Consumer finance woes have taken a bite out of Shinsei (JP: 8303) too! Net income for the year-ending March 2008 is expected to be ¥72 billion vs. a loss of ¥61b this fiscal year-ended March ’07. Coverage of its earnings by Bloomberg notes it is the worst performing bank stock in Japan this year and it reported its first annual loss since going public in ’04. Despite the forecast back to black, it was short of analysts’ average estimate of ¥77b (per Reuters) and its FY06 net of ¥76b.
Shinsei remains a long-term holding for us. On April 11, we suggested “Keeping an Eye on Shinsei Bank.” It ended up giving up all of its recent gains (up to ¥594 on Mar. 29) trading as low as ¥510 on May 1. We said at the time, “[There's] No rush to buy or go all-in,” and said to consider adding around ¥565, which would have been a 5% pullback from the then recent rally to ¥594. It would have been a painful ride to ¥510, but based on volume, it looks like it may have bottomed.
From here, look for buying opportunities on dips. Maybe trade it, or gradually build up a full position. Again, no hurry.
Following its earnings release, it is up 3.5% to ¥558.
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