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Japan Fintech Tracker: Valuations for online payment assets

Astris Advisory Japan

Valuations for payment assets have become increasingly important as LY Corp (PayPay IPO) and Rakuten (fintech restructuring) look to public markets for eventual validation. Kirk Boodry thinks both are worth more than ¥1,000bn, although he gives a slight edge to PayPay on better visibility. Whilst there has been talk of a PayPay IPO for years, Rakuten will probably be the first to move as it has set a Jan deadline for its fintech restructuring. Meanwhile, online banks have been market darlings with SBI +87% YTD and Rakuten Bank +45% even with the uncertainty over a deal with the parent company.

Edition: 195

- 20 September, 2024


Rakuten Bank (5838)

Technology

Galliano's Financials Research

Rakuten Bank is positioned to benefit from rising interest rates in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio. The proposed FinTech reorganisation of the group around the bank should drive further potential shareholder benefits; higher ROE, lower customer acquisition costs, increased active account penetration and lower operating costs. Victor Galliano believe that there will be effective governance checks and balances in place to ensure fair valuations of the FinTech segments pre-reorganisation.

Edition: 188

- 14 June, 2024


Rakuten Bank (5838)

Financials

Galliano's Financials Research

The shares have re-rated but remain attractive given Rakuten Bank's strong balance sheet and low-cost base with undemanding valuations compared to its Asian digital banking peers. The bank is well positioned to benefit from the negative interest rate policy exit in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio. It continues to leverage off the Rakuten Group eco-system, as a low-cost source of new customers; nearly a third of clients use Rakuten Bank as their primary Japanese bank.

Edition: 183

- 05 April, 2024


Rakuten Bank (5838)

Financials

Galliano's Financials Research

IPO adds an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention. On efficiency metrics, Victor Galliano shows how Rakuten Bank scores well vs. its key domestic peers as well as global comparables. At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE.

Edition: 158

- 14 April, 2023