Potential to stand out when industry bottoms out
​After a year of declining earnings and the stock price falling 33%, we believe the worst has passed and there is more upside risk than downside. Industry-wise we expect 1) earnings declines to stabilize and reverse in 3Q16F; and 2) the rate cut impact to diminish in 2H16F. We also believe Fubon’s stronger than peers profitability would help it stand out when industry weakness bottoms out. Therefore, we upgrade Fubon FHC to BUY with a TP of NT$46, based on a raised P/EV to 0.7x from 0.6x and suggest investors to accumulate when shares pull back to around NT$36-39 as a LT entry point.
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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