SBI Holdings (8473 JP) – Switching Earnings Focus from Broking to Asset Management
Key PointsSBI Holdings had an excellent year in FY17 and it is obviously very difficult to forecast what the company is going to deliver in FY18, let alone FY19 and FY20, given the vagaries of the stock market. However, it is working off improved metrics in most cases in FY18:
• The stock market has a favourable base of comparison, due to its steady gains in FY17.
• The asset management and insurance business continue to expand.
• Meanwhile, the pharma business should not be the drag on earnings that we saw in FY17.
• Unless anything untoward happens to the stock market, we think SBI Holdings should deliver good earnings growth through to FY20.
• Moreover, valuations, whether on an adjusted EV/EBT basis or on a sum of the parts-basis, are not stretched.
SBI Holdings is a holding company engaged in the control and management of its group through share ownership. Through its subsidiaries, Co. is engaged in the provision of securities, banking, insurance, housing loan, financial media, real estate financial, forex margin trading businesses, and overseas financial services; the operation and management of investment partnership, the investment in domestic and international venture companies, and the provision of investment advisory services. Co. is also engaged in the 5-aminolaevulinic acid-related business, as well as the research, development, and sale of drugs, cosmetics and health foods.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
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