In 2024, the “Distribution and Net Banking” industry* experienced the highest growth, with an impressive appreciation rate of 91.28%** as of 12/19/24.
Am I the only one surprised by this data? I regret not foreseeing this trend and missing out on writing on the industry.
The 2nd performer is a no surprise – “Electric Wires & Cables “ – with an appreciation of 80.74%.
*A new group of banks related with distribution/retail companies and internet companies. The Financial Services Agency relaxed regulations in 2000, leading to a surge in their entry.
** The percentage change in the total stock prices of companies within the industry from the beginning of the year to the end of the year (as of 12/19).
The listed companies in this industry include:
Aeon Financial Service (8570): PE 13x PB 0.58x
Rakuten Bank (5838): PE 17x PB 2.77x
SBI Sumishin Net Bank (7163): PE 21x 3.6x
Seven Bank (8410): PE 19x PB 1.32x
Admittedly, this is a small group that becomes even more concentrated considering the outperformance was largely driven by two stocks: Rakuten and SBI. However, it’s important to highlight the reasons behind their strong performance, which may continue into 2025.
Net banks, unlike traditional banks, do not have physical branches, which has been considered a strength for efficient management. In recent years, they have leveraged the benefits of utilizing the “economic zones” within their respective groups to attract customers. This involves offering better interest rates and fees the more a customer uses services from the same group. For example, Rakuten Bank offers various services in collaboration with other companies in the Rakuten Group, such as online shopping, securities, and credit cards.
Rakuten Bank’s closing price on 1/4 was Y 2,138, but it rose to Y 4,528 by 12/19 (+118%). This growth was partly due to their highly profitable apartment loans. On 11/11, the company announced a revision to their earnings forecast for the FY3/25, expecting an ordinary profit of Y 65 bn, a 22.1% increase from the previous forecast, thanks to scale benefits.
SBI stock price rose 157% from Y 1,527 on January 4th to Y 3,925 on 12/19. Their performance has been driven by the continued execution of new mortgage loans.
(Source: shikiho)