Tactical Signal on Société Générale (GLE-FR)

We had an Enter Long Strategic signal on May 5, 2021, triggered by our system on Société Générale, GLE-FR, the french Bank.

Our system also triggered an Enter Long Tactical signal on September 28, 2021 that imply a likely bullish acceleration. Société Générale has a rather poor track record, with a Behavioral score of 1/10, therefore the bullish signal is to be considered as mainly Tactical.

Société Générale is a € 23 Bn market cap Bank which operates through three segments: French Retail Banking, International Retail Banking & Financial Services and Global Banking and Investor Solutions. French Retail Banking includes the domestic networks Societe Generale, Credit du Nord and Boursorama. International Retail Banking & Financial Services consists of International Retail Banking (consumer finance activities), Financial Services to Corporates (operational vehicle leasing and fleet management, equipment and vendor finance) and Insurance Activities. Global Banking and Investor Solutions comprises Global Markets and Investors Services, Financing and Advisory, Asset and Wealth Management. The Group is active globally.

SG posted an impressive 13.4% CET1 ratio in H1-2021 as it represents a buffer of around 430 basis points over Société Générale's MDA (Maximum Distributable Amount) capital requirement of 9.02%.Société Générale holds a 80% stake in the leasing company ALD, which specializes in car leasing. Partly due to soaring used car prices ALD had an exceptional H1 2021, with net income up 70% y/y.

SG strong results (Q2-21 was the best quarter since Q2 2016) were driven by all businesses, and refelects operational improvements across all divisions, a strengthened capital position following years of disposals and capital preservation.
The valuation is attractive with a 12 Month forward P/E at 7x, while the dividend yield currently stands at 6.3%. The company’s €470 Mn buyback planning in Q4-21, is another positive move for shareholders.

Short term catalyst : Rising long rates in Europe, reopening economy.

This signal looks consistent with the Major Bullish Trend in the European Banking sector. The European Banking sector is currently the only sector with both positive Strategic participation (62%) and tactical (69%).