Financials

• After rumours were rekindled a week earlier, on 22 August 2024, Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) announced they would merge.
• The ratio is 0.6022 shares of Taishin for every share of Shin Kong putting NEWCO assets at about the level of Taiwan #3 CTBC Financial. That’s bad.
• There’s history here. LOTS of history. This would need approvals from the FSC and FTC, but CTBC is already a spoiner, and the SKFH Board Meeting was anything but clean.

• The Huafa Property Services Group (982 HK) vote on Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’ HK$0.29 offer is on 28 August. However, shares trade wide ahead of the vote.
• Several readers have enquired about the unusually high spread ahead of the vote of a seemingly clean deal. The conversations raised several concerns. 
• The concerns are unwarranted, and this remains a clean deal. At the last close and for the 30 September payment, the gross/annualised spread was 5.5%/68.9%. 

• IVs have moved to new lows for the summer, breaking below the floor set through June & July. Nifty50 IVs now trading at 11.0% levels.
• Spectacular turnaround in IVs since early-August vol-spike. In spite of this, Vol Regime remains steady in its “High & Down” vol-state.  
• Nifty50 Vol surface characteristics have compressed for Monthly-expiry contracts. Smile & Skew for Quarterly contracts remain unchanged.

• A media outlet that Reports on Deals reported that the consortium will offer HK$14.50 per share, a 22.1% and 61.8% premium to the last close (HK$11.88) and undisturbed price (HK$8.96).
• While not a knockout offer, the consortium’s impending binding proposal suggests confidence that the offer price and structure would gain the support of the substantial shareholders. 
• The downside to a deal break is low as ESR’s valuation is undemanding. Its forward EV/EBITDA multiple is at a 30% discount to the median peers’ multiple.

• In line with our forecast, Canara Bank (CBK IN) will replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the close on 27 September.
• Bandhan Bank Ltd (BANDHAN IN) will be deleted from a global index at the close on 31 August, so real float will increase a lot over the next month.
• Passive trackers will need to buy over 2 days of ADV in Canara Bank (CBK IN) and sell 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN). 

• This Insight focuses on PSU owned Housing Finance companies – PNB Housing Finance Ltd (PNBHOUSI IN) , LIC Housing Finance (LICHF IN) and Can Fin Homes (CANF IN). 
• PNB Housing aims to focus on affordable housing, LIC Housing Finance is possibly struggling due to its size and a conservative risk appetite.
• Can Fin Homes exhibits some serious questions regarding its internal controls and underwriting policies.

• StoneCo has showcased a robust performance in the second quarter of 2024, aligning closely with its strategic goals for the year.
• Despite facing an evolving competitive landscape and a complex economic environment, StoneCo demonstrated commendable growth and operational efficiency across its multiple segments.
• In the payments sector, StoneCo reported impressive year-over-year growth with a 30% increase in its client base and a 25% expansion in total payment volume (TPV).

• Bank Rakyat Indonesia booked flat earnings in 1H2024 despite healthy loan and fee income growth, with a shift towards corporate loans, as it sought to address its problem microloans.
• The bank front-loaded provisions in 1H2024 but recoveries have seen a steep improvement, with 2H2024 to see lower credit costs. Strong loan corporate loan growth is offsetting slower micro.
• Bank Rakyat Indonesia remains a unique proxy for micro-lending in Indonesia, with a depositor base of 176m and the skillset to manage risk in this space. Valuations remain attractive. 

• We have correctly forecasted a August rally for the Hang Seng Index in previous insights, here and then here – the rally is on, but a pullback is coming.
• The pullback may come in this week or the next, but it’s probably behind the corner, the index can continue higher after the pullback.
• In this insight we want to expose what are the levels to buy LONG to benefit from a highly probable continuation of the rally in September.

• The summer of 2020 marked a pivotal moment for decentralized finance (DeFi), as it gained significant momentum, reflected by the surge in Total Value Locked (TVL) across DeFi protocols.
• Chart 1: Total Value Locked (TVL) in 2019 and 2020While DeFi continued to grow through 2021, it was the rapid expansion during the summer of 2020 that left a lasting impression on the community, earning the period the moniker ‘DeFi Summer.’Chart 2: Total Value Locked (TVL), All TimeAlthough the actual season may be shifting towards winter, ‘DeFi Summer’ is making a comeback, but the Total Value Locked is still quite far from its 2021 peak.
• However, it is likely only a matter of time before we surpass that all-time high – potentially as soon as the first half of 2025.

CoinShares International (CS) posted a strong adjusted EBITDA in Q224 of £26.6m (vs £11.4m in Q223), which included two one-off factors: the £21.8m full write-down of its holdings in FlowBank and a £28.8m impairment reversal, following the successful sale of CS’s FTX claim. Management highlighted that CS’s operations have not been disrupted in any way by the recent turmoil across financial markets (including the digital assets market). CS recently paid the first two instalments of its £9.3m dividend (£0.13 per share) from FY23 earnings, with the full-year payment now implying a c 2.6% dividend yield. Furthermore, it declared a special dividend of US$31.4m (c £24.3m), representing 86% of the consideration it received for the FTX claim, to be paid in October 2024.

• Data from Bank of East Asia (23 HK) is just out with poor 1H24 results YoY
• Notable in its release are its Hong Kong overdue exposure by over three months
• Hong Kong region income is the worst affected by credit costs, this does not seem to be over

• The new rule mandates that retail pool fees be tied to the fees paid by institutional borrowers, and this information must be publicly disclosed.
• This rule ensures faster, more accurate market release of stock-specific borrow fees, which are now tied to actual fees received, replacing the arbitrarily set rates by brokerages.
• With short-selling resuming next April, this rule could drive new flow trading strategies and significantly influence target screening in the short-selling market.

• Asirvad Micro Finance Limited (1053198D IN) is looking to raise around US$183m in its upcoming India IPO.
• Asirvad Micro Finance Limited (Asirvad) is a non-banking finance company (NBFC), and a microfinance institution (MFI) offering small loans to low-income women in India.
• In this note, we talk about the company’s historical performance.

• The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
• In this insight, we take a look at the potential ADDs/DELs for SET 50 during the index rebal event in December 2024.
• Currently, we see 4 expected ADDs/DELs but the 3-month reference period used for average market cap rankings starts on 1st September and only after that the rankings will become stable. 

• Its portfolio of Japanese investments should benefit from the change in investor focus to domestic names.
• Has shown strong outperformance since the sell-off presaging future relative strength
• The business itself progressing as planned for increased shareholder returns

• We maintain an Outperform rating on SIRI, holding a positive view on the sale of hotel management rights to the Hyatt Group, which is favorable to both the firm’s earnings and financial position.
• SIRI’s fundamental valuation is attractive, while the tactical factors are viewed neutrally. This should help offset the slower EPS growth expected due to the high base in 2023.
• The 1H24 dividend yield is 4.0% from the DPS of Bt0.07, with the  XD date scheduled for August 28, 2024.

• Kalpataru Limited (KTARU IN) is looking to raise about US$189m in its upcoming India IPO. The deal will be run by ICICI, JM Fin and Nomura.
• Kalpataru is an integrated real estate development company involved in activities associated with real estate development, including identification and acquisition of land, planning, designing, execution, sales, and marketing of projects.
• It is a prominent real estate developer in the Mumbai Metropolitan Region (MMR) and is present across all micro-markets in MMR, as per an Anarock Report.

• We are increasing our diluted EPS estimate for 2024 by $0.11, from $2.19 to $2.30, a 7% gain from 2023’s actual diluted EPS of $2.15 and raising our diluted EPS estimate for 2025 from $2.35 per share to $2.40 per share, a 4% gain over our 2024 estimate.
• We expect good gains in net interest income in 2024 and 2025 as solid loan growth, estimated at 10% in 2024 and 8% in 2025, will be aided by improving prospects for CPKF’s net interest margin (NIM).
• We have raised our NIM estimate for 2024 by 13 basis points from 3.32% to 3.45%, down 5 basis from 3.50% in 2023, and for 2025 by 15 basis points from 3.35% to 3.50%, up 5 basis points from our 2024 estimate.

• Q1-2 FY12/24 results demonstrated sustained double-digit earnings growth, driven by the Wealth Consulting business through customer acquisition and the rising number of concluded contracts.
• The Real Estate Solutions business has further raised assets under management and despite the increasing challenges in finding suitable assets, there were five transactions conducted for the ADVANTAGE CLUB business.
• Although the company has maintained FY12/24 guidance, we believe earnings momentum remains positive with the 1) increase in consultant numbers, 2) customer acquisitions, and 3) business investment in personnel as well as IT to boost productivity. We have left our earnings estimates unchanged.

Information Services Corporation (ISC) has entered a new era of strategic growth, striving to double both revenue and adjusted EBITDA (on an FY23 basis) by 2028. Its Registry Operations will be a strong foundation to enable this growth, generating more than C$1.3bn in cash flow to 2053. Registry revenue was up 27.5% y-o-y in H124 due to a full year of fee uplifts combined with robust market activity in Saskatchewan. The Services segment continues to demonstrate strong organic growth, with revenues up 14% y-o-y. Continued organic growth in both the Services and Technology Solutions segment is essential for ISC to reach its 2028 targets. We value ISC at C$40/share (48% upside to the current price).

• Bajaj Housing Finance (BHF IN) is looking to raise around US$830m in its upcoming India IPO.
• BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
• We have looked at the company’s past performance in our earlier notes. In this note we will undertake a peer comparison.

• NUAM Exchange is a Chilean holding company formed from a merger of stock exchanges in Chile, Colombia, and Peru in October 2023
• Shareholders of the previous exchanges received varying percentages of ownership in NUAM
• The company is in the process of merging operations to create a single equity market, trading system, and team by the end of 2025; reported pro forma 2023 numbers of 129.9 million in revenues, 50.1 million in EBITDA, and 30.9 million in net profits.

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.

• This final guideline formalizes earlier drafts by the FSS. Though not strictly mandatory, its detailed requirements mean it functions as a de facto rule that must be followed closely.
• The new, stringent requirements are likely to eliminate common stock borrowing practices in Korea, making timely transactions difficult.
• New trading patterns and market flows may emerge when short selling resumes in April, with increased importance of borrow balance data and potential rise in counter-flow trading.

• Increased exchange rate volatility affects the ADR premium, but past patterns show that exchange rate and ADR premium directions may not always align, requiring consideration of specific contextual factors.
• If the won appreciates below the 1,300s range, overseas institutions may shift to asymmetric selling of underlying shares for foreign exchange profit, as shown by rising ADR premiums.
• We should watch for peak conditions to capture significant ADR premiums. Trading options include borrowing underlying shares for ADR conversion, even under the current short-selling ban.

• Market Volatility Signals Prolonged Consolidation: Recent market chaos suggests a period of consolidation, not immediate recovery—critical insight for strategizing in crypto markets.
• Global Liquidity Concerns Dominate Market Trends: The BoJ’s struggle with interest rates highlights how global liquidity influences both traditional and crypto markets, driving current trends.
• Spotting Market Anomalies is Crucial: Identifying anomalies in trading behavior can uncover opportunities or warn of potential risks, vital for informed decision-making in volatile times.

• After a large sell-off, similar to other major global markets, the KOSPI 200 INDEX last week rebounded and closed strongly up. In this insight we want to evaluate what’s next.
• According to our pattern models, at the moment the index is not overbought yet, so in theory the index could rise higher, this week.
• Pay attention when the index reaches the 385 price area, from there the index could start to encounter some resistance.

• The crypto market has been pretty boring lately, with low volatility and no significant movements in either direction for weeks.
• The past week’s low volatility, combined with the ongoing drop in exchange balances for Bitcoin and Ether, strengthens our view that we are in an accumulation phase.
• This suggests the market is gearing up for a move upward rather than downward.

• Hero FinCorp (HF) is looking to raise around US$438m in its upcoming India IPO.
• HF is a non-deposit taking NBFC. It offers a suite of financial products catering primarily to the retail segment and the MSME customer segment in India.
• In this note, we talk about the not-so-positive aspects of the deal.

The Biotech Growth Trust (BIOG) has two experienced managers, Geoff Hsu and Josh Golomb, at leading global healthcare specialist OrbiMed. They remain very positive on the outlook for the biotech sector, believing that industry valuations became disconnected from positive industry fundamentals during a period of elevated interest rates. BIOG’s strategy favours emerging (smaller-cap) over large-cap biotech companies, as, while aggregate risks are higher, they can be more than outweighed by superior returns. This strategy has proved successful over the longer term, but was detrimental to the trust’s performance between Q121 and Q323. Investor focus is starting to return to company fundamentals but Hsu and Golomb also believe that when the US Federal Reserve starts to cut interest rates, it should be a positive catalyst for small-cap stocks, including those of emerging biotech companies.

• H&T 1H’24 results saw pre-tax profits rise 12.5% from 1H’23 to £9.9m.
• We have identified five key ongoing business messages, four of them favourable and one unfavourable.
• The scale of the latter, though, means we have reduced our FY’24 estimates by £3m, but still forecast double-digit profit growth.

• LICHF reported weaker than expected NIM due to lower than usual recoveries, however, adjusted for it, NIM was as expected. FY25 NIM is on track as per the 2.7-2.9% guided.
• Weak growth of 4% YoY was the biggest negative surprise; however, this is just random quarterly variation rather than any structural slowdown. LICHF is expecting 10%+ YoY growth for FY25. 
• Asset quality has been improving consistently. Q1FY25 Stage-3 assets declined to 3.30% vs 4.96% YoY and 3.31% QoQ. Stage-2 assets declined to 4.06% vs 5.74% YoY and 4.20% QoQ.

Foxtons Group’s H1 results clearly highlight the success of the strategy the company embarked on at the start of last year. Although there is still work to be done, significant progress has been made and it now appears likely that the medium-term target of reaching operating profit in the range of £25–30m can be achieved. Although we have maintained our existing forecasts and valuation, we believe the risks appear to be to the upside, considering that the underlying macroeconomic data appear to be supportive; something that has been lacking for some time.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight include: Swire Pacific (19/87 HK)/Swire Properties (1972 HK) and Hang Lung (10 HK)/Hang Lung Properties (101 HK).

• Star Asia Investment (3468 JP) is looking to raise around US$118m in its primary follow-on offering to acquire four hotels. The acquisition will amount to a total of JPY34.7bn (US$237.5m). 
• The deal is a somewhat large one to digest, at 83 days of three month ADV and 13.3% of TSO .
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• NAB reported its 3Q24 results with slightly lower profit, but major divergence inside the figures
• The bank shows a staggering decline in credit costs in 3Q24, which means the results were flattered
• This is despite a very sharp rise in bad loans in major segments, corporate and residential mortgages, up around 50% YoY annualized in 3Q24

• Wharf REIC reported 2% yoy core earnings growth, the first earnings increase since 2019. The results also show Hong Kong retail business is more resilient than expected
• The upcoming catalysts include 1) lower interest rates, 2) weakening currency environment and 3) bottoming out of HK retail market
• Market is forward-looking and we think the worst is behind us.  Valuation is very compelling.  The stock is a beta play.  BUY

• Market pricing reflects less Fed cuts than previously expected, with uncertainty surrounding the impact on the dollar
• RBNZ rate cut delivered as expected, leading to potential further kiwi weakness
• Labor market data and rate pricing are key factors to watch for potential future movements in FX markets

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

• Hero FinCorp (HF) is looking to raise around US$438m in its upcoming India IPO.
• HF is a non-deposit taking NBFC. It offers a suite of financial products catering primarily to the retail segment and the MSME customer segment in India.
• In this note, we talk about the positive aspets of the deal.

JDC Group’s (JDC’s) H124 results were strong, with organic revenue growth close to 20% and an EBITDA margin of 6.5% (H123: 6%). Management reiterated its FY24 guidance of €205–220m of revenue and €14.5–16m for EBITDA. Given JDC’s H124 performance, we have increased our estimates to the high end of the range. With an FY25e EV/EBITDA multiple of 11.9x (based on our estimates), we believe our valuation is undemanding, certainly compared to platform peers. Our discounted cash flow (DCF) values JDC at €38.20 per share (€34.04/share previously).

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.

• China Hongqiao
• China Jinmao Holdings
• Citicore Renewable Energy

• CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
• In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
• Our expected ADDs and DELs baskets have changed slightly since our last insight.

• NPS is concerned that aggressive value-up measures by bank holding companies and ongoing cancellations might quickly use up their room up to the 10% ownership limit.
• With their stake already at mid-8%, they may not buy as much as the index suggests, creating new trading opportunities in the four major bank holding companies.
• Woori Financial has more room for buying, so as the year ends, NPS’s skewed-buying could give it a better price impact than other bank holding companies.

• The S&P/ASX 200 has been quietly rallying since its (modest) -11% correction in 2023, mostly unaffected by global turmoils, even the latest sell-off in US, Asia and Europe was “non-damaging”.
• The index has already recovered a large part of the losses suffered for only 1 week, very brief if we consider that the SPX INDEX had corrected for 4 weeks.
• Now that the S&P/ASX 200 has rallied strongly we want to analyze its pattern model, to identify the area where it could pull back again (or slow down).

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.

• Lenovo
• Citicore Renewable Energy
• Vedanta Resources

Vista Land & Lifescapes’ (VLL) H1/24 results were acceptable, with improved earnings and margin expansion. That said, cash flows stayed negative and debt continued to rise. Hence, leverage remained moderately weak.

VLL maintains a sizeable portfolio of securities investment and investment properties, which generate recurring income and support the balance sheet. The investments could also be monetised if needed, albeit their market value is unclear. We expect the company’s liquidity needs to be manageable, given VLL’s reasonable access to funding.

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.

• Lenovo
• Citicore Renewable Energy
• Vedanta Resources