Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

J. Brian Waterhouse has been covering the Japanese financial sector as an analyst continuously since 1976, working for CLSA, Japaninvest, Rabobank, HSBC Securities, James Capel, Marine Midland Bank of New York and National & Grindlays Bank.  He has been ranked No.1 overall in Japanese banks research in Japan by Asiamoney for 6 of the past 9 years and was runner-up in 2015.  He was awarded the coveted Starmine prize as top Japanese bank stock picker in 2012 and 2014 and was runner-up in 2013.  He frequently appears on TV, radio and in international print media as a commentator on Japanese banking.

Senior Bank Analyst - Japanese Banks

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Windamee Research

Japanese Banks

Equity Bottom-Up

<p>Having reached a high of ¥1,852 on July 31 2018, <a href="https://www.smartkarma.com/entities/20702" target="_blank" data-smartkarma-citation="entities:20702:1">Bank Of The Ryukyus (8399 JP)</a>’ share price nosedived 15% on Monday of last week to a low of ¥1,272 before recovering to ¥1,320 at the close of business on Friday August 31.  Turnover on Friday was 1.34 million shares: over 11x normal daily trading volume.  Surely not caused by rumours of yet another “inappropriate” regional bank lending scandal?  Fortunately, no: just a very badly-timed announcement of an attempt to raise an additional ¥6 billion (approx. US$55 million) in new capital to support lending operations in the scuba-diving and snorkeling paradise that is Okinawa Prefecture. While the stock may look inexpensive, trading on a PER of 8.4x (using the bank’s own FY3/2019 guidance) and on an historic PBR of just 0.43x, there are good reasons for this low valuation.  The current surge in volume is likely to be only temporary: a value trap for the unwary.  <em>Caveat emptor</em> (may the buyer beware!).</p>

Having reached a high of ¥1,852 on July 31 2018, Bank Of The Ryukyus (8399 JP)’ share price nosedived 15% on Monday of last week to a low of ¥1,272 before recovering to ¥1,320 at the close of business on Friday August 31.  Turnover on Friday was 1.34 million shares: over 11x normal daily trading volume.  Surely not caused by rumours of yet another “inappropriate” regional bank lending scandal?  Fortunately, no: just a very badly-timed announcement of an attempt to raise an additional ¥6 billion (approx. US$55 million) in new capital to support lending operations in the scuba-diving and snorkeling paradise that is Okinawa Prefecture. While the stock may look inexpensive, trading on a PER of 8.4x (using the bank’s own FY3/2019 guidance) and on an historic PBR of just 0.43x, there are good reasons for this low valuation.  The current surge in volume is likely to be only temporary: a value trap for the unwary.  Caveat emptor (may the buyer beware!).

Bank of the Ryukyus (8399 JP): Taking a Dive