Table of Contents
Executive summary ........................................................................... 3
Outlook ....................................................................................................................................3
Valuation ..................................................................................................................................5
Risks ........................................................................................................................................5
Financials – a missing piece in the puzzle of cross-strait
relaxation............................................................................................ 7
Money left on the table..................................................................... 9
Shaking up the sector landscape ............................................................ 14
Near term: strategic partnerships/alliances.............................................................................15
Mid to long term – M&A to create value.................................................................................16
Taiwanese banks to acquire small/medium Chinese banks ....................................................17
Time to get going ............................................................................ 18
Never too late to catch the opportunities ...............................................................................18
Where are Taiwanese banks now? .........................................................................................19
Off a low base….....................................................................................................................19
…but ample room out there ...................................................................................................21
3 ways to grow into China.............................................................. 24
OBU: near-term alternative .....................................................................................................25
Taking stakes/forming subsidiaries: cost efficient...................................................................27
Branch upgrade: seven golden tickets ....................................................................................28
Fundamentals aside…..................................................................... 29
The Oscar goes to… ........................................................................ 31
Fubon FHC (2881 TT, Buy, SOTP TP: NT$24.86).....................................................................31
First FHC (2892 TT, Buy, SOTP TP: NT$17.00)........................................................................34
Chinatrust FHC (2891 TT, Hold, SOTP TP: NT$9.70) ...............................................................37
Risks.................................................................................................. 40
Cannibalization? ......................................................................................................................40
More favorable treatments needed ........................................................................................40
Appendix A: Insurers in China ........................................................ 42
China’s insurance market – plentiful room to grow.................................................................42
Taiwanese insurers already present........................................................................................43
…but not necessarily win........................................................................................................44
Appendix B: Brokers in China......................................................... 45
Where are they now?..............................................................................................................46
What does the Chinese government say? ..............................................................................46
What does Taiwan’s government say? ...................................................................................47
Appendix C: China footprints ......................................................... 49
Appendix D: CEPA ........................................................................... 50