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

Yamaguchi Financial Group (8418 JP): In Autumn Finery

Chiba Bank (8331 JP):  Chiba 'n Cheerful

Windamee Research

Japanese Banks

Equity Bottom-Up

<p>Interim results announced on Friday by <strong><a href="https://www.smartkarma.com/entities/16063" target="_blank" data-smartkarma-citation="entities:16063:1">Seven Bank Ltd (8410 JP)</a></strong> were marginally better than the company’s September 7 surprise profit warning of a ¥0.5 billion consolidated net loss, but were still taken negatively by the market.  Having traded essentially flat around the ¥355 level in morning trading, the share price dropped quickly in the afternoon session to ¥347 right after the results announcement, before closing the day on ¥348, down 2%.  Seven Bank is maintaining its dividend at ¥10/share, which suggests a dividend payout ratio of over 90% this year rather than the usual 40%.  On a prospective PER (using Seven Bank’s revised guidance) of 32.4x and PBR of 1.95x, the stock is by no means cheap.  Its share price appears to be in a secular downtrend, with waning foreign investor interest in this ATM specialist despite an attractive dividend and, arguably, thematic attractions as an inbound tourism play. Regardless of the high dividend payout offered, our view is there are much better investment opportunities elsewhere in the banking sector, such as <a href="https://www.smartkarma.com/entities/1048" target="_blank" data-smartkarma-citation="entities:1048:1">Chiba Bank (8331 JP)</a>, <a href="https://www.smartkarma.com/entities/5248" target="_blank" data-smartkarma-citation="entities:5248:1">Bank Of Kyoto (8369 JP)</a> or <a href="https://www.smartkarma.com/entities/15836" target="_blank" data-smartkarma-citation="entities:15836:1">Yamaguchi Financial Group In (8418 JP)</a>.</p>

Interim results announced on Friday by Seven Bank Ltd (8410 JP) were marginally better than the company’s September 7 surprise profit warning of a ¥0.5 billion consolidated net loss, but were still taken negatively by the market.  Having traded essentially flat around the ¥355 level in morning trading, the share price dropped quickly in the afternoon session to ¥347 right after the results announcement, before closing the day on ¥348, down 2%.  Seven Bank is maintaining its dividend at ¥10/share, which suggests a dividend payout ratio of over 90% this year rather than the usual 40%.  On a prospective PER (using Seven Bank’s revised guidance) of 32.4x and PBR of 1.95x, the stock is by no means cheap.  Its share price appears to be in a secular downtrend, with waning foreign investor interest in this ATM specialist despite an attractive dividend and, arguably, thematic attractions as an inbound tourism play. Regardless of the high dividend payout offered, our view is there are much better investment opportunities elsewhere in the banking sector, such as Chiba Bank (8331 JP), Bank Of Kyoto (8369 JP) or Yamaguchi Financial Group In (8418 JP).

Seven Bank Ltd

Seven Bank (8410 JP): Trips Overseas