious run for it.  As an arb, Travis sees a small chance of a bump because of some potential harassment value by Hsu Tso-Ming’s friends at Baojia Group. Hitachi has already taken that into account with the lowering of the minimum, but it is possible that enough noise can be created to obtain a bump. 

(link to Travis’ insight: Hitachi Tender for Yungtay Engineering Launches) 

Courts Asia Ltd (COURTS SP) (Mkt Cap: $58mn; Liquidity: $0.02mn)

Courts, a leading electrical, consumer electronics and furniture retailer predominantly in Singapore and Malaysia, has announced a voluntary conditional offer from Japanese big box electronics retailer Nojima Corp (7419 JP) at $0.205/share, a 34.9% premium to the last closing price. The key condition to the Offer is the valid acceptances of 50% of shares out. Singapore Retail Group, with 73.8%, has given an irrevocable to tender. Once tendered, this offer will become unconditional. The question is whether minorities should hold on. 

• Barings/Topaz-controlled Singapore Retail Group are exiting, having not altered their shareholding since CAL’s 2012 listing. If Nojima receives acceptances from 90% of shareholders, it will move to compulsory delisting of the shares. If the Offer closes with Nojima holding >75% of shares, it could still launch an exit/delisting offer pursuant to Rule 1307 and Rule 1308.
• Long-suffering shareholders may wish to hold on for a potential turnaround should Nojima extract expected synergies.  But this looks like a decent opportunity (of sorts) to also exit along with the controlling shareholder.

(link to my insight: Courts Asia To Be Taken Over By Nojima)

Navitas Ltd (NVT AU) (Mkt Cap: $1.4bn; Liquidity: $3mn)

The board of Navitas, a global education provider, has unanimously backed a revised bid by 18.4% shareholder BGH Consortium of A$5.825/share, 6% higher than its previous rejected offer and a 34% premium to undisturbed price.

• The revised proposal drops the “lock out” conditions attached to BGH Consortium’s previous offer, enabling BGH to support a superior proposal. BGH has also been granted an exclusivity period until the 18 Feb.

(link to Arun George‘s insight: Navitas (NVT AU): A Bid Priced to Go with a Reasonable Chance of a Competing Bid)

Panalpina Welttransport Holding (PWTN SW) (Mkt Cap: $4.2bn; Liquidity: $13mn)

Panalpina Welttransport announced that it had received an unsolicited, non-binding proposal from DSV A/S (DSV DC) to acquire the company at a price of CHF 170 per share, consisting of 1.58 DSV shares and CHF 55 in cash for each Panalpina share.  The offer comes at a premium of 24% to Panalpina’s closing share price of CHF 137.5 as of 11 January 2019 and 31% to the 60-day VWAP of CHF 129.5 as of 11 January 2019. Following the announcement, Panalpina’s shares surged above the terms of the offer implying that the market was anticipating a higher bid from DSV or one of its competitors. 

• Investors lashed out at Panalpina’s board last year (after years of griping by some of the top holders), eventually forcing the main shareholder to support the installation of a new chairman of the board.
• The stock is clearly in play. And the sector is seeing ongoing consolidation. DSV’s approach to Panalpina comes just months after it failed in an attempt to buy Switzerland’s Ceva Logistics AG (CEVA SW). Media reports suggested Switzerland’s Kuehne & Nagel are also rumoured to be considering an offer for Panalpina.
• Panalpina’s largest shareholder, Ernst Goehner Foundation, owns a stake of approximately 46%. If EGS wants to see OPMs up at global standards level – in the area of DSV and KNIN – then they may need to see someone else manage the assets.  If EGS is steadfastly against Panalpina losing its independence, a deal will not get done. That said, if a deal does not get done because the board reflects the interest of EGS, that proves the board is not as independent as previously claimed.  But one must imagine there is a right price for everything.

(link to Travis’ insight: Beleaguered Panalpina Gets An Unsolicited Takeover Offer) 

Celgene Corp (CELG US) (Mkt Cap: $60bn; Liquidity: $743mn)

Earlier this month, Bristol Myers Squibb Co (BMY US) and Celgene announced a definitive agreement for BMY to acquire Celgene in a $74bn cash and stock deal. The headline price of $102.43 per Celgene share plus one CVR (contingent value right) is a 53.7% premium to CELG’s closing price of $66.64 on January 2, 2019, before assigning any value to the CVR. The CVR has a binary outcome: it will either be worth zero or will be worth a $9 cash payment upon the FDA approval of three drugs.

• While there don’t appear to be any major problems in commercial products, it remains to be seen whether the antitrust authorities go further into the pipeline to determine whether potential competition from drugs still in clinical trials could present issues in the future.
• Overall, the merger agreement appears fairly standard, but it does (also) require BMY shareholder approval which typically overlays a higher risk premium. For John DeMasi, the attraction for this arb is the current risk/reward.
• ANTYA Investments Inc. chimes in on the deal and considers it unlikely that a suitor for CELG emerges at a higher price, whereas rumours of suitors for BMY abound, and would therefore make a long bet on BMY.

links to
John’s insight: Celgene Acquisition by Bristol-Myers Squibb: A Call to Arbs
Antya’s insight: Celgene and Bristol-Myers Squibb – Undervalued and Underappreciated

Ck Infrastructure Holdings (1038 HK)/Power Assets Holdings (6 HK)

On the 10 January, PAH announced CKI had entered into a placing agreement to sell 43.8mn shares (2.05% of shares out) at HK$52.93/share (a 4.7% discount to last close), reducing CKI’s holding in PAH to 35.96%. This is CKI’s first stake sale in PAH since the 2015 restructuring of the Li Ka Shing group of companies, and it has been over three years since the CKI/PAH scheme merger was blocked by minority shareholders.  It is also around two months since FIRB blocked CKI/PAH/CKA/CKHH in its scheme offer for APA Group (APA AU).

• I don’t see a sale of PAH as being a realistic outcome – this is more likely an opportunity to take some money (the placement is just US$328mn) off the table. CKI remains intertwined with PAH via their utility JVs in Australia, Europe and UK, and in most investments, together they have absolute control. 
• I would also not discount a merger re-load. The pushback in 2015 was that the (revised) merger ratio of 1.066x (PAH/CKI) was too low and took advantage of CKI’s outperformance prior to the announcement. That ratio is now around 0.9x. A relaunched deal at ~1x would probably get up – the average since the deal-break is 1.02x and the 12-month average is 0.95x. And a merger ratio at these levels would ensure Ck Hutchison Holdings (1 HK)‘s holding into the merged entity would be <50%, so it would not be required to consolidate.  This recent sell-down does not, however, elevate the near-term chances of a renewed merger.

(link to my insight: StubWorld: CK Infra/Power Assets, Amorepacific, JCNC) 

Amorepacific Group (002790 KS)/Amorepacific Corp (090430 KS)

Following Curtis Lehnert‘s (TRADE IDEA: Amorepacific (002790 KS) Stub: A Beautiful Opportunity) and Sanghyun Park‘s (Full List of Korea’s Single-Sub Holdcos with Current Sigma % – Quick Thought on Amorepacific) insights, I analysed Amorepacific’s stub earnings over the past 6 years to see if there was any viable/usable correlation in the implied stub. 

Source: CapIQ

• The takeaway is that the stub is very choppy, it often (but not always) widens after the full-year results, and the highest implied stub/EBITDA occurred outside of FY16, its most profitable year. The downward trend since January last year reflects the anticipated ~17% decline in EBITDA for FY18 to ₩148bn, its lowest level in the past four years.
• Sanghyun mentioned that there are signs of improving fundamentals for local cosmetics stocks (as reflected in CapIQ) and that Holdcos have traditionally been more susceptible to fundamental changes. This should augur a shift to the upside in the implied stub.
• I see the discount to NAV at 27%, right on the 2STD line and compares to a 12-month average of 3%. This looks like an interesting set-up level. 

(link to my insight: StubWorld: CK Infra/Power Assets, Amorepacific, JCNC) 

Briefly …

Sanghyun recommends a long Holdco and go short Sub for Hankook Tire Worldwide (000240 KS). By my calcs – I don’t use a 20MDA – the current discount to NAV is 40% against a one-year average of 38.5%, with a 32%-43% band. My implied stub trades above the one-year average.
(link to Sanghyun’s insight: Hankook Tire Worldwide Stub Trade: Another Quick Mean Reversion The Other Way Around)

• The Offer for Selangor Properties (SPR MK) has been bumped again, to RM6.30 from RM6.00. The original Offer was pitched at RM5.70/share.  This latest proposal is a 55% premium to the undisturbed price and 10% above the initial bid. This is starting to look reasonable, at 0.89x P/B. On balance, this will probably now get up. (link to my earlier insight: Selangor Props – Privatisation Offer Does Not Reflect Full Value) 

• New Sports Group (299 HK) is suspended pending the release of info pursuant to the Code. New Sports forms part of the Huarong-CMB network, according to David Webb.

In a similar vein, LEAP Holdings Group Ltd (1499 HK) is potentially subject to a takeover. Leap is part of Webb”s Enigma Network.

• Yugang International (613 HK) is suspended pursuant to the Takeovers Code.

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions.  These may be indicative of share pledges.  Or potential takeovers. Or simply help understand volume swings. 

Often these moves can easily be explained – the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.   

• Source: HKEx

4. Global Banks: Why Buy High Into Popular and Fashionable Banks and Markets? Be Contrarian and Buy Low

Trawling through  >1500 global banks, based on the last quarter of reported Balance Sheets, we apply the discipline of the PH Score™ , a value-quality fundamental momentum screen, plus a low RSI screen, and a low Franchise Valuation (FV) screen to deliver our latest rankings for global banks.

While not all of top decile 1 scores are a buy – some are value traps while others maybe somewhat small and obscure and traded sparsely- the bottom decile names should awaken caution. We would be hard pressed to recommend some of the more popular and fashionable names from the bottom decile. Names such as ICICI Bank Ltd (ICICIBC IN) , Credicorp of Peru, Bank Central Asia (BBCA IJ) and Itau Unibanco Holding Sa (ITUB US) are EM favourites. Their share prices have performed well for an extended period and thus carry valuation risk. They represent pricey quality in some cases. They are not priced for disappointment but rather for hope. Are the constituents of the bottom decile not fertile grounds for short sellers?

Why pay top dollar for a bank franchise given risks related to domestic (let alone global) politics and the economy? Some investors and analysts have expressed “inspiration” for developments in Brazil and Argentina. But Brazilian bonds are now trading as if the country is Investment Grade again. (This is relevant for banks especially). Guedes and co. may deliver on pension/social security reform. If so, prices will become even more inflated. But what happens if they don’t deliver on reform? Why pay top dollar for hope given the ramp up in prices already? Argentina is an even more fragile “hope narrative”. More of a “Hope take 2”. Similar to Brazil, bank Franchise Valuations are elevated. While the current account adjustment and easing inflation are to be expected, the political and social scene will be a challenge. LATAM seems to be “hot” again with investment bankers talking of resilience. But resilience is different from valuation. Banks from Chile, Peru, and Colombia feature in the bottom decile too. If an investor wants to be in these markets and desires bank exposure, surely it makes sense to look for the best value on offer. Grupo Aval Acciones y Valores (AVAL CB) may represent one such opportunity.

Our bottom decile rankings feature a great deal of banks from Indonesia. In a promising market such as Indonesia, given bank valuations, one needs to tread extremely carefully to not end up paying over the odds, to not pay for extrapolation. In addition, India is a susceptible jurisdiction for any bank operating there – no bank is “superhuman” and especially not at the prices on offer for the popular private sector “winners”. Saudi Arabia is another market that suddenly became popular last year. We are mindful of valuations and FX.

Does it not make more sense to look at opportunity in the top decile? While some of the names here will be too small or illiquid (mea culpa), there are genuine portfolio candidates. South Korea stands out in the rankings. Woori Bank (WF US) is top of the rankings after a share price plunge related to a stock overhang but this will pass. Hana Financial (086790 KS) , Industrial Bank of Korea (IBK LX) and DGB Financial Group (139130 KS) are portfolio candidates. Elsewhere, Russia and Vietnam rightly feature while Sri Lanka and Pakistan contribute some names despite very real political and macro risks. We would caution on some of the relatively small Chinese names but recommend the big 4 versus EM peers – they are not expensive. In fact some of the big 4 feature in decile 2 of our rankings. There are many Japanese banks here too. And many, like some Chinese lenders, are cheap for a reason. While the technical picture for Japanese banks is bearish, at some stage selective weeding out of opportunity within Japan’s banking sector may be rewarding. The megabanks are certainly not dear. Europe is another matter. Despite valuations, we are cautious on French lenders and on German consolidation narratives – did a merger of 2 weak banks ever deliver shareholder value? The inclusion of two Romanian banks in the top decile is somewhat of a headscratcher. These are perfectly investable opportunities but share prices have been poor of late.