Financials

• BFI Finance Indonesia management recently confirmed its expectations for receivables growth of +20% YoY this year, which looks conservative after a strong start to the year, with +53.9% new-financing growth. 
• The company booked a strong set of 1Q2023 numbers with strong new bookings growth,  improving net interest spreads, low NPLs, and an ROE of over 22%
• BFI Finance Indonesia has the lowest cost of funds of the multi-finance companies in Indonesia, with a long track record of strong risk management, and remains a top pick.

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
• KWG Living Group

• Last week, Binance announced that it would restrict trading of privacy tokens for users in France, Italy, Poland, and Spain starting June 26.
• This follows similar de-listings by Huobi, OkCoin, Bithumb, and Upbit.
• As the name suggests, privacy tokens are designed to allow users to transact anonymously, rather than pseudonymously.

CoinShares International (CS) har gått vidare från oron på marknaderna för digitala tillgångar under 2022 och har levererat Q123 EBITDA på 8,4 miljoner GBP, med ett meningsfullt positivt intäkts- och inkomstbidrag från både dess passiva kapitalförvaltningstjänster (9,4 miljoner GBP) och dess egenutvecklade handelsaktiviteter (6,7 miljoner GBP). Det upprätthåller en försiktig kostnadshanteringsmetod, med administrativa kostnader (inkl. D&A och direkta kostnader) på 7,6 miljoner GBP under Q123, en minskning med cirka 22 % jämfört med föregående år och i stort sett jämförbara med 7,9 miljoner GBP under Q422 (exklusive en goodwillnedskrivning). Det handlas nu till 0,8 gånger sitt bokförda värde i slutet av mars 2023.

• With the inception of the pandemic, borrowers have largely been wrestling with financial distress, compelling fintech companies like SoFi technologies, which banks on student loan financing, to largely reimagine their business model.
• SoFi has moved away from its core business over the past three years, instead casting a wider net, extending its services to include diverse financial products, personal loans, and its banking-as-a-service business targeting enterprise customers.
• In 2023, SoFi has had to grapple with mounting external pressures emanating from a slowing economy.

• USD rise met tactical rally objectives. USD dip/rally sequence in play with a focus on adding to the USD near DXY 103 and gunning for 105.80.
• Euro, NZD, AUD. USD/JPY. ZAR. Re cycle game plan. Sterling and SGD our USD dip bets to overlap with USD long reduce zones.
• US 10yr 3.80% yield top call with 3.40% pocket support. Yield will be pivotal in a near term USD dip sequence.

• The June 2023 regular rebalance index changes for the SE600 index and the EURSTX index were announced after the close yesterday.
• There are 8 ADDs/DELs for the SE600 index and 3 ADDs and 2 DELs for the EURSTX index.
• In this insight, we take a closer look at our final index flow expectations for June 2023.

For our next Corporate Webinar, we are glad to welcome BHG Retail’s CEO, Chan Iz-Lynn.

In the upcoming webinar, Iz-Lynn will share a short company presentation after which, she will engage in a fireside chat with Smartkarma Insight Provider, Osbert Tang, CFA. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Tuesday, 06 June 2023, 17:00 SGT/HKT.

About BHG Retail REIT

Listed on Singapore Exchange Securities Trading Limited, BHG Retail REIT has a diversified portfolio of six retail properties strategically located in major cities in China, namely Beijing, Chengdu, Hefei, Xining and Dalian. BHG Retail REIT’s asset portfolio consists of community focused retail properties situated in high population density areas frequented by growing middle class professionals and families. Designed as lifestyle destinations, each multi-tenanted mall features a compelling mix of shopping, dining, education and entertainment establishments.

• SPX kissed our 4,250 overshoot zone to unwind our 4,120 long. A case of selling the fact as Euphoria fades and reality sets in.
• RTY remains our top US short and is underperforming the SPX. 1,710 near target with a June bias to crack this pivotal support.
• US 10yr yield met our rally and sell target at 3.80%. Macro take was to sell yield at 3.80% to test pocket support. USD will lag.

• In this insight, we take a look at Quiddity’s final predictions for index changes for the  F100 and F250 indices for the June 2023 Rebalance.
• The index changes are likely to be confirmed after market close today.
• We expect one change for the F100 index and six changes for the F250 index.

• Broker Mason Financial Holdings (273 HK) is suspended pursuant to the Hong Kong Code on Takeovers and Mergers. 
• Shares are down 95% from its June 2015 peak, and 54% since the onset of Covid. The company last turned a profit in 2018.
• The largest shareholder is the chairman of Shimao Group (813 HK).

• With the review period complete, we see Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) being added to the SET 50 Index in June.
• Jaymart PCL (JMART TB) is a certain deletion from the index while the second deletion will be determined on the criteria used for liquidity or on market cap.
• JMT Network Services (JMT TB) was deleted from the MSCI Thailand index yesterday and could be deleted from the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) next.

• For the month of May, 8 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$15bn.
• The average premium for the new deals announced (or first discussed) in May was 32%.
• This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

• As projected, Nesco’s BEC business has completely normalized and clocked INR 45cr+ revenues in Q4FY23. With this, Nesco clocked FY23 PAT of INR 290cr+, well above our INR 250cr+ estimate.
• Alongside the BEC business, Nesco’s foods business has also seen significant recovery led by footfalls from the BEC. Independent of BEC also, Nesco Foods is growing significantly on its own.
• Nesco is on track to earn PAT of INR 320cr+ for FY24, suggesting that at the current market cap of INR 4250cr, it is valued attractively at 13x P/E.

• Kolte Patil delivered on the optimistic expectations for Q4FY23 which led to a stellar close for FY23 with all-time-high pre-sales and robust deliveries.
• Its flagship project, Life Republic, was at an inflection point as outlined in our original thesis. It contributed immensely in FY23 and is now all set for accelerated growth.
• Despite high base of FY23, Kolte Patil is all set to post a strong FY24 with 25% pre-sales growth, led by new launches and strong sustenance sales.

• The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
• The largest inflows will be on Meituan (3690 HK), JD.com (9618 HK), Zijin Mining (2899 HK), Baidu (9888 HK), Trip.com (9961 HK) and JD Logistics (2618 HK). 
• The largest outflows will be on HSBC Holdings (5 HK), Li Auto (2015 HK), Kuaishou Technology (1024 HK), China Construction Bank H (939 HK) and NetEase (9999 HK). 

• LICHF reported a strong Q4FY23 with a PAT of INR 1180cr. This takes the FY23 PAT to INR 2891cr, well above our estimate of INR 2700cr.
• Asset quality worsened as Stage 2 assets increased to 5.25% vs 3.92%. However, this is temporary due to one-off interest rate hike related technical issues in EMI payments.
• LICHF has guided for a strong FY24, led by margin expansion and AUM growth. As credit costs remain benign, profitability should jump significantly.

CoinShares International (CS) has moved on from the turmoil in digital asset markets in 2022 and has delivered Q123 EBITDA of £8.4m, with a meaningfully positive revenue and income contribution from both its passive asset management services (£9.4m) and its proprietary trading activities (£6.7m). It maintains a prudent cost management approach, with administrative expenses (incl. D&A and direct costs) of £7.6m in Q123, down c 22% y-o-y and broadly comparable with £7.9m in Q422 (excluding a goodwill write-down). It now trades at 0.8x its end-March 2023 book value.

• kopi-C with Heeton Holdings’ CEO: “Property development fascinates me” When Heeton Holdings’ chief executive Ivan Hoh first took over the company’s reins, he was gunning for change, ready to expand the company’s property portfolio.
• Established in 1976 and listed on Singapore Stock Exchange in September 2003, Heeton Holdings Limited is a real estate company focused on property development, investment and management, and hospitality.

• U.S. Bancorp stock remains severely overvalued, according to a top-down analysis.
• The firm’s non-interest-bearing income is facing troubles as mortgage applications and corporate activity is slowing down.
• The analysis contradicts a bearish outlook, but the observation is isolated and carries little substance.

• Rakuten Bank’s imminent TOPIX index inclusion is a further share price support, to a neobank with a fundamentally attractive outlook
• Rakuten Bank trades on a LTM PE multiple of 10.9x, LTM PBV ratio of 1.5x and an ROE of 13.8%, the best ROE to PBV ratio of its neobank peers
• Aside from its premium long-run growth prospects and low prospective PEG ratio, Rakuten Bank is also the lowest cost to serve Japanese neobank

• Besides COLI, we also like CRL, being another SOE play (no bankruptcy risk), with dual growth engine from residential development business and shopping mall business
• Major share price drivers includes its contract sales trend, retail sales, rental performance as well as property policy from government
• CRL is trading HKD30, there is no placement risk until it trades at HKD HKD39 (P/B =1x).  We recommend buying if stock trades <HKD35 as a technical indicator

• The Web3 era, characterised by a decentralised internet and blockchain technology, presents opportunities and challenges in equal measure.
• Prominent among these challenges are security and usability issues, which demand a high degree of attention and innovativeness.
• Safe, formerly known as Gnosis Safe, a programmable smart contract account, stands at the forefront of this innovation, offering a multitude of benefits that greatly enhance the user experience overall. 

• Since the collapse of FTX last year, there has been little good news on the liquidity front for crypto assets.
• The shutdown of the Signet and SEN fiat settlement networks in the US severely impacted market makers operational efficiency.
• This can be seen in 2% market depth for ETH, which dipped in March and has failed to recover to pre-FTX levels.

• Multi Commodity Exchange India (MCX IN) has been having troubles at the bottom-line due to transaction fees, delay of commodity derivatives platform, etc. which is not totally within its control.  
• However what warrants attention is the investment yield that has dropped considerably in FY22, coupled with the non-traceable interest income from the bank deposits, which has affected the margins.
• Other forensic takeaways include no-provisioning of doubtful debts and misstatement of cash flows.

• In this insight, we explore the investment thesis and major share price drivers for 688 HK
• COLI saw share price weakness, and is trading at 0.46x P/B.  Potential risks are 1) fail to meet 20% growth target 2) slower than expected land acquisition
• We see value emerging from the stock, and recommend BUY as long as the stock trades below HKD20 (as a technical indicator)

• We add value play Bank of Baroda to the peer group, and to our buy list; we also add liquidity and funding screens and a PEG ratio valuation metric
• We keep HDFC Bank as our higher quality bank, with its strong balance sheet, especially on NPA coverage, and further positive momentum from the upcoming HDFC merger
• We remain negative on State Bank of India, and we are also cautious on ICICI Bank; Axis bank remains a name to watch, although valuations are far from compelling

• There continues to be little traction above $93 on MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range. Important downside targets are $86, $84, and $75-77.
• Additionally, the EURO STOXX 50 remains below 2-year resistance at 4400-4415.
• We remain overweight Europe, Japan, and India, and we prefer to only add exposure on a pullback — especially in Japan where indexes are bullish yet extended.

S&U, the specialist motor and property finance lender, reported a good start to the financial year with profit before tax (PBT) up £0.3m in the period to 24 May despite group borrowing costs increasing by £3m versus the same period last year. A new £230m funding facility has increased total funding facilities to £280m, giving the group just under £100m to fund its growth plans over the next two years. Although rising interest rates are a headwind, credit quality remains strong, and S&U expects growth to continue in FY24. Our estimates remain unchanged.