Core Viewpoint - The August non-farm payroll report from the U.S. indicates a weakening labor market, with employment, hours worked, and income growth returning to pandemic levels, suggesting a likely interest rate cut by the Federal Reserve in September [1] Summary by Relevant Sections - **Labor Market Conditions** - The labor market is showing signs of weakness, with key metrics such as employment, hours worked, and income growth reverting to levels seen during the pandemic [1] - **Federal Reserve's Monetary Policy** - The Federal Reserve is almost certain to cut interest rates by 25 basis points in September, with a potential for a 50 basis point cut if inflation data for August is weaker than expected [1] - Previous inflation forecasts by the Federal Reserve have proven overly pessimistic, while their predictions regarding the labor market have been overly optimistic [1] - **Future Interest Rate Projections** - A sustained easing cycle is anticipated, aiming to lower rates to around 3% by March 2026, which is considered the "neutral level" [1] - The new Federal Reserve Chair is expected to implement further stimulus measures, potentially reducing rates close to 2% [1] - There is a risk that if inflation rises again, some of the stimulus measures may be reversed by 2027 [1]

Mizuho Financial is aiming to become Asia’s top investment bank by bolstering equity underwriting and M&A advisory, seeking to replicate the headways the firm has made in the US. https://t.co/BYexgO4nVM ...

Financial Performance - Operating profit reached $159.7 million, a 5.4% increase compared to FY24[8,18] - Operating EPS increased by 7.3% to 89.8 cents[8,18] - The full year dividend increased by 12.6% to 73.3 cents per share[8,18] - Returns to shareholders totaled $202.1 million, a 64% increase from FY24, including $74 million from on-market share buy-backs and $128 million in total dividends[8,18,19] - Strategic partnership income surged by 202% year-over-year to $31.1 million, representing 20% of total operating profit[8,10] - Fund investment income increased by 210% to $42.2 million[20] Assets Under Management (AUM) - Assets under management (AUM) grew by 8.2% year-over-year, reaching $39.6 billion[8,10,18] - Investment Management revenue decreased by 12% year-over-year to $245.7 million, due to a decline in margins[8,10,18] Strategic Partnerships - Invested capital in strategic partnerships increased by 103% to $324.5 million[24] - Strategic partnerships returned 10% on invested capital in FY25, up 4% over the year[26] - FinClear reported revenue growth of 8% year-on-year and underlying EBITDA growth of 15% year-on-year[62,63]

Financial Data and Key Metrics Changes - Operating profit increased by 5.4% to $159.7 million, supported by disciplined cost management and increased distributions from fund investments [2][10] - Revenue decreased by 12% year-on-year, primarily due to a reduction in average management fees across assets under management (AUM) [3][12] - Statutory profit fell by 31% compared to the prior period, reflecting lower mark-to-market gains on investments [11] Business Line Data and Key Metrics Changes - In the Investment Management business, AUM rose by 8.2% to $39.6 billion, driven by strong investment returns across strategies [2][18] - Management fees decreased by 8.6% due to a 13% reduction in the average fee rate, partially offset by a 4% increase in average AUM [12] - Performance fees amounted to $11.1 million, driven by strong performance in the infrastructure strategy [13] Market Data and Key Metrics Changes - The strategic partnerships segment saw profits triple to $31.1 million, contributing 20% of total operating profit [3][14] - Barron Joey's NPAT rose by 73% with revenue up 24%, indicating strong growth across multiple business lines [27] - Vimba contributed positively to the annual result for the first time, reinforcing the strategic fit and earnings potential of the partnership [14][28] Company Strategy and Development Direction - The company aims to provide diversified sources of revenue and has refreshed its corporate brand to better position itself for the future [1][5] - The strategy focuses on high-quality partnerships, particularly in investment management and specialist financial services, to enhance earnings diversity [4][30] - The company plans to pay out at least 80% of group operating profit as dividends, reflecting growth in earnings from strategic partners [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong performance from strategic partnerships and a solid balance sheet [9][10] - The company is focused on improving long-term investment performance and expanding client solutions through strategic partnerships [34][35] - Management acknowledged challenges from super fund internalization and geopolitical instability but remains committed to providing alpha for clients [51] Other Important Information - The company declared a fully franked final ordinary dividend of $0.259 per share, reflecting a payout ratio of 95% of investment management operating profit [10] - The company has over $560 million in liquid capital, providing strategic optionality for future growth [11] Q&A Session Summary Question: Update on the infrastructure fund and institutional clients' sentiment after leadership changes - Management reported no institutional client outflows following leadership changes, with positive client responses and increased attention to listed infrastructure as a strong asset class [40] Question: Is Barron Joey close to maturity or still has growth potential? - Management indicated that Barron Joey is not in a mature state and continues to see growth across multiple business lines [43] Question: Net flows in the first weeks of FY '26 compared to FY '25 - Management noted no material changes in net flows, with good momentum continuing from FY '25 [45] Question: Impact of fee transitions on margins - Management confirmed that the transition of fee rates will have a relatively small impact on overall margins [47] Question: Stability of AUM growth and future pressures - Management expressed optimism about the stabilization of AUM growth, despite ongoing challenges from super fund internalization and geopolitical instability [49] Question: Changes in revenue margins and fee reductions - Management clarified that there have been no changes in advertised rates, with the reduction in fee rates primarily due to compositional changes [54] Question: Future use of surplus capital - Management stated that they continue to explore strategic partnerships while balancing returns to shareholders through buybacks [58][60]

Core Viewpoint - Mizuho's report indicates that the end of the year is considered the earliest opportunity for the Bank of Japan (BOJ) to raise interest rates, with a hawkish stance on inflation and economic conditions being highlighted [1][2] Group 1: Monetary Policy Insights - The BOJ's July monetary policy meeting summary released on August 8 presents a hawkish view on inflation, noting that both actual inflation and inflation expectations are rising, alongside increases in corporate profits and wages [1] - Some board members advocate for an early rate hike, emphasizing the need for the BOJ to manage risks and not miss the opportunity to raise rates [1] - However, there are opinions suggesting that the BOJ intends to take time to assess the economic impact of U.S. tariffs, indicating that a decision on policy changes may not be imminent [1][2] Group 2: Assessment Timeline - It is suggested that at least two to three months are needed to evaluate the impact of U.S. tariff policies, which could delay any potential rate hike until December at the earliest [2] - The statement regarding the assessment period and the earliest exit from the current stance implies a lower likelihood of rate hikes in September or October, contrasting with market expectations of a 40% probability for a rate hike in October [2] Group 3: Inflation Focus - Multiple opinions suggest that the BOJ should shift its focus from core inflation to actual inflation, recognizing that actual inflation is becoming increasingly important as core inflation approaches 2% [3] - Despite acknowledging that inflation is running above 2%, there are concerns that focusing too much on actual inflation could hinder the possibility of a rate hike due to expected declines in inflation rates [3] Group 4: U.S. Federal Reserve Context - Mizuho notes that U.S. employment data indicates a softening labor market, which may support the Federal Reserve's move towards rate cuts, with a probability of over 90% for a rate cut in September [4] - Nomura Securities has also adjusted its expectations for the Fed to cut rates in September, citing signs of slowing inflation and initial cracks in the labor market [4]

Group 1 - Mizuho Financial Group is one of Japan's three megabanks, alongside Mitsubishi UFJ and Sumitomo Mitsui Financial [1] - The company has experienced significant growth recently, indicating strong performance in the banking sector [1]

Core Insights - The research service "Asia Value & Moat Stocks" targets value investors looking for Asia-listed stocks with significant discrepancies between market price and intrinsic value, focusing on deep value balance sheet bargains and wide moat stocks [1][2] Group 1: Investment Focus - The service emphasizes purchasing assets at a discount, such as net cash stocks, net-nets, low price-to-book (P/B) stocks, and sum-of-the-parts discounts [1] - It also highlights the importance of acquiring earnings power at a discount in high-quality companies, including "Magic Formula" stocks and hidden champions [1] Group 2: Market Outlook - A previous update from May 27, 2025, suggested that an upward revision of the fiscal year 2025 outlook or achieving better-than-expected actual results for MFG is likely [1]

Financial Performance - Mizuho Financial Group raises its annual profit forecast [1] - Sumitomo Mitsui Financial Group's earnings exceeded expectations [1]

Financial Performance Highlights - Consolidated Net Business Profits decreased by 37% YoY, reaching JPY 3164 billion, impacted by Yen appreciation, but progress is at 24% vs FY25 Outlook of JPY 128 trillion[6, 9] - Profit Attributable to Owners of Parent increased by 04% YoY, totaling JPY 2905 billion, driven by net gains related to stocks and reversals in credit-related costs, with progress at 30% vs FY25 Outlook of JPY 094 trillion[6, 11] - TSE ROE increased by 12 percentage points due to profit growth and other factors, indicating improving capital efficiency[6, 12] Business Segment Performance - Customer Groups experienced strong interest income and fee business, contributing to largely flat YoY Consolidated Gross Profits, which decreased by 09%[7] - Retail & Business Banking Company (RBC) reported Profit Attributable to Owners of Parent of JPY 439 billion[18, 33] - Corporate & Investment Banking Company (CIBC) reported Profit Attributable to Owners of Parent of JPY 314 billion[18, 33] Balance Sheet and Asset Quality - Total Assets reached JPY 278 trillion, a decrease of 46%[19] - Loans in Japan showed a Loan and Deposit Rate Margin of 061%[21] - Loans outside Japan had a Loan and Deposit Rate Margin of 494%[24] - Non-performing Loans (NPL) Ratio stood at 073%[30] Non-Interest Income - Non-Interest Income reached JPY 3163 billion[27] - Global Corporate & Investment Banking Company (GCIBC) contributed JPY 1122 billion to Non-Interest Income[27] Future Outlook - The company revised its FY25 earnings outlook upward, anticipating further business growth, with a Consolidated Net Business Profits outlook of JPY 133 trillion and Profit Attributable to Owners of Parent outlook of JPY 800 billion[36]

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years. MFG currently has a forward P/E ratio of 10.80, while NU has a forward P/E of 23.07. We also note that MFG has a PEG ratio of 0.68. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio ...