Financials

• Just under 6 weeks ago, Japanese activist Murakami-san’s company and daughter reported a 5+% stake in Aozora Bank Ltd (8304 JP). They bought after a sharp dip caused CRE-related writedowns. 
• As is normal, they bought more (now 8.92%) post-5%-filing-trigger, but before the actual first filing. And as is normal these days, the stock popped on the first filing.
• Then it fell, and hasn’t recovered much. So far, on a weighted basis, they are up 1% vs TOPIX Banks Index. 

For our next Corporate Webinar we are glad to welcome Elite Commercial REIT’s CEO, Mr Joshua Liaw.

In the upcoming webinar, Joshua will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Sumeet Singh. 

Sumeet will also be providing an industry overview, featuring landscape commentary and returns analysis. The Corporate Webinar will include a live Q&A session.

In the spirit of giving back to our community, one of the attendees will also be awarded an Amazon Kindle as part of our exclusive lucky draw. 

The Corporate Webinar will be hosted on Monday, 15 April 2024, 19:00 SGT.

About Elite Commercial REIT

Elite Commercial REIT (“Elite REIT”) is a Singapore real estate investment trust established with the investment strategy of principally investing, directly or indirectly, in commercial real-estate related assets in the United Kingdom (“UK”). Elite REIT is the only UK REIT listed in Pound sterling on the Singapore Exchange.

Elite REIT’s portfolio (“Portfolio”) comprises predominantly freehold properties strategically located mainly in town centres, and near amenities and transportation nodes. The Portfolio offers a stable government-backed income stream with over 99% of the gross rental income derived from the UK Government, backed by AA-rated sovereign credit strength. The leases are on triple net basis and Elite REIT is one of the largest providers of critical social infrastructure to the Department for Work and Pensions (“DWP”) and other UK Government departments. The DWP is the UK’s largest public service department that is responsible for welfare, pensions and child maintenance policy, serving over 20 million claimants and customers. The Portfolio is part of the crucial social infrastructure through which the DWP provides services to local communities.

• With the review period nearing completion, 6 stocks are in inclusion zone and 8 are in deletion zone. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 7% at the June rebalance leading to a one-way trade of CNY 9.7bn (US$1.34bn). Index arb balances could increase the impact on the stocks.
• The inflows into mainland China ETFs have further increased the flow and impact on the potential changes. The potential adds have continued to outperform the potential deletes.

• The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
• Sompo Holdings (8630 JP) had a stake over US$100m in at least 16 listed Japanese stocks, amounting to a total of around US$6bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

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
• Melco Resorts and Entertainment (Philippines)

Utilico Emerging Markets Trust’s (UEM’s) manager Charles Jillings, at specialist investor ICM, is very excited about the prospects for the trust’s investee companies. He believes that investors underappreciate the quality of these businesses and the teams that manage them. Jillings travels extensively, along with deputy portfolio managers Jacqueline Broers and Jonathan Groocock, meeting with current portfolio and other firms and relevant organisations in emerging markets. They report first hand that companies in the fund are performing very well, with robust top-line growth and cost reductions leading to higher margins. Because of the nature of UEM’s holdings in infrastructure and utility assets, the fund has a consistently low beta. Successful stock selection has led to the trust’s NAV outperformance versus the MSCI Emerging Markets Index over the last one, three, five and 10 years – most notably over the last three years. Since inception in 2005, UEM’s NAV total return compounded at 9.5% per year.

• Every year in April there is an interesting phenomenon with TOPIX. It is what Janaghan Jeyakumar, CFA calls “The Big April Basket.” The TSE re-assesses Liquidity Factor Coefficients.
• It also does a FFW change, and this year it has Phased Weight Reductions for those slowly leaving TOPIX and PWR re-inclusions for those identified last October as going back.
• Janaghan had 18 “High Conviction” LF removals. All were hits. They are upweights. Then there are 34 changes to FFW coefficients.

• 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.
• According to my estimates, the SSE 50 expected ADDs and DELs could see US$1.7bn index buying and US$828mn index selling respectively (leaving nearly $900mm of funding sales to do).

• Market momentum continues to be strong. As we head into earnings season, the momentum is likely to continue.
• Strong operational updates Info Edge India (INFOE IN); Aavas Financiers Ltd (AAVAS IN) & Sula Vineyards (SULA IN).  
• The overall market sentiment, represented by the average revisions across all sectors, is nearly flat, with a slight positive revision for FY1E at 0.02% and essentially stable for FY2E.

• As of end of Q1, NAV was SEK 166.8 billion (SEK 386/share). NAV increased by 11% due to a sharp decrease in leverage, while the portfolio value rose by 6%.
• Industrivärden C shares are trading at a 5.5% discount to NAV (vs. 8.8% average for the last 5 years). It seems risky to bet on a further discount reduction.
• My target NAV is SEK 173,116 million (SEK 400.8/share). My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 361.7.

• The KOSPI 200 INDEX is currently pulling back for a 2nd week in a row.
• This could be an opportunity to go LONG,  if the pullback is limited to this (or at most the next) week closing down and reaching targets between 365 and 338.
• If the index goes down for 3 weeks and reached below 343 caution is advised: the pullback may be larger than expected in that case.

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.

• Pakuwon Jati
• Sunny Optical Technology Group

Picton Property Income has agreed the sale of Angel Gate, its second largest office asset, and largest portfolio void, with an agreed consideration above the Q323 valuation. The sale is part of its strategy to repurpose selective office assets and accretively recycle the capital. This sale supports NAV, and we expect a positive impact on earnings. Further repurposing asset management initiatives are being progressed.

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

• Author has a negative outlook on self-storage REITs, particularly EXR
• Valuations are high despite challenging outlook and higher interest rates
• Predicts industry’s long-term prospects are unfavorable due to institutionalization and increased competition

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.

• Greentown China

• Greetings from a sunny Copenhagen, where it feels like summer is just around the corner, and the warm weather seems to be spreading to the crypto market as well.
• Bitcoin has risen by approximately 4.5%, reaching $72,250, and Ethereum has seen an increase of nearly 4%, up to $3,620 during the same timeframe.
• We would like to reiterate our optimistic outlook from last week, as highlighted in both Crypto Crisp and Crypto Moves #22.

• The saying goes, the proof of the pudding is in the eating.
• ABG’s 2023 results proved that the strategic positioning of the group, as a relationship bank, has created enormous value.
• Key highlights were i) PBT £47.1m (2022: £20.0m), ii) operating income £178.9m (2022: £137.4m), iii) average net margin 5.7% (2022: 5.1%), iv) EPS +103% to 222.8p, v) total dividend for the year of 46p (2022: 42p), vi) net assets of £252.4m (2022: £212.0m), NAV per share of 1,547p (2022: 1,411p), vii) CET1 ratio of 13.0% (2022: 11.6%), and total capital ratio of 15.2% (2022: 14.0%).

JDC Group (JDC) reported FY23 results that were in line with the preliminary results published on 8 March. After a very strong Q423, JDC expects FY24 revenue growth to accelerate to c 17% (FY23: 10.0%) and EBITDA to grow by 36% (FY23: 30.2%) at the midpoint of guidance. To reach the FY25 target of €246m in revenue, JDC also needs 17% top-line growth in FY25. JDC trades at an FY25e EV/EBITDA multiple of 13.7x on our estimates, which we believe is undemanding for what is essentially a fast-scaling platform business. Our DCF provides a valuation of €34.04/share (versus €34.09/share previously).

• Writer reflects on past experience selling leads to Oportun and shares insights on company’s loan performance
• Receives letter from Findell Capital in March 2023, sparking interest in potential changes at Oportun
• Believes company’s board and management may comply with Findell’s requests, especially with additional shareholder pressure, and anticipates significant changes in the near future.

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.

• Tiptree plans to IPO its subsidiary, The Fortegra Group, potentially driving over 50% upside for investors
• Fortegra filing recent S1s and strong syndicate team indicate IPO in late January at 17.5x 2023 Adjusted Net Income
• Estimates suggest Tiptree’s ownership in Fortegra could be worth around $31.87/share, making it a valuable asset for investors.

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.

• Equities shrug off hawkish RBI rhetoric – eye on $3 Billion inflows from MSCI rejig & June Elections results
• Short dated IVs trade lower. Quarterly-expiry IVs continue to hold at >13.0% levels as they capture multiple event risks
• Short vega positions recommended as “High & Down” vol state persists. Use current scenario to buy tail hedges as protection for long Equity positions. 

• Crypto market is driven by narrative in the short term, and capital favors new narratives. Ethereum restaking is the brand new narrative and biggest investment opportunity in this cycle.
• Restaking and Liquid Restaking will bring upward pressure to ETH, and tokens of Liquid Restaking protocols will benefit from the growing restaking market.
• DeFi use cases related to Liquid Restaked Tokens introduce increased financial leverage to the Ethereum DeFi ecosystem, which also entails heightened risks.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, the focus remained on HD Hyundai Marine Solution (443060 KS) and Bharti Hexacom (6597372Z IN).
• On the placement front, India remained at the forefront with JSW Energy Ltd (JSW IN) and the potential share sale of Vodafone Idea (IDEA IN). 

• This last week was packed with deals, amendments, and merger breakups.
• A SPAC is set to merge with an electric utility firm, and a blank-cheque firm is taking a critical metals supply chain-focused firm.
• Also, Sam Altman’s SPAC surges as it nears a deal, and a SPAC terminates a merger with a hydrogen energy firm. Read on to find out the latest about all things SPACs. 

• Bread Financial (formerly Alliance Data) has experienced a drop in stock price since 2015 but has improved its balance sheet.
• The future earnings outlook is uncertain due to pending regulations, but the company is expected to generate a high return on equity.
• Bread Financial issues private label and co-brand credit cards with major partners, making it a potentially valuable investment opportunity at its current price.

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.

• Affirm Holdings, Inc had a strong performance in its second quarter of fiscal 2024.
• A sense of optimism pervaded the call, as the company’s Founder and CEO, Max Levchin, and CFO, Michael Linford, highlighted the impressive run of results, attributing it to the strength of business across their merchant base and favorable economic conditions.
• 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.

• The Hang Seng Index has been rising for 2 weeks but the uptrend seems slow and weak. The rally may have stalled, a pullback may be behind the corner.
• Based on our MONTHLY seasonal studies for the HSI, the index has a extremely high chance to close April in negative territory.
• You can go SHORT now, or during this coming week if the index keeps rising, target the 17000 to 17300 areas.

• Ramsdens Holdings PLC is a pawnbroker offering pawnbroking, precious metal buying, FX currency exchange, and retail jewelry sales services
• They have a diverse customer base from lower-income households to higher income customers interested in premium watches and jewelry
• With 158 stores in the UK, Ramsdens is the second largest pawnbroker behind H&T Group, focusing on increasing store estate and distributing dividends for further growth, making it an appealing investment opportunity.

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.

• 10+ Months ago, Suruga Bank Ltd (8358 JP) announced it would sell a large chunk of its treasury shares to Credit Saison and would then buy back ¥22bn of stock.
• I liked the odds in Suruga Bank (8358) To Sell, Then Buy Back 17% of the Bank, but HOW Is Key. They spent the ¥22bn. The stock rose a lot.
• Today, we get a div hike for H2 (implying a div hike for this year too), another buyback, a huge share cancellation, and new KPIs. As always, details matter.

• Hong Kong hotel-play Langham Hospitality (1270 HK) was spun-off from Great Eagle (41 HK) on the 30 May 2013. Now GE intends to take the company back into the fold. 
• Covid was devastating to the hospitality sector. As were the 2019 demonstrations. Langham’s share price never recovered, and is currently trading at a lifetime low and a P/B of 0.21x.
• No price was mentioned in the announcement. Expect a healthy premium to undisturbed, should a firm Offer unfold. But I wouldn’t expect a knockout price.

• ZhongAn Online P&C Insurance C (6060 HK) is benefiting from the cross-selling opportunities  generated through the eco-systems of Alibaba Group Holding (9988 HK) and Tencent (700 HK), its parent companies
• Largest solely online insurance company in China with Rmb 30B gross premiums written in 2023.
• Expertise and cross-selling from Ping An Insurance (H) (2318 HK) , another parent company with a jointly run auto insurance business.

• In our 15 March 2023 initiation, ‘Pawnbroking royalty, with strong, profitable growth’, and subsequent 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.
• These results reconfirmed both, with the pledge book up 28% and net pawnbroking revenue up 36%.
• Like many in the retail space, H&T faced the challenge of customers focusing on lower-value, lower-margin items in the key run-up to Christmas 2023.

• We are swiftly approaching the fourth Bitcoin halving, which is expected to take place at block number 840,000.
• Currently, the network has reached a block height of approximately 837,700.
• Bitcoin experiences a halving event every 210,000 blocks.

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
• Indika Energy
• Vedanta Resources

• Langham Hospitality Inv Ss (1270 HK) received a notice from Great Eagle Holdings (41 HK), the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.
• The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.
• Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.

• In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in June 2024.
• The index changes for the June 2024 index rebal will be announced on 17th May 2024.
• The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.

• Our popular, text-only weekly is back, hopefully in an improved version, and aims to be more consistent throughout this financial year.
• The market structure and momentum seem to be positive. Upcoming earnings season and elections are likely to be key drivers going forward.
• Stocks discussed include Bajaj Finance Ltd (BAF IN), SBI Cards & Payment Services (SBICARD IN), Honasa Consumer (HONASA IN) and Delta Corp Ltd (DELTA IN) 

• It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
• CBA’s past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
• Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL

China Vanke’s FY 2023 numbers were somewhat soft in our view. While its top line and profitability declined in tandem with industry trends, the company’s property development gross margin remained robust (relative to peers) at c. 15%. Negatively, OCF (after interest and tax) was weak and net debt continued to rise. Leverage and coverage metrics deteriorated, but remained at reasonable levels (vs. peers).

Vanke’s liquidity at the holdco level is likely tight. In particular, the migration of bank borrowings to the project level has pressured the company’s holdco-level financing. The development may also indicate lenders’ reduced risk appetite towards Vanke. In addition, we view negatively that management did not disclose the amount of cash held under escrow restrictions. Moreover, it is unclear whether the Shenzhen government would provide extraordinary support (above and beyond market-oriented measures) to the company.

• ABL’s SPAC merger did not generate significant proceeds, leading to limited research coverage and low visibility in the market
• Investors have identified ABL as a promising long-term investment with the potential for a 20% return on equity over the next five years
• ABL’s unique trading setup, with only 1.5 million shares available for trading due to insider ownership and a staggered lock-up period, presents challenges and opportunities for investors. Additionally, a $15 million share repurchase program has been announced, further adding to the intrigue surrounding the company.

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.

• As we predicted in the last few weeks’ Crypto Crisp, the crypto market has been relatively stable in recent weeks.
• However, things are beginning to shift.
• During a speech in San Francisco on Friday, Federal Reserve Chairman Jerome Powell mentioned that robust economic growth in the US allows Federal Reserve officials to take their time with interest rate cuts.

• CLS Holdings is a vertically integrated cannabis company with core operations in Nevada.
• The company owns and operates Oasis cannabis dispensary, one of the leading stores in Las Vegas.
• CLS also has a state-of-the art extraction and manufacturing facility in Nevada and a suite of top-performing brands.

In FY23, Information Services Corporation (ISC) enjoyed year-on-year top-line and adjusted operating profit growth, augmented by consistent organic expansion of its Services division and incremental earnings from fee uplifts linked to the Master Service Agreement (MSA) extension. Management’s encouraging FY24 guidance reflects organic growth potential from the Services division, alongside a full-year impact of earnings accretion from fee adjustments. We have raised our valuation modestly from C$37/share to C$40/share, which implies 48% upside.

• On-The-Run Quarterly Options now capture India General Elections. Position buildup can be seen in the 21,000 put and 24,000 call strikes
• Weekly and Monthly contract risk premia being squeezed lower due to holiday shortened trading but Quarterly contracts exhibit vol richness
• Scale back short gamma exposure as reward-risk unappealing at current IV levels

• The Italian Treasury sold an additional 12.5% stake in Banca Monte dei Paschi di Sien (BMPS IM), raising €650 million as part of re-privatization efforts following the 2021 failed attempt.
• The Treasury’s divestment makes BMPS more appealing for buyers. BMPS still trades at attractive valuation multiples. The bank announces approval from the ECB for a €0.25 cash dividend per share. 
• Economy Minister Giorgetti and PM Meloni aim to boost competition through privatization, favoring a merger with another mid-sized Italian bank, possibly BPER Banca or Banco BPM.

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
• First Pacific Co
• Xiaomi Corp