Financials

• After the market close on 21 March, Daishin Securities announced a capital raise worth 230 billion won through RCPS. Daishin Securities currently has a market cap of 901 billion won. 
• Through this issue of 230 billion won in RCPS, Daishin Securities achieved 3 trillion won in equity capital, which is a condition for applying as a comprehensive financial investment business.
• We are Negative on Daishin Securities in the next 6-12 months as the concerns about RCPS capital raise related shares dilution are likely to weigh negatively on its stock price.

Road King’s FY 2023 results were poor, with the company’s gross margin plunging to negative 5% (FY 2022: 17%). The EBITDA and net profit margins were negative 13% and negative 30%, respectively. While Road King has continued to reduce net debt, liquidity is poor. In addition, we view negatively the company’s downbeat statement of “significant debt repayment pressure due to a lack of refinancing channels”.  

We believe it is difficult to ascertain management’s willingness to honour repayments, amid the bleak business prospects. Road King has a small and dwindling land bank that might suffice for only another 1-2 years of development. Moreover, the negative gross margin suggests that the business is no longer profitable. In our view, this increases the risk that the company may opt for a holistic restructuring of the USD notes (which account for 65% of total debt) to reduce its debt load.

We move to “Not Recommended” from “Hold” on the ROADKG 6.7 ’24s. 

• CI Financial Corp is a low-risk investment manager with a highly appealing valuation at 4x FCF
• The company has improved business operations, including reduced debt levels, share buybacks, and support from shareholders like the chairman
• With a current stock price of $14.55 and a reasonable SOTP valuation of $24-29, CI Financial Corp offers significant value for investors, especially considering potential in its various business segments.

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 new strategic vision set out by the CEO is gaining significant momentum, driven by investment in staff and in best-in-class bespoke IT and data platforms, and implies that medium-term targets are now coming into focus. Market share is being gained in all divisions, which is likely to be boosted if the sales market stabilises in 2024. We have modestly raised forecasts and our valuation to 132p/share and believe that if interest rates stabilise or ease further, there are upside risks to our forecasts.

• Investors buying on February ex-dates, perhaps due to the Value-up factor, led to a successful strategy for local managers: buying before ex-date and selling at close, yielding positive results.
• On March 19th, Kia Corp (000270 KS) diverged from February’s pattern. Notably, FINANCIAL INVESTMENT sold heavily on Kia’s ex-date, a deviation from their quiet February activity.
• FINANCIAL INVESTMENT’s trend of liquidating positions held since last quarter, especially for dividends, gains momentum as March ends, possibly overshadowing February’s Value-up factor.

• Sudden resignation of Ravi Narayanan Group-Head in charge of retail branches, retail liabilities and third party products as he wishes to pursue entrepreneurship.
• Possible explanation is that the bank like other banks is finding it difficult to raise retail deposits and pressure is building up on senior management
• Bank has a high LDR and reportedly the banking regulator is demanding the bank to lower its LDR. This will have consequences on future loan growth or on NIM

• Another quick trade idea. A continuation of the China theme (see my last post for more info).  Lufax holdings (LU). Again courtesy of JohnTill on Stocktwits.
• A Chinese lending company, lending out directly and providing a peer to peer lending platform for the Chinese market.
• With Ping An being a ~41% shareholder.

• Burford’s business model is one of capital deployment.
• The company reinvests proceeds from previous investments and raises private funds to act as asset manager.
• Although it has temporarily escaped competition, finding refuge in the high end of the market, it is unclear how sustainable their returns are.

The Biotech Growth Trust’s (BIOG’s) two co-managers, Geoff Hsu and Josh Golomb, at global healthcare specialist OrbiMed, believe that now could be an opportune time to consider the biotech sector as it is recovering from the longest and largest absolute and relative drawdown since 2006. The sector was negatively affected by sharply rising interest rates rather than a deterioration in industry fundamentals; indeed, the managers continue to refer to a ‘golden era’ of innovation within the biotech sector. BIOG’s relative performance has been through a difficult period given its high weighting in emerging (smaller-cap) biotech stocks, which performed significantly worse than the shares of large-cap biotech businesses during the sector sell-off.

• Debt buyers like ECPG can accelerate growth during times of increased charge offs by credit card issuers
• Growth is impacted by tough collections environment with an abundance of cheap charged off paper
• Investors must consider buying these stocks when growth prospects are high and expectations have factored in collection challenges, as industry may soon enter a favorable cycle for debt buyers

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.

• Swire Pacific (19 HK)‘s discount to NAV is around a one-year high; and its implied stub (net of Swire Properties (1972 HK) has just rolled over from a multi-year high. 
• 45%-Held Cathay Pacific Airways (293 HK) recently reported its highest annual profit in more than a decade.
• Reportedly (Bloomberg) Air China Ltd (A) (601111 CH) is mulling a stake increase in the Hong Kong carrier. This is inevitable. It’s just a question of timing. 

• Promoters in Aditya Birla Sun Life AMC (ABSLAMC IN) are looking to raise US$189m via an offer for sale (OFS). This assumes that the over-allotment option is exercised.
• This appears to be done in a bid to meet SEBI’s 75% free-float requirement for listed firms in India. .
• News of the selldown had surfaced a week earlier leading to a correction in share price. As such, we would argue that the deal here is well flagged

• The SET50 index tracks the performance of the top 50 largest and most liquid names listed in the Stock Exchange of Thailand (SET).
• In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
• The 3-month reference period used for average market cap rankings started on 1st March 2024 and as things stand, there could be three ADDs/DELs in June 2024.

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.

• Adani Green Energy
• Azure Power Global Ltd
• Greenko Energy Holdings

• Edelweiss Financial Services (“Edelweiss”) reported a steady Q3FY24 led by robust profitability from across businesses except insurance, which is in gestation phase. All its businesses are scaling up well.
• Edelweiss’ credit business reported good traction in co-lending. 80% and 32% of the disbursals in the NBFC and the HFC businesses, respectively, came from co-lending. 
• Within the asset management vertical, the mutual fund business is growing well with 23% YoY growth in overall AUM and 47% YoY growth in equity AUM.

• The KOSPI 200 INDEX is falling for the second week in a row, but the pullback is modest so far.
• This pullback is probably just another occasion to buy at better prices, however some more pullback may be in store between here and the end of the week.
• The support area where we think a LONG trade has good probability of success based on our models is between 356 and 350.

• Nuvama Wealth Management (“Nuvama”) has been seeing strong growth across all its businesses. Wealth management business is scaling up well. Capital markets business continues to benefit from the upbeat cycle.
• The asset management business is in its infancy but is scaling up well. Nuvama launched a new real estate fund via a 50:50 JV with Cushman & Wakefield.
• Given wealth management is still nascent in India; the growth potential is huge for Nuvama. At the current valuation, an investment in Nuvama has potential to more than triple.

• ICICI Securities Shareholders will consider delisting proposal at the end of March-24 which will decide its fate
• Swap Ratio based on current prices offers limited downside for I-Sec Shareholders if delisting goes through.
• There could be potential upside of 20% if delisting fails.

• The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
• Tokio Marine Holdings (8766 JP) had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

• Recently, we have voiced our concerns about the excessive use of leverage in the crypto market.
• Just last week, traders were facing annual rates of up to 150% to maintain long positions in Bitcoin on the perpetual market.
• By the end of the week, it became evident that this approach was unsustainable, leading to a significant market correction and extensive liquidations in the futures market.

EML Payments has agreed to sell Sentenial to GoCardless for an enterprise value of €32.75m/A$54.1m. As Sentenial is currently loss-making, the disposal will be earnings and cashflow accretive to EML in year one. Proceeds from the sale will be used to reduce debt and strengthen EML’s balance sheet. This disposal combined with the liquidation of PFS Card Services Ireland (PCSIL) leaves EML as a more focused group specialising in prepaid cards, with all remaining businesses profitable and cash generating.

• SPAC Activity returned to full pace in the past week, with several deals being announced, including with a Sustainable Fuels Maker and a Gold Producer from South Africa.
• Also, Trump tried to sell his stake in his social media company to Elon Musk as his SPAC deal stalled, and Fisker could be the latest EV De-SPAC to run out of cash. Read on to find out the latest about all things SPACs. 

• Sustainable Aviation Fuel (SAF) and clean biofuels producer XCF Global Capital is merging with SPAC BH3 Acquisition, in a deal valuing the combined company at $1.84 billion. 

• Estimating FINANCIAL INVESTMENT’s dividend arbitrage positions’ exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January’s volume (≥₩2T).
• Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April’s end, likely impacting index negatively, akin to January.
• Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.

• KE Holdings’ (BEKE) reported C4Q23 revenue 6.2%/7.5% above our est./cons.. Its non-GAAP net income miss our est. by 8.3%, due to bad debt write-off and year-end bonus
• Although recovery in new home market remains muddy, we view Beike’s commitment to deliver 5% yield through dividend and stock buyback as investor friendly. 
• We reiterate BUY rating and maintain TP at US$24/ADS . 

• 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 are Sino Land  (83 HK), Hysan (14 HK), Far East Consortium (35 HK), Dongyue (189 HK) & Great Eagle Holdings (41 HK)/Champion REIT (2778 HK).

• It has been exactly eighteen months since Ethereum made the big switch from Proof-of-Work to Proof-of-Stake, an event widely known as the Merge.
• In simple terms, after the Merge, the responsibility for verifying transactions and proposing new blocks on the Ethereum network shifted from miners to holders, provided they choose to become stakers.
• To maintain the blockchain as stakers, holders lock up their Ether in the network.

• Arthur J. Gallagher & Co.
• reported strong fourth quarter results for 2023 with key financial metrics in line with its December IR day.
• Revenue growth for the Brokerage and Risk Management segments was 20% with 8.1% organic growth, a figure that the company corrects to 9.4% controlling for accounting adjustments and large life case timing.

• The Hang Seng Index is rallying and could co higher this week but it seems there isn’t much room to go really higher.
• A good target to cover your LONG holdings would be 17500, for this coming week and/or the following week.
• A pullback this coming week is also possible, so it’s not sure the index can rally more from here, or at least not without some correction first.

• Aon plc demonstrated strong operating momentum in its 2023 performance as evidenced in its Fourth Quarter 2023.
• The company’s Aon United journey was driven by client demand amid increasing trends of volatility and interconnected risks.
• Specifically, four significant areas of focus were identified that broadened the scope of Aon’s core business while creating opportunities to deliver more value to their clients.

• BlackRock, Inc.
• recorded a significant growth in its fourth quarter and full year results of 2023.
• The company portrayed a positive image with Chairman and CEO, Laurence Fink announcing the agreement to acquire Global Infrastructure Partners (GIP).

• Recent RBI and SEBI actions unveil irregularities in JM Financial (JM IN) Products IPO financing, exposing risks in NBFC-led subscriptions.
• Ensuring market integrity and investor protection, regulatory scrutiny highlights governance lapses, urging transparency and accountability.
• Prompts investor caution, demanding rigorous scrutiny of financial intermediaries, and reinforcing the need for robust regulatory oversight.

• The NIFTY Index this week suddenly stopped its rally and started to correct.
• This week should close down and the next week may be also down, but if it is the odds are great for a LONG trade.
• Re-Enter the rally at prices between 21800 and 21150, this week or the next.

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.

• Agung Podomoro Land
• China Vanke

BlackRock Latin American Investment Trust’s (BRLA’s) lead manager Sam Vecht and deputy manager Christoph Brinkmann remain optimistic about the prospects for the region. Interest rates are coming down as Latin American central banks have been more proactive than those in developed markets in raising interest rates to combat higher inflation, which should be supportive for economic growth and asset prices. Latin America has remained relatively isolated from global geopolitical conflict, enabling trade with both eastern and western nations. The region has been overlooked by global investors, which has led to very attractive valuations on both absolute and relative terms.

• Back on the 31 Jan, WAM Leaders Ltd (WLE AU), said it intended to make an off-market Offer after QV Equities Ltd (QVE AU) rejected its all-scrip NBIO.
• WAM and QVE have now entered into a Scheme. The current scrip terms are 0.7609 new WAM shares per QVE share; OR A$1.02/share cash. Terms will be adjusted …
• … in accordance with the most recently released NTA/shares of WAM and QVE. QVE shareholders are also expected to receive the quarterly dividend of A$0.013/share. 

• Fairfax India’s stock price may increase due to potential higher valuations
• Company’s fee structure may be high but offers opportunity for strong returns
• Investment in Fairfax India provides discounted opportunity with growth potential, specifically through ownership in Bangalore airport

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.

• There has been a renewed wave of optimism towards web3 in light of recent events, including the approval of the long-awaited spot Bitcoin ETF; and the surge in market activity in the early months of 2024.
• On the regulatory front, we have seen the conclusion of several high-profile court cases and lawsuits, including some of the charges involving Ripple and Binance.
• Beyond the results of the rulings (which many argue are in favour/support of web3), the resolution of these cases in itself has provided greater clarity and stability to the ecosystem.

• J Trust Co Ltd (8508 JP) is a financial services group operating banking and finance businesses in Asia. 
• In FY12/23, the company reported full-year consolidated operating revenue of JPY114.3bn, operating profit of JPY8.1bn, pre-tax profit of JPY9.8bn, and profit attributable to owners of parent of JPY16.3bn.
• On February 13, 2024, J Trust Co., Ltd. announced it has resolved on matters concerning the repurchase and cancellation of own shares.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
• I continue to expect 5 changes for SSE 50 and 18 changes for SSE 180 but some names have changed since my last insight.

• QV Equities Ltd (QVE AU) has disclosed a binding scheme proposal from WAM Leaders Ltd (WLE AU) consisting of a cash and scrip consideration pegged to pre-tax NTA per share.
• The indicative value of the cash proposal is A$1.02, and the scrip is A$1.058 (0.7609 WLE shares per QVE share). Shareholders are entitled to an A$0.013 March quarter dividend. 
• The offer is attractive, and the shareholder structure facilitates the vote. At the last close, the gross spread of the scrip + dividend offer is 8.1%.

• The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
• MS&AD Insurance (8725 JP) had a stake over US$100m in at least 29 listed Japanese stocks, amounting to a total of US$17.4bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

• Tenpo Innovation (3484 JP) is a real estate company specializing in restaurant properties.
• FY03/23 results: In its first year of reporting consolidated results, Tenpo Innovation reported full-year revenue of JPY13.1bn, operating profit of JPY1.2bn, recurring profit of JPY1.3bn, and net income of JPY886mn.
• Tenpo Innovation Inc. announced plans to start preparations for a transition to a holding company structure through a company split and changes to its trade name.