Smartkarma Daily Briefs

• Conglomerate Guoco Group (53 HK) has fielded three privatisation Offers from Guoline (the Quek family) over the past twenty years. 
• Elliott Advisors, then holding 9.72% of shares out, backed the most recent Offer of HK$135/share in November 2018; but it was voted down at a Scheme Meeting. 
• Elliott has now, surprisingly, exited. This may open the door for a fourth Offer. Shares popped 14% on the news.  

• UOL Group (UOL SP) has underperformed its Singapore peers and the drop in market cap could result in the stock being deleted from global passive portfolios in February.
• UOL Group (UOL SP) has traded higher since end October and there has been a steady increase in cumulative excess volume on the stock since then.
• UOL Group (UOL SP) trades richer than its closest peer, City Developments (CIT SP), on EV/Sales and EV/EBITDA. The recent outperformance presents a trading opportunity.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Lippo Malls Indonesia Retail Trust
• Road King Infrastructure

• Bank Central Asia (BBCA IJ) booked a strong finish to the year with PPOP rising by +15.4% YoY and zero provisioning in 4Q2023, driven by loan growth of +13.9% YoY. 
• The bank’s net interest income grew by +19.5% YoY, with a stable NIM of 5.5% in 4Q2023 and CASA growth of +4.3% YoY, bringing the CASA ratio to 80.3%.
• BCA remains a core holding amongst Indonesian banks, with conservative bank guidance of +9%-10% loan growth, stable NIMs and CoC in 2024. Valuations reflect bank returns and quality.

• Outlook for interest rates in 2024 remains uncertain with market expectations diverging from Fed’s dot plot. Overall, rate cuts are expected in 2024.
• Lower rate outlook for 2024 will drive higher deal-making which is likely to benefit Goldman. A slowdown in the US economy could hamper Goldman’s recovery.
• Market metrics point to a positive sentiment around Goldman Sachs stock amongst analysts with summary analyst recommendation pointing to a Buy rating and average upside of 11%.

• Krung Thai has solid post-provision profitability, close to double digit ROE with a healthy balance sheet, along with attractive PBV and PE ratios
• We add Kasikorn to the buy list, as its cost of risk sharply improved in 4Q23, suggesting that it peaked in 3Q23; this should improve post-provision returns going forward
• We remove Ayudhya from the buy list, as its worsening cost of risk trends are eroding post-provision returns; it is also relatively weak in terms of capital adequacy

• The S&P 500 INDEX is WEEKLY OVERBOUGHT, it may continue higher this week or the next but a pullback is behind the corner.
• Currently the index has reached beyond the Q3 resistance target (4897) and it’s up 4 weeks in a row.
• Cover your LONG holdings for the upcoming pullback, going SHORT is also possible but maybe won’t be much profitable as we expect the index main rally to last into April.

• Here we are revisiting the Thai bond market, as per requests from our Thai readers, to see the impact of the global rate trajectory on Thailand.
• The Thai bond market will remain unattractive to foreign institutional investors, in our view.
• The attempt to increase yield should involve a material change in Thailand’s financial structure and regulatory mindset.

• Since early November 2023 we have laid out our bullish expectations for a year-end rally that we anticipated would continue into the early part of 2024. 
• Here we are in the early part of 2024, and we see every reason to continue riding this bull market higher. We see small- and mid-caps resuming uptrends $IWM $VXF
• Downgrading Staples (XLP) to underweight after brief stint at market weight. Highlighting several buys within Financials: Property & Casualty Insurance BRK.B, PGR, CB, TRV, ALL, CINF, ERIE, and more

Martin Currie Global Portfolio Trust’s (MNP’s) manager Zehrid Osmani was correct in his assumption that investors were too conservative in 2023; global equities delivered an above-average total return led by large-cap US technology stocks. However, he believes that the consensus outlook for 2024 is too bullish given economic uncertainty and increasing geopolitical risks. The manager’s view is that with inflation remaining elevated, western central banks will not reduce interest rates until the second half of 2024, which is likely to cause disappointment and stock market volatility. With such an investment backdrop, he stresses the importance of focusing on high-quality companies with structural growth opportunities and strong balance sheets that can weather the prevailing headwinds.