Table of Contents
Investment summary................................................................3
Key recommendations .................................................................................................3
Valuation comparison – Fubon looks the most attractive ............................................3
Issue I – Reaching breakeven remains challenging..............6
High liability cost.........................................................................................................6
Cathay’s efforts to restructuring balance sheet positive...............................................7
Issue II – Resumption of carry trade could be slow..............8
Liquidity hurts asset yields ..........................................................................................8
The pace could slow due to loss of risk appetite and NT$ appreciation ......................8
And hedging cost could go up along with NT$ appreciation.......................................9
Issue III – Benefits from liquidity...........................................11
Net worth growth driven by property reflation ..........................................................11
Benefit from strong FYP growth ...............................................................................12
Fubon Financial (2881 TT; OW).............................................14
Re-rating continues ....................................................................................................14
Cathay Financial (2882 TT; N) ...............................................15
Restructuring efforts pay off......................................................................................15
Shin Kong Financial (2888 TT; UW) ......................................16
Valuation and earnings estimates.........................................17
Fubon Financial (2881 TT; OW) ...............................................................................17
Cathay Financial (2882 TT; N)..................................................................................19
Shin Kong Financial (2888 TT; UW) ........................................................................20
Fubon Financial Holdings: Summary of financials .............22
Cathay Financial Holdings: Summary of financials ............23
Shin Kong Financial Holdings: Summary of financials ......24