SMFG
Sumitomo Mitsui Financial Group, Inc.
$25.59
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 64.1% below fair value
You pay
$25.59
Bear
$43.91
Fair
$71.38
Bull
$87.86
Bear
$43.91
+71.6%
ROTCE 8.6% → 1.89x TBV
Fair
$71.38
+178.9%
ROTCE 11.4% → 3.08x TBV
Bull
$87.86
+243.3%
ROTCE 13.1% → 3.79x TBV
Key Value Driver
ROTCE (11.4%) vs. cost of equity (6.4%)
Implied Market Multiple
1.1x
Summary
With ROTCE of 11.4% vs. 6.4% cost of equity, fair P/TBV is 3.08x on $23.21 tangible book, implying $71.38 per share.
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.
Financial statements were converted from JPY into USD using USDJPY at 0.0061 USD per JPY.
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