CATY
Cathay General Bancorp
$59.95
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 12.0% below fair value
You pay
$59.95
Bear
$47.67
Fair
$68.10
Bull
$88.53
Bear
$47.67
-20.5%
ROTCE 9.3% → 1.02x TBV
Fair
$68.10
+13.6%
ROTCE 12.4% → 1.62x TBV
Bull
$88.53
+47.7%
ROTCE 14.2% → 1.98x TBV
Adjust Assumptions
12.4%
9.2%
Key Value Driver
ROTCE (12.4%) vs. cost of equity (9.2%)
Implied Market Multiple
1.58x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$60.67
Divergence from AlphaVal
12%
Summary
With ROTCE of 12.4% vs. 9.2% cost of equity, fair P/TBV is 1.62x on $37.99 tangible book, implying $68.10 per share. DDM cross-check: $20.19.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $20.19 (70% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly