Financials

• The Guotai Junan Securities (2611 HK)/Haitong Securities Co Ltd (H) (6837 HK) merger is a done deal.  The key risk, as withTCM (570 HK)‘s Offer, is one of timing.
• IF you are an arbitrageur,  Buy Shin Kong Financial Holding (2888 TT) vs A Basket of FHC Peers (not including Taishin).
• First Pacific Co (142 HK)‘s 46.2% share of Metro Pacific Investments Co (MPI PM)at delisting last year was worth ~US$1.25bn. It is now potentially worth ~US$3.21bn. 

• Singapore-headquartered digital asset exchange SDAX has closed its US$50 million Series B2 funding round led by Oman-based Muscat Precious Metals Refining Company.
• This follows a US$18 million Series B round in 2021 led by PSA International, Straits Trading Company, and New Horizon Global.
• The new funds will be used for client acquisition and adding new business lines, such as wealth and fund management.

• Today, Hillhouse announced it would buy the 63% of SAMTY HOLDINGS Co Ltd (187A JP) not owned by Daiwa Securities Group (8601 JP) at an 18% premium. 
• It’s a highly-levered real estate company. Huge inventory. Decent margins on sale so embedded profit sitting in inventory. Not a very big premium, but an all-time high. 
• Retail including some large former insiders and passive own the vast bulk of the float here. The former get this done. Or not. 

• In our previous insight about the Hang Seng Index‘s we theorized a probable continuation of the rally in October, after some resistance, but the index just shoot up straight.
• Resistance appeared last week, from an area considered a tail by our SHORT model, so it was not possible to make a forecast from there.
• The question now is: can the index re-start to rally from here? Or will it pull back more this coming week?

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. China Oil And Gas
2. ICTSI
3. Pt Cikarang Listrindo Tbk
4. Tata Motors Ltd
5. Adani Green Energy

and more…

• We analyse ten Japanese midcap banks to target beneficiaries of the realization of strategic shareholdings, as well as beneficiaries of the improving interest rate outlook
• We add Hachijuni Bank and Hokuhoku Financial to the buy list, based on the potential for realization of strategic holdings; these share-holdings are large relative to their respective market capitalizations
• We maintain Gunma Bank on the buy list, primarily for its very strong gearing into the rising interest cycle and its attractive PE multiples

• On August 27, the decentralized autonomous organization (DAO) Maker, known for managing the world’s largest partially decentralized stablecoin, Dai, announced that it would rebrand to Sky on September 18.
• Starting on that date, Dai stablecoin holders gained the ability to convert their Dai 1-to-1 into Sky Dollar (USDS), the new stablecoin of the Sky ecosystem.
• This shift is part of Maker’s “Endgame” roadmap—a vision that co-founder Rune Christensen has been developing for years.

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 Oil And Gas
• Continuum Green Energy
• China International Marine Containers A
• Shui On Land

• A month after China’s leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong Securities (H) (6837 HK), announced an intention to merge, we have a firm deal. 
• Via a share swap, each Haitong H share may be exchanged for 0.62 H shares of GJS. A similar ratio is in place for the As. Cash options are afforded
• Conditions include GJS and Haitong shareholder approval; plus the usual suspects on the regulatory front. The key risk, as with TCM (570 HK)‘s Offer, is one of timing.

For our next Corporate Webinar, we are glad to welcome Kina Bank’s executive management to Smartkarma. In the upcoming webinar, they will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Daniel Tabbush. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 15 October 2024, 17:00 SGT.

About Kina Bank

Kina Securities Limited (Kina Bank) was established in 1985 and is now Papua New Guinea’s second largest bank and financial services company.  It offers customers end-to-end financial solutions – from savings accounts to business loans, investments to mortgages, financial advice and investment management. It is also the largest wealth management business in PNG, with more than PGK8 billion funds under management. As the country’s largest fund administrator, it administers accounts on behalf of more than 850,000 beneficiaries whose funds total almost PGK14 billion. Kina Bank is also the leading stockbroking company in PNG. 

• Ouch!, a Malaysia-based next-gen, tech-enabled insurance platform, has raised RM5 million (US$1.2 million) in strategic funding from PPB Ventures.
• The startup will invest the money to expand its market share, enhance technology infrastructure, and drive product innovation.
• Separately, Ouch! has received an additional one-year extension to operate under Bank Negara Malaysia’s (BNM) Regulatory Sandbox. It is now working to secure a DITO licence from BNM, which would enable it to close critical protection gaps for Malaysians, especially young families.

• On higher revenue & cost constraint initiatives, the company’s 1H 2024 EBITDA loss margin narrowed compared to 1H 2023 and OMH expects 2H24 cost containment measures, anticipated revenue growth – supported by a higher total value of contracts signed in 3Q24 – to drive further margin improvement.
• As a result, OMH anticipates further reduction in EBITDA loss in 2H 2024 as it maintains measures to optimize its cost structure and operational efficiency.

• Peakstone Realty Trust (PKST) is a undervalued net lease REIT with high dividend yield of 8.5% and low payout ratio of 39%
• PKST has ample free cash flow, minimal debt maturities, and stable tenant roster, reducing pressure on management
• PKST’s portfolio consists of high-quality properties, with 43% serving as headquarters locations, presenting a potentially lucrative 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.

• Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) all-scrip merger is set at an exchange ratio of 0.62x. 
• The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds. 
• The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip. 

• Media reports indicate that the shareholder base of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) have approved their merger. 
• Shin Kong meeting results were public just before the market closed. The results from Taishin were known earlier. The market and spread were un-moved. If anything, things widened a little.
• Next, the two companies try to get fair Trade Commission, FSC, and Exchange approval to join to become Taishin Shin Kong FHC. And there’s a good trade to do here.

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.

• Pt Cikarang Listrindo Tbk
• Greentown China

• Sila Realty Trust is a healthcare real estate investment trust focused on medical office buildings
• Despite high-quality portfolio and low debt levels, Sila’s stock is undervalued
• Potential buying opportunity with strong lease profile and attractive valuation, especially if interest rates rise

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.

• Back in October 2023, a consortium including First Pacific (142 HK) took Metro Pacific Investments Co (MPI PM) private. First Pac’s 46.2% share at delisting was worth ~US$1.25bn.
• Following Mitsui (8031 JP)–backed Mit-Pacific’s possible stake in a tollway operator held by MPIC, First Pac’s 43.2% holding in MPIC, including the 47.5% stake in Meralco, is potentially worth ~US$3.21bn.
• The question is whether this recent development from Mitsui has any bearing. First Pac’s discount to NAV is elevated versus its historical trading range. 

• The crypto market showed some positive momentum over the weekend.
• We will not repeat ourselves on why we are highly bullish going into this fourth quarter, so we will spare you that for now.
• What is notable is the steady stream of major financial institutions announcing new digital asset services on a weekly basis.

• Kaanapali Land is a company that owns 4,000 acres of land on Maui in Hawaii, near the Kaanapali resort community
• The company operates in the agricultural sector, focusing on coffee cultivation, and has a market capitalization of $59 million
• Controlled by JMB Realty, Kaanapali Land is facing challenges with regulatory issues and delays in land development, exacerbated by the Maui wildfires in August 2023.

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.

• Revenue increased by 4.1% YoY to JPY69.4bn, achieving 84.7% of the full-year forecast, driven by Development business growth.
• Operating profit rose 18.0% YoY to JPY17.1bn, reaching 93.8% of the full-year forecast, with notable profit margin improvements.
• Tosei revised its full-year forecast, lowering revenue by 11.1% but raising profit forecasts due to strategic adjustments.

• In our initiation, we highlighted that NBPE is uniquely focused in the co-investment sector of PE.
• Our report underlined why this sector has especially appealing return, cashflow, asset selection, risk management, and GP access characteristics.
• In this note, we review how the manager, NB, adds value in this attractive market.

• Freshworks demonstrated a robust performance in the second quarter of 2024, continuing its trajectory of growth and investment in strategic areas to enhance its offerings, particularly in IT and employee experience solutions.
• The company reported a revenue of $174.1 million for the quarter, marking a year-over-year increase and reflecting a healthy business operation.
• Notably, the business maintained substantial operational discipline, resulting in a free cash flow of $32.8 million, and showed an impressive free cash flow margin of 19%.

• This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
• The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
• The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.

• Bright Smart Securities is a successful brokerage firm in Hong Kong founded by Mow Lum Yip in 1995 and publicly listed in 2010
• The company has shown steady growth since its IPO, with impressive increases in revenue and net income
• Despite a challenging market environment in Hong Kong, Bright Smart has maintained stable results, grown its client base and assets under management, and pays out all earnings in dividends, with dividends exceeding net earnings over the last 5 years.

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 our last Nikkei 225 insight we predicted that the Nikkei 225 INDEX was overbought and about to pullback and that is exactly what happened the following week.
• We also reiterated our view about the index’s overall trend, not looking good, and the fact that our seasonal quantitative model point to a coin flip scenario (up/down) for October.
• This week the index gapped up and the current SHORT pattern model is showing a good chance to rally from here. Let’s check how high it can go.

• Nikkei 225 (NKY INDEX) volatility is trading at historically high levels, and the skew is steep.
• National, regional and global catalysts provide the potential for further near-term market turbulence. Downside risk persists.
• The current vol environment lends itself to tactical option trades, such as put spreads or risk reversals.

• US economic growth has shown exceptional resilience, with a strong payrolls report and other positive macroeconomic factors
• Higher US yields may put pressure on dollar shorts and lead to a potential capitulation in those positions
• Canadian dollar baskets may outperform in this environment, with higher US yields benefiting the CAD

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

• RaaS Research Group has published an update on ethically-motivated, diversified financials group Pioneer Credit (ASX:PNC) following the company’s announced new $272.5m four-year syndicated senior finance facility.
• Our base case valuation has increased to $250m (previously $217m) or $1.94/share due to lower finance costs in FY26 (down $8m to c.
• $20m) and ongoing.

• Labor market data challenges notion of slowing labor demand and jolts
• Fed policy expectations shift to 25 basis point cut in November
• Uncertainty in policy outcomes causing high policy uncertainty and potential for large market moves

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

• ESR Group (1821 HK) provided a positive update on the indicative proposal. The update notes that the consortium has expanded from three to six, representing 39.91% of outstanding shares.
• The addition of new consortium members is a positive. While the recent market rally is not a dealbreaker, it should give the consortium renewed impetus to launch an acceptable offer.   
• The downside to a deal break is low as ESR’s valuation is undemanding, which is supported by the potential earnings recovery in a more benign interest rate environment.

• Hang Seng Index (HSI INDEX), Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX EQUITY) and Nikkei 225 (NKY INDEX) all have elevated implied vols vs their peers and vs historical observations for October.
• NIFTY Index (NIFTY INDEX) , S&P 500 INDEX (SPX INDEX) and S&P/ASX 200 (AS51 INDEX)  implied vols are on the low end of what is typically realized in October.
• Most markets see price weakness in the 3rd week of the month with realized volatility underperforming over the back half of the month.

• Nifty50 Monthly IVs post +2.6 vol jump as risk premia gets marked higher on return from 02.10.2024 holiday – China-induced Index selloff & FII Options-buying being the main drivers.
• Vol Term-Structure has switched from Contango to Backwardation in the front end for Nifty50 options. BankNifty Vol Curve flattens due to 11th hour IV markdown. 
• Options Market looks ill-prepared for another leg lower in indices – Smile & Skew subdued in spite of IV-jump.

• Temasek Holdings Pte Ltd (TMSK SP), Singapore’s state investment firm, is reportedly eyeing a 10-15% stake in India’s top snack maker Haldirams (Unlisted), valued at $11 billion.
• India’s packaged and processed food sector is booming, driven by modern retail growth, improved food standards, rising convenience demand, and greater affordability.
• Big acquisitions, upcoming IPOs, and strong growth prospects keep this sector in the spotlight, with listed companies offering investors opportunity to play the upswing.

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.

• CIFI Holdings
• Vedanta Resources

• Taishin‘s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.
• KKR’s “bid” for ASMPT (522 HK) has all the hallmarks of the “approach” by PAG last year. Which came to nought. From a regulatory standpoint, it’s unlikely to get up.
• Never a dull moment for Korea Zinc (010130 KS). The Choi family makes Offers for KZ and Young Poong Precision (036560 KS) (YPP). Then MBK counters for both.

• On the 28 May, credit service provider MPHB Capital (MPHB MK) announced that controlling shareholder and chairman Tan Sri Surin Upatkoon intended to delist the company via a selective capital reduction.
• Shareholders approved the RM1.70/share (87.21% FOR, 8.34% AGAINST) terms. The Offer required the Court to sign off on the SCR, and that’s when matters unravelled. 
• ISM Sdn Bhd, MPHB’s minority partner in six JVs, filed an intervening application on the grounds that sanctioning the SCR may affect its rights in an ongoing legal dispute. 

• Our last insight predicted quite precisely what happened to the NIFTY Index during the last 3 weeks (our forecast was a 3-5 weeks rally, around +4%/+5% higher).
• After 3 weeks up in a row, last week the NIFTY pulled back – the question obviously now is: would this be a good time to enter/re-enter the trade LONG?
• The answer, as always, lies in our Market Reversal Matrix models, keep reading to find out…

• Schloss Bangalore Ltd (SCHBL IN) plans to raise about US$600m in its India IPO. The deal will be run by BofA, MS, JPM, Kotak, Axis, Citi, IIFL,ICICI, JMF,Motilal and SBICaps.
• It is a luxury hospitality company which owns, operates, manages and develops luxury hotels and resorts under ‘The Leela’ brand, through direct ownership and hotel management agreements with third-party owners.
• According to the HVS Report, SBL is the only institutionally owned and managed pure-play luxury hospitality company in India. Its portfolio comprises 3,382 keys across 12 operational hotels.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Biocon Ltd
2. Lippo Karawaci
3. Tata Motors Ltd
4. Softbank Group
5. Rakuten

and more…

• For weeks, we have been anticipating October with optimism, given multiple positive factors for the crypto market.
• Among these is the conclusion of the U.S. Dollar liquidity squeeze in September, which we expect to be followed by increasing liquidity from this month onward.
• In Monday’s edition of Crypto Crisp, we outlined additional reasons for our bullish outlook on crypto throughout the fourth quarter.

• Upstart’s second quarter 2024 financial results reflect a period of transformation and recovery under challenging macroeconomic conditions.
• The company, led by CEO Dave Girouard, expressed confidence in the progress Upstart has made in returning to sequential growth and EBITDA profitability, despite the continued absence of significant macroeconomic improvements.
• This optimism is grounded in internal developments, particularly in artificial intelligence (AI) model enhancements, revived funding strategies, and augmented operational efficiency.

• What you need to know: • September was a big month for the metals space as gold, silver, and copper were all up over 6%.
• Gold broke to new all-time-highs, peaking at $2,685/oz before closing the month at $2,661/oz (up 46% LTM).
• • The mining equities lagged the metals slightly but greatly outperformed broader markets with the GDX, GDXJ, SIL, and COPX up 4.8%, 8.2%, 7.9% and 11.0%, respectively.

• PB Bankshares founded in 2019 and valued at $450 million
• CEO Janak Amin shifted focus to commercial loans, increasing profitability
• Bank expected to be sold in the future, but not immediately, presenting a promising 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.

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 Karawaci

Tetragon Financial Group (Tetragon) reported a 1.3% return on equity (RoE) in H124, with its net asset value (NAV) per share increasing by 1.9% in US dollar total return (TR) terms, and further 3.8% to end-August. The portfolio continued to generate solid cash flow, predominantly from collateralised loan obligation (CLO) structures and through fees from asset management businesses, which Tetragon recycled back into the portfolio (mostly public stocks) and was a net investor in the period. Tetragon continues distributions to shareholders, with a dividend yield of 4.3% (above the peer average and on top of share repurchases). As a result, Tetragon increased the amount drawn on its revolving credit facility and its leverage at end-August 2024 stood at record-level of 13.1% of NAV.