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Sebastien Couvidat

 
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  • This Russian Stock May Be Sending Us Some Love [View article]
    Thanks for the article. Another reason MBT took a beating is that the CEO of its parent company (AFK Sistema), Vladimir Evtushenkov, has been put under house arrest: it is believed that the Russian government is trying to grab OAO Bashneft from Evtushenkov. There is a risk that Evtushenkov and Sistema will also be punished with hefty fines and will have to reimburse dividends received from Bashneft, and might use MBT as a cash cow... So, on top of the sanctions against Russia, MBT is also victim of a political attack against its parent company. I agree with you that MBT's price is really low, but there is significant risk...
    Oct 27 01:25 PM | 2 Likes Like |Link to Comment
  • Vodafone: Ready To Shine With 4G [View article]
    Hello, thanks for the article. Another reason, that you allude to in your article, that makes VOD more attractive than AT&T or Verizon to me is the exposure to Africa and India (which together account for close to 25% of the group's revenue I believe): these markets represent a growth potential that US carriers don't have.
    Aug 21 01:38 PM | 6 Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    Thanks for the detailed answer. I agree with you that this preferred share issuance is a double edged sword: better tier 1 capital ratio, but a risk that BoC cut the dividend. My gut feeling, for what it's worth, is that they won't cut the dividend, because their payout ratio is low enough. But it is so difficult to anticipate what they will do, or what the Chinese government will force them to do, that I would not bet on it. If they do cut the dividend then yes, the share price might drop a bit. At the same time, if the yield drops to 4% or so, it will still be a decent yield (higher than most other global banks). And again, the issuance of preferred shares has been known for a while, so i would assume that the risk of a dividend cut is already partly priced in the share.
    Aug 21 02:26 AM | Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    Hello, I was wondering where you saw that BoC would reduce its dividend this year. I cannot find any information about such a cut anywhere, and I believe that their payout ratio is low enough that they can easily maintain their dividend. The Hong-Kong subsidiary of BoC did announce a dividend cut, but that was back in March.
    Aug 21 12:39 AM | Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    Hello, thanks for your comment. To compute the price-to-book ratio, I did not look at the ADR, but I directly looked at the H-share price (traded on the Hong-Kong stock exchange) using http://www.ft.com. Then, I converted the HKD (Hong-Kong dollars) into RMB, and used the net-asset value per share in RMB provided in BoC's financial statement (3.46 RMB per share according to the statement as of June 30, 2014). The A-shares of BoC are even cheaper, and therefore correspond to a lower price-to-book ratio. Unfortunately, they cannot be directly bought by non-Chinese citizens.

    Regarding the conversion ratio: it looks like you are right and that 1 ADR is equal to 25 H-shares of BoC.
    Aug 20 11:42 PM | Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    I believe China withholds 10% on the dividend paid to foreigners. Also, the bank holding the ADR probably charges a small fee too.
    You can claim the withholding as a foreign tax credit on your federal tax return.
    Aug 20 01:04 PM | Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    That's a very good point, thanks for raising it. I did not mention the upcoming preferred share issuance because it has been known since April/May that Bank of China ---BoC--- (and other Chinese banks) would raise up to 100 billion RMB (16 billion dollars or so) to beef up its tier 1 capital: I figured this event was already fully priced in the shares (which is my main concern). I should have mentioned it, though, when I listed the capital ratio in my article.

    To answer your question on the impact on the dividend:
    last year, Bank of China distributed 54.7 billion RMB in dividend, i.e. 0.196 RMB per share. The 1st half of 2014 EPS was 0.32 RMB. Assuming the same EPS for the 2nd half of 2014, that gives us an annual 0.64 RMB per share. That means that the current payout ratio is only 30.6%, which is rather low.
    If the yield on the preferred shares issued by BoC is, say, 8% (I use an average of your 7-9% range, because I could not find the numbers anywhere), that means BoC will have to pay an extra 8 billion RMB in dividend every year: now, if BoC decides to keep paying the same dividend as before to common share holders, and to pay the dividend for the preferred share holders, that means paying 54.7+8= 62.7 billion RMB in annual dividend. At the current EPS, that means a payout ratio of 35.1% rather than 30.6%. I believe that 35% is a perfectly sustainable payout ratio, and therefore I am inclined to believe that BoC will just continue paying the same dividend to common shareholders: in short, I do not think that the preferred share issuance will have any impact on the dividend of the common shares (except that BoC might not raise it as it has done these past 8 years in a row).
    Aug 20 01:15 AM | Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    That's the problem: can you trust their financial report. I tend to believe that you can, because it's a huge company and not a small cap one like A-Power or Duoyuan Global Water which acted fraudulently. Moreover, they have an international presence, which I think makes fraud less likely. But I would not bet my savings on it...
    Aug 19 08:32 PM | Likes Like |Link to Comment
  • Bank Of China Is Priced For A Major Catastrophe [View article]
    Thank you!
    Aug 19 08:28 PM | Likes Like |Link to Comment
  • Is The Real Value In Banking Overseas? [View article]
    Thanks for the article. There are other banks in Europe that are even cheaper. I like the French bank Credit Agricole (OTCPK:CRARY), which trades at a very low P/B ratio because of exposure to southern Europe and because it had a stake in the Portuguese Banco Espirito Santo BES, which went under. However, if you remove the write-off of BES (which was a one time item) from the 2nd quarter financial statement, you see that Credit Agricole had an impressive year-on-year growth. I also like Banco Santander (NYSE:SAN) which is well managed and sports a high dividend, but not at the current share price.
    Aug 14 12:41 PM | Likes Like |Link to Comment
  • Credit Agricole Appears Undervalued And Has A Good Potential Upside [View article]
    interesting, i did not know the regional banks were available as ADRs in the US, but you are right. Thanks very much for the information. The shares are not liquid at all though. I like Credit Agricole SA because I like the international exposure, that the regional banks don't have.
    Aug 13 12:24 AM | Likes Like |Link to Comment
  • Buy Portugal Telecom Right Now [View article]
    Well, the reason the stock was down in the first place is that the CEO made a very bad call with BES and was responsible for a $900 million loss. So it seems reasonable and very rational to assume that there is going to be a short-term bounce in the share price when the CEO resigns. That is most logical.
    Aug 8 04:11 PM | Likes Like |Link to Comment
  • Buy Portugal Telecom Right Now [View article]
    Same thing here: thank you Paulo. I had my eyes on PT for a while and was waiting for the "right time" to buy some shares. Your analysis made sense to me so I bought a (small) position.
    Aug 8 04:08 PM | Likes Like |Link to Comment
  • Why I Bought Guangshen Railway [View article]
    By the way, I forgot to thank you for the article: it's a good one, and I agree with your thesis (I am myself long GSH). I'm a bit worried by the competition that is about to increase significantly though (but the Futian Express has been plagued by delays so far, so we can hope that situation will persist :-) ).
    May 28 03:15 PM | 1 Like Like |Link to Comment
  • Why I Bought Guangshen Railway [View article]
    I just checked, and there is the Futian express rail service that will connect Shenzen to Guangzhou and therefore will be a direct competitor to GSH. It's currently being built, but the Futian station in Shenzen is expected to open in a couple of months. So yes, competition will appear very soon. That might be one of the reason why GSH has not been performing so well lately.
    May 28 03:07 PM | 1 Like Like |Link to Comment
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