Financials

• 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.

• IMM PE, via Obis1, is looking to raise US$136m from selling a portion of its stake in Woori Financial Group (316140 KS).
• While the deal doesn’t look particularly well-flagged, the PE has been invested for quite some time now. 
• Despite the overhang, the deal is a small one to digest at just 1.7% of total shares outstanding, representing 5 days of the firm’s ADV.

• Government sees foreign investors as key for Corporate Value-Up success, considering reinstating short selling.
• Planning to expand short selling beyond 350 stocks, but anticipating pushback from retail investors, likely capping additional stocks around 100.
• The head of the Financial Supervisory Service will formally disclose these plans during the upcoming short selling conference scheduled for March 13th.

• Last October, I wrote about the plan the sponsor of Sankei Real Estate (2972 JP) had to exchange buildings with the REIT to clean it up, then buy more units.
• Today they announced the completion of the Portfolio Rebalancing Plan started in March 2023. And the plan to buy more units. The assets transferred out were gone at end Jan-2024.
• Now that’s done, and there are units to buy. Maximum 46,652 units over maximum 220 days.

• Following an Staits Times article this week – or perhaps just a coincidence – property play Wing Tai Holdings (WINGT SP) popped 8%. 
• Yesterday’s close of S$1.47/share, compares to its book value of S$4.24 (as at 31 Dec 2023). Cash on hand is S$684mn against borrowings of ~S$770mn.
• And the Cheng family has been buying up shares, almost every day since last September. That stake is currently 61.45%. Another Wing Tai Malaysia (WING MK) privatisation in the making?

• IMM Private Equity announced that it is selling a 1.7% stake in Woori Financial Group (316140 KS) in a block deal sale. 
• The number of shares subject to sale is 12.56 million, or 177.7 billion won to 181.5 billion won.
• Block deal sale discount range is reasonable, valuation multiples are low, and we expect continued positive capital inflow into stocks related to Corporate Value Up in the next 12 months. 

• The domain bitcoin.org was registered on August 18th, 2008.
• Just over two months later, on October 31st, an individual or group using the pseudonym Satoshi Nakamoto unveiled the Bitcoin whitepaper.
• This was soon followed by the mining of the first Bitcoin block, known as the genesis block, on January 9th, 2009.

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”.

• Management’s successful execution to 4Q23 has driven its LTM ROE of 18%+ and ROA of 2.6%; in Brazil, the focus is to grow secured lending and further penetrate high-income retail
• In Mexico, management aims to leverage off the deposit base and build its credit business, as well as establishing itself in Colombia; challenges include containing capital consumption and credit delinquency
• In Mexico especially, the competitive climate in digital banking is intensifying which puts pressure on customer acquisition costs, costs to serve, and it could drive up credit delinquency risks

• During 2023, the company took significant steps toward utilizing AI in the development of future electrolytes.
• SES’ objective is to create a roadmap for the next iterations of Li-Metal technology.
• SES highlighted that practical safety and manufacturability as the key milestones for entering into B-sample development.

In its trading update between December 2023 and January 2024, S&U announced that FY24 PBT will be 10% to 15% below consensus of c £38m. The key reason is lower collection rates in Advantage of 90% (H123: 94%) have prompted an increase in provisions. Management expects the collection rate to partially recover in the following months. Underpinned by an improving real estate market, Aspen continues to grow steadily with net receivables just over £130m (FY23: £114m). Elevated borrowing, at £224m, alongside higher interest rates have consequently doubled S&U’s interest payments to £15.1m (FY23: £7.5m). We have lowered our FY24 and FY25 PBT estimates by 12% and 8%, respectively.

• RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect. 
• That would be That is Special Stamp Duty, Buyer’s Stamp Duty, New Residential Stamp Duty. “Measures no longer necessary given the current economic and market conditions.”
• This should cause people to get excited short-term about property developers.

• Insiders must disclose transaction details, complete deals within 30 days, limit deviations to 30%, and submit disclosures 30 days before transactions.
• Financial investors, including institutional ones, are exempt. This encompasses local pension funds (including NPS) and foreign financial investors. Deals under 1% of total shares and less than ₩5B are exempt.
• Confirmation of the timeline indicates many block deals before July. We should hunt potential deals for proactive setups. Also, we should monitor basis widening in futures due to short-selling ban.

• Hong Kong residential property prices declined 7% in 2023 and are down >20% from the 2021 peak in 2021. The average price of offices also declined ~7% in 2023.
• Scrapping property cooling measures, such as the special stamp duty applied to homes resold within 24 months, have been rumoured, to push up housing prices. 
• In today’s annual budget, we got those. And then some. 

• Murakami’s entity, City Index Eleventh, reported a 5.42% shareholding in Aozora Bank Ltd (8304 JP). Murakami started buying a day after the disastrous 3QFY23 results.
• Murakami’s average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price. 
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals (5541 JP) playbook.

• Yesterday after the close, well-known Japanese activist Murakami-san’s preferred entity City Index Eleventh filed a Large Shareholder Report. 
• The blast across Bloomberg was “*AOZORA 5.4% STAKE REPORTED BY CITY INDEX ELEVENTH.” Sounds exciting after the shares dropped 34% in two days earlier this month after reporting big writedowns. 
• But there has to be a question here. Why? And Why this way? And what kind of activism would be possible? 

• Goodman Group (GMG AU) has been moving higher recently and the stock has outperformed its peers handily over the last year.
• The stock trades marginally expensive compared to its peers and that could be partially attributed to the stock being a part of large indices.
• There is another index inclusion to come and that could lead to further outperformance in the short term.

• Shriram Finance (SHFL IN) will replace UPL Ltd (UPLL IN) in the NIFTY Index (NIFTY INDEX) at the close of trading on 27 March. This was a high probability change.
• Trent Ltd (TRENT IN) missed out on inclusion and that results in Bharat Petroleum Corp (BPCL IN) staying in the index.
• There is over 11 days of delivery volume to trade in the add and delete and there appears to be significant positioning in one of the stocks.

• The Federal Reserve was expected to announce tapering of quantitative tightening (QT) in March and implement it in April, but recent minutes suggest a more relaxed approach with no urgency to start the process soon.
• SOFR rates have trended lower in January, easing concerns over upward pressure, and there is plenty of liquidity in the marketplace, with significant RRP and reserve balances.
• Forecasting for the Fed’s balance sheet evolution suggests a less volatile TGA balance and a shift in the relationship between t-bill issuance and RRP balances, leading to a more stable scenario for reserves in the near term.

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

• ADIA, via Haumi Co, is looking to raise NZ$262m (US$160m) from selling its entire stake in Precinct Properties New Zealand (PCT NZ).
• While the deal will be a clean-up share sale, the deal is a large one for the firm to digest at 344 days of its three month ADV.
• Momentum on the stock hasn’t been great, with the shares continuing to correct since the onset of the pandemic.

Yanlord’s FY 2023 results were robust in our view. The company reported solid top-line growth, albeit the margin contracted from a high base as projects were delivered outside of Shanghai. Still, cash flows were healthy, which supported meaningful debt reduction.

Yanlord’s near-term debt repayment risks have eased materially, after the company fully redeemed the YLLGSP 6.78 ’24s at maturity yesterday and successfully refinanced the USD syndication loan due in February 2024. The company’s next bond maturity will be in May 2026, when the USD 500 mn YLLGSP 5.125 ’26s come due.

• BFI Finance Indonesia saw a marked turnaround in new bookings and a declining NPF ratio in 4Q2023, as its business recovered from the malware attack in May last year.
• The company has started to be more aggressive in non-dealer 4W space but remains cautious on 2W. Write-offs peaked in 4Q2023 and will decline in 2024, leading to lower CoC. 
• BFIN will launch a tripartite collaboration with GoTo and Bank Jago which will help to drive future bookings growth. Valuations remain attractive with BFIN trading in 2.0x PBV 

• The Samsung KoAct Dividend Growth Active ETF (476850F.KS) raised around US$7.4m and started trading on 27 February.
• There are 45 stocks in the ETF and the aim is to beat the Korea Stock Exchange Kospi Index (KOSPI INDEX) by employing an active management strategy. 
• Financials, Consumer Discretionary and Industrials stocks make up nearly two-thirds of the ETF, the dividend yield of the underlying basket is 4% and the forward dividend yield is slightly higher.

• The SE600 index is one of the most widely followed benchmark indices in Europe. This index is rebalanced on a quarterly basis.
• In this insight, we take a look at the potential index changes that could take place between now and the end of the March 2024 index rebal event.
• Based on the latest available data, I expect up to 12 index changes over the next few days including an intra-review change!

• Inmobiliaria Colonial Sa (COL SM), with a quality portfolio, trades at 55% discount to NAV. Lacking short-term catalysts, buy on improving earnings guidance, rate cuts and favorable market conditions.
• Colonial probably has one of the best-quality office portfolio in Europe, with the great majority of its assets are situated in core areas of Paris, Madrid, and Barcelona.
• Colonial offers a 24.5% upside, which implies a 40% discount/NAV. The shares offer a 5.26% 2024e dividend yield (source: IBES), which I consider sustainable over time.

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 Vanke

• The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
• Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
• But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.

• Indiabulls Housing’s Right Issue offers a unique opportunity to earn higher returns on smaller investment. 
• Indiabulls Housing is at the cusp of a turnaround: detaching its old identity maligned by various governance issues 
• Turnaround + Special Situation Bet – A potential opportunity to make outsized returns owing to the lower initial investment requirement in a company undergoing significant turnaround

• The ASX 200 INDEX closed last week down, and this week is barely up, it has been flat for 3 weeks and its direction is unclear.
• The index may be preparing for a pullback, even though our models at the moment are not flashing yet the “go SHORT” signal. Covering LONG holdings may be wise.
• Wait for prices > 7670 or the end of this week, if the index closes the week up, to increase the probability of success for a SHORT Trade.

• HSBC Holdings Plc Wednesday reported a $3 billion write-down on its stake in a Chinese bank, underscoring challenges the British lender faces in one of its key growth markets.
• Europe’s largest bank by assets took a charge on its 19.03% holding in Bank of Communications Co. Ltd. (601328.SH +1.41%), one of China’s biggest state-owned banks, after a reassessment of the accounting value-in-use, the bank said in a release of its fourth quarter financial results.
• The reassessment compared the future cash flow from the asset, discounted for underlying risk, with the stake’s carrying value, which measures the cost of the asset minus depreciation factors.

• Ethereum has surged past the 3,000 ETH/USD mark, now trading at 3,050 ETH/USD.
• This increase is mainly driven by the intensifying anticipation over the potential launch of an Ethereum spot ETF, along with Ethereum’s recent breakout from a months-long period of underperformance compared to Bitcoin.
• Over the last week, Ethereum has seen an 8% increase relative to Bitcoin, with the latter seeing less net inflow into exchange-traded products than the week prior.

• On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
• The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation. 
• The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation. 

• The rollout of the Korea Value-Up Index has encountered a minor delay. Completion of the index is slated for 3Q, with ETFs scheduled for release in 4Q.
• The government will encourage the National Pension Service to utilize it as a benchmark.
• Dividend payout ratio, dividend yield, PER, and cash flow will be included as screening factors for this index, in addition to the already known factors of PBR and ROE.

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.

• Powerlong Commercial Management Holdings

• SPAC dealmaking surged in the last week with several new deals being announced, including an Italian copper company, a consumer electronics firm, and an oncology-focused business.
• Also, a space exploration company saw its shares skyrocket after successfully landing its spacecraft on the moon, and a struggling truck maker sells part of its assets.
• Read on to find out the latest about all things SPACs. 

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND and NORTHBOUND flows net positive. AH premia on average fell so Hs OUTperformed As by 2.1%. Liquid Hs saw their H outperform the A by 3.1% on average.
• Last week was the sharpest one-week fall in AH premium in a very long time.  SOUTHBOUND Flows Monitor here. NORTHBOUND Flows Monitor here.

• This is our first report on Coinbase Global Inc, a leading cryptocurrency exchange company.
• In the recent earnings, the management reported cost cuts of 45% year-over-year which led to positive net income of $95 million for the year, alongside total revenue of $3.1 billion and $964 million in positive adjusted EBITDA. According to the CEO, Brian Armstrong, the company’s success has been based on long-term thinking, regulatory compliance, and operational efficiency, despite the challenging crypto market environment.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Georgia Capital (GCAP) reported a Q423 NAV total return (TR) of 7.7% in Georgian lari (GEL) terms (3.4% in sterling terms), bringing the FY23 NAV TR to a strong 26.5% (20.4% in sterling terms). The considerable increase in the sterling share price of Bank of Georgia (BoG) was the main contributor, adding c 5.1% and 19.5% to GCAP’s opening NAV in Q423 and FY23, respectively. This was further assisted by positive revaluation of all large and investment-stage private holdings, except for the hospital business. In aggregate, GCAP’s private holdings added 1.9pp to its Q423 NAV TR. NAV-accretive buybacks of US$8.3m added a further 0.9pp.

• StandChart may need to take further impairment hit on China Bohai Bank
• VIU model is used to justify the higher carrying value compared to fair value of the holdings.  There is zero headroom between the VIU model and the carrying amount.
• We looked at VIU model assumptions for HSBC and StandChart. A declining NIM is likely put further pressure on the VIU model output for StandChart.  

• In our latest South Korean banks screener; we add Woori Financial to existing buy KB Financial as our preferred Korean banks picks
• Delinquency ratios continued to worsen QoQ, with only Woori bucking the 4Q23 NPL trend; Woori has lagged in terms of returns, but we expect CoR control to support 2024 returns
• KB has a low PBV ratio relative to its ROE, it delivers rising post-provision returns,  it has a high CET1 ratio and it maintains a healthy LDR

• In the short to medium term, Ethereum is mainly depending on what is known as off-chain scaling to significantly expand its blockchain’s capacity beyond its current limit of roughly 15 transactions per second.
• This strategy sets Ethereum apart from other blockchains like Solana, which primarily concentrate on scaling directly on the blockchain itself, also known as on-chain scaling.
• Ethereum’s method involves using something called Layer 2s, or rollups.

• Moody’s Corporation showed a promising performance in their fourth quarter and full-year results of 2023.
• The company ended the year with an 8% revenue growth and an increase in adjusted diluted EPS by 16%.
• Within these achievements, Moody’s has been highlighted as an early adopter and innovator of GenAI. A significant accomplishment was the launch of their first-ever GenAI-enabled product in December 2023.