Скачать презентацию Financials David Kaplan Nikhil Ketkar Jonathan Khoury Steve Скачать презентацию Financials David Kaplan Nikhil Ketkar Jonathan Khoury Steve

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Financials David Kaplan, Nikhil Ketkar, Jonathan Khoury, Steve Kuljko Financials David Kaplan, Nikhil Ketkar, Jonathan Khoury, Steve Kuljko

Agenda • Sector Recap • Recommendations • Business/Financial Analysis & Valuation: Hudson City Bank Agenda • Sector Recap • Recommendations • Business/Financial Analysis & Valuation: Hudson City Bank • Business/Financial Analysis & Valuation: JP Morgan Chase and Co. • Review of Recommendations

Recap: SIM v. S&P 500 Weightings S&P 500 Weight SIM Weight +/- 10. 11% Recap: SIM v. S&P 500 Weightings S&P 500 Weight SIM Weight +/- 10. 11% 9. 53% -0. 58% Consumer Staples 11. 26 11. 77 0. 51 Energy 10. 88 10. 10 -0. 78 Financials 16. 50 11. 93 -4. 57 Health Care 12. 15 15. 27 3. 11 Industrials 10. 50 13. 03 2. 53 Information Technology 18. 87 19. 87 1. 00 Materials 3. 48 1. 80 -1. 67 Telecommunications 2. 81 3. 62 0. 82 Utilities 3. 44 1. 88 -1. 57 Sector Consumer Discretionary

Previous Recommendations • Overweight in Financials: sell Financials and move investment to more reliable Previous Recommendations • Overweight in Financials: sell Financials and move investment to more reliable sectors – Technical analysis suggested we were overvalued – Worries prevalent about interest rate increases – Political Reform and its negative impact on the financial sector Class Consensus: Remain at current underweight level

Company Recommendations • Position Alterations: • • J. P. Morgan: Sell all (172 basis Company Recommendations • Position Alterations: • • J. P. Morgan: Sell all (172 basis points) Progressive: Hold (299 basis points) Goldman Sachs: Hold (441 basis points) HCBK: Buy (increase by 172 basis points)

Recommendation 1 JP Morgan Chase (Sell) • Stock Price: $39. 84 • Market Cap: Recommendation 1 JP Morgan Chase (Sell) • Stock Price: $39. 84 • Market Cap: $154. 7 B • Outstanding diluted shares: 3. 98 B • Beta: 1. 16 • Lines of Business: – Investment Banking: 26% of sales – Retail Financial Services: 30% – Card Services: 19% – Commercial Banking: 5% – Treasury and Security Services: 7% – Asset Management: 7% – Corporate/Private Equity: 6%

JPM v. S&P 500 (1 year) JPM v. S&P 500 (1 year)

JPM v. S&P 500 (6 months) JPM v. S&P 500 (6 months)

JPM return vs. FS returns Time JPM Financial Sector 1 month -12. 59% -7. JPM return vs. FS returns Time JPM Financial Sector 1 month -12. 59% -7. 29% 3 months -0. 56% 4. 62% 1 year 14. 03% 31. 19%

Background Information Earnings Revenues Background Information Earnings Revenues

JPM DCF JPM DCF

JPM Valuation JPM Valuation

Risks to JPM • Headline risk – SEC currently conducting criminal investigation against JPM, Risks to JPM • Headline risk – SEC currently conducting criminal investigation against JPM, C, GS and others • Interest Rate risk – Rates currently at all time lows, will increase – Increased interest rates will hurt investment banking business and margins in the market • Regulation – Volcker Rule – No longer too big to fail – Moody’s will downgrade debt ratings if the regulation passes

Recommendation 2 • HCBK (Buy) – Strong Buy 28% Upside – Target Price: $16. Recommendation 2 • HCBK (Buy) – Strong Buy 28% Upside – Target Price: $16. 50 – Buy 170 Basis Points, currently 2. 4% of SIM – Increase Holding to 4. 1% – Use HCBK as a hedge against regulation

Background Information: 1 • • Current Price: $13. 00 Dividend Yield: 4. 6% Dividend Background Information: 1 • • Current Price: $13. 00 Dividend Yield: 4. 6% Dividend Growth 5 Yr: 19. 79% Market Cap: 6. 8 Billion Shares Outstanding: 470 M Beta Vs. S&P: 0. 95 Industry: Thrift & Savings

Background Information: 2 Earnings Revenues Background Information: 2 Earnings Revenues

Income Statement: Graph Income Statement: Graph

Discounted Cash Flow Model Year 2010 E 2011 E 2012 E 2013 E 2014 Discounted Cash Flow Model Year 2010 E 2011 E 2012 E 2013 E 2014 E Net Interest Income 1, 271, 185 1, 420, 361 1, 467, 610 1, 526, 314 2015 E 2016 E 2017 E 2018 E 1, 587, 367 1, 650, 861 1, 716, 896 1, 785, 571 1, 856, 994 2019 E 2020 E 1, 912, 704 1, 970, 085 11. 7% % Growth 3. 3% 4. 0% 3. 0% Subtractions 676, 196 753, 495 779, 872 811, 067 843, 509 877, 250 912, 340 948, 833 986, 787 1, 016, 390 1, 046, 882 % of Revenues 46. 8% 47. 0% 46. 9% 46. 9% Free Cash Flow 594, 989 666, 866 687, 738 715, 247 743, 857 773, 611 804, 556 836, 738 870, 208 896, 314 923, 203 12. 1% 3. 1% 4. 0% 3. 0% % Growth Terminal Discount Rate Terminal FCF Growth 11. 3% 3. 0% NPV of Cash Flows NPV of terminal value Projected Equity Value Free Cash Flow Yield 4, 467, 400 3, 968, 994 53% 47% 8, 436, 394 9. 07% 100% Terminal Value Free Cash Yield Terminal P/E 11, 526, 054 8. 01% 5. 9 Current P/E Projected P/E 5. 2 6. 6 Shares Outstanding Current Price Implied equity value/share Upside/(Downside) to DCF 4. 6 5. 9 4. 5 5. 7 492, 751 $ $ 13. 31 17. 12 28. 6% Strong Buy

Sensitivity Analysis Implied equity value per share Growth rate Discount rate $ 17. 12 Sensitivity Analysis Implied equity value per share Growth rate Discount rate $ 17. 12 8% 9% 10% 11% 12% 13% 14% 15% 0% 21. 379541 18. 83825383 16. 814378 15. 166174 13. 799198 12. 648107 11. 6662649 10. 819499 1% 23. 053203 20. 03636887 2% 25. 284752 3% 28. 40892 4% 33. 095173 17. 69724 15. 832014 14. 311037 13. 047904 11. 9828237 11. 073111 21. 5768025 18. 800818 16. 645819 14. 925244 13. 520391 12. 3521424 11. 36574 23. 630714 20. 219703 17. 663075 15. 675941 14. 087375 12. 7886099 11. 707141 26. 5061901 22. 11155 18. 970975 16. 614312 14. 780355 13. 3123709 12. 110614 5% 40. 905594 30. 81940426 24. 760136 20. 714842 17. 82079 15. 646581 13. 9525232 12. 594782

Valuation: Relative Multiples Relative to Industry High Low Median Current P/Trailing E P/Forward E Valuation: Relative Multiples Relative to Industry High Low Median Current P/Trailing E P/Forward E P/B P/S P/CF 3. 4 3. 3 19. 5 33. 4 6. 6 0. 65 0. 26 0. 3 0. 9 0. 1 2. 2 1. 1 3. 4 4. 2 0. 68 0. 67 1. 1 1. 0 0. 7 Relative to S&P 500 High Low Median Current P/Trailing E P/Forward E P/B P/S P/CF 0. 53 0. 49 0. 2 3. 1 0. 7 1. 4 1. 2 0. 7 8. 9 2. 3 0. 79 0. 6 4. 7 1. 1 2. 0 1. 7 1. 8 14. 0 2. 9

Valuation: Absolute Multiples Absolute Valuation High A. P/Forward E P/S P/B P/EBITDA P/CF B. Valuation: Absolute Multiples Absolute Valuation High A. P/Forward E P/S P/B P/EBITDA P/CF B. 31. 6 19. 4 5. 7 15. 46 33. 5 Low C. 9. 8 4. 3 1. 1 2. 86 10. 9 Median Current D. 19. 4 12. 9 1. 8 10. 13 23. 6 E. 12. 2 6. 0 1. 4 3. 28 12. 1 #Your Target Multiple F. 15 7 1. 6 5. 4 18 *Your Target E, S, B, etc/Sha re Your Target Price (F x G) G. 1. 35 2. 97 10. 32 4. 40 1. 20 H. 20. 25 20. 8 16. 51 23. 6 21. 6 The Price-to-Book 1. 6 x

Risks • Interest rates • Negatively correlated with interest rates • Interest rates will Risks • Interest rates • Negatively correlated with interest rates • Interest rates will increase soon • Economic risks • 10% Unemployment • High national debt

Questions? Sell: JPM Buy: HCBK Questions? Sell: JPM Buy: HCBK

Recommendation 1: GS • Market Cap: $77. 14 B • Outstanding diluted shares: 538. Recommendation 1: GS • Market Cap: $77. 14 B • Outstanding diluted shares: 538. 6 M • Stock Price: $143. 23 • Beta: 1. 40 • Lines of Businesses: • Investment Banking (10. 62% of total sales) • Trading and Principal Investments (76. 1% of total sales) • Asset Management and Securities Services (13. 30% of total sales) • Competitors: • JP Morgan Chase Co. • Morgan Stanley • Citigroup

Price Movement: GS Price Movement: GS

Sales of GS • This quarter was a PERFECT trading quarter. Not one day Sales of GS • This quarter was a PERFECT trading quarter. Not one day did GS sustain a loss • 0% increase for principal and trading reflects the rest of the year being tough in light of the SEC and regulation

DCF for GS • Higher terminal Discount rate for headline risk still doesn’t take DCF for GS • Higher terminal Discount rate for headline risk still doesn’t take the upside away… 20% upside from the current price with 18% discount rate

Valuation of GS Relative to Industry High Low Median Current P/Trailing E P/Forward E Valuation of GS Relative to Industry High Low Median Current P/Trailing E P/Forward E P/B P/S P/CF 1. 2 1. 1 1. 5 1. 2 1. 8 . 13. 8. 3. 2 . 96. 93 1. 0. 6 1. 1 . 44. 86 1. 0. 9. 7 Relative to S&P 500 High Low Median Current P/Trailing E P/Forward E P/B P/S P/CF 2. 1 1. 4 1. 1 2. 1 1. 7 . 33. 51. 4. 5. 5 . 70. 72. 7 1. 1 1. 0 . 34. 52. 5 1. 3. 6 Absolute Valuation A. P/Forward E P/S P/B P/EBITDA P/CF High Low B. 21. 5 3. 6 5. 7 4. 01 21. 3 Median Current D. E. C. 7. 5. 4. 7. 52 3. 9 12. 2 1. 7 2. 1 2. 38 11. 9 7. 5 1. 6 1. 1 2. 86 5. 3 #Your Target Multiple F. 8. 0 1. 7 1. 1 2. 86 5. 0 *Your Target E, S, Price B, etc/Share (F x G) G. 18. 36 81. 00 150. 00 50. 08 27. 02 H. 146. 88 138. 00 165. 00 143. 23 135. 12

Risks to recommendation • Headline risk – Damaged reputation from S. E. C charges Risks to recommendation • Headline risk – Damaged reputation from S. E. C charges – Material fines and business reduction • Interest Rate risk – currently low, will increase… – Increased interest rates will hurt margins for trading, lower volume, less activity • Regulation – Material effects of financial reform on GS business

Analysis: PGR Analysis: PGR

Analysis: PGR Analysis: PGR

Qualitative Assessment: PGR • Price target: $22 (8. 10%) • Limited volatility in relation Qualitative Assessment: PGR • Price target: $22 (8. 10%) • Limited volatility in relation to other financial stocks (product offering…) • Acquisition of market share promising • April EPS consistent with April ‘ 09, revenues up to $1. 47 bn vs $1. 41 bn