Financials

• 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.

• Huge volumes continue to be traded on the mainland share markets. SOUTHBOUND volumes bounced, and net buying was both large and broad-based.
• Stocks in HK and mainland markets fell heavily with HK’s main indices down 6-7% and China’s blue chip indices down 3.3-3.6% (CSI 500 – 4.8%). 
• Within H/A Pairs, after outperforming the HK/mainland spread for weeks, spreads got shellacked. Worst week in a long time (-3.7%), perhaps on the back of “disappointing” lack of stimulus measures.

• In a previous insight, on Oct 26th, we theorized 2 possible scenarios: a rally or a mini-crash for the KOSPI 200 INDEX, from the following week.
• It looks like we are more in the mini-crash scenario (see chart below), at the moment, but the index is already very oversold according to our WEEKLY model.
• Keep reading to find out where to buy based on our MRM WEEKLY models for the KOSPI 200.

• Based on Atour (ATAT)’s strong pillow sales in 11.11, we raised C4Q24/2025 revenue estimate by 6.9%/7.1%. Our number is now 7.9%/15% higher than consensus;
• The outstanding performance of the retail business may draw more consumer attention to the brand, thus bring contribute to Atour’s hotel expansion.
• We raise the TP by US$1 to US$37/ADS and maintain the BUY rating.

• We are increasing our diluted EPS estimate for 2024 by $0.02, from $2.30 to $2.32, an 8% gain from 2023’s actual diluted EPS of $2.15, and our diluted EPS estimate for 2025 from $2.40 per share to $2.45 per share, representing a 6% gain over our 2024 estimate.
• We expect good gains in net interest income in 2024 and 2025 as solid loan growth, estimated at 8% in both 2024 and 2025, will be aided by improving prospects for CPKF’s net interest margin (NIM).
• We have raised our net interest margin estimate for 2024 by 4 basis points from 3.45% to 3.49% and our 2025 NIM estimate by 2 basis points from 3.50% to 3.52%, up 3 basis points from our 2024 estimate.

• During the period under consideration, i.e. September 12th, 2024, to October 14th, 2024, the EUR/USD pair posted both downward and upward swings.
• In the beginning, it faced a general increase, until September 26th where the pair faced a sharp decrease.
• After that, it fluctuated sideways in a slight but steady downward momentum, and by the end of the period the price traded at a lower level than September 12th. 

• Global Indemnity Group, LLC, provides specialty and niche insurance products nationwide.
• GBLI focuses on small market property and casualty business.
• The company has made a concerted effort to reduce its property exposure.

• Key 3Q24 takeaways include: 1) recent company launches (SolFi Technologies and CoreFi Strategy) and the acquisition of Stillman Digital further diversifies DEFTF’s platform, thereby enhancing the pace and sustainability of growth, we believe 2) senior executives remained focused on broadening Valour’s footprint, with plans to offer 100 products by the end of 2025 across additional markets including Africa, the Middle East, Asia, and the U.S. and
• 3) management is increasingly tapping rising profitability to strengthen the company’s financial position and build treasury reserve digital assets to mitigate the effects of inflation and generate higher yields on excess liquidity.
• While we edged down our 2025 EPS estimate, our price target remains unchanged at $4.00 reflecting a lower risk profile given ongoing initiatives to further diversify businesses/revenues, thereby driving a more sustainable growth profile.

• Key F2Q25 takeaways include: 1) origination volumes seem set to ramp up reflecting rising demand for liquidity in light of ongoing growth in alternative assets under management and Beneficient’s comprehensive go-to-market strategy spanning multiple clients, distribution channels, and approaches 2) the recently announced transaction reclassified $126 million of temporary equity to permanent equity, thereby meaningfully strengthening BENF’s balance sheet and 3) GWG Wind Down Trust’s BENF position down to 348,183 shares, thus enhancing supply/demand trading dynamics for the stock and removing a technical overhang.
• In our minds, the stock’s YTD underperformance provides investors with an attractive entry point for BENF as awareness and appreciation of the company’s business model, growth prospects, unique positioning, and valuation disconnect increasingly take hold.

• The Italian government sold a 15% stake in Banca Monte dei Paschi di Sien (BMPS IM), reducing its holding to 11.7%, signaling potential acquisition interest.
• Banco BPM SpA (BAMI IM) and Anima Holding (ANIM IM)’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.
• BMPS’s improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.

• Observing implied volatility across 16 markets plus gold provides a picture of falling implied volatility, despite dispersion in market performance.
• Several, but not all, markets display moderation from unusual volatility levels to a more balanced implied volatility structure.
• The realignment of implied volatility across markets presents potential relative value opportunities.

• In Crypto Moves #18 from early March this year, we referred to this crypto bull market as the least speculative in the history of the crypto market.
• By Crypto Moves #35 in early July, we reaffirmed this view.
• Meanwhile, during this period, Bitcoin had outpaced almost every other altcoin.

• Grandy House reported sales of JPY27.0bn (+9.1% YoY), with operating profit down 25.7% YoY at JPY434mn.
• Total assets at end-Q2 FY03/25 were JPY71.7bn, a decrease of JPY2.7bn from end-FY03/24, due to reduced inventories.
• Net income attributable to owners of the parent was JPY78mn, a 69.1% YoY decline, amid rising housing prices.

• FY09/24 revenue reached JPY36.8bn (+90.9% YoY), with operating profit at JPY5.9bn (+194.2% YoY) and net income JPY3.0bn (+236.0% YoY).
• The company sold 28 properties in FY09/24, increasing revenue by 90.9% YoY, with a gross profit margin rise of 2.7pp YoY.
• FY09/25 forecast includes revenue of JPY50.0bn (+35.9% YoY) and net income attributable to owners of the parent of JPY3.5bn (+16.0% YoY).

• LSEG is shifting from a transactional exchange operator to a data and info services company
• Expected low-teens EPS growth and 20% IRR in the medium term
• Operates in financial data/analytics and market infrastructure, offering long-term investment potential

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.

• The key takeaways from NBPE’s 6 November CM day, in our view, were i) positive market indications, including exits and an increase in the correlation between operating company EBITDA growth and NAV growth
• ii) NB’s platform brings unique benefits: accessing deals, analysing investment opportunities, and GP relationships, (which have generated a big increase in opportunities presented to them, even when the overall market slowed) and
• iii) multiple levers for value creation mean that bottom-line return expectations are unchanged.

• NLOP reported two small property sales since the $71.5 million raised from the sale of the Scottsdale, Arizona building in August 2024. 
• The asset sales have contributed to NLOP reducing its debt burden from mortgage and mezzanine loans that carry interest rates of 9.8 percent and 14.5 percent, respectively.   
• Cash flow from operations resulted in further reduction of debt in the third quarter.  

• In 1H FY03/24, ordinary revenues rose 10.6% YoY to JPY1.7tn, driven by higher insurance premiums.
• Group adjusted profit increased 46.1% YoY to JPY81.8bn, with strong performance across all main life insurance companies.
• The consolidated solvency margin ratio rose to 1,023.0%, with significant increases at Daido Life and TDF Life.

• Operating revenue reached JPY96.9bn, a 14.8% YoY increase, driven by growth in financial and real estate businesses.
• Operating profit decreased 58.7% YoY to JPY5.0bn, affected by a JPY10.2bn decline in the Real Estate Business.
• Profit attributable to owners of parent fell 78.8% YoY to JPY4.1bn, influenced by deferred tax liabilities reversal.

• On 12 November, Klarna announced that it confidentially filed public offering paperwork. The company is getting ready for an IPO in 1H 2025.
• Klarna’s valuation reached as high as $45 billion in 2021 which declined to as low as $6.5 billion. Its valuation has recently risen to about $14.6 billion. 
• Klarna generated 13.27 billion SEK in revenue (US$1.2 billion) in 1H 2024 (up 27% YoY). Operating margin improved significantly from -18% in 1H 2023 to -2% in 1H 2024.

• US market continues to see historical high; in the real estate space, we look at Prologis, the world’s largest logistics company
• We like the sector on the back of strong structural demand drivers and depleting supply.  Logistics is the future and we think Prologis is the name to own
• Broader real estate index is up 8.3% YTD, while PLD is down -15% YTD.  Valuation is attractive, we think PLD has room to catch up

• Niva Bupa Health Insurance (1226871D IN) raised around US$260m in its India IPO.
• Niva Bupa Health Insurance (Niva Bupa) is a health insurance firm. Its portfolio consists of health (including retail and group), personal accident, and travel insurance.
• We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the trading dynamics.

• Our outlook remains bullish following the S&P 500’s multi-month base breakout above 5670, alongside constructive market dynamics which have significantly improved over the past week.
• Last week’s 11/5/24 report titled “Buy the Pullback” discussed how we were buyers, expecting a strong end-of-year rally to start that day or the following day (day after the election)
• The strong rally officially started on election day, and all that is left to do is ride the trend higher into year-end and the early part of 2025

• Go Digit General Insurance raised US$315m in its India IPO in May 2024, via selling a mix of primary and secondary shares. Its IPO lockup is set to expire soon.
• Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
• In this note, we will talk about the lockup dynamics and possible placement.

• Mark Rowan shares his journey from founding Apollo Global Management to growing the firm to over $700 billion in AUM, emphasizing the importance of being aligned with tailwinds in the market.
• Apollo’s success is attributed to their investment philosophy of focusing on purchase price, excess return per unit of risk, and alignment with their clients.
• Rowan discusses the challenges and risks in the current market environment, stressing the significance of judgment, integration, and communication in leadership and decision-making.

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• Discussion on US elections and Fed policy implications
• Impact of policy uncertainty on calendar spreads and wild card options
• Investor positioning and its influence on various bond contracts

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Custodian Property Income REIT’s (CREI’s) Q225 trading update points to strong H1 performance when results are released in December. With income growth supported by leasing progress and rental growth, DPS (+9% y-o-y) is fully covered. Reflecting improved investment market sentiment and asset management, portfolio valuations show early signs of recovery. CREI expects this to continue.

• Operating revenue decreased by JPY1.3bn (-25.5% YoY) to JPY3.7bn, while gross profit increased by JPY518mn (+18.6% YoY).
• Recurring profit declined by JPY263mn YoY to JPY788mn, impacted by increased SG&A expenses and decreased foreign exchange gains.
• The company invested in a green ammonia development company and formed a new fund for logistics startups.

• Revenue increased by 90.0% YoY to JPY47.9bn, with operating profit up 19.4% YoY to JPY7.2bn.
• JINUSHI Business saw strong demand, with 137 tenants and 417 properties developed, totaling JPY517.7bn.
• Total assets rose to JPY113.2bn, with net assets increasing to JPY43.5bn, maintaining an equity ratio of 38.2%.

• Companies in India have disclosed their shareholding pattern as of end-September in October. There are companies with significant float changes from end-March and/or end-June.
• The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
• Depending on the date that the shareholding was published, there could be 11 stocks with passive inflows from global trackers while 6 could see passive outflows in November.

• The Auswide Bank (ABA AU) IE has considered Mystate Ltd (MYS AU)’s all-scrip merger offer in the best interests of the Auswide shareholders. However, the opinion comes with caveats.  
• The offer is conditional on Auswide shareholder and regulatory approvals (ACCC, Treasury). The scheme meeting is on 2 December.
• Vote risk is low due to the lack of substantial shareholders and the disinterested retail base. At the last close and for 18 December payment, the gross/annualised spread was 1.6%/10.3%.  

• Our core pick is Brazilian exchange B3; this is a contrarian call, given its poor share price performance year to date, but it is attractively priced versus its peers
• B3’s share of post-trade revenue is understated, and it is a well-diversified exchange in terms of the product offering, which includes cash equities, equity derivatives, FX, interest rates and commodities
• We also like Hong Kong Exchange, with its high share of post-trade revenues; HKEx should benefit from improving investor sentiment towards China, boosted by the Chinese government’s recent economic stimulus

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Shui On Land’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.

• Blockchain technology provides decentralized, transparent, and immutable digital ledgers, revolutionizing how transactions and data are managed without reliance on centralized authorities or intermediaries.
• Tokens enable participation in blockchain ecosystems by providing access to services, governance rights, or value transfers, playing a key role in incentivizing user engagement and network growth.
• Foundations and companies shape the development of blockchain projects, issuing tokens to fund innovation, promote decentralization, and drive community-driven governance, supporting the evolution of Web3 technologies.

• Spectral AI is developing an AI-guided predictive medical device that employs multispectral imaging (MSI) to estimate a wound’s capacity to heal.
• The company is pursuing indications in burn and diabetic foot ulcers (DFUs) with the former receiving support from BARDA & other government agencies.
• Spectral is distinguished by its combination of MSI and AI to improve diagnoses.

• There could be two or three Aussie names that are deleted from global passive portfolios in November. In each of the cases, there is a lot to sell from passives.
• One name is very high probability while the deletion of the others depends on the day of the week chosen.
• Shorts have been built up on the stocks and there are strong indications of positioning. But the extent of the positioning varies, and the stocks could have differently.

• On the 27th September, China Merchants China Direct Investments (133 HK) (CMCDI) teased a share buyback and a special dividend. But as of today. no firm details have been forthcoming. 
• CMCDI has also now offered to reduce management fees by 25 basis points in the new management agreement, which will be voted on  by independent shareholders in November/December.
• This concession does not go far enough. Especially when 45% of the management fees are received by founder Victor Chu. 

• The Nikkei 225 INDEX continues to move chaotically in highly unpredictable and fragmented fashion. At the moment it’s been falling for 2 weeks (CC=-2 to be confirmed on Friday).
• Since the index is in a phase where it keeps going up and down with no trend, we see an opportunity to accumulate short-term LONG positions on the current pullback.
• A small bounce from current levels, rising towards the 41k target, could generate some good returns in a short span of time. This would be a reversal trade.

• A new all-time high for Bitcoin is within reach, which aligns with the strength we anticipated in last week’s Crypto Crisp.
• As we have repeatedly emphasized, this quarter is primed for significant price growth due to a convergence of favorable factors.
• These include increased U.S. Dollar liquidity, strong seasonal trends, Chinese economic stimulus, and the post-fourth Bitcoin halving phase, which has historically led to substantial returns.

• On the 19th August, MyState Ltd (MYS AU), Tassie’s largest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
• MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the MergeCo.  
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 2nd December Expected implementation on the 18th December. The IE (Kroll) says fair & reasonable.

• Cellulose specialties production affected. RYAM issued a press release last Monday with respect to a fire that took place at the company’s largest plant in Jesup, GA plant on October 11 that will likely keep two cellulose specialties production lines offline until October 28, while the cause is investigated and repairs are made.
• Two of three production lines at Jesup affected. The fire, which occurred during scheduled maintenance work, was quickly contained without death or injury to plant employees or safety personnel, and has not affected the operations of Line C, which produces fluff pulp (270K mt annual capacity).
• Management believes the two-and-a-half-week disruption in the operations of Lines A and B, which manufacture cellulose specialties (330K mt annual capacity), will not materially affect its ability to supply its current customers.

• Last Thursday, Uniswap, the leading decentralized spot exchange, announced its upcoming Layer 2, also known as rollup, on Ethereum, called Unichain.
• For a detailed explanation of Ethereum rollups, please see Crypto Moves #16.
• This new rollup will be based on Optimism’s Superchain technology, which also powers Coinbase’s Base rollup and the soon-to-launch Layer 2 from Sony.

• KMC Properties ASA and Logistea AB have announced a merger expected to be completed by end of Q3 or beginning of Q4
• Potential 23% return in around 3 months by going long on KMC-P ASA and shorting Logistea AB
• Merger involves Logistea acquiring all assets of KMC Properties and issuing consideration shares in two tranches, with the first already distributed and second expected soon

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.