Financials

• Nexus Select Trust (NST IN), a consumption centre REIT, is seeking to raise up to Rs32 billion (US$392 million). The offer opens from 9-11 May. 
• We previously discussed the IPO in Nexus Select Trust IPO: The Investment Case. NST is sponsored by Blackstone Group (BX US). 
• Our valuation analysis suggests that the IPO price range is attractive. Therefore, we would participate in this IPO. 

• After the market close today, Kim Ik-Rae (Chairman of the Daou Kiwoom Group) announced his resignation of the Chairman position.
• Chairman Kim mentioned he has not done anything legally wrong. He will donate the entire amount (60.5 billion won) which was gained from selling 1.4 million shares of Daou Data. 
• We believe that Kiwoom Securities’ share price could fall additional 10-30% in the next several weeks/months. This could be offset by a large share buyback & cancellation by the company. 

• Derivatives markets in crypto are not only where the most speculation occurs, but also where many sophisticated investors place their bets, hedged or conviction-based.
• The directionality of these bets: long/shorts or puts/calls can give us great insight into investor sentiment in crypto markets particularly before and after big market events, such as a Fed meeting or the Merge.
• In this article, I’ll walk through the state of derivative markets in crypto right now, looking closely at Bitcoin and Ethereum first, before exploring some altcoins that are getting attention in futures markets, and finally looking at the exchange landscape in the derivatives market.

• China Fortune Land Development Co. Ltd said it successfully restructured more than 80% of its 219 billion yuan ($31.7 billion) debt overhang.
• The cash-strapped private developer returned to profitability after two years of liquidity crisis
• Hebei province-based China Fortune Land signed agreements with creditors to restructure 180.6 billion yuan of debts through various means by the end of 2022, accounting for 82.4% of total outstanding debt

• Nexus Select Trust (NST IN) is looking to raise around US$391m in its upcoming India IPO.
• NST is a REIT with a portfolio of 17 Grade A urban consumption centers. It is backed by Blackstone.
• In our earlier notes, we have looked at the company’s past performance. In this note, we talk about implied valuations in the IPO price range.

• Bank jitters touted to resurface in May with growth concerns topping falling inflation data. SPX MACD in focus as a key bearish driver.
• KRE bear break below 42 support targets 32.40 and will bleed into the SPX and the global cycle.
• MACD cycle trough expected near mid-June and will set the stage for a bull recovery. Until then we are selling bounces per our May/June negative cycle.

• Fiserv’s delivered a 30% return since October of last year, when I laid out my full investment thesis.
• Fiserv is laying the groundwork for long-term growth, says the company’s market commentators.
• The company continues to outmaneuver its direct competitors, according to analysts.

• Cycle: May/June a more negative cycle. Late April negative/ turn phase is unfolding with a squeeze surprise (2-3 session swing turns).  Sell SPX 4,200 top zone. 4,100 break will open up selling pressure. 
• RTY bear reversal at 1,790 resistance on track and the underperform favored US short.
• Euro wedge break would pick up slack as the USD/JPY rise stalls at resistance. Asian equity short, long updated levels.

• Two thirds of the way through the review period, we forecast two changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
• Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) could replace Jaymart PCL (JMART TB) and Ngern Tid Lor (TIDLOR TB).
• JMT Network Services (JMT TB) is a very close delete on market cap, while Intouch Holdings (INTUCH TB) is a close delete on liquidity. Multiple possibilities here.

• In the latest inning of the crypto credit crisis, real world banks like Silvergate was shuttered making the on-and-off ramp of crypto to fiat more challenging.
• Crypto lenders have already been decimated in the centralised lending space while DeFi lenders seem to trudge along – but are they the bastions of success? 
• We analyse what the current landscape means for the crypto lending industry and have a regrettable conclusion.

• Discounts to NAV of covered holdcos have generally tightened during April. Discounts to NAV: C.F.Alba, 51.3%; GBL, 32.3%; Heineken Holding, 16.4%; Industrivärden C, 7.7%; Investor B, 9.5%; Porsche Automobile Holding, 49.7%. 
• The spread of Rio Tinto DLC tightened to 16.8%. Rio Tinto is a candidate for an Australian top hat structure.
• Recommended trades: Heineken Holding, Investor AB (long Investor B/short main holdings) and Rio DLC.

• My prediction is the news cycle in crypto heats up over the next 6 months as bigger and bigger brands start experimenting or building solid propositions using this nascent technology.

• Almost every startup in the space I’ve spoken to over the last 6-9 months is looking to raise capital.

• And even though deal count as a metric has stabilised and actually seen an increase in Q2 2023, numbers still aren’t as strong.

Molten Ventures released its FY23 trading update (to end-March 2023), with its NAV per share down c 17% in FY23 to c 775p. That said, it posted only a minor 2% decline in its gross portfolio fair value in H223 (excluding foreign exchange impact), which indicates some stabilisation after the 17% decline in H123. Molten’s ‘Core’ portfolio (c 62% of total portfolio) saw a robust 40% value-weighted revenue growth in the calendar year to end-December 2022 (though below the expected 60-65%, partly due to greater focus on cash preservation). The company expects continued high top-line growth of its ‘Core’ holdings in 2023 at over 65%. Management highlighted that its ‘Core’ holdings remain well funded, with over 80% of them having a cash runway of more than 18 months.

• TUSD depegged on a number of exchanges yesterday, hitting a high of $1.20 relative to USDT on Binance.
• Binance has recently been promoting TUSD, making BTC-TUSD the only zero-fee pair on the exchange.
• This quickly made Binance BTC-TUSD one of the highest-volume pairs in all of crypto despite TUSD being relatively unknown amongst stablecoins.

• Nexus Select Trust (NST IN), a consumption centre REIT, is seeking to raise up to Rs32 billion (US$391 million). The offer opens from 9-11 May. 
• NST, sponsored by Blackstone Group (BX US), owns India’s most extensive portfolio of consumption centres and will be the first publicly listed consumption centre REIT in India.
• The key elements of the investment case rest on strong portfolio performance, high occupancy rates, favourable lease contracts, rental reversion potential and low tenant concentration risk.

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.

• Central China Securities
• Japfa Comfeed Indonesia

• Last year, Silchester International Investors wrote a series of letters to Bank of Kyoto management and then asked to put items on the AGM agenda. It lost. 
• A Bloomberg article last week suggests Silchester will ask for a ¥62 special div and a ¥5bn buyback this year. The Silchester letter is “due” by 30 April. 
• The Bank has already delivered most of the ask this year (¥3bn in upped div, and ¥5bn in buybacks). Silchester will lose. Expect no Conversion on the Road to Kasumigaseki.

• In a back to the 90’s, Deustche seeks to acquire UK corporate stockbroker Numis for a  350p/share package (72% premium, 2.1x P/BVPS, 15.5x on a smoothed-out P/E) via scheme of arrangement.
• The deal should bring deal flow to Deutsche Bank’s UK business. Mifid II may spark more consolidation across UK brokers. Readacross: Peel Hunt Ltd/Guernsey (PEEL LN) could become a target.
• Irrevocables are 27.2%. There’s no arguing with the premium and the deal should close. Spread is 2.63%/c. 4.93% (gross/annualised, assuming for simplicity all payments at settlement, around 15 November). Long.

• The ‘end of the dollar’ has been nigh since 2005.
• The U.S. dollar will be the last to go crash, says CNN.com’s John Sutter.com.com/Doom merchants are back.
• The end of thedollar has been in place since 2005, says Sutter.

• Yesterday Hokkoku Financial Holdings (7381 JP) came out with an odd decision to delay earnings from 28 April to 8 May. Volume traded. 
• Today, despite not reporting earnings, the Kanazawa-based regional bank announced a BIG buyback with subsequent share cancellation.  This was not unexpected. They have an aggressive policy which started last year.
• Hokkoku Bank policy introduced last year is special. It has worked. They are pursuing it. Expect more policy action like this as banks report. 

• Krung Thai Bank Pub (KTB TB) remains our pick; it ranks top in terms of post-provision profitability, screens well on NPL coverage, funding and valuations, including its attractive PEG ratio
• We also like Bank Of Ayudhya (BAY TB), with its sound pre and post-provision profitability in 1Q23, strong credit quality metrics and very attractive valuations
• Kasikorn has seen its high cost of risk come down in 1Q23, but this remains elevated versus its domestic peers; Kasikorn may be a 2023 opportunity, one for the watchlist

• First Pacific Co (142 HK), together with three other entities, are proposing to delist Metro Pacific Investments Co (MPI PM) at PHP 4.63/share, a 22% premium to the 12-month VWAP.
• The four bidders hold a combined stake in MPIC of 63.4%. The Offer is conditional on First Pac shareholder approval, a tendering threshold, and an MPIC shareholder vote.
• Elsewhere, First Pac continues to trade cheap to its NAV. Nothing new there.

• The recent matched order operation’s ringleader called in local major broadcasting companies for an interview and claimed the sell orders through SG on Monday were not from their CFD accounts.
• The trigger is Kiwoom Securities’ Chairman Kim, who created a continuous and rapid decline in stock prices and led to a vicious cycle of endless margin calls and covering orders.
• Rather than fishing for a bottom for the eight stocks from this point on, it seems necessary to actively design positions aimed at Kiwoom Securities’ legal risk-induced stock price decline.

• Metro Pacific Investments Co (MPI PM) disclosed a voluntary delisting tender offer from a consortium at PHP4.63 per share, an 8.7% premium to the undisturbed price (26 April). 
• The offer is conditional on shareholder approval and meeting the threshold for voluntary delisting (95% of outstanding shares) or obtaining an exemptive relief from the PSE.
• The shareholder approval and delisting threshold require around 73% and 86% acceptance rate, which is a risk as the offer is far from a knockout bid. 

• Bank Negara Indonesia achieved a strong set of 1Q2023 numbers despite moderate loan growth, where the headline masked some significant growth areas, whilst asset quality improvements led to lower provisions.
• The bank continues to stride ahead with its digital initiatives with a multi-touchpoint approach, which has led to increased transactions and a positive impact on CASA and hence funding costs. 
• Bank Negara Indonesia remains an interesting proxy to the overall Indonesian economy through its high exposure to corporate and consumer lending. Valuations are attractive on 1.1x PBV for 15% ROE.

• The best design often goes unnoticed. DeFi lending and borrowing stalwarts Aave and Compound have proven themselves to be great design: critical for day-to-day functioning but largely taken for granted.
• This becomes apparent when a competitor experiences an exploit, highlighting the reliability of Aave and Compound
• When last we checked in on these protocols in December they were in a period of change.

• Foreign shareholding has dropped in HDFC Limited and increased in HDFC Bank – the net effect is an increase in foreign room to just north of 18%.
• The merger is expected to complete in Q2/Q3 when there will be buying from MSCI trackers. There will be adhoc inclusions to the NIFTY, Nifty Next 50 and SENSEX indices.
• HDFC Limited (HDFC IN) trades 1.39% below the merger ratio with HDFC Bank (HDFCB IN) and also at a lower price to book.

• The EURO STX 50 Index is one of the most highly-tracked indices in mainland Europe and the annual index review takes place in September.
• Historically, these Rebalance events have had significant volume and ADV impact and they generally involve large cap names. 
• In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2023.

• Vonovia to sell €1bn residential portfolio to US investor Apollo. 
• The transaction could have a signal effect on the struggling German real estate market
• Share price is +13% since our initial note. This could be just the beginning of share price appreciation

• This is our first report on a regional lender that played the rate hike well with its high-quality deposit base – M&T Bank Corporation.
• Their interest-bearing bank deposits decreased from $41.9 billion to under $25 billion due to their repositioning the balance sheet to use surplus cash.
• We initiate coverage on the stock of M&T Bank Corporation with a ‘Buy’ rating.

• In this insight, we take a look at the potential ADDs/DELs for Thailand’s SET50 index rebalance in June 2023.
• I currently see 2 ADDs and 2 DELs but the next-in-line names are lurking close to the border.
• Thai Life Insurance (TLI TB) is one of these potential ADDs and there might be an interesting pair trade against Bangkok Life Assurance (BLA TB) for the next few weeks. 

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. 1) Response to key levels. 2) Price action. 3) Momentum confirmation.
• Bitcoin (XBTUSD) confirmed a meaningful top in the past 2 weeks when it rejected material MT resistance levels and completed a bearish weekly reversal pattern.
• With definitive bullish price and momentum triggers in play, we anticipate that a multi-week period of consolidation / correction will remain counter-trend. Searching for the next MT base towards 25200/25250. 

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. 1) Response to key levels. 2) Price action. 3) Momentum confirmation.
• Throughout Q4 2022 / Q1 2023 each material turning point has been confirmed by a definitive weekly reversal pattern. Last week produced a definitive bearish weekly reversal pattern. 
• Long-Term charts imply that MXEF has entered a sustainable multi- quarter uptrend. Last week’s bearish weekly confirmation however, confirms risk of a further counter-trend correction in the coming weeks.

• Late April capitulation turn unfolding on the SPX trendline break and RTY wedge support breach. We turned bearish (shorting) on April 18 just under SPX 4,200.
• A number of breakdown coming through in Asia – Korea’s bear impulse and Taiwan’s break of trendline support that turns the cycle to bearish. Japan will lag.
• SPX MACD bear turn is in line with our late April bear phase. A cycle trough is due in 6 weeks time (second week of June).

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.

• Road King Infrastructure

Simon Gergel at Allianz Global Investors has managed The Merchants Trust (MRCH) for the last 17 years. His disciplined fundamental investment process has proved to be a successful strategy as MRCH is ahead of its benchmark over the last one, three, five and 10 years. The trust’s NAV total returns also rank top out of 20 funds in the AIC UK Equity Income sector over the last three years. MRCH has a commendable dividend track record, having increased its annual payments for the last 41 consecutive years, and its yield is consistently above the level of the UK market. Gergel’s, and the board’s, confidence in the positive prospects for the UK market is illustrated by a higher level of gearing; the remainder of the trust’s debt facility was drawn down in November 2022.