Financials

• A cross-country study on the post earning announcement drift effect.
• We explore the use of various options-implied analytics to systematically view returns around earnings announcements.  
• Options-Implied Analytics can provide empowering information to better inform investment decisions.

• Pioneer Credit Limited (ASX:PNC) is one of the leading acquirers and managers of impaired credit in Australia and has gained its status by maintaining positive customer engagement, an unblemished compliance record with ASIC, and strong relationships with Australia’s largest bank and non-bank lenders.
• PNC purchases debt from numerous Australian vendor partners (18 different vendors in the past 12 months) with long-term partnership purchasing arrangements in place with Commonwealth Bank of Australia (ASX:CBA).
• Pioneer’s success in purchasing large debt portfolios at attractive IRRs since October highlights the strong position the company occupies in the marketplace.

• HDFC Bank (HDFCB IN) has been the most successful bank in India over the last two decades, delivering best-in-class performance consistently; Things changed drastically with the merger with HDFC Ltd.
• The negatives outweigh the positives in the near-term from the merger; the synergies, which are significant, are long-term in nature and hence would take time to play out.
• We remain long-term believers, but it is a “Short” in the short-term as we expect further -20% correction in valuations

• Kolte Patil Developers (KPDL IN) reported a decent Q3FY24 led by record sales value and improved realization. It is on track to achieve its guided INR 2800cr sales value for FY24.
• Demand environment continues to be robust. Kolte Patil has guided for 25%+ sales value growth even for FY25. Realization also has room to improve and should aid the growth.
• New business development activity is strong. Kolte Patil is in advances stages of discussion for projects with sales value worth INR 8000-10000cr, INR 3000-4000cr of which could close soon.

abrdn UK Smaller Companies Growth Trust’s (AUSC’s) managers, Abby Glennie and Amanda Yeaman, are looking forward to further improvement in the trust’s relative performance, as investors’ focus is now more on company fundamentals rather than macroeconomic developments. The managers are continuing to use the Matrix, a proprietary screening tool, to search for companies exhibiting high-quality, growth and positive momentum features. Despite a difficult period of performance during 2022, when rising interest rates led to a derating of growth stocks, the strategy employed by abrdn’s small-cap team has proved very successful over the last 25+ years across multiple business cycles.

CoinShares International (CS) avslutade sitt senaste räkenskapsår med justerad EBITDA för Q423 på 25,7 miljoner pund, vilket ökade vinsten för FY23 till 56,9 miljoner pund (det näst bästa resultatet i företagets historia). Bolaget inför nu en utdelningspolicy med målsättningen att utbetala 20–40 % av totalresultatet justerat för valutakursdifferenser. Vi beräknar att detta, baserat på resultatet för räkenskapsåret 2023 och nuvarande aktiekurs, innebär en god direktavkastning på ca 3,4–6,8 %. CS vill expandera till USA genom att utnyttja sin option att förvärva Valkyrie Funds (som har en bitcoin-ETF i USA i sitt erbjudande) och genom sin nyligen lanserade Hedge Fund Solutions-verksamhet.

• On the 23 January, Aspen (APZ AU) improved its scrip terms to 0.26 Aspen shares per Eureka (EGH AU) share, up from 0.225 Aspen shares on the 2 March 2023.
• Two weeks later, Eureka said they still had not received a formal Offer. Aspen has now released its Bidder’s Statement. Its Offer has a 50.1% acceptance condition.
• Complicating the Offer was the recent disclosures from FDC Group that it held a 12.89% stake, preventing Aspen compulsory acquiring shares.

• Net Lease Office Products (NLOP) reported its first quarterly report since being spun off late last year.
• The takeaway from the results was how the Company was structuring the balance sheet ahead of more properties being sold.
• There were a series of lease signings and extensions within the December quarter. Most notably were the extensions for the property in Poland and Wisconsin

• China Vanke has caused jitters as it was reported to be closely watched by some insurers as it seeks to rollover some of its debt with insurers.
• It is reported that it has sufficient funding to repay its bond due on March 11th and is lining up a HK$1.5 billion syndication loan.
• Vanke warrants close monitoring as there is no sign of turning in its reducing contract sales, deteriorating cash position, shrinking financing ability. 

• The Smartkarma Corporate Webinar | Sasseur REIT: A Glimpse into China’s Outlet Industry on Feb 29 explored the Oulet sector with Sasseur REIT, a Singapore REIT focused on China Outlets.
• Sasseur REIT is 57.85% owned by the Sasseur Group operating China outlets since 2008, with 4 outlets in 3 major Tier-2 cities currently in the REIT, with room for expansion.
• Sasseur REIT is a play on China consumption and outlet operations. 2023 EMA rental income +10.7% Y/Y.  The 9.1% dividend yield stands out, at a relatively low aggregate leverage.

• Markets continue to be extremely bearish on HK/China, we look at the latest property market fundamentals and macro indicators, as well as company updates of our top picks
• In the latest budget, the HK government just announced to scrap all spicy measures on property market and eased mortgage policy
• With government support, we view the bottom of physical market is near.  For further re-rating, we need interest rate to go down, as well as resumed fund flows.

• The Nikkei 225 INDEX is initiating a pullback that should be a buy-the-dip opportunity.
• The first buyable area for a LONG trade, this week, is 39600 and 39300 (this week) and down to 38100 (next week).
• The index should restart its rally after the pullback, and there is a good chance the pullback won’t last for more than 1-2 weeks.

• Of the six Malaysian banks screened, we keep quality play Maybank on the buy list and switch our prior buy RHB for CIMB
• CIMB is our value pick for its undemanding PE and PBV whilst second from top in post-provision profitability; its credit quality is improving, a positive trend we expect will continue
• We maintain quality pick Maybank as a buy for its relatively undemanding valuations, and strong balance sheet credentials in terms of credit quality and capital adequacy

• The cryptocurrency market is probably the most speculative, largely because it has not had enough time for price discovery, lacks consistent and measurable metrics, and has seen minimal institutional involvement.
• The crypto market is unique for its overwhelming number of retail investors compared to institutional ones, a rarity in most other markets where institutions lead the way.
• This dynamic has led to significant volatility, primarily driven by the emotional reactions of retail investors, more so than in any other market.

• In this note, we explore how the sources of value creation have evolved and how NBPE’s GP partners are expected to organically and inorganically generate incremental EBITDA growth to offset higher interest costs.
• Long-term target returns for new deals on the NB platform are unchanged, despite the short-term interest rate noise.
• This note builds on the drivers of historical superior EBITDA (see 2023 CMD: value creation from growing companies).

• Author recommends shorting TBBK due to stretched valuation, unsustainable earnings, vulnerable loan book, and signs of aggressive accounting
• TBBK benefits from a cheap deposit base and generates revenue through transaction fees on prepaid cards and interest income from lending activities
• TBBK competes with various financial institutions in specialty lending lines such as real estate bridge loans, SBLOC, IBLOC, advisor financing, small business loans, and direct lease financing

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.

• Despite the lifting of the “spicy” property cooling measures last week, New World Development (17 HK) has plumbed fresh P/B lows after a (very) brief respite. 
• Preceding my comments on NWD are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• EQT (EQT SS) , via Supreme, is looking to raise US$311m from selling its stake in Shinhan Financial (055550 KS).
• Momentum on the stock has been strong over the past few months, and the recent selldowns in the stock have held up by the end of the week.
• The share sale here will be a cleanup one, and a small one to digest at just 5.3 days of ADV. 

• India’s Credit Landscape has changed and is facing structural and regulatory challenges.
• The Indian regulator (RBI), particularly in its oversight of underwriting practices and the behavior of Non-Banking Financial Companies (NBFCs), is commendably proactive, positioning it ahead of the curve.
• We expect more such steps in other parts of the credit funnel. The recent crack down along with the stock underperformance is here to stay and possibility intensify. 

• EQT Partners announced that it is selling all of its remaining shares in Shinhan Financial for about 400 billion won in a block deal sale.
• The block deal sale price range is expected to be 43,776 won to 44,688 won, representing 2% to 4% discount to the closing price on 6 March (45,600 won).
• We would take the deal. The block deal discount is reasonable and Shinhan Financial continues to have attractive valuations and dividend yield despite recent share price appreciation. 

• Former professional football player turned banker/trader
• Helped build up Swiss franc capital market operation for Merrill Lynch
• Witnessed UBS acquisition of Credit Suisse in 2023, highlighting lack of sustainable business model for Credit Suisse

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

• Merger with Cambridge Bancorp seen as strategic move to bolster asset management business
• Market initially reacted negatively to merger announcement
• Both EBC and CATC stocks have started to bounce back, reflecting overall recovery of bank stocks; Eastern Bankshares remains significant player in industry with strong asset base

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.

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
• Greentown China

• After the market close on 5 March, it was reported that Alipay will sell a 2.2% stake (2.95 million shares) in Kakaopay (377300 KS) in a block deal sale.
• A key component of this block deal sale is that there will be a lock up period of 90 days post the sale date.
• We would avoid this block deal sale. There is a high probability of Kakao Pay’s share price falling below the block deal price of 38,380 won after 90 days. 

• With the review period for the March rebalance complete, Abacus Storage King (ASK AU) could be deleted from the index and there will be capping changes.
• The index changes will lead to a one-way turnover of 3.6% resulting in a one-way trade of A$21m. There are three stocks with over A$4m to trade.
• Goodman Group (GMG AU) is an inclusion to a global index in March and that buying will far outweigh the selling from the Vaneck Vectors Australian Property ETF (MVA AU). 

• ANZ Funds is looking to raise around US$242m from selling a portion of its stake in AMMB Holdings (AMM MK).
• Having written down its carrying value earlier, we would argue that the deal now is somewhat well flagged, with ANZ attempting to record some gains on investment.
• That being said, there is an overhang and the deal would be a large one to digest at 111 days of AMBank’s three month ADV.

• The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy
• Domestically, news reports suggest that the BoJ’s 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy
• Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia

The key feature of Primary Health Properties’ (PHP’s) 2023 results was the further acceleration in rental uplifts, rising at the fastest pace for 15 years. This is driving organic earnings growth to fully cover progressive dividends, which are now in the 28th year of unbroken increase.

Q423 earnings demonstrated the inherent profitability and resilience of returns at NatWest Group (NWG). PBT came in 25% ahead of consensus, with beats on both revenues and impairments along with good cost control. Despite continuing normalisation of credit and assuming around two more base rate cuts in 2024 than are currently priced into the bond market, management expects to deliver a return on tangible equity (RoTE) of c 12%. On consensus estimates, the shares trade at 0.8x tangible net asset value (TNAV) and P/E of 6.4x in 2024e. Without a re-rating, the consensus 10% TNAV growth and 6.4% yield imply a 16.4% 12-month total return.

CoinShares International (CS) concluded its latest financial year with Q423 adjusted EBITDA of £25.7m, which brought its FY23 earnings to £56.9m (the second-best result in its history). The company is now introducing a dividend policy, aiming to pay out 20–40% of its total comprehensive income adjusted for currency translation differences. We calculate that, based on the FY23 results and current share price, this implies a healthy dividend yield of c 3.4–6.8%. CS is looking to expand into the US by exercising its option to acquire Valkyrie Funds (which has a US spot bitcoin ETF in its offering) and through its newly launched Hedge Fund Solutions business.

EML Payments reported good growth in revenue and underlying EBITDA in H124, mainly due to the benefit of higher interest income. Management’s focus has been on the underperforming PCSIL General Purpose Reloadable (GPR) business, now in liquidation, resulting in the cost cutting programme shifting to H224. With that obstacle removed, management can now shift its sights to growing the remaining Gifting and GPR businesses and rightsizing the cost base.

• Recently, a friend of mine asked me why I own positions in Markel and Brookfield, as they do not align with my typical investment style of small niche companies trading at attractive free cash flow yields. 
• I consider both companies as alternatives to index funds, benefiting from the expertise of two exceptional capital allocators, Tom Gayner and Bruce Flatt, at no additional cost.
• Over time, if my investment process proves itself as sound, the positions in Markel and Brookfield should naturally decrease in size.

• The Hang Seng Index closed the month of February up, printing a +6.63% return, after months of uninterrupted downtrend.
• The big question at this point is: has the index reached the turning point that many have been waiting for?
• In this insight we will try to analyze what the possible short-term trend could be for the index after the recent trend reversal.

• Macrotech Developers (LODHA IN) is looking to raise around US$398m via a QIP.
• The deal here will be a well flagged one with LODHA’s board having announced its intention of raising up to INR50bn via a QIP earlier in Jan 2024.
• That being said, while representing just 3% of LODHA’s shares outstanding, the deal would be a large one to digest at 30 days of its three month ADV.

• Last week was notably positive for the cryptocurrency market, particularly for Bitcoin and Ethereum, which both experienced impressive gains.
• Bitcoin’s price has surged to $65,000, marking an increase of over 25%, while Ethereum has increased to $3,510, up by approximately 15%.
• This puts Bitcoin close to its highest ever price, just below $69,000.

• The large SOE bank indicates that it will list its housing rental subsidiary, although the proceeds may be inconsequential given the size of CCB.
• CCB shows lower (and very low) credit costs despite what appears to be a major weakening in its NPL distribution.
• Loss NPLs are up 2.5x from FY19 to 1H23 much more than its 1.5x rise in total NPLs, so that its declining and benign credit costs may not last.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Agile Group’s ESG as “Adequate”. The company’s Environmental and Social scores are “Adequate”, while Governance is “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.

On 15 February AGBA announced term sheets have been executed on a US$5.1m private placement of ordinary shares plus warrants to an institutional investor and AGBA’s group president and management. The terms are similar to the announcement made at the Q323 results with the shares priced at US$0.70 per share, a 62% premium to the previous day’s closing share price. The significant premium signals management’s confidence in AGBA’s long-term value, with group president Mr Wing-Fai Ng taking up 53% of the offer. Moreover, on 27 February AGBA released an investor update signalling a strong recovery in Mainland Chinese visiting Hong Kong over the 2024 Chinese New Year holiday, above 2018 levels. With its continuing focus on costs and sales of non-core activities, AGBA is streamlining itself to benefit from the anticipated continuing recovery in 2024 and beyond.

• For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
• The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
• Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

• Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
• Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
• Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

• Korea’s authorities aim to streamline delisting and tighten rules for smooth market funds. 71 companies (17 in KOSPI, 54 in KOSDAQ) under review, about 8 trillion won tied up.
• It’s unclear if this ties directly to the FSS chief’s mention of kicking non-compliant firms of the Value-up Program. Rumors hint at FSS-FSC differences. Impact on Value-up trading seems minimal.
• Nonetheless, we must explore stocks that may gain from expediting delisting for the 71 companies under review.

• Chongho Bridge (2314866D CH) is looking to raise up to US$500m in its upcoming HK IPO. The deal will be run by CICC.
• Chongho Bridge (CB) is an integrated services provider to China’s rural population. It offers rural inclusive credit services, agricultural production services, rural consumer goods and rural clean energy services.  
• According to F&S, CB is the largest non-traditional financial institution targeting China’s rural market in terms of total loan balance as of FY22 (31st Dec 22).

• Philippine Stock Exchange (PSE PM) reported a slow Q4 2023/FY23, with revenue down 9.5%/8% YoY and profits down 30% YoY for Q4 FY23 but up 4% YoY for FY23. 
• We are excited by the recent passing of a bill to reduce the tax on stock transactions and a proposed law for lowering the tax on dividends for non-residents.
• Trading at 19x FY24e with a 5% dividend yield, EBITDA/PAT margins >55%/40%, and 25% of the market cap in cash with an acquisition angle, this stock is a must-watch

Key points

• FFB Bancorp is expanding its reach across California by offering remote banking services
• The bank has a niche market in payment processing as an acquiring bank, generating additional income
• CEO Steve Miller, with a diverse background in banking, is leading the company towards a larger market share role in California and beyond

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.

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.

• Adaro Energy
• China Jinmao Holdings

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Toei Animation (4816 JP)‘s prices its US$550 million secondary offering and Trial Holdings (5882 JP) IPO.
• Event-Driven developments: Aozora Bank Ltd (8304 JP), Outsourcing Inc (2427 JP), Tsuruha Holdings (3391 JP), Samsonite (1910 HK), Alumina Ltd (AWC AU), APM Human Services Internation (APM AU). 

• The results for the March 2024 index rebal event for ASX indices were announced after the close on Friday 1st March 2024.
• There is one change for ASX 20, two changes for ASX 100, and four changes for ASX 200.
• There are 14 ADDs and 10 DELs for ASX 300 and while most of these are small-size flow names some of them have more than 15x ADV to trade.

• Hong Kong-based MediConCen, a startup automating insurance claims using AI and blockchain, has raised US$6.85 million in its latest Series A round.
• HSBC Asset Management led this round, with support from existing investors G&M Capital and ParticleX and new investor Wings Capital Ventures.
• Also Read: Wealthtech, insurtech, SaaS fintech are the new hot verticals in Indonesia: AC Ventures report This brings MediConCen’s total raise to US$12.7 million.

• In the Philippines, a staggering 99.5% of all businesses are SMEs.
• As of last year, 67% of local SMEs grappled with credit constraints – a lot of business owners found the friction that comes with traditional bank loans too much of a hassle.
• One startup looking to solve this issue is ProCredit, a Filipino lending firm that engages business owners with its senior decision-makers from the get-go.

• Block has shown considerable growth in gross profit with an impressive 25% increase year over year, largely driven by the strong performance of its Cash App.
• Adjusted EBITDA was up by 81% compared to previous year, proving positive focus on efficiency and profitability.
• The execution of its investment framework and consistent progress towards achieving its Rule of 40 target in 2026, were also remarkable.

Regional REIT (RGL) has declared an unchanged Q423 DPS of 1.2p per share and is making good progress with asset sales. However, with H223 property valuations following the market lower, and a subsequent further increase in the loan to value ratio (LTV), investors are focused on RGL’s refinancing plans, particularly the near maturity of its unsecured bonds. The company is considering a range of options, explored in this note, which likely include an equity raise. By removing uncertainty, an equity raise has the potential to materially improve the share rating.