Financials

• A previously published insight correctly highlighted an high-probability opportunity to go LONG and join the KOSPI 200‘s current multi-month Bull run.
• The index closed the week strongly up, now we want to evaluate how far this new leg up could go: a total of +3/+4 weeks up, price targets =359-385.
• Holders of KOSPI 200 LONG positions: Covered Calls can be written at Strikes between 346 and 360, expiry August 10th (4 weeks). A pullback is highly probable from 360.

• Nikkei 225 (NKY INDEX) has pulled back from its peak. Direction currently unclear but last week’s positive Close was super weak (+0.1%) , may lead to lower prices this week.
• If the index falls this week, a -1 or -2 weeks down is the most common pattern, followed by a rebound. Reversal probability is =75% for -2 weeks down.
• Valid support levels for buy-the-dips are between 32067 and 31554. If lower, up to -3 weeks down this pattern is still bullish, from -4 weeks it turns bearish.

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.

• Agung Podomoro Land
• Azure Power Global Ltd

• In this insight, we conducted fundamental analysis on Wharf REIC .  It has a simple business model that it operates key malls in HK including Harbour City and Times Square
• Macro-Wise, despite Wharf REIC should be seeing a recovery trend in terms of retail sales, the weak Chinese economy could pose concern on Wharf REIC’s retail sales
• Wharf REIC is also facing several headwinds such as high interest cost and weak office market in Hong Kong.  We view the re-rating potential limited despite attractive valuation

• This is our first report on one of the largest insurance companies, the Allstate Corporation.
• The company had a mediocre quarterly result and saw a 26% year-over-year increase in total revenues, totaling $13.8 billion.
• This was fueled by a rise in premiums, investment income, and realized capital gains, with total premiums showing a 9% year-over-year growth to reach $12.5 billion, driven by growth across all segments, especially the auto insurance segment which grew 11% year over year.

• This iThis is our first report on a global custodian and asset management behemoth, Bank of New York Mellon Corp.
• This After a surge in deposit balances following recent market fluctuations, BNY Mellon finished the quarter slightly higher than its starting point.
• The company’s broader liquidity platform, managing over $1.3 trillion of cash and short-term investments, witnessed growth in most channels.

• This is our first report on State Street, a prominent provider of asset servicing and other financial services in the U.S.
• The company experienced a varied market performance in the second quarter due to continued strength in developed equity markets, weakness in emerging markets, and a subdued market environment.
• State Street onboarded $1.2 trillion of Assets Under Custody/Administration (AUC/A) primarily through the State Street Alpha platform, underscoring its effectiveness.

• We expect Atour to report 2Q23 revenue and non-GAAP NI at 94% YoY and 259% YoY, which is 22% and 20% above BBG consensus respectively. 
• We expect Atour’s RevPAR in 3Q23/2023 increase to 110%/114% of corresponding 2019 level from previous estimate at 105%/112%. 
• We maintain the stock as BUY rating, and maintain TP at US$35 because the operational gains has been mitigated by FX loss in terms of valuation

• On 13 July, it was reported in the local media that the Korea Development Bank selected Hana Financial as the preferred bidder for the sale of KDB Life Insurance. 
• The potential overpaying for KDB Life and the rising delinquency rates of loans by all the major banks in Korea are likely to result in continued underperformance of Hana Financial. 
• If Hana Financial is able to acquire KDB Life Insurance, this would boost Hana Financial as the 8th largest life insurance company in Korea in terms of asset size.

• The S&P/ASX 200 INDEX has been stuck in the 7000-7400 range for the past 16 weeks.
• If the index continues to be trendless for some more weeks, it’s possible to profit from repeatedly writing Covered Calls against ASX 200 index holdings.
• Strike target areas for Covered Calls begin in the 7319-7409 (July 20 expiry). Deeper OTM Strikes are safe,  but the premiums are smaller.

• On July 7, HKMA announced measures to ease property based lending. The major changes involve relaxation of LTVs, according to property values
• We see these policies target the up-graders and will support the residential market. Housing price has been on a decline trend since early 2022
• Residential developers are trading at attractive valuation.  In particular, we see a lot of upside for 17 HK NWD and 101 HK HLP

• The discount to NAV of C shares is 7.4%, well below the “usual” 15% conglomerate discount, and also below the 5-year average of 10%.
• C shares are trading at a 0.3% discount to A shares. The reduction in the discount could be driven by acquisitions by the Lundbergs of C shares.
• My target NAV is SEK 158,144 million, a 18% increase. My target TP for the C shares of Industrivärden, assuming a 10% discount to NAV, is SEK 329.5 (15% higher).

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
• Central China Securities

• Marsh & McLennan managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• The company had significant growth in most of its businesses, market sectors, and geographical areas, with Marsh, Guy Carpenter, and Mercer all experiencing faster underlying growth than in the previous quarter.
• Guy Carpenter’s revenue was $1.1 billion, driven by solid growth in all areas and worldwide specializations, reflecting tighter reinsurance market conditions.

Martin Currie Global Portfolio Trust’s (MNP’s) relative performance is back on track following a tough 2022, when investors favoured value and cyclical companies rather than growth businesses. Manager Zehrid Osmani has remained disciplined, seeking high-quality, long-term growth companies, and has retained his five- to 10-year investment horizon. Over the last decade, the trust has generated robust double-digit absolute annual NAV and share price total returns of 10.3% and 10.6% respectively. Within the AIC Global sector, MNP’s NAV total returns are above average over the last one and five years.

• Utkarsh Small Finance Bank (1639303D IN) IPO opens for subscription this week.
• The company currently is fifth largest SFB in India and has demonstrated robust growth in loan portfolio, deposits and improved productivity in the last two years.
• However, one must be cautious of the write offs worth INR 6 bn done in the last two years which benefitted the NPAs

We view Vista Land & Lifescapes (VLL) as “High Risk” on the LARA scale. This is mainly in consideration of the company’s weak financial profile, with high leverage and inadequate Cash/Short-term Debt coverage. Moreover, there are large ongoing related-party transactions. Positively, the company enjoys high margins. It also has a sizeable portfolio of investment properties and long-term securities investments, which supports the balance sheet and provides recurring income.

Our fundamental Credit Bias is “Negative”, considering the company’s track record of negative FCF generation and inadequate liquidity. Moreover, the challenging macroeconomic conditions (with rising costs and interest rates) may impact its margins and financing costs. That said, we believe VLL has good access to funding, which mitigates its debt repayment risk. In addition, we believe the controlling shareholders have a strong incentive to support VLL if needed.

We initiate coverage with a “Hold” recommendation on the VLLPM notes. We deem the yield unattractive. That said, market technicals appear robust, possibly supported by demand from private banks and local investors.

• Block’s share price has remained relatively flat over the past year, but that’s hardly good news.
• The highly supportive outside environment was not able to propel the share price anywhere near its previous highs.
• When adjusting for risks, Block remains as one of the worst performers within its peer group, according to analysts.

• Pioneer Credit Limited (ASX:PNC) was founded in 2009 and listed on the ASX in 2014.
• The company has grown to be one of the leading acquirers and managers of impaired credit in Australia by; maintaining strong customer engagement, an unblemished compliance record with ASIC, consistently good Net Promoter Score from customers and strong relationships with Australia’s largest bank and non-bank lenders.
• PNC currently purchases debt from 18 different vendor partners with long-term partnership purchasing arrangements in place with Commonwealth Bank of Australia (ASX:CBA). 

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.

• Agung Podomoro Land
• Shui On Land

• A cyclical pivot within the retail space is likely as consumer sentiment in the U.S. and the United Kingdom has started recovering.
• Receding market risk premiums could lend the REIT the necessary latitude to gain value.
• Today we turn our attention to Realty Income Corporation (NYSE:O), a retail-centric Real Estate Investment Trust (“REIT”) known to many as the “monthly dividend company.”

• MetLife delivered a disappointing set of results as the company was unable to meet the revenue as well as the earnings expectations of Wall Street.
• The company achieved substantial revenue growth in the majority of its main businesses and markets, including Group Benefits, Asia, and Latin America.
• Furthermore, adjusted earnings for Retirement and Income Solutions was $400 million, a decrease from the previous year due to reduced variable investment income.

• Last week, bankrupt crypto lender Celsius gained court approval to convert its altcoin holdings into more liquid BTC and ETH as part of its restructuring plan.
• The company has reportedly moved some of its holdings to market maker Wintermute and stablecoin issuer Paxos.
• As of end-March, Celsius held more than $2B in BTC, ETH and stETH and a mixed bag of liquid and illiquid altcoins, including $240mn of its own CEL token.

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 SCE
• Hopson Development
• Reliance Industries
• Sino-Ocean Service
• Vedanta Resources

• Progressive Corp delivered a mixed set of results in its most recent result, with revenues above Wall Street expectations but below-par earnings.
• The growth in new applications represents an increase in quotes from the current shopping in the marketplace as well as an increase in the convention.
• This resulted in increasing reserves as well as reach with increases in rate.

• The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.
• It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world’s most credible “green” economies, not a regulatory force-fix of something broken.
• No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.

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 Jinmao Holdings
• Sunny Optical Technology Group
• Tata Motors ADR
• Vedanta Resources
• Yanlord Land

• The bitcoin halving is officially insight, expected to occur in late April 2024.
• Unlike bitcoins competitors for money like the US dollar or British pound, its monetary policy is programmatic, simple, immutable and transparent to its holders.
• The upcoming halving will reduce the block subsidy to 3.125 BTC a block, trimming bitcoins issuance rate to 0.9%.

• Xiamen International Investment (1567256D HK) is looking to raise up to US$1.3bn in its upcoming HK IPO. The deal will be run by CICC, Citic Securities, Huatai and Industrial Securities.
• Xiamen International Investment (XII) is an integrated financial services group based in China’s Greater Bay Area. 
• The Group has two commercial banks headquartered in Hong Kong and Macau, respectively and operates through its two banks Chiyu Banking Corporation (CYB) and Luso International Banking (LIB).

• The Hong Kong Hang Seng Index (HSI INDEX) has been in a downtrend since January 2018. Long-term direction unclear, but the WEEKLY period is mildly OVERSOLD, it may bounce soon.
• The case for a LONG trade is valid if the market does not fall > 2 consecutive weeks from June 30th’s Close (18916.43). High-probability LONG trades from 17786.
• SHORT trade strategy possible but requires patience: if the market rises, it could rise for 2-3 weeks, based on MRM’s pattern readings. Better wait and short that scenario, not earlier.

• Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
• The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
• There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.

• The monthly profit figures at Taishin are rising substantially, suggesting a strong 2Q23
• Taishin’s LDR had declined dramatically in 1Q23, monthly figures may suggest expansion
• With declining credit costs, to match lower NPLs, the outlook for Taishin’s profit is strong

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. Greentown China
2. First Pacific Co
3. Vedanta Resources
4. China Jinmao Holdings
5. Lifestyle International Holdings

and more…