Financials

• Conglomerate Guoco Group (53 HK) has fielded three privatisation Offers from Guoline (the Quek family) over the past twenty years. 
• Elliott Advisors, then holding 9.72% of shares out, backed the most recent Offer of HK$135/share in November 2018; but it was voted down at a Scheme Meeting. 
• Elliott has now, surprisingly, exited. This may open the door for a fourth Offer. Shares popped 14% on the news.  

• UOL Group (UOL SP) has underperformed its Singapore peers and the drop in market cap could result in the stock being deleted from global passive portfolios in February.
• UOL Group (UOL SP) has traded higher since end October and there has been a steady increase in cumulative excess volume on the stock since then.
• UOL Group (UOL SP) trades richer than its closest peer, City Developments (CIT SP), on EV/Sales and EV/EBITDA. The recent outperformance presents a trading opportunity.

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.

• Lippo Malls Indonesia Retail Trust
• Road King Infrastructure

• Bank Central Asia (BBCA IJ) booked a strong finish to the year with PPOP rising by +15.4% YoY and zero provisioning in 4Q2023, driven by loan growth of +13.9% YoY. 
• The bank’s net interest income grew by +19.5% YoY, with a stable NIM of 5.5% in 4Q2023 and CASA growth of +4.3% YoY, bringing the CASA ratio to 80.3%.
• BCA remains a core holding amongst Indonesian banks, with conservative bank guidance of +9%-10% loan growth, stable NIMs and CoC in 2024. Valuations reflect bank returns and quality.

• Outlook for interest rates in 2024 remains uncertain with market expectations diverging from Fed’s dot plot. Overall, rate cuts are expected in 2024.
• Lower rate outlook for 2024 will drive higher deal-making which is likely to benefit Goldman. A slowdown in the US economy could hamper Goldman’s recovery.
• Market metrics point to a positive sentiment around Goldman Sachs stock amongst analysts with summary analyst recommendation pointing to a Buy rating and average upside of 11%.

• Krung Thai has solid post-provision profitability, close to double digit ROE with a healthy balance sheet, along with attractive PBV and PE ratios
• We add Kasikorn to the buy list, as its cost of risk sharply improved in 4Q23, suggesting that it peaked in 3Q23; this should improve post-provision returns going forward
• We remove Ayudhya from the buy list, as its worsening cost of risk trends are eroding post-provision returns; it is also relatively weak in terms of capital adequacy

• The S&P 500 INDEX is WEEKLY OVERBOUGHT, it may continue higher this week or the next but a pullback is behind the corner.
• Currently the index has reached beyond the Q3 resistance target (4897) and it’s up 4 weeks in a row.
• Cover your LONG holdings for the upcoming pullback, going SHORT is also possible but maybe won’t be much profitable as we expect the index main rally to last into April.

• Here we are revisiting the Thai bond market, as per requests from our Thai readers, to see the impact of the global rate trajectory on Thailand.
• The Thai bond market will remain unattractive to foreign institutional investors, in our view.
• The attempt to increase yield should involve a material change in Thailand’s financial structure and regulatory mindset.

• Since early November 2023 we have laid out our bullish expectations for a year-end rally that we anticipated would continue into the early part of 2024. 
• Here we are in the early part of 2024, and we see every reason to continue riding this bull market higher. We see small- and mid-caps resuming uptrends $IWM $VXF
• Downgrading Staples (XLP) to underweight after brief stint at market weight. Highlighting several buys within Financials: Property & Casualty Insurance BRK.B, PGR, CB, TRV, ALL, CINF, ERIE, and more

Martin Currie Global Portfolio Trust’s (MNP’s) manager Zehrid Osmani was correct in his assumption that investors were too conservative in 2023; global equities delivered an above-average total return led by large-cap US technology stocks. However, he believes that the consensus outlook for 2024 is too bullish given economic uncertainty and increasing geopolitical risks. The manager’s view is that with inflation remaining elevated, western central banks will not reduce interest rates until the second half of 2024, which is likely to cause disappointment and stock market volatility. With such an investment backdrop, he stresses the importance of focusing on high-quality companies with structural growth opportunities and strong balance sheets that can weather the prevailing headwinds.

• Back on the 20th January 2023, shares in Bank Of Jinzhou (416 HK) (BoJ) were suspended due to a delay in publishing its FY22 results. 
• BoJ was previously bailed out in March 2020 by the PBOC and Liaoning Financial Holdings, owned by the finance authority of Liaoning province, via the placement of new domestic shares. 
• Now Liaoning Financial is taking BoJ private at HK$1.38/share, or ~0.28x P/B.

• Temporary implications of Evergrande’s court ruling on property sector sentiment and other troubled property developers’ restructuring plans
• Evergrande’s situation is more complicated than that of other troubled developers, as its founder is still under arrest and the company is unable to issue new debts.
• Cross-Border bankruptcy cases for Chinese companies are still relatively rare, making the recognition and enforcement of Hong Kong bankruptcy judgments by the PRC court uncertain

• With the “Postcard” series, our objective is to bring to our readers on-ground insights based on interactions across key channels located in tier 2 and tier 3 locations.
• For this Postcard, we travel to the east to the city of Ranchi, located in the heart of Jharkhand. 
• Stocks in focus include Utkarsh Small Finance Bank (1639303D IN), Aditya Vision (AVL IN), Mahindra & Mahindra (MM IN), Vedant Fashions (MANYAVAR IN). 

• IDFC First Bank Limited (IDFCBK IN)  management has provided long-term strategic guidance along with its 3Q24 results, which lays down a clear roadmap for the bank’s progress.
• The latest results are slightly below estimates but the medium-term factors for our thesis haven’t changed – viz. a strong franchise underscored by heavy retail footprint and incrementally improving unit-economics.
• We reiterate “Long-term Buy”, with 42% upside in near-term, as the bank continues to realize the benefits of its increasing scale on its earnings profile.

• The S&P/ASX 200 INDEX started to go up again after just 1 week down, now starting the 2nd week up, we want to evaluate how far it can go.
• There are a number of Q2 resistance levels just above the 7600 price area for the next 2 weeks, so if the index goes up there it will be overbought.
• This pattern is bullish, you need to wait for at least 3 or 4 weeks up in a row before going SHORT, unless you love to take risks…

• If a sustainable bottom was made in January, which sectors are best to invest?
• China State Owned Enterprises fit the current uncertain investment climate
• The Hang Seng China Affiliated Index (red chips) provides some good ideas

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net BUY RMB 12.1bn of A-shares on very strong average activity. National Team continued to buy this week. Foreigners bought banks
• Renewables were again a net sell by NORTHBOUND. It is not clear what stops persistent net selling. Capacity huge/growing and Pricing is a disaster in solar modules, batteries, etc. 

• This is our first report on cloud- based artificial intelligence (AI) lending platform operator, Upstart Holdings, Inc.
• Its recent results reveal a diverse picture as substantial growth and progress are achieved in the midst of a challenging lending environment.
• The positives are the company’s rapid strides in advancing its artificial intelligence lending platform, achievement as a financially sound company, growth in fee revenue, increase in team size, and AI platform expansion.

• The KOSPI 200 INDEX closed the last week up, after 3 weeks down in a row (CC=-3).
• The index could pullback again this week, after last week’s bounce, support is around 332-325 or, if the market goes lower, around the 313 price area.
• Most likely the pullback will last only for 1-2 weeks (if any), but caution is advised: a longer pullback that could reach below 313 is not impossible.

• The combination of policy decisions in the US rates markets has led to a significant decline in tenure yields.
• There appears to be policy coordination between fiscal and monetary authorities, with the treasury displaying flexibility and the Fed focusing on tightening in financial conditions.
• The upcoming Fed meeting is anticipated to provide forward guidance on policy tightening, with expectations of a move towards a neutral bias and steps towards eventual easing or cutting. Inflation language in the statement may also be up for debate.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• The Hang Seng Index this week reversed up and close the week up, after 3 weeks down. This may not be the usual opportunity to go SHORT.
• The index may rise for another 1 week and then pullback, but our seasonal matrix model says there is a good probability the HSI rallies in February.
• Based on this market reading we advise HSI Short Sellers to be particularly careful when setting up SHORT trades between here and the end of February.

• Goldman reported FY and Q4 2023 earnings and revenue that topped analysts estimates. Goldman stands to benefit from higher deal-making and lower operating expenses in 2024.
• FY2023 earnings and revenue were lower than FY2022 as Goldman faced large losses on its real estate portfolio and retreat from its consumer banking push.
• Q4 earnings beat expectations by a huge margin but investment banking fees continued to lag; heading into a looser monetary environment in 2024, Goldman stands to outperform.

Key points (machine generated)

• Fidelity National has a track record of creating value through acquiring and spinning off financial businesses, making it an attractive investment opportunity.
• The recent partial spin-off of F&G Annuities & Life Inc. and the decline in mortgage origination volumes make now a good time to invest in Fidelity National.
• The author recommends taking a long position in Fidelity National, while hedging exposure to FG, as they believe the title business is undervalued.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• A case involving Ambase is expected to go to trial or be resolved through summary judgment in early 2025.
• The outcome of this litigation will have a significant impact on the potential value of Ambase as an investment, as its current market cap is significantly below the potential claim.
• The upcoming document discovery process and motions for summary judgment will allow investors to evaluate the chances of a positive outcome and potential net recovery for Ambase shareholders.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• Avanza, a Swedish direct-to-consumer investment platform, has seen a significant decline in its share price since August 2021, with a 42% decrease and a 50% decrease from its peak in November 2021.
• Despite the decrease in share price, Avanza remains an attractive investment opportunity due to its offerings and market position.
• Avanza allows Swedish consumers to invest in a variety of securities and funds through different types of accounts, including pension schemes and tax-efficient investment accounts. The company also provides cash savings products, corporate finance services, and lending options for mortgages and margin loans. With a large capital of SEK715bn and 1.87 million clients, representing 18% of the Swedish population, Avanza is the leading D2C platform in Sweden.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

In FY23, Foxtons Group’s three divisions took market share, the direct result of management action to invest in the business. The company’s new strategy focuses growth on non-cyclical revenue streams and decouples performance from sales market cycles. This is evidenced in the FY23 trading update, which highlights a financial performance that exceeds market expectations. At this early stage of the year, we are retaining our FY24 and FY25 estimates and valuation, but it would appear that the risks to our estimates are to the upside.

• Frasers Centrepoint Trust (FCT SP) aims to raise around US$152m in order to partly fund its purchase of an additional stake in NEX mall.
• The company had purchased its initial stake in the property nearly a year ago.
• In this note, we comment on the deal dynamics and run the deal through our ECM framework.

• Thai Credit Bank PCL (3674238Z TB) is looking to raise up to US$281m in its Thailand IPO.
• TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
• In this note, we will look at the updates since, undertake a quick peer comparison, and share our thoughts on valuation.

• On the 26th June 2023, MUFG (8306 JP) and 92.7%-held Adira Dinamika (ADMF IJ) entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
• Although not explicit in various company announcements, MUFG/Adira are paying an estimated IDR 3,297/share. The SPAs are subject to regulatory approvals, primarily Indonesia’s OJK.
• An EGM for MFIN’s shareholders has now been tabled for 13th Feb to vote on this change of control. Presumably, you wouldn’t progress to the EGM without OJK’s conditional approval. 

• BWP Trust (BWP AU), the owner of  75 properties (mostly Bunnings Warehouses), will merge with smaller landlord Newmark Property REIT (NPR AU), whose tenants also include Bunnings.
• Via an off-market transaction, BWP is offering NPR unitholders 0.4 new BWP units for every NPR unit held, for an implied Offer price of $1.36/unit, a 43.1% premium to undisturbed.
• The key condition is a 50.1% tendering threshold. 18.3% of NPR have given an irrevocable. This looks done; although NPR was listed at A$1.89/unit a little over two years ago.

• In our 2023 thematic outlook, we highlighted that on-chain insurance is a DeFi sub-sector that remains underdeveloped.
• Today, DeFi has largely covered the services offered by TradFi, such as payments, lending and exchanges; as well as central, commercial and investment banking services.
• There is also DeFi insurance (or more accurately termed as ‘DeFi cover,’ since the solutions provided are more discretionary than contractual; and may not be regulated), but presently it is not being offered as extensively as traditional insurance

• The podcast will feature an anonymous source who will be disguised and have their voice altered, similar to investigative shows.
• The guest, known as high yield Harry, runs social media accounts and a newsletter where they chronicle events in the credit markets.
• The discussion will focus on the credit markets, investor demand, the impact of higher interest rates, and the players involved in making loans and deals.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

Heliad Equity Partners (HEP) and FinLab completed their merger in Q423. Heliad, the new combined entity, has seen positive developments across its three largest holdings recently. flatexDEGIRO, while still affected by the low trading activity across the market, in Q323 generated its highest quarterly EBITDA since the meme stock hype in 2021. Raisin has shown sustained strong growth in assets under management (AUM) and last year crossed the €50bn mark. Finally, Enpal more than doubled its revenue to €900m in 2023. All three are profitable and the value of Heliad’s stakes in these companies more than covers its current market cap and net liabilities. Heliad recently invested in AI21 Labs, which develops proprietary text-generating AI technology. Heliad’s shares are now available at a 48% discount to the last reported NAV.

• Banorte delivered a strong close to 2023, with ROE of close to 22% for the group, efficiency ratio of under 40%, healthy core capital adequacy and a low delinquency ratio
• There were few amber warnings in the 4Q 2023 figures, with the exception of non-interest costs, especially those relating to IT and digital banking capex, and slightly on funding costs
• Management’s 2024 guidance is, in our view, optimistic; we see potential erosion of the net interest margin, structurally higher opex – due mainly to digital competition – and worsening delinquency

• In its continuing push in international markets, Bakkt announced on January 24 that it activated its crypto capabilities in several new international markets in Asia, Europe, North America, and South America with existing clients Hapi and SogoTrade.
• Bakkt crypto trading is now live in Hong Kong and Singapore with SogoTrade.
• Bakkt is excited about its entry into these markets given the rapid growth in their crypto economies. 

• 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 Sun Hung Kai Properties (16 HK), Wuxi Biologics (2269 HK), Sichuan Kelun-Biotech Biopharm (6990 HK), and Wisdom Sports (1661 HK).

• In the post meeting press briefing, governor Kazuo Ueda said there was an increasing chance of the BoJ’s 2% inflation target being hit; JGB 10Y yields rose as a result
• This implies that the BoJ could change from negative interest rate policy in the near future, perhaps as soon as March, which is positive for the Japanese bank sector’s fundamentals
• We believe that this new will give further impetus to Japanese bank shares, especially those banks that are well geared into rising domestic interest rates; we highlight eight banks

• Newmark Property REIT (NPR AU) has disclosed an off-market takeover merger proposal from Bwp Trust (BWP AU) of 0.40 BWP units per NPR unit, implying A$1.39 per NPR unit. 
• The proposal is conditional on a 50.1% minimum acceptance condition, which can be waived or lowered. Irrevocables represent 18.35% of NPR units.
• The offer is attractive given the weak sector sentiment due to ongoing high-interest rates. At the last close, the gross spread was 2.6%.

• The bond basis is a significant concern for investors, as the long end of the curve has been steepening and rates are rising, increasing the probability of shifts in the cheapest deliverable (CTD).
• There are several bonds that are nearly equally cheap, meaning they are not currently the CTD but are close enough to potentially become the CTD. This could impact futures pricing.
• Investors who are long the March bond futures contract can hedge against the risk of CTD duration extension by buying March bond contract puts with a strike price of 118. This can mimic a long basis position.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• In our 15 March 2023 initiation, Pawnbroking royalty, with strong, profitable growth, and later notes, we have highlighted the strong market for pawnbroking and why H&T, as the market leader, is uniquely placed to take advantage of these opportunities.
• Subsequent to the initiation, we had raised our pledge book forecast twice, and we do so again with the latest trading statement.
• In this note, we explore how pawnbroking growth is a key driver to the retail offering, pawnbroking scrap and gold purchase, with varying degrees of time lag.

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.

• Anton Oilfield
• Greentown China
• Reliance Industries

Henderson International Income Trust (HINT) is meeting its long-term objectives to provide both rising income and capital appreciation. It adopted a more generous dividend policy in 2021 and its 4.7% dividend yield is the highest among its peers. HINT has also delivered average annualised gains of 8.4% in NAV terms over the 10 years ended December 2023. However, the manager’s cautious, balanced stance, which favours value and defensive names and underweights the US, has underperformed recently due to the AI-driven rally in a handful of tech stocks and the improvement in the United States’ economic outlook, which has benefited cyclical names. However, HINT’s manager is using what he believes to be unjustifiably low valuations to add good companies with the capacity to grow dividends, at attractive prices. This includes businesses exposed to structural trends such as decarbonisation and the rapid spread of technology. He expects such acquisitions to outperform as the market comes to fully appreciate their merits.

Custodian Property Income REIT (CREI) and abrdn Property Income Trust (API) have announced a proposed all-share merger, recommended by both boards. This recommendation reflects the increased diversification of income that the combined company will provide, with potential to benefit from increased scale and share liquidity, and the opportunity for cost savings. The investment strategy will remain income focused, emphasising below institutional-sized regional assets, typically offering a yield premium. The combined portfolio offers 24% reversionary potential.

• Completing three-quarters of the review period, 6 stocks are in inclusion zone and 9 in deletion zone. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 6.8% at the June rebalance leading to a one-way trade of CNY 7.35bn (US$1.02bn). Index arb balances could increase the impact on the stocks.
• The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) over the last few months and could continue to do so as positioning builds up.

• On the 2 March 2023, Aspen Group (APZ AU) made an all-scrip NBIO for Eureka Group (EGH AU), a senior accommodation rental play. The implied A$0.399/share Offer was subsequently rejected.  
• Aspen held 13.7% of shares out at the time, having acquired the stake in December 2022. Aspen has returned with all-scrip off-market Offer with an improved implied price of A$0.431/share. 
• The Offer is contingent of Aspen getting to 50.1% of shares out. Eureka said it hasn’t received a formal approach. I think they’ll ask for more gruel.

• A few days ago, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】
• That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy. 
• Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better. 

• The seasonal matrix indicates a possibility for the Nikkei 225 (NKY INDEX) to continue its current rally into April and that rally should end in May.
• The index at the moment is very overbought, we expect some form of WEEKLY pullback soon, please consult our previous insight to find the WEEKLY resistance levels.
• The pullback should be seen as a WEEKLY pullback within a larger, longer MONTHLY (multi-month) uptrend, i.e. an opportunity to buy and/or add positions at better prices.

• A Smartkarma Corporate Webinar | Lendlease Global: Sustainable Returns Through High-Quality Assets revealed a global commercial REIT with high-quality retail and office properties in Singapore and Italy.
• LREIT saw rental reversions of +16.3% YoY in its 1Q2024 with a portfolio committed occupancy of 99.9% and a weighted average lease expiry of 8.0 years by NLA.
• Management remains optimistic about the coming year with a strong capital position, a high level of sustainably linked finance, a low cost of debt, and an eye on potential acquisitions.

• Due to the ongoing earnings season, for the next couple of weeks, we will temporarily deviate from our regular format and instead focus on reported earnings.
• HDFC Bank (HDFCB IN) – The core concerns that worry the street do warrant attention. While the management believes it is temporary, we anticipate some more incremental pain ahead. 
• Other interesting names highlighted include Delta Corp Ltd (DELTA IN), IndiaMart (INMART IN), Polycab India (POLYCAB IN), and Poonawalla Fincorp (POONAWAL IN). 

• The market is pricing in a 25 basis point cut in the June meeting, with additional easing expected to reach a neutral level by the first half of 2025.
• The ECB is expected to remain on hold at the upcoming meeting, with the focus on their updated views on growth, inflation, and any forward guidance.
• The sell-off in recent weeks has been driven by the repricing of monetary easing expectations, but the strategic over duration stance remains comfortable, particularly in the medium term.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• The market is pricing in aggressive rate cuts by the Fed, but the data does not fully support this expectation.
• The dollar has performed well this week, and further upside is plausible due to low-grade US exceptionalism and underwhelming global economic data.
• The focus on the Fed and US rates is important, but the non-US side should not be overlooked, as there is a stark difference in initial conditions between the US and other G7 rate curves. The rate differentials could lead to a convergence with the US catching up to other rate curves, resulting in a volatile and high-impact dollar trend.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• Ping An Insurance (601318 CH) trades at a 40% premium to Ping An Insurance (2318 HK). The premium has blown out the last week and there could be a reversal.
• The difference in Ping An’s AH premium versus the HSAHP Index has shrunk to its narrowest level in the last 10 years.
• Shareholding in Ping An Insurance Group of (601318 CH) via Northbound Connect has dropped and shareholding in Ping An Insurance (H) (2318 HK) via Southbound Connect has increased steadily.

• HDFC Bank reported earnings last week. The next day the stock fell 8% followed by another 4% the day after.
• HDFC Bank is one of India’s bluest blue chip stocks with a reputation for being a high quality compounder.
• What happened and where do we go from here? First, some lessons from another life.

• The previous week was packed with deals, IPOs, and other SPAC-related events.
• Four new deals were announced, including SPACs taking a conglomerate, an eVTOL company, and Korean and Chinese Biotech firms public.
• Also, a new SPAC priced its IPO, and SPAC rules could come under the microscope in the week ahead when the SEC meets. 

• The S&P/ASX 200 INDEX closed last week down at 7421.20 (CC=-1). The index was rallying in the previous weeks, but then pulled back before reaching the previous all time highs.
• The next strong support for a LONG trade is 7288 (Q3 support), but there is a risk of a slide to lower levels, so hedge your LONG trades.
• This looks like a temporary correction (buy-the-dip opportunity to add LONG positions, or to re-enter LONG at better prices).