Financials

• In Jun 2023, CPPIB raised around US$750m via selling a 1.6% stake in Kotak Mahindra Bank (KMB IN). Prior to that it had sold a similar amount in Mar 2022.
• CPPIB will be released from its placement linked lockup early next month.
• In this note, we will talk about the lockup dynamics and past deals performance.

• IREDA (1845911D IN) raised around US$258m in its India IPO, after the deal was priced at INR32/share. It will begin trading tomorrow on 29th Nov 2023.
• Indian Renewable Energy Development Authority (IREDA) is a wholly owned Government of India (GoI) enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE).
• We have looked at various aspects of the deal in our previous note. In this note, we talk about demand and trading dynamics.

• Concerning the newly imposed 90-day mandatory repayment period for institutional investors, the elimination of the recall risk during this period is not included in this improvement plan.
• The right to re-establish the same short-selling position after the 90-day repayment period is unlimited. We should pay attention to the potential of this creating new trading events.
• Institutions borrowing stocks from overseas are not subject to the 105% collateral ratio. However, everyone is subject to the 90-day repayment period, even for investors who borrow stocks from overseas.

• ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
• Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
• We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the updates from its recent filings.

• The KOSPI 200 INDEX has been rising for 4 weeks, it’s OVERBOUGHT and may soon perform a quick pullback, followed possibly by another rally.
• The upcoming pullback is likely to be short-lived, in this insight we analyze where the pullback can reach, and where it should be possible to go LONG again.
• The price area to watch is 330-326: if the index reaches there, the LONG trade odds will be good (assuming the uptrend will continue into the end of the year).

• BTC is up ~140% since its bottom 1yr ago. Prior instances imply BTC is in the early innings of a new bull cycle with most of its expected gains ahead.
• Market breadth is expanding as we are seeing industry wide participation in recent weeks.
• Onchain borrowing activity is picking up, as are average lending rates and utilization rates on stablecoins, which are some of the most popular assets to borrow during market uptrends.

• Digital finance platform for SMEs in Southeast Asia, Funding Societies (Modalku in Indonesia), has secured US$7.5 million in debt funding from Norwegian government-owned development financial institution (DFI) Norfund.
• The fintech lender will channel the funds via its tailored financing solutions to the SME segments across all five markets.
• This is Norfund’s first debt transaction with a fintech SME lender in Southeast Asia.

• Lending platform Lendela said it hit profitability in Singapore and Hong Kong, as well as doubled its revenue growth in the past year.
• The Singapore-based company is now looking to expand its presence across Asia Pacific.
• To bankroll these plans, Lendela has secured US$5 million in a series A funding round led by Chocolate Ventures.

• The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. 
• The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). 
• Major Korean banks may need a “Hail Mary” pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. 

• The property management unit of Dalian Wanda Group Co. wants to push back the maturity of a $600 million bond by nearly a year, highlighting the property conglomerate’s deepening liquidity crunch.

• Dalian Wanda Commercial Management Group Co. said Tuesday that it is seeking to delay the payment on the 7.25% note by 11 months due to liquidity pressures.

• The 10-year dollar-denominated notes, issued by its subsidiary Wanda Properties International Co., are set to mature on Jan. 29, 2024, Wanda Commercial, the guarantor of the bond, said in a filing to the Hong Kong stock exchange.

• We turn positive on Banco PAN, for its consistently improving operational metrics to 3Q23, attractive valuations and sound capital adequacy
• Nubank is operationally strong but we remain cautious on Nubank shares as we see this neobank to be challenged by capital constraints, as well as being on stretched valuations
• Inter has been improving operationally, and is sound on capital but is in the shadow of PAN in terms of valuations; KakaoBank is sound operationally and one to watch

• Juniper Hotels (JH) 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.
• The company is jointly held by Saraf Hotels and its affiliate, Juniper Investments and Two Seas Holdings (an indirect subsidiary of Hyatt Hotels Corporation).

• Fedbank Financial Services (0702066D IN) is looking to raise about US$130m in its India IPO.
• Fedbank Financial Services (Fedbank) is a retail-focused non-banking finance company (NBFC) promoted by The Federal Bank Limited.
• In this note, we will look at past performance, and share our thoughts on valuation.

• There could be 3 changes for the S&P/ASX 200 (AS51 INDEX) in December. There are unlikely to be any changes for indices higher up the hierarchy.
• Passive trackers will need to buy between 7-11 days of ADV in the inclusions while the impact on the deletions will be larger at between 11-23 days of ADV.
• Short interest has decreased on the potential inclusions and increased on the potential deletions. There is significant pre-positioning on some of the stocks.

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

• The VIX INDEX has reached very OVERSOLD levels, it could bounce soon. Our models predict a short-lived bounce, probably 1-week.
• An increased VIX could trigger panic selling also in Asia-Pacific markets, dragging down returns and increasing volatility.
• The S&P500 is also WEEKLY OVERBOUGHT, the combination of VIX OVERSOLD and SPX OVERBOUGHT for us is a clear indication: WEEKLY pullback incoming!

• Haitong International Securities Group (665 HK)’s scheme meeting is on 15 December. The IFA considers Haitong Securities Co Ltd (H) (6837 HK)’s HK$1.52 per share offer fair and reasonable. 
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
• The high takeover premium ensures a done deal. At the last close and for the 18 January 2024 payment, the gross and annualised spread is 2.7% and 18.2%, respectively.

• On 21 November, Nice Holdings (034310 KS) announced new shareholder return policies that included material increase in dividends and share cancellations.
• First, Nice Holdings has decided to raise dividends by more than 10% every year for the next three years. Nice Holdings paid dividend per share of 410 won last year. 
• Nice Holdings also announced that it will cancel more than 1% of total outstanding shares every year for the next three years. 

• Once the pre-cons were satisfied on the 15th November, it seemed pessimistic to stick to the delayed 29 December dispatch date for Haitong International Securities Group (665 HK)‘s Scheme Document. 
• And right on cue, the Doc was issued last night (21 Nov). The Court Meeting is the 15 December. with an expected cash despatch on or around the 18 January.
• Trading at a gross spread to terms of 2.7%. The headcount test applies. But this should comfortably get up. 

• Welcome to this US rates nugget with three charts on why November data from the US economy could refuel the hawkish bias within the Federal Reserve.
• First, our ISM Services model hints at a large rebound in the ISM number released on December 5.
• ISM Services jumps to >60 in our models when you adjust for the spreadsheet wizardry of the Institute of Supply Management (remember the abysmal prints in Nov/Dec of 2022) as the seasonal adjustment factors are much more helpful than a year ago.

• IREDA (1845911D IN) is looking to raise at around US$258m in its India IPO. 
• Indian Renewable Energy Development Authority (IREDA) is a wholly owned Government of India (GoI) enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE).
• In this note, we look at the company’s past performance and share our quick thoughts on valuation.

In its Q323 trading update, Secure Trust Bank (STB) posted 1.7% q o q growth in net lending alongside 2.6% growth in its deposits. This was despite a 7% fall in new business lending from an elevated Q223 comparable as consumer spending weakened. More importantly, STB also hosted a capital markets day (CMD), where management reiterated the medium-term 14–16% return on average equity (RoAE) target and presented on the V12 Retail Finance business in detail. The RoAE should be supported by an improved mix weighted towards Retail Finance, combined with moderated volume growth and greater cost efficiency. Project Fusion is developing well and has now been extended to deliver annualised savings of £5m by the end of FY24. We have only changed our estimates for the issue of 0.2m shares under the employee share plan.

AGBA’s Q323 results continued to be affected by the weak recovery in China and consequent subdued mainland demand for Hong Kong health and wealth products. As a result, revenues were flat year-on-year at US$13.2m, but down from US$17.4m in Q223. The pre-tax loss was US$12.9m, putting the company on track to meet its US$49m projected loss for FY23. AGBA also announced that it has entered into term sheets for a US$6.2m private share placing with a new institutional investor, AGBA’s group president and AGBA management at US$0.70 per share plus warrants with an exercise price of US$1.00/share. The amount could expand subject to ongoing conversations with additional potential investors. The significant premium to the current share price signals management’s confidence in AGBA’s long-term value. The capital will go towards funding organic growth, strategic acquisitions and managing liquidity until projected material profitability in FY25.

• Back on 30 October, Daito Trust Construct (1878 JP) announced a large earnings, a new Shareholder Return policy, a higher payout this year, and a big buyback. 
• It said the buyback period would start two days later, but they did not specify the method (Daito Trust Construction (1878) – Big Buyback, Dense Register, 120% Payout This Year 
• Today they announced a ToSTNeT-3 purchase for “the whole size”, which is accompanied by a “Japan-style ASR.” Know your details.

• HK & China CRE credit impaired loans are rising sharply and high in 3Q23. We believe there is risk that the bank has to take much higher credit costs.
• Not only Mainland China CRE where there are risks. HSBC shows its ECL coverage ratio for HK CRE rising 45% over the past nine months, from 4Q22 to 3Q23.
• LT credit costs shows HSBC’s provisioning is like during a benign environment, at ~1/3 of its LT average. Its +34% QoQ credit costs in 4Q22 is worth keeping in mind.

• The S&P/ASX 200 INDEX closed up last week (CC=+1), currently uptrending, but the rally is weak, there is a chance that it could fall already this week and close down.
• The index has reached Q2 resistance, that’s the area where the index starts to be OVERBOUGHT, based on the current pattern.
• We see a potential pullback between -1% and -2% from current levels, across 1-2 weeks, this would bring the index down to the 6990-6920 support area. 

Deutsche Börse, a German markets infrastructure provider, operates through four divisions: Trading & Clearing, Securities Services, Data & Analytics and Fund Services. Trading & Clearing handles regulated market securities including derivatives, commodities, cash equities and foreign exchange, as well as providing market data. Data & Analytics – through its Institutional Shareholder Services (ISS) and Qontigo subsidiaries offers quality-focused ESG, data and analytics products alongside indices such as STOXX and DAX. Securities Services manages settlement, custody, collateral and liquidity. Fund Services provides a comprehensive service offering data, distribution and processing(safekeeping). Both Security Services and Fund Services are operated on its leading platform, Clearstream, the largest asset holder in Germany.

Mutares (MUX) predominantly invests in corporate carve-outs (80%+ of all deals) where it seeks to drive an operational turnaround, and often also executes a ‘buy-and-build’ strategy. MUX looks for companies with an annual turnover of €100–750m, with its ‘sweet spot’ in the range of €200–300m generated across multiple production sites. Its focus is on four major sectors: automotive & mobility (which is early-cycle), engineering and technology (project-driven, late-cycle), goods and services (considered non-cyclical) and retail and food (cyclical). MUX’s portfolio as at October 2023 consisted of 29 companies (including signed transactions) across Europe with more than 27,000 employees worldwide and annualised revenues of more than c €6bn.

Alpha Bank is the third largest Greek bank with a presence in Cyprus, Romania, Luxembourg and the United Kingdom. Through its subsidiaries, Alpha Bank provides a range of services including banking services (comprising both retail and corporate banking), financing services by providing leasing and factoring solutions, financial services through asset management and brokerage support, investment services (setting up the first private equity/venture capital firm in Greece), real estate management and life insurance. Domestically, it ranks number one in wholesale lending, mutual funds, private banking and credit cards.

• ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
• Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
• We have looked at the company’s past performance in our earlier notes . In this note, we will undertake a peer comparison.

CoinShares International (CS) fortsätter sin stabila utveckling under 2023 och redovisade en justerad EBITDA på 9,9 miljoner pund under kvartal 3 2023 (6,4 miljoner pund under Q322). Detta trots en förlust på 3,0 miljoner GBP på huvudinvesteringar, främst till följd av avsättningar i FlowBank (där CS har en ägarandel på 28,3%). Både kapitalförvaltningsverksamheten och kapitalmarknadsverksamheten bidrog starkt till resultatet för kvartal 3 2023, med 10,7 miljoner GBP i avgifter och 9,3 miljoner GBP i vinster och intäkter. I september 2023 lanserade CS officiellt Hedge Fund Solutions (aktiv kapitalförvaltning), med de första strategierna aktiva sedan slutet av kvartal 3 2023 och pågående diskussioner med potentiella investerare över hela världen.

Following the merger of Heliad Equity Partners (HEP) with FinLab, the combined entity holds a portfolio of more than 20 innovative, private businesses and fully owns Patriarch Multi-Manager, which develops fund of funds solutions and asset management strategies for independent financial advisers, selecting managers for each mandate.

JDC’s key asset is its highly scalable Advisortech insurance platform, which enables private clients to manage insurance portfolios from hundreds of German insurance companies. This technology platform, in which JDC invested more than €70m to develop, was initially built for its own broker pool business, Jung, DMS & Cie, and the financial advisory business FiNUM, but at a later stage JDC decided to exploit it commercially.

• This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
• The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Zhongji Innolight, Foxconn, and this week Longi Green Energy. Nets are smaller.
• Last week, NORTHBOUND was again net sellers, showing three weeks ago (the only weekly net buy in months) may have been a fluke.

• The FRTIB benchmark switch from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index will result in a round trip trade of around US$56bn.
• The changes for the CSI 300, CSI 500, STAR50, SSE50 and a bunch of other mainland China indices will be announced after market close on Friday.
• Relatively quiet week for ETF flows with no major creations or redemptions during the week.

• The S&P 500 INDEX will probably continue to rally in December (as long as the November rally does not reach extreme OVERBOUGHT conditions.
• The OVERBOUGHT condition begins at around 4600, so the index is NOT overbought (yet).
• The index will probably pullback soon for 1 or 2 weeks and then you can buy to ride the continuation of the rally into December (classic Christmas Rally).

• Atour reported 3Q23 revenue 6.4%/17.1% higher than our estimate/consensus, non-GAAP NI 5.5%/9.1% higher than our estimate/consensus.
• We expect Atour 4Q23/2023 RevPAR recovered to 107%/114% of 2019 level, and revenue to increase 104%/96% YoY respectively.
• We maintain the stock as BUY rating, and raised TP by US$1 to US$37.5, reflecting the rapid growth of retail product sales.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, WuXi XDC ended up doing well, as expected. Now Tata Technologies will be another one to watch.
• The placements continued to flow in this week as well, with both Australia and Japan deals coming relatively thick and fast, at least by 2023’s pace.