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#51 – Shinhan: Winning the Financial War in Korea
The ADR Alert
Monday, February 28, 2005
By Alexander Green, Investment Director
Email – #51
** Shinhan: Winning the Financial War in Korea
Our portfolio below looks like a United Nations delegation, with holdings in South America, Europe, Canada, Eastern Europe and South Africa.
But we don’t have any exposure to the fast-growing economies of Southeast Asia. Fortunately, that’s about to change.
South Korea is currently the world’s 11th-largest economy. And at the rate the country is growing, the investment opportunities are plentiful.
One of them is Shinhan Financial Group Co., Ltd. (NYSE: SHG). Currently Korea’s second-largest financial services group, the company has its sights set on being #1.
Already the bank is posting fabulous numbers. Net income in the most recent quarter soared 144%. Net profit for 2004 nearly tripled.
Korea is quickly emerging as the regional business gateway for the massive Japanese, Chinese, and ASEAN (Association for South Asian Nations) economies. In fact, almost half of the Fortune Global 500 companies have established a foothold in Korea.
The reason? China, Japan and the ASEAN countries now account for 31% of the world’s demand.
And Shinhan is making the right moves to capitalize on the upswing. Management is slashing bad loans, increasing reserves, and aggressively pursuing growth.
In the next three years as part of its self-proclaimed “leapfrog phase,” the company wants nothing less than to rank 1, 2, or 3 in the nation for each of its core businesses.
Despite a 54% run-up last year, shares still trade at a 25% discount to the industry price-to-book ratio.
And the stock is technically sound, as well. Shares are trading well above both the 50-day and 200-day moving averages. Despite today’s market downturn, the stock is hitting a new 52-week high.
***Action to Take***
Buy Shinhan Financial (NYSE: SHG) at $61 or better. And place a sell stop at $50 for protection. There are no options on this one for speculators to consider.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com, or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
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