5 investment themes on Shinhan Financial Group

Earnings growth outlook is tepid for 2013.

According to Barclays, since December 7, domestic investors have bought SFG’s share, leading it to outperform both the KOSPI and the KRX Bank Index so far in 2013.

Here's more from Barclays:

Although we see SFG’s earnings growth outlook remaining tepid for 2013, our key investment themes on SFG remain largely unchanged: 1) still oversold by domestic investors; 2) compelling valuations;

3) its downward earnings cycle appears to be almost over; 4) SFG has historically been a beneficiary of macro turnarounds; and 5) its management team is trustworthy. SFG is one of our top picks in Korea along with HFG and DGB (all rated OW).

In line with our adjustments to our earnings forecasts, we trim our 12-month price target from W52,000 to W51,000 (1.0x FY13E BVPS) for potential upside 26%.