Financials

• 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.

• NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
• The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
• The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.

• Union Bank Of India (UNBK IN) is looking to raise up to INR 30bn (US$362m) with the floor price set at INR 142.78/share and a maximum discount of 5%.
• The stock has run up a lot and with index inclusion around the corner, this is as good a time as any to issue stock.
• Union Bank Of India (UNBK IN) trades cheaper than peers and could continue to outperform over the near-term.

• Union Bank Of India (UNBK IN) is looking to raise up to US$370m (INR30bn) via its QIP.
• The company last undertook a QIP in Aug 2023, which we covered in Union Bank of India QIP – Well-Flagged Deal, Recent Momentum Has Been Strong.
• This deal too is a very well flagged one, with the firm having earlier reported that it would look to do a QIP to boost its free float and capital.

Key points

• Previous VIC writeup accurately predicted BGC’s stock performance and highlighted key factors such as historical developments, valuation, and potential catalysts
• Minimal feedback received on previous writeup, but insights proved valuable as stock outperformed
• New writeup aims to provide more detail, updates, and analysis to support case for BGC’s potential growth, currently the largest position for the author.

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.

• In the most recent quarters HSBC saw its NIM decline from around 1.7% to 1.5%
• As the bank de-risks its CRE lending it is left with a greater proportion of bad CRE loans
• There can be more significant impairment charges on BoCom, the USD3bn done was small

• The open interest of the HSCEI 2024 dividend futures is less than half that of the HSCEI 2023 and HSCEI 2022 open interest at the same time of the year.
• Market volatility and the fallout of the losses faced by Korean investors (and the scrutiny of Korean ELS-issuing banks) are among the primary reasons for the low open interest.
• Our fair value for the HSCEI 2024 dividend futures is higher than the current market but there is a lot of sensitivity to bank dividends and special dividends.

• HSBC will release its results on Thursday and there remains risk of far worse credit metrics, not only related to CRE lending in HK and China
• Construction loan risks are tangentially related to CRE and are also considered fairly high risk, where HSBC can see sizable migration to stage 3 loans
• HSBC remains highly concentrated in UK and N America in its wholesale lending book, which we do not believe is well understood, and risky given economies

• Juniper Hotels is looking to raise up to US$217m in its upcoming India IPO.
• Juniper Hotels is the largest owner by no. of keys of Hyatt affiliated hotels in India as of 2Q23 (30th Jun 23), according to Horwath.
• We have looked at the company’s past performance in our previous note. In this note, we provide our thoughts on valuations.

• Bank Mandiri is our top pick for its quality attributes, its premium and growing pre- and post-provision returns; Mandiri provides a better valuations to returns mix than Bank Central Asia
• Bank Negara is the value pick with its low PE multiples, its attractive PEG ratio, whilst also improving pre- and post-provision returns with cost of risk well controlled
• Bank Rakyat registered worsening pre- and post-provision returns in 4Q23, with cost of risk worsening; this reflects its heavily MSME focused loan mix which keeps structural cost of risk high

• U.S. interest rates have been climbing since early January 2024 after reaching their lowest points between December 27th and January 11th.
• For example, the yield on 2-year Treasury bonds has increased by 52 basis points (bps), and the yield on 10-year bonds has risen by 49 bps since their respective lows.
• Similarly, the Dollar Index (DXY), which measures the value of the U.S. dollar against a basket of other currencies, experienced its weakest point on December 28th, 2023.

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.

• Alam Sutera Realty
• Citicore Renewable Energy