Tag: ASX:CYB

Clydesdale & Yorkshire Bank, the UK spin-off from NAB, recently acquired Virgin Money. Their trading update for the December quarter was released overnight and there are some encouraging signs on increased cost synergy savings and improved margins in their loan books.

We see long-term value in CYB, despite the short-term volatility around the Virgin Money integration and Brexit impact.

CYB reports their earnings on Tuesday and we recommend buying the stock ahead of the announcement.

We believe the combined CYB and Virgin Money business provides a strong platform for growth.

CYB

Look to accumulate CYB on any weakness near $4.70 ahead of their full year earnings release on the 20th of November.

Considering that CYB has most of its mortgage exposure in the UK, has an net interest margin of 220 basis points and is not being targeted by the Royal commission, we believe the stock is oversold.

CYB

Our ALGO engine maintains a buy signal in CYB near the $5.20 support area.

This “higher low” pattern is referenced to the intraday low of $5.00 posted on June 1st.

On a percentage basis, the 15.5% drop in CYB  is almost twice as much as the other ASX banking stocks over the last month.

Considering that CYB has most of its mortgage exposure in the UK, has an net interest margin of 220 basis points and is not being targeted by the Royal commission, we believe the stock is oversold.

At $5.20, CYB is trading at 12X FY 2019 earnings. Technical readings suggest a bounce back into the $5.70 area before more significant price resistance at $6.25.

CYB Bank

Our ALGO engine triggered a buy signal for CYB into yesterday’s ASX close at $5.69.

This “higher low” pattern is referenced to the intra-day low of $5.20 posted on June 4th.

CYB at $5.50 – $5.60 appears to be a good buying opportunity. We expect earnings upgrades next year following integration with Virgin Money.

CYB

Shares of CYB remain firm as the beneficial synergies of the Virgin Money acquisition begin to crystallize into forward guidance estimates.

Reports show that CYB will spend GBP 60 million to re-brand all of its businesses to Virgin Money, but overall, the amalgamation will result in over GBP 120 million in cost savings.

It’s expected that these savings will equate to around 13% EPS growth over the next 18 months and lift the dividend to 25 cents per share.

Our ALGO engine triggered a buy signal in CYB in July of last year at $4.35. We have a medium-term upside target in the $6.25/35 range.

CYB

Shares of Clydesdale and Yorkshire bank continue to firm as the market assesses the takeover of Virgin Money as a net positive for the UK-based lender.

Under the terms of the current proposal, CYB will acquire 100% of Virgin Money by issuing 1.21 new shares in exchange for each share in Virgin.

The takeover board has extended the deadline for CYB’s decision to June 18th for Virgin’s 6 million personal and business customers.

Will believe that CYB will move forward with the takeover. As such, the cost synergies via the rationalization of operations and the reduction in IT spending will add value and lift the share price.

Our ALGO engine triggered a buy signal at $4.40 back in July of last year. We suggest buying CYB at current levels with an initial upside target of $6.00 and solid support at $5.15.

CYB

Clydesdale & Yorkshire Bank was spun-off by National Australia Bank in 2016 and has since become a leaner-meaner banking machine. CYB is further bulking up through the acquisition of Virgin Money in the UK.

Overnight CYB announced a 7% increase to its preliminary offer to acquire Virgin Money, and extend the final bid deadline to the 18th June.

Whilst a key to holding CYB long-term is the impact of Brexit-related
macro-economic risks, we see scope for a rally back to $6.00 following the take-over.