Asia Fears Could Give Citi Bulls Chance To Buy: Here's Why

• Citigroup Inc C shares are down 11 percent since July 31, and declined 3 percent in the last 5 trading days.
• Oppenheimer’s Chris Kotowski maintained an Outperform rating for the company, while reducing the price target from $74 to $69.
• After the company’s shares plummeted on news of the Asian market turmoil and fears of it spreading, Kotowski believes there is a buying opportunity.

Analyst Chris Kotowski said that Citi's stock has lost ~11 percent since July 31, mainly “in sympathy with the turmoil in Asian markets.” After the decline, the shares are currently trading at 87 percent of TBV. The analyst believes that this is a “good buying opportunity” in view of the fact that Citi’s valuation “clearly seems to discount some significant problem that we do not think is likely to materialize.”

Citi has a strong franchise in Asia, both consumer and institutional, and it contributes around ~21-22 percent of corporate revenues and earnings. Kotowski pointed out, however, that the franchise is diverse and at the very upscale end of the market. Moreover, the franchise has performed “exceptionally” during downturns in the past.

In the report Oppenheimer noted, “Citi provides excellent disclosures of loan balances, delinquencies and loss rates by country on a quarterly basis and these have been both low and rock-steady over the past 18 months.”

Kotowski added that Citi's excellent performance in these markets has resulted from the fact that its target customer base here is “the affluent globally connected consumers, who have residences and business interests in multiple countries, who travel frequently and often have children studying abroad.”

Kotowski believes that Citi's Asia franchise is “a significant positive” in the long run, since the region is expected to achieve faster GDP growth than Europe and North America. The price target has been reduced to reflect a lower market multiple.