First Read: Shizuoka Financial Group "Positive view of unique growth..."

研报英文原文证据摘录

First Read: Shizuoka Financial Group "Positive view of unique growth..."

Forecast returns

Forecast price appreciation 17.7%

Forecast dividend yield 3.4%

Forecast stock return 21.1%

Market return assumption 7.7%

Forecast excess return 13.4%

Company Description

Based in Shizuoka Prefecture, Shizuoka Financial Group operates banking services, offering a

wide range of services including deposit operations, loans, fund management, and domestic

settlements. Through a community-focused business model, it supports local businesses and

individual customers. It is characterised by a stable financial foundation and prudent

management. As a regional bank, it contributes to the development of the local economy.

Valuation Method and Risk Statement

Our price target is based on a residual income model (RIM).

Risks to our view are as follows. (1) The pace of increase in Japan's policy interest rate falling

below our assumption (a total of 50bps by 2026), and (2) company guidance for FY2026 (EPS/

DPS) coming in significantly below our forecast, driven primarily by core business rather than

temporary factors. Other fundamental risk factors are as follows. Market: (1) Falling share

prices and (2) sharp fluctuations in domestic and foreign interest rates, as well as tightening

of foreign currency liquidity, could lead to a decrease in the market value of held shares and

an increase in bond valuation losses, resulting in the impairment of CET1 capital and a

deterioration in financial soundness. Regulatory: (1) The tightening of supervisory guidelines

for regional financial institutions and (2) changes to capital adequacy ratio regulations could

increase credit management costs and force a review of investment and lending policies,

constraining revenue opportunities.