Standing out thanks to stronger profitability
​Reiterate BUY and lift TP to NT$60: The US 10-year bond yield increase is steeper than our expectation, reflecting that the US government is likely to issue more bonds in the future. We have thus changed our view and expect the bond yield to rise +80 bps to 2.5%, from our previous expectation of +30 bps (1.7%). Accordingly, we raise Fubon FHC’s earnings by 7% and lift our TP to NT$60 based on a higher P/EV multiple of 0.8x (from 0.7x) for Fubon Life, to reflect better profitability. Overall, Fubon FHC is our top pick among Taiwan financials given it has the highest ROE, each subsidiary’s leading position, and its relatively stable profitability without pressure to realize capital gains due to Fubon Life’s positive interest spread.
Fubon Financial Holding and its subsidiaries are engaged in the business of property and casualty insurance; brokerage, margin lending and securities financing and refinancing, security transfer services, brokerage services, securities underwriting, and principal transactions; commercial banking operations; life insurance underwriting; raising securities investment trust fund through issuance of beneficiary certificates to invest in securities and related products, managing discretionary managed accounts for investors, and other operations approved by the authorities; trust operations, handling of the public - benefit lottery operations, and other authorized operations.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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