Financials

• Today, Hulic Co Ltd (3003 JP) announced a large secondary offering where about a quarter of the crossholdings will sell down holdings. Some exit entirely. Some partially. 
• After this selldown, there is a fair bit more to go later, but more of that will be corporate. It’s a BIG offering: 55d of ADV and 55% of MRWF. 
• It is “only” about $800mm and retail gets 80% of it. The high div yield will be a selling point but there is a lot of debt.

• For March KOSPI 200 futures, expect a 0.95% to 1% yield for spot-futures arbitrage, with contango depending on year-end ex-div trends and passive inflows.
• Passive inflows into the value-up index in January and spillover effects into K200 futures, potentially fueling year-end contango due to overlap with KOSPI 200.
• Prop trader dynamics are cooling off: Tax-driven buying in December, selling in January likely to ease, reducing the past backwardation. Without it, expect higher volatility in K200 futures.

• Hulic Co Ltd (3003 JP) has announced a secondary offering of up to 85.4 million shares (98.2 million including overallotment), worth around US$800 million (US$920 million including overallotment).
• Unlike the 2021 offer, this is a pure secondary offering. It is smaller in terms of outstanding shares and 1-year ADV. The shares are hovering around all-time highs.
• Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 12 December (likely 10 December).

• A group of domestic financial institutions are looking to raise US$775m from trimming their stakes in Hulic Co Ltd (3003 JP).
• The deal will be a large one to digest at 48 days of the stock’s three month ADV, representing 11% of its shares outstanding.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Overnight, Hulic Co Ltd (3003 JP) announced a placement of 85.37m shares to unwind crossholdings and improve corporate value. There is an overallotment option for another 12.8m shares.
• There will be limited passive buying in the short-term and the number of shares offered is a very large percentage of real float of the stock.
• A price drop of 20% or more puts Hulic Co Ltd (3003 JP) at risk of deletion from a global index and could lead to a further price drop.

• Quick trading idea:  S&P 500 INDEX DAILY is overbought. Has been closing up for 7 days in a row, soon there will be a DAILY reversal (lasting => 1 day).
• The ideal area to go short is the price area above yesterday’s Close (6021.63).
• Alternatively go SHORT today at the Close. The interactive chart for the SPX DAILY can be freely accessed here.

• With 42 years under its belt, ERA Asia Pacific, a wholly owned subsidiary by APAC Realty, embraces technology to empower agents in delivering elevated services with a personal touch.
• In recent years, APAC Realty – which operates a real estate brokerage in Singapore under the ERA brand – has embraced technology, viewing digital tools not as threats but assets to support its agents and enhance their work.
• Together, agents from ERA Asia Pacific account for 57.4% of ERA’s global network of real estate agents.

• SYF, DFS, and ALLY are spinoffs from larger companies in consumer finance and create shareholder value through focused strategies and good management culture.
• ALLY is particularly interesting due to rate-cycle dynamics and a shift from investing in competitive strength to harvesting from past investments.
• The onboarding of a new CEO at ALLY suggests potential developments in the company’s strategy, with a focus on management culture, competitive strength investment, and the impact of the current rate cycle on earnings power.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Hyundai Motors Securities announced a rights offering worth nearly 200 billion won involving a 49% shares dilution. 
• The amount of shares dilution is excessive which is likely to result in a share price weakness in Hyundai Motor Securities in the coming weeks.
• The expected rights offering price for now is 6,640 won per share which is 24.5% discount to the closing price on 26 November.

• DigiCo REIT (DIGICO AU) is looking to raise nearly A$2bn in its IPO by selling 399.1m shares at A$5/share. Stock is expected to list on the ASX on 12 December.
• HMC Capital (HMC AU) will own 18.2% of DigiCo REIT (DIGICO AU) after the IPO while IPO investors will own 72.5% of the company.
• Subject to DigiCo REIT being an eligible stapled security, we expect the stock to be included in global and local indices between March and June mopping up 11.7% of float.

• Last Thursday, I shared my conviction in our Telegram crypto chat:
• My two cents: We touch $100,000 (or very close) but we do not comfortably get on the other side.
• This makes all the leverage and open interest (and retail euphoria) turn against us.
• After witnessing the Bitcoin price face repeated rejections since then, I am even more confident in this view.

• The Nikkei 225‘s trend is uncertain at the moment: the new N225 WEEKLY QUANTCHART presented here (freely accessible 24/7 clicking here) shows us the current MRM models’ support and resistance.
• In the last few months the index stalled, currently it is stuck in a range roughly between 37650 and 40250, and it has closed down for 2 consecutive weeks (CC=-2).
• At the moment we expect the index to fall maybe another week (closing this week down) and then a LONG reversal the following week.

• Old Republic International Corporation reported its third-quarter 2024 earnings, revealing mixed results influenced by a range of market factors.
• The company’s consolidated pretax operating income declined to $229 million, down from $251 million in the prior year.
• Similarly, the consolidated combined ratio rose to 95% from last year’s 92%, indicating a deterioration in underwriting performance.

• The Hanover Insurance Group’s recent financial results for the third quarter show a complex but generally positive picture of the company’s performance.
• The firm reported an operating income of $3.05 per diluted share, with an operating return on equity of 14.4%.
• This performance reflects improvements driven by strategic initiatives such as enhanced pricing, adjustments in insurance value, and targeted underwriting actions.

• Lincoln National Corporation delivered a strong performance in the third quarter of 2024, showcasing its highest quarterly adjusted operating income in over two years.
• This reflects positive momentum across all its business lines, driven by strategic initiatives focused on capital foundation, operating model optimization, and profitable growth.
• The company has made considerable progress in aligning its operations with these strategic goals, although it acknowledges that the transformations required are part of a multiyear journey.

• CNA Financial Corporation reported strong financial performance in the third quarter, reflecting robust growth in core income and investment results, as well as strong underwriting performance.
• The core income for the quarter was $293 million, driven by a $73 million increase in net investment income to $626 million pre-tax.
• This surge in investment income was propelled by the positive performance of CNA’s alternatives portfolio and the growth of its fixed-income investments, which benefitted from higher book yields and a larger asset base.

• Chubb Limited delivered a robust third quarter of 2024, posting significant growth in its Property and Casualty (P&C) underwriting, investment income, and life insurance segments.
• Core operating income increased by 14.3% year-over-year to $2.3 billion, contributing to a 16.9% rise in net income.
• The global P&C premium revenue grew by 7.6%, translating to an 8.5% increase in constant currency, reflecting strong performance across its diversified international markets and business segments.

• Treasuries surged yesterday, with yields falling 10-13 bps across the curve after a strong auction of 2Y notes and in the wake of US President-elect Donald Trump’s nomination of Scott Bessent as the next Treasury Secretary.
• Mr Bessent is expected to implement Mr Trump’s tax cuts, while reducing the budget deficit and boosting GDP growth through deregulation and other pro-growth policies.
• The yield on the 2Y UST fell 10 bps to 4.27%, while that on the 10Y UST declined 13 bps to 4.28%. 

• Using data from the close on 25 November, there could be 6 adds and 5 deletes for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December.
• There will also be capping and funding flows that will lead to a one-way turnover of 17.3% and a one-way trade of TWD 60.6bn (US$1.86bn).
• On average, the forecast adds have started to outperform the forecast deletes. Positioning should continue in stocks that have large flow/impact or have recently joined the list of forecast adds/deletes.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
• Today is the base date for the final ranks and we see five ADDs and four DELs.
• We estimate one-way flow to be around US$1.68bn with multiple names having 5x ADV or more to trade.

• UniCredit SpA (UCG IM) launches an all-share takeover bid for 100% of Banco BPM SpA (BAMI IM). The exchange equation is 0.175 UCG IM x 1 BAMI IM.
• The implied value of Banco BPM shares is €6.6658/share, just a 0.3% premium. The transaction offers strong financial appeal, with Banco BPM trading at 0.72x P/BVPS and 11.52% dividend yield.
• The gross spread of +7.4% suggests UniCredit may need to enhance the offer—adjusting the exchange ratio and/or adding cash—unless its share price approaches the IBES median target.

• IVs trade higher in spite of a late-week recovery in equities. Negative correlation between Index & option premiums reasserted as multiple holidays fall off the calendar.    
• Vol-Regime Switching Model firmly lodged in “High & Down” state. Allocation to Iron Condors/ Iron Butterflies recommended.   
• Vol surface characteristics also reflecting increased risk premia – Skew extends away from overly compressed levels. Vol term structure swings from Contango to Backwardation.

• The NIFTY Index (NIFTY INDEX) finished last week in positive territory. A longer rally could ensue.
• This Insight provides option strategies based on the resistance and support levels identified in the quantitative Insight EQD | NIFTY 50: State Of The Odds.
• Volatility skew and option liquidity inform three strategies, which include a Capped Risk Reversal, a Risk Reversal, and a Call Spread.

• On November 7, 2024, Migalo Holdings Inc. (hereafter, the Company) announced its Q2 FY2025/3 earnings results.
• In H1, sales increased 23.3% YoY to JPY 30,001 mn, and operating profit fell 15.6% YoY to JPY 1,935 mn.
• Q1 saw a decline in sales and profit due to the impact from last year’s concentration of new property deliveries.

• PICC Property & Casualty H (2328 HK) will replace Longfor Properties (960 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 6 December.
• Estimated one-way turnover is 2.68% resulting in a round-trip trade of HK$2.84bn (US$365m). The final capping will use the close of trading on 3 December.
• There could be a move higher in PICC Property & Casualty over the next few days while any selling in Longfor Properties will be a covering opportunity for the shorts.

• Beike (BEKE) reported C3Q24 revenue in-line with our estimate and consensus but non-GAAP operating profit 26%/25% below, mainly due to higher commission rebate and agent salaries;
• Strong rebound in home transaction volumes in October and November, led to our C4Q24 revenue 16% above consensus. But the rebound needs more stimulus to sustain;
• We maintain the stock as BUY and raise TP to US$25 to reflect the near term rebound and steady market share gains.

• Arthur J.
• Gallagher & Company reported strong financial results for the third quarter of 2024, showcasing a robust performance across its core segments, Brokerage and Risk Management.
• The company’s revenue growth was impressive at 13%, with organic growth marking 6%.

• In the second edition of Crypto Moves, published almost exactly a year ago, I shared this conviction:“Perhaps the only thing you want to know is: Do we expect the Bitcoin halving to cause a new run?”“The short answer is yes.
• In this edition of Crypto Moves, we assess Bitcoin’s current position in its historical 4-year cycle. The 4-year cycle is fundamentally tied to Bitcoin’s halvings, which occurs roughly every four years and halves the mining block reward.
• This process has now taken place four times, reducing the reward from 50 bitcoins per block to just 3.125 bitcoins per block.

• After a period of prolonged sell-off, the NIFTY Index last week found support around the 23263 level and bounced.
• Below we introduce a new “quantitative chart” tool called “QUANTCHARTS“: it displays in a compact format all the information you need to evaluate the probability of trend reversal.
• As you will see the NIFTY Index closed just below the 25% (Q1) probability target, so it has room to rise further in the coming weeks, the CC is supportive.

• Atour (ATAT) reported C3Q24 revenue 2.3% lower than our estimate but 4.8% higher than consensus. The net income beat our estimate/consensus by 6.6%/9.5%, thanks to disciplined cost controls.
• Although RevPAR weakened in C3Q24 as expected, turnaround is coming already in C4Q24. We also expect moderate RevPAR growth in 2025.
• We keep the TP at US$37/ADS and maintain a TOP BUY on Atour.

• We take a more nuanced view on Nubank; the stock has corrected 16%+ from its high and, despite 28% YoY loan book growth, it has organically generated capital in 3Q24
• Although Nubank is a digital bank success story, increased competition, especially from other fintechs, and a further deterioration in credit quality remain key business challenges going forward
• Its recent share price correction and narrowing valuation gap leads us to recommend reducing short positions but, on balance, we remain sellers of Nubank; we stay positive on Bradesco

• In today’s Morning Views publication we comment on developments of the following high yield issuers: China Vanke, Gajah Tunggal, ReNew Energy, Adani Green Energy, Bharti Airtel, UPL Limited
• Treasuries fell yesterday, with yields up 1-3 bps across the curve following a soft auction of 20Y notes.
• The yield on the 2Y UST rose 3 bps to 4.32%, while that on the 10Y UST was up 1 bp at 4.41%.

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• In this insight, we take a look at the upcoming constituent changes in the run up to the December 2024 index rebal event.
• We expect two regular changes in December 2024. There are also several live spin-off and M&A events which could trigger intra-review index changes in late-2024/early-2025.

• Pantheon Infrastructure PLC (PINT) is a closed-ended investment company offering investors access to a diverse portfolio of global infrastructure assets
• Focus on providing progressive dividend and potential for NAV organic total return of 8-10%
• Aiming to reduce discount to NAV, capitalize on potential improvement in NAV valuation, and offer attractive IRR with potential for best-case scenario of 30% by end of FY2026

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• H1 Results improved but did not raise guidance for the FY
• Insurance subsidiary surprised with a buyback of shares after strong results
• Bank subsidiary profits improved as expected as interest rates increase

• This write-up is not something you would normally (or ever) expect from me.
• It’s about a bank. To be more specific, it is about a one-branch community bank out of Fort Worth, Texas.
• Despite sounding unimpressive at first, probably enticing you to stop reading the article immediately, this bank has managed to outperform both the SPY and every other bank ETF that you can think of since going public in late 2003.

• Block, the parent company of brands like Square and Cash App, has reported its third-quarter financial results for 2024, revealing a noteworthy performance with both achievements and challenges.
• This analysis provides a balanced examination of the outcomes and outlook for the company, incorporating insights from their latest earnings call.
• Block’s third-quarter results exhibited robust growth, with a significant increase in gross profit, reaching $2.25 billion, up 19% compared to the previous year.

• The structure and investment remit of the real estate investment trust (REIT) have been proven to be resilient and position it strongly for the short- and medium-term future.
• The investment return emphasis is on income, which is generated from a diverse portfolio with modest capital gearing.
• Because Custodian Property Income REIT (CREI) is designed to focus on smaller, individual property lot sizes, it acquires at higher asset yields than the market in general.

• Clip Money is a rapidly growing NCR-backed start-up based in Ottawa, Canada, and operating in Canada and the US.
• It is helping physical stores and businesses quickly, safely, and less expensively deposit cash into their bank accounts, as well as replenishing notes and coins for store operations.
• The company uses its proprietary software platform to facilitate cash management, and its network is made up of a network of DropBoxes and NCR ATMs located in retail outlets.

• Keppel DC REIT (KDCREIT SP) is looking to raise S$600m (US$450m) from a primary placement. The proceeds will be used to acquire interest in two data centers in Singapore.
• The deal will be a large one to digest, accounting for 47 days of the stock’s three month ADV. That said, the acquisitions appear to be accretive to bottomline.
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• The official index changes will be confirmed later this week on Friday 22nd November 2024.
• In this insight, we take a look at our final index change expectations and updated flow estimates for the upcoming index rebal event.

• The NIFTY Index (NIFTY INDEX) and the NSE Nifty Bank Index (NSEBANK INDEX EQUITY) reached all-time highs on 26 September 2024 but have since declined.
• Most stocks in the Bank Index have fallen below their 200 and 50 day moving average,. Volatilities have gone up, but trade cheap when compared to historical levels.
• Opportunities present themselves either in stocks that stayed resilient during the downturn (Federal Bank (FB IN)),or fell and gained in implied volatility. A long-short strategy might also be considered.

• DigiCo REIT (DIGICO AU) aims to raise over US$1bn in its Australian IPO.
• DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
• In this note, we talk about the not-so-positive aspects of the deal.

• PJT Partners is a global investment bank with strong strategic and restructuring advisory services
• The company’s partnership structure results in a tax drag on free cash flow, leading to an expensive valuation compared to peers
• Despite lower growth than expected, PJT shares trade at high multiples, making a short position recommended due to estimated overvaluation of over 40% compared to normalized earnings

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Since Sep 24, 32 companies made Value-Up disclosures. After filtering, 17 remain, but KRX will keep inclusions tight. They’ll likely use PBR and ROE rankings for final selection.
• We have 6 names—3 financials, 2 healthcare, 1 industrial. New Value-Up disclosures through Dec 6 could add more, but these 6 are the frontrunners for now.
• KRX is likely to announce results by Dec 10-11. Start eyeing entry points 10 days prior, and if price action heats up early, consider pulling the trigger sooner.

• Alliance Witan (ALW LN) is the main candidate for addition in Top 100 (footsie 100) replacing Vistry Group (VTY LN) whose price recently plummeted more than 50%.
• St James’s Place (STJ LN) is the next candidate for addition in Top 100 replacing Frasers Group (FRAS LN) with both stocks being extremely close to the entry-exit rank.
• Metro Bank (MTRO LN) and Diversified Energy (DEC LN) are the top two addition candidates for Next 250 (footsie 250), replacing PZ Cussons (PZC LN) and Close Brothers (CBG LN).

• DigiCo REIT (DIGICO AU) aims to raise over US$1bn in its Australian IPO.
• DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
• In this note, we talk about the positive aspects of the deal.

• Freshworks, a provider of cloud-based software solutions, reported its third-quarter 2024 earnings, showcasing strong financial performance and strategic advancements.
• The company exceeded its own forecasts for revenue growth and profitability, highlighted by a 22% increase in revenue year-over-year to $186.6 million.
• Freshworks also doubled its free cash flow from the previous year, reaching $40.1 million with a margin of 21%, demonstrating its operational efficiency and scalability.

• FY09/24 revenue was JPY19.2bn, a decline of 8.1% YoY, with operating profit at JPY6.4bn, down 14.4%.
• FY09/24 net income attributable to owners increased 5.6% YoY to JPY4.5bn, with a 104.4% achievement rate.
• The company targets 376 deals and 405 consultants by FY09/27, with a CAGR of 19.4% and 31.0%.

• In our April 2024 initiation, we highlighted that DUKE, by optimising the best of equity and debt, aimed to achieve equity-type returns with debt levels of risk.
• We highlighted four pillars of returns, namely: i) term credit; ii) participating preference shares, which support DUKE’s high, covered and growing dividend yield (2025E 10.0%, 2026E 10.7%, 2027E 11.4%); iii) early exit fees; and iv) equity stakes.
• Here, we update investors on how management will take DUKE to the next level, noting i) a £20.2m+ equity issue to fund short-term growth, and ii) the progress made towards a third-party capital model, negating the need for further raises.

After two quarters of >20% y-o-y revenue growth, JDC Group (JDC) has benefited from strong tailwinds in Q324 as well. Revenue growth of 36% in the quarter was partly driven by the acquisition of Top Ten, but mostly by strong Insurance, investment and banks activities. Q424 is also expected to be strong and JDC indicated that the high end of FY24 revenue guidance of €205–220m is well within reach. FY24 EBITDA guidance is in the range of €14.5–16.0m (FY23: €11.7m). After raising our estimates with the H124 results, we make no further changes. Our discounted cash flow provides a valuation of €34.0/share.

• PTJ is benefiting from an exceptionally favorable operating environment that is unlikely to persist
• PJT’s partnership structure creates a significant tax drag on free cash flow making valuation more expensive than implied by the EBITDA multiple.
• Even so, shares trade at well above peer multiples despite lower than expected growth

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• IVs steady in spite of significant drop in Indices. Nifty50 Monthly IVs flat at 12.7% & BankNifty Monthly IVs mildly higher to 14.9%. 
• Paring back of Skew-harvesting recommended. RR levels look overly compressed against backdrop of index weakness
• Multiple market holidays pushed short-dated IVs lower. Vol term structure moved deeper into Contango,  Weekly vs. Monthly vol-differential now at -1.9 vols.