Financials

• VinFast (VFS US), the EV arm of Vietnamese conglomerate Vingroup Jsc (VIC VN), commenced trading on the 14 August. And promptly took off. 
• VinFast’s current market cap is ~4x General Motors (GM US)‘s, twice that of Mercedes-Benz (MBG GR)‘s, and the second-largest pure-play EV-maker after Tesla  (TSLA US).
• Vingroup’s holding in VinFast is worth 13x its market cap. This is not sustainable. 

• Rebound on Nikkei 225 INDEX may not last for long, 2-3 weeks tops, it will encounter resistance no later than mid of September (most unfavorable month for stocks gains).
• Resistance levels to watch vary, depending on number of weeks up. For this week and the next, a new pullback could start from 32476 and 32817.
• If the index goes =>33000, it means it is rallying and will not correct into September, the rally then could last into October.

• New results detail from CMB shows divergence with credit quality and actual credit costs
• The bank saw its credit costs decline 25% YoY despite higher Loss and Doubtful Loans YoY
• Property development NPLs surged from 4.1% to 5.5% at 1H23 HoH, to RMB19.6bn in total

• GradRight, an India-based startup that helps students with selecting their university majors and financing their studies, has raised 500 million rupees (US$6.1 million) in series A funding from IvyCap Ventures. 
• The investment will be used to accelerate GradRight’s growth and expand its reach to lower- and middle-income students around the world.
• Founded in 2020 by Aman Singh and Sasidhar Sista, the edtech startup runs an AI-powered platform that brings together prospective students, universities, and lenders.

Greentown China has released H1/23 results that were in line with expectations. Contracted sales rose 16% y-o-y, driven by higher ASP (+19%), but offset to a degree by less GFA sold (-1%). The company added CNY 57 bn saleable resources with total GFA of 2.57 mn sqm. Revenue fell 12% to CNY 57 bn, primarily due to a CNY 7.9 bn slide in revenue from property development. Gross profit also decreased 12% to CNY 9.92 bn, with a largely stable margin (16% vs. 16.5% in H1/22).

We believe Greentown will continue its strategy of clearing inventories and delivering homes through H2/23. The company’s ability to deleverage will be impacted by the scale of its land acquisitions. In this regard, Greentown could expend up to 40% of its sales proceeds on acquisitions. That said, the level may be tempered by any further deterioration in the residential housing market.

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.

• Yanlord Land

Yuexiu Property’s (YXP) H1/23 results were largely in line with expectations. Overall revenue climbed 2.6% y-o-y to CNY 32.1 bn, driven by strong growth in property management, rental income and real estate agency & decoration services. However, sales from property development remained stagnant at CNY 29.8 bn (H1/22: CNY 29.8 bn). The company encountered ongoing margin pressure, largely due to falling profits and margins for the property development business, which we believe is in line with the overall industry trend.

We note positively YXP’s CNY 221 bn in unrecognised sales, which could have positive implications for steady revenue growth in the near to medium term. The company appears to have resilient access to capital markets. Liquidity was boosted as at end-June 2023, by a c. 39% y-o-y increase in cash to CNY 30.3 bn. The debt structure improved, with exposure to ST debt narrowing to 12% of total debt.

The 2023 notes are trading near par (yielding 7-8%). The YUEXIU 2.8 26 are quoted at c. 90.6 (yielding 6.9-7.2%), while the 2031 notes are trading at c. 80 (yielding c. 7.5%). We view the pricing as fair, and maintain our “Hold” recommendation on the YUEXIU curve given the current weak market technicals.

• Jio Financial Services (JIOFIN IN) started trading on 21 August following its demerger from Reliance Industries (RIL IN). The stock was locked limit down on its first four trading days.
• Passive NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers hold Jio Financial Services (JIOFIN IN) stock and will need to sell over the next few days.
• We estimate passive trackers will need to sell around 188m shares (US$487m) of Jio Financial Services (JIOFIN IN) next week and the stock could head lower in the short term.

• On 22 August, TSE Growth-listed insurance agent  FP Partner (7388 JP) announced a special dividend, a secondary offering of 1.4mm shares, and a move to TSE Prime.
• The equity offering is designed to raise tradable share percentage to meet the TSE Prime listing requirement. The move to Prime on 11 September means a TOPIX inclusion end October. 
• The pattern of “Offering To Get Float to Get TOPIX Inclusion” is well-trod. This one has some interesting dynamics.

• Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$174 million. The pricing is on 4 September, and the listing is on 20 September. 
• We previously discussed the IPO in Integral Corporation IPO: The Bull Case and Integral Corporation IPO: The Bear Case. 
• In this note, we discuss forecasts and valuation. Our analysis suggests that the indicative IPO price range of JPY2,800-3,400 per share is unattractive. We would give the IPO a pass.

• The KOSPI 200 INDEX has reached a tipping point: the previous Bull run trend is cracking, there is a high chance the index will drop.
• The current MRM WEEKLY pattern is bearish: if the index falls for more than 1 week it may tailspin into a 4-6 weeks correction in September.
• Cover your LONG holdings, support can be found at 325 (Q2), 315 (Q3) and 297 (Inner Fence).

• FUTU reported 2Q23 revenue 5.9%/13.5% vs. our estimate/consensus, non-GAAP NI beat our estimate/consensus by 9.9%/19.4%, mainly contributed by higher revenue from interest income due to continuous interest rate hike.
• Overseas expansion turns to be the primary focus. However, we think exploit new market is a bumpy and slow path, which cannot solve the near-term headwind on weak trading sentiment.
• We maintain the stock as BUY rating and maintain TP at US$55/ADS, which implies 12.6x PE in 2023, the stock currently trading at 11.3x PE in 2023, leaving 12% upside.

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
• Meituan
• Vedanta Resources

• MetLife delivered mixed results for the previous quarter, with revenues above analyst expectations but below-par earnings.
• MetLife reported adjusted earnings of $1.5 billion or $1.94 per share, showcasing underlying momentum in its core businesses.
• MetLife’s prudent investment portfolio management and risk management were evident in the well-controlled underwriting results and effective expense management.

Road King’s H1/23 results were mixed in our view. The company reported robust top-line growth, albeit gross profit plunged due to lower ASP of properties delivered. In addition, cash dividends from toll roads declined materially, owing to the non-renewal of the Tangjin expressway concession upon expiry in April.

Positively, Road King’s net debt continued to decrease, as it repaid borrowings using cash collection from property deliveries. The company could sustain its sales momentum in H2/23, as it is poised to launch the So Kwun Wat project (its sole remaining undeveloped project in Hong Kong) for sale.

We believe Road King will remain current on its obligations for the next 12 months. That said, the company’s medium-term prospects appear dim. Moreover, the small and dwindling land bank might suffice for only another two years of development. In the meantime, the company is likely to continue repurchasing offshore bonds.

We move our LARA to “High Risk”. We maintain our “Hold” recommendation on the ROADKG 2024 notes, but move to “Not Recommended” on the remaining notes.

• Regulators cleared state-backed bank card giant China UnionPay, the world’s largest provider of debit cards, to more than triple its registered capital to almost 10 billion yuan ($1.37 billion).
• Such a capital increase usually is intended to improve a payment institution’s risk control system and ensure the safety and stability of the business, a senior analyst in the payment industry said.
• People at UnionPay told Caixin that the capital increase was a distribution of unrealized shareholder equity and was a normal financial adjustment with no impact on its shareholding structure.

Deutsche Beteiligungs (DBAG) posted a 20% NAV total return in the nine months to end-June 2023, thereby recouping the valuation loss in FY22. The uplift to last carrying value from its recently agreed sale of R+S (implying a healthy internal rate of return of over 40%) contributed €14m to its net income in Q323. As a result, management now expects FY23 results to be at the upper half of its guidance of net income at €85–115m and NAV of €610–715m. DBAG’s asset management business delivered a profit of €11.3m in 9M23, on track to meet management’s FY23 guidance of €13–15m. DBAG’s shares currently trade at a c 15% discount to last reported NAV (with the latter not capturing the value of the asset management business).

• Yesterday, M&A Research Institute (9552 JP) announced it would list on the TSE Prime section on 29 August, which means it will join TOPIX at the close of 28-Sep-2023.
• This is NOT a surprise. On 27 June, the company announced a secondary offering of 1.631mm shares (by the founder/CEO), and said it had applied for TSE Prime transfer. 
• I take a look at how this could play out. 

• The recent 7% drop in Bitcoin’s value coincided with SpaceX’s announcement of selling off its entire $375 million worth of holdings.
• This event highlighted two crucial factors: the lack of liquidity in the market and the end of the bear flag counter-trend rally.
• Additionally, Binance Coin was already showing signs of breaking down, which could decrease the overall crypto market cap.

Shui On Land’s (SOL) H1/23 results were acceptable in our view, as the company reported improved revenue recognition from property sales and largely stable rental income. SOL’s operations remained strong, with robust demand for its project launches. Still, management retained its guidance for a 52% y-o-y decline in FY 2023 contracted sales, largely due to the timing of sale launches. Negatively, net debt climbed 8% from FYE 2022, as the company acquired a project in Shanghai during April.

SOL has tight liquidity. That said, it will likely have sufficient resources to repay the USD 500 mn bond coming due in November 2023. The company does not appear to be in immediate financial distress overall, despite negative news about its bondholder identification exercise last month.

• Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$175 million. The pricing is on 4 September, and the listing is on 20 September. 
• In Integral Corporation IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rest on the declining mix of fee-earning AUM, growth driven by volatile investment income and uninspiring 1HFY22 performance in fee-related revenue growth and margin.

• There is considerable worsening in net profit, including from key divisions
• Despite rising assets for Health and Life, profit in this core division is down a lot
• Banking exposure is significant, with a poor outlook, and making Ping An less pure

• Despite Headwinds Revenue Remains Relatively Stable at HK $1,968 million 
• For 1HFY2023–Total Buyback of 0.77 million shares (HK$2.3 million) at average price of $2.99 
• Stock at 0.25x tangible P/B and at 1.96x P/E on our FY2024 earnings estimate 

• Union Bank Of India (UNBK IN) is looking to raise US$301m from its qualified institutional placement (QIP). Included in the deal is an option to effectively double its base deal. 
• The deal is a relatively large one to digest with the base deal alone representing 21.1 days of three months ADV. 
• That being said, the deal here is a very well flagged one with the firm having earlier reported to look to do so to boost its free float.

• Kolte Patil (KPDL) reported record sales velocity in Q1FY24 and is on track to achieve 25%+ sales value growth in FY24 as per its stated guidance.
• Business development activity is also happening at a record pace and Kolte Patil is on track to beat its prior FY24 guidance of INR 8000cr by a wide margin.
• Despite 80%+ rise in the share price since our coverage initiation 2Y ago, Kolte Patil still offers an upside potential of 25%+ IRR over a holding period of three years. 

• SAMHI Hotels (SAMHI IN) plans to raise around US$200m (estimated) in its Indian IPO.
• Samhi is India’s third-largest hotel asset owner, by number of keys, with a portfolio of 25 operating hotel assets comprising 3,839 keys, as of Feb 2023.
• In this note, we will undertake a peer comparison and provide our thoughts on valuation.

• The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
• There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
• A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.

• 1Q23 shows strong Value Of New Business (VONB), not sure of profit flow through
• Comparative to 1H22 is easy vs loss of USD556m in the period, but risk to downside
• Despite, stock buybacks, increased dividends market cap down 34% since peak this year

• New release shows surge in Australia residential mortgage non-performing exposures QoQ
• From March 2023 to June 2023 these NPLs rose by 10.5% and this is not an annualized rate
• Its total NZ non-performing loans rose from AUD671m to AUD741m or 10.4% QoQ

• Integral Corporation (5842 JP) is looking to raise around US$175m in its Japan IPO.
• Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
• In this note, we talk about the positive aspects of the deal.

• Integral Corporation (5842 JP) is looking to raise around US$175m in its Japan IPO.
• Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
• In this note, we talk about the not-so-positive aspects of the deal.

• Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$175 million. The pricing is on 4 September, and the listing is on 20 September. 
• Integral primarily targets investments in Japanese medium-sized companies and invests its own capital both through investments in funds under management and through direct investments.
• The bull case rest on rising AUM, strong operating income growth, cash flow potential through material unrealised carried interest and solid potential returns on its principal investments.

Longfor’s H1/23 results were weaker than expected, with y-o-y declines of 35% in overall revenue to CNY 65 bn and 40% in revenue from property development to CNY 50 bn. That said, recurring income rose 10.4% to CNY 12.2 bn, which is becoming a meaningful annuity-like cash flow. This will be helpful in underpinning Longfor’s financial risk profile should there be a prolonged downturn in the property sector.

The company appears to have healthy access to bank funding, and should have sufficient liquidity to meet near-term debt maturities. That said, we highlight the risk of a potential reduction in the liquidity buffer, due to weak contracted sales and higher ST debt. Longfor recorded contracted sales of only CNY 7.6 bn in July 2023, compared to an average of CNY 11 bn per month in H1. ST debt surged 75% to c. CNY 39 bn, from c. CNY 22 bn at FYE 2022.

We maintain our “Hold” recommendation on the LNGFOR curve. The various notes appear to offer good value at current yields of 15-21%. That said, market technicals are very poor for private developers, with even the bonds of solid names such as Longfor experiencing volatility.

• Fundamentals of the German residential market our strong. The imbalance between demand and supply is widening.
• Overall message from IR is positive. Market is pricing a bearish scenario. As the interest rates environment stabilizes, we should see improvements in the German real estate market
• Trading at 61% to NTA. The market believes that the NTA that Vonovia shows is unsustainable in higher interest rate environment. The market remains very bearish. 

• Exceptionally low liquidity, macro factors, and a flurry of bad news were among the drivers of last week’s flash crash, pushing BTC to its lowest level in months and spurring a wave of liquidations across derivative markets. 
• While BTC 2% market depth has stabilized over the past few months at around 5k BTC, it remains more than 50% below its pre-FTX highs.
• As BTC prices began falling towards $25k around 8pm UTC on August 17, market depth dropped 50% to just 2k BTC.

• Evergrande’s filing in itself does not signify a deterioration in its financials; it was already insolvent as of end 2021.
• The bankruptcy filing provides the benefits of automatic stay and is a necessary step to validate the Group’s offshore restructuring plan. 
• Evergrande’s long term viability still depends on recovery of the China property market. 

• Atour reported 2Q23 revenue 9.5%/11.7% higher than our estimate/ consensus, which leads to non-GAAP NI 15.1%/21.1% higher than our estimate/ consensus respectively. Both retail and hotel business have positive contribution.
• We think the strong sales momentum in 2Q23 hotel business is likely to continue in 3Q23 due to the strong summer season but gradually eased in 4Q23. 
• We maintain the stock as BUY rating, and raise TP by US$1.5 to US$36.5 to factor in the better operating efficiency in retail business.

• Jana Small Finance Bank (3667144Z IN) is looking to raise up to US$100m in its upcoming India IPO. The deal will be run by Axis Capital, ICICI-Sec and SBI Capital.
• Jana Small Finance Bank (JSFB) is the fourth largest small finance bank in India in terms of AUM and deposit size as of FY23 (Year ended 31st Mar 2023). 
• The firm has served nearly 12m customers since 2008, including 4.57m active customers as of FY23.

• Concerning Australian tax-loss selling baskets, the sell across the four baskets made 4.2% vs ASX200 in May, then is up.
• Be long Japan Post Bank (7182 JP). Or longJapan Post Holdings (6178 JP) for a long JPB position. Don’t be short JPB or short JPB vs JPH.
• As a PRC aviation/defense play, AviChina Industry & Technology H (2357 HK)‘s fundamentals are undemanding. 

• AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions
• AUD610m of returned capital in past 12 months will see AUD140m added by October
• AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages

• This week, news broke that the oldest crypto market maker, GSR, has been scaling back operations – particularly in the U.S. – while a number of top executives have left the company.
• This is yet another hit to U.S. and global liquidity and volumes; in May, Jump Crypto and Jane Street revealed they were reducing crypto operations.
• This week, we’ll take a look at the state of the crypto market, including volatility, liquidity, and volumes, and then examine some budding narratives and tokens.

CoinShares International (CS) levererade ytterligare en solid uppsättning kvartalsresultat, med EBITDA på 12,8 miljoner GBP under andra kvartalet 2023 jämfört med 8,4 miljoner GBP under första kvartalet 2023. Kapitalförvaltningsverksamheten genererade avgiftsintäkter på 10,6 miljoner GBP (ned från 14,2 miljoner GBP under andra kvartalet 2022, men upp från 9,2 miljoner GBP under första kvartalet 2023) när det totala förvaltade kapitalet ökade till 2,14 miljarder GBP i slutet av juni 2023 från 1,44 miljarder GBP i slutet av 2022. Verksamheten inom kapitalmarknadsinfrastruktur (CSCM) redovisade en vinst på 10,0 miljoner GBP under andra kvartalet 2023, främst tack vare aktiviteter inom räntebärande tillgångar, staking och decentraliserad finansiering (DeFi). CS fortsätter att utveckla sin aktiva kapitalförvaltningsverksamhet och börjar med att köra sin första strategi för att generera ett track record före den formella lanseringen i slutet av 2023.