Carl Delfeld is a long-standing expert on international investing; more recently, he became the senior editor of Cabot Global Stocks Explorer. Here, he looks at a trio of Asian play in the financial sector.
DBS Bank (DBSDY) is a high quality play on growth in Southeast Asia. It is the largest and strongest bank in the region and the leading consumer bank in both Hong Kong and Singapore.
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Its tentacles reach out through 200 branches in 50 cities. DBS Bank produces steady profit margins, revenue, and earnings and is also increasing market share in consumer and corporate banking.
Despite all of these strengths, DBS is trading at only eleven times trailing earnings and sports a solid 4.5% dividend yield. Any tangible improvements in the U.S.-China relationship will get this stock moving.
ICICI Bank (IBN) shares were up 5% this past week. India's second-largest private lender recently reported a quarterly profit compared with a loss a year earlier, helped by lower provisions and higher retail loan growth. Net profit for the fiscal first quarter was $277 million.
The bank's corporate loan book grew at a pace of 13% in the quarter, while its retail loan book grew 22% and net non-performing assets (NPA) at the end of the June quarter were down 51%.
IBN is a solid India play and there are still 191 million Indians without a bank account, which means a lot of potential new customers. This is a good entry point to take a stake in IBN if you have not yet done so.
LexinFintech (LX) operates an online consumer finance platform aimed at young adults in China. More than 90% of its customers are young, educated, and between the ages of 18 and 36.
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The company recently reported encouraging financial results. Registered users increased 72% to more than 50 million. Active users hit 1.3 million, a 153% increase.
Total loan originations rose 57% to reach $3.6 billion, while its 90-day loan delinquency ratio remains low at 1.49%. Adjusted net income jumped 35% on a 140% increase in sales.
This high-growth fintech idea is currently trading at less than 10 times forward earnings projections and based on this and its solid quarter I encourage you to build a position if you have not already done so.
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