Table of contents
Investment summary................................................................3
Size of the opportunity.................................................................................................3
Buy on dips ..................................................................................................................3
Potential share price drivers.........................................................................................4
Recommendations........................................................................................................6
Cross-straits talks provide optimism .....................................8
Timeline and agenda of the discussion ........................................................................8
The progress likely to be slow – Taiwan’s wish list ....................................................8
We expect long-term structural changes in the domestic economy .............................9
However, we still see structural issues with the financial service sector ...................12
Operating outlook...................................................................13
Issue 1: NIM should pick up in 2H09 ........................................................................13
Issue 2: Improved visibility in asset quality...............................................................15
Issue 3: Benefits from easy monetary policy .............................................................17
Issue 4: Reduced risks for recapitalization.................................................................19
Issue 5: Potential risks ...............................................................................................22
Sinopac Financial Holdings...................................................26
Fubon Financial Holdings......................................................30
Chinatrust Financial Holdings...............................................35
Yuanta FHC.............................................................................40
Chang Hwa Bank ....................................................................46
First Financial Holding Co Ltd...............................................52
Cathay Financial Holdings.....................................................56
Taishin Financial Holdings ....................................................65
Shin Kong Financial Holding Company ...............................69