Financials

• Remitly is a digital international money transfer company competing with traditional providers like Western Union and MoneyGram.
• Mario Sabelli sees Remitly as potentially becoming the “booking.com of the digital remittance space.”
• He believes Remitly is well-positioned to dominate the market due to its scale and competitive advantages over legacy competitors.

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Attacq is a diversified real estate investment trust (REIT), which generates revenue from a ZAR22.9bn investment property portfolio made up of shopping centres, collaboration hubs (offices), logistics, hotels and data centres in South Africa. It also taps into its huge land bank and 1.4 million sqm of bulk with development rights in various sectors to build residential properties for sale. Attacq’s gross revenue for FY24 increased 6.9% to ZAR2.6bn, largely bolstered by rental income growth of 8.8% to ZAR2.5bn. Distributable income per share (DIPS) came in at 86.2c, up 19.9% y-o-y, above management’s previous guidance. Attacq has provided DIPS guidance of 103.4c for FY25, which implies an 82.7c dividend per share, given the 80% payout ratio. The stock is trading at a price to NAV multiple of 0.7x, with a dividend yield of 5.3% and a shareholder yield of 31.8% (sum of dividend yield, share buyback yield and net debt repayment yield). The share buyback and net debt repayment yields are 0.6% and 25.9%, respectively, although the shareholder yield has benefited from asset sales.

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.

• Adaro Energy
• China Vanke
• Greentown China

• Sales increased to JPY34.0bn (+136.2% YoY), with an operating profit of JPY2.9bn (+84.4% YoY) and net income of JPY1.6bn (+79.3% YoY).
• Wholesale Sales segment saw sales rise by 355.7% YoY and operating profit by 66.6% YoY, with a 7.3% profit margin.
• Real Estate Management segment achieved sales of JPY2.0bn (+62.9% YoY) and operating profit of JPY925mn (+437.0% YoY), with a 45.9% profit margin.

• RaaS Research Group has published an update on ethically-motivated, diversified financials group Pioneer Credit (ASX:PNC) following the company’s FY24 result in which it delivered NPAT adjusted of $1.2m.
• Our base case valuation has increased to $263m (previously $217m) or $1.96/share reflecting improved financing.
• We model a range based on a number of factors giving us a low case of $1.84/share and high case of $2.23/share.

• DAM Capital (930970Z IN) is looking to raise at least US$100m in its upcoming India IPO. The deal will be run by Nuvama Wealth.
• DAM Capital provides a range of financial solutions in investment banking comprising equity capital markets, mergers and acquisitions, private equity, structured finance advisory; and institutional equities comprising broking and research.
• According to CRISIL, DAM Capital was the fastest growing investment bank in India by revenue CAGR from FY22-24 along with the highest profit margin in FY24.

• TradFi shows resilience, while crypto struggles—BTC is down, and ETH underperforms US Treasuries.
• Powell’s Pivot promises hope, but crypto markets await the real demand catalyst for recovery.
• Despite market weakness, short-term opportunities exist—learn to navigate price action and volume dynamics.

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
• Continuum Green Energy
• Sands China

Partners Group Private Equity received a strong €103.7m in realisation proceeds in H124 (c 11% of opening NAV). Proceeds of €70.2m came from the successful sale of SRS Distribution to Home Depot at a more than 30% uplift to the previous carrying value (contributing to Partners Group Private Equity’s 4.1% NAV total return in H124), which resulted in a healthy gross multiple on invested capital (MOIC) of over 5x since its investment in this business in 2018. There are a number of exit candidates in the company’s portfolio, with 29% of its current investments by value held at a gross total value to paid-in capital multiple of more than 2.0x.

• Our long-term outlook remains neutral on the S&P 500 (SPX) as of our 8/6/24 Compass, after being bullish since early-November 2023.
• Since late-July discussed expectations for a 1-to 4-month pullback/consolidation on SPX and QQQ; now it’s likely to last closer to four months, and potentially 4- to 6-months from 7/17/24.
• At that point the market will decide which way this consolidation resolves. Throughout this pullback we have said that this consolidation could end up being a significant topping pattern.

• Since the release of our Crypto Moves #42 on Friday, the market experienced further declines but has since regained some of its lost ground.
• Our outlook remains unchanged: at best, the market will move sideways throughout September, and at worst, we may see further declines.
• However, starting in October, the market will most likely show signs of life similar to those we saw in the early months of this year.

• We reiterate our buy on CIMB; management continues to drive credit quality with cost of risk improvements, and we see potential for operating efficiency gains, combined with its attractive valuations 
• We downgrade Maybank to a neutral from buy, largely on the back of valuations and its middle-of-the-peer-group pre- and post-provision return trends, with its efficiency ratio requiring attention 
• We believe that AM Bank is a name to watch for its low valuations as well as its improving cost of risk trends and profitability returns

• Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK), two of China’s leading state-backed brokerages, intend to merger via a share swap, subject to regulatory approvals.
• Via a Merger by Absorption. GJS will issue new A and H shares to Haitong shareholders. The ratio hasn’t been firmed. Upon completion, the MergeCo creates China’s largest securities entity.
• A merger is welcome – possibly mandated – amid challenging capital markets and a tightening regulatory backdrop.

• K Bank is the biggest IPO in Korea in 2024. The IPO price range is from 9,500 won to 12,000 won. It is offering 82 million shares in this IPO.
• According to the bankers’ valuation, the expected market cap of the company is from 4.0 trillion won to 5.0 trillion won.
• The IPO deal size is 779 billion (US$579 million) to 984 billion won (US$732 million). 

• Bajaj Housing Finance (BHF IN) upcoming IPO is worth INR 65.6 bn, comprising of fresh issue worth INR 35.6 bn and offer for sale worth INR 30 bn. 
• The company reports strong KPIs and has been better than peers in several aspects. AUM growth is strong and is driven by Developer Financing and Lease Rental Discounting. 
• There are few important cautions regarding the NHB observations and assignments.

• Pub play Hotel Property Investments (HPI AU) has announced – and summarily rejected – a A$3.65/share cash Offer from Charter Hall Retail Reit (CQR AU).
• Terms are a 14.8% premium to the undisturbed share price on March 28; following which a 14.8% “strategic interest” (@ A$3.35/share) was acquired by CQR and Charter Hall (CHC AU).  
• The Offer is subject to a 50.1% acceptance hurdle. The Offer should be open for acceptances around the 23 September.

• To justify a higher multiple, K-Bank is comparing itself to international internet banks, with KakaoBank as the only local peer. Differences in market conditions could complicate this comparison.
• This might explains why K-Bank is cautiously testing the market by announcing the rights issue first and delaying the prospectus, amid regulatory crackdowns on inflated IPOs.
• Controversy over high multiples from overseas peers and KakaoBank’s legal discount will be key in setting K-Bank’s IPO pricing.

• Markets experienced significant volatility in response to comments from New York Fed presidents and Governor Waller, resulting in pricing of around 30 basis points for the September meeting
• Labor market data suggests softening, with revisions showing a decline in private sector payroll growth, indicating a shift towards imminent Fed easing
• Opportunities in Treasuries lie in steepeners, with a focus on front end steepening and potential for further broadening of the steepening trend as the Fed moves towards easing.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Back on the 23 June 2024, property developer Midea Real Estate Holding (3990 HK) announced the in-specie distribution of its core ops, either in unlisted scrip, or HK$5.90/share in cash.
• The in-specie involved distributing 97.8% of Midea’s assets (involved in property development and sales); accounting for 95% of revenue and ~91% of profit. All figures as at FY23.
• Midea went ex yesterday, closing down just HK$4.87/share. Midea, ex-in-specie, is currently trading at a trailing 0.6x P/B, and 2.3x PER. Pricing looks full.

• The NIFTY Index closed down last week, but if the rally restarts from here it would be good to analyse the pattern trend, to estimate how high it could go.
• The current WEEKLY pattern favors uptrend that last for 2 or 3 weeks up in a row, on average, and up to 5 consecutive weeks up in a row.
• Some additional reasoning is necessary to highlight the strongest resistance levels, we will do it in the insight.

• Austin from Solana tweeted about Solana’s new network extensions
• Kyle Samani discussed how Solana rollups will differ from Ethereum’s
• Prasad observed developments in Solana rollups, including SVM separation and new apps like Magic Block and Spicenet.

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Martin Currie Global Portfolio Trust’s (MNP’s) performance was negatively affected in 2022 by the shift in interest rate expectations as US rates quickly moved up from 0.25% to 5.50%, in response to rising prices. Now, with inflation coming down, the consensus view is that US interest rates will soon be lowered, which should be beneficial for the valuation of long-duration growth stocks. Also, Zehrid Osmani, MNP’s manager since October 2018, has a proven track record of successful stock picking during periods when the stock market is driven by company fundamentals rather than when investor focus is on macroeconomic developments. Hence, Osmani has a high degree of confidence that there are better times ahead for MNP’s performance.

• On 6 September, Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) entered a legally binding agreement to merge through absorption and share exchange. 
• The high-profile merger aligns with the Chinese government’s ambition to reform the brokerage sector and create world-class investment banks. The merger would result in the largest China broker by assets.
• In this note, we evaluate the potential share exchange ratio and the risks to satisfying the conditions for implementing the potential merger.

• Affirm Holdings recently reported its Fourth Quarter Fiscal 2024 Earnings and the management emphasized the company’s robust performance both in terms of growth and profitability for the fiscal year.
• The discussion underlined Affirm’s management’s ability to leverage technological advancements, particularly in artificial intelligence and machine learning, to maintain control over credit outcomes, which they describe as an intentional result of their strategies.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Late week Equity weakness pulled IVs off Summer Lows – IVs back at 14.0%. A dose of skepticism is required, given End-of-Summer Seasonality effect. 
• PCR drops to 0.92 & put-strike OI looks weak as weekly expiry rolls to 12.09 date – likely contributing to index’s inability to hold support levels.  
• Vol-Regime Switching Model held back from switching to Low-Vol state, highlighting sticky nature of “High & Down” Vol-state. Retain Short Vega & Skew-selling bias.

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

• Post merger, HDFC Bank (“HDFCB”) has been under pressure in regards to sustaining its loan growth, which very much hinges on rapid deposit growth.
• While the deposit growth has been weak, it has been an industry-wide issue. Furthermore, at times, the period-end numbers can be misleading.
• Focusing on average numbers paints a better picture of growth. Looking at the averages, deposit growth has been strong at 4.6% QoQ, despite liquidity issues in the banking system.

• Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage
• We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
• Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward

EML Payments’ FY24 results were the first to show the full impact of the liquidation of PFS Card Services Ireland Limited (PCSIL). Continuing operations, which exclude PCSIL, saw gross debit volume (GDV) growth of 18%, revenue growth of 18% and underlying EBITDA growth of 34%. The sale of Sentenial has since completed with proceeds of A$53.4m, moving EML to a net cash position. Management is now focused on moving back to a growth mindset in the remaining business and optimising the cost base post the disposals. Shifting away from the medium-term targets given in February, management expects to disclose more at its AGM in November. We have reduced our FY25 forecasts to reflect the more modest EBITDA guidance and to remove the Sentenial business.

• The KOSPI 200 has corrected for 3 weeks in a row, reaching a low at 340.08 last week. It is WEEKLY OVERSOLD, according to our models.
• In a previous insight we theorized the index could go higher (but only for 1 week), however the rally never materialized. From there it went downhill, now it can bounce.
• The support area between the last Close and 320 offers strong support, according to our WEEKLY pattern models. 

• 0.08x P/B. That’s where New World Development (17 HK) is currently trading. Less than half the P/B of the next comparable real estate peer.
• So, what’s going on? Announcing an expected HK$19-20bn loss for FY24 last week didn’t help matters. Shares are down 14% this week and 85% since Covid.
• Landlords need to drastically cut rents to jumpstart the retail sector. That translates to further impairment losses for property developers. 

• S&P MidCap 400 additions by transition require market cap, float cap, sector balance, liquidity and earnings as parameters for inclusion.
• The highest combined score from the parameters is given to CVNA, HOOD, LPLA and ENTG which makes them acceptable candidates for addition. 
• Ensign Group (ENSG US) and Mueller Industries (MLI US) have the highest probability of being added out of the migrations. Market cap of migration candidates is estimated to be insufficient.

• This Insight focuses on lenders operating in consumer finance, including MSME-focused NBFCs. 
• Companies in focus include Bajaj Finance Ltd (BAF IN), Poonawalla Fincorp (POONAWAL IN),SBFC Finance Limited (SBFC IN) & MAS Financial Services Ltd (MASFIN IN). 
• We also cover high yield lender Five Star Business Finance (FIVESTAR IN).  

Shui On Land’s (SOL) H1/24 results were weak, as the company reported reduced earnings, higher net debt and weaker leverage. Positively, rental income continued to grow. As a result, recurring operating income from rentals and property management covered 0.9x of interest expense for LTM June (FY 2023: 0.8x). In addition, asset values were stable, with consolidated investment properties covering 1.7x of net debt. We expect cash flows to improve in H2/24, supported by the planned delivery of two projects.  

That said, liquidity is poor. We view negatively management’s cautious tone during the earnings call. Going forward, we believe that SOL could seek to monetise its 100% stake in its property investment and management arm, Shui On Xin Tian Di. In addition, the company may raise fresh funding by further increasing the LTV on its investment property portfolio to the maximum of 45%, albeit this is uncertain (depending on its arrangements with banks). SOL may also carry out more asset sales.

Meanwhile, we believe that the company may be considering potential liability management exercises for the USD bonds in the event it fails to obtain sufficient financing for repayment.

• Bajaj Housing Finance (BHF IN) is looking to raise around US$800m in its India IPO.
• BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
• In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.

• AP Liberty (Apollo) is looking to raise US$318m from trimming its stake in Challenger Ltd (CGF AU).
• Apollo’s stake in the firm dates back to Jul 2021, when the investor first acquired a 18% stake in the firm for A$720m. 
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Sanergy (2459 HK), a graphite electrode manufacturer, was added to the MSCI Small-Cap Index on 30th August; and was due to enter the Hang Seng Composite Index on 9th September.
• However, the SFC announced a concentration warning on the 2nd September. Shares promptly cratered ~98% yesterday (the 3rd September). Expect the HSCI inclusion to now be yanked.
• This Sanergy debacle should refocus investors on other heavily concentrated stocks, such as Jinhai Medical (2225 HK), in which GoFintech (290 HK) (another heavily concentrated stock) has inexplicably been buying. 

• The GoI is looking to raise up to US$600m from selling its stake in General Insurance Corp Of India (GICRE IN).
• Earlier in Apr 2024, there were media reports indicating that the GoI planned to offload a 10% stake in the insurer over multiple tranches.
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Nubank is the leader in digital banking in Latin America with high potential for earnings growth and market penetration
• Lower expenses and higher customer satisfaction due to digital-first approach compared to traditional banks
• Cost to serve is 85% lower than competitors due to lack of physical branches, leading to high customer preference and strong growth prospects

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• kopi-C with Far East Orchard’s Group CEO: ‘We’re building an enduring Singapore real estate enterprise’ Nearly a decade after entering the student housing market in the United Kingdom in 2015, Singaporean real estate company Far East Orchard continues to see massive potential for growth.
• Established since 1967, Far East Orchard has a track record in real estate development, investment and management across residential, commercial, hospitality and Purpose-Built Student Accommodation (“PBSA”) properties in Australia, Japan, Malaysia, Singapore, and the United Kingdom (“UK”).

• On August 7, 2024, Migalo Holdings Inc. (hereafter, the Company) announced its 1Q FY2025/3 earnings results.
• Sales declined 10.6% YoY to ¥13,671 mn, and operating profit fell 56.9% YoY to ¥792 mn.
• The declines in both sales and profit were anticipated, primarily due to the concentration of new property deliveries in the DX Real Estate business during the same period last year. 

• TOGA is an ETF managed by Tremblant Capital that provides low-cost and tax-efficient exposure to the consumer/tech/media/industrial sectors
• Founded by Brett Barakett, TOGA is ideal for asset allocators and small fund managers seeking sector exposure without the need for dedicated research resources
• While liquidity may be limited at present, it is expected to improve as awareness of the product grows, making it worth exploring for VIC members at funds interested in tax efficiency.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Back on the 21st March, Virgin Money UK (VUK AU/VMUK LN), UK’s sixth largest retail bank, entered into a Scheme with Nationwide Building Society, at 220 pence/share, in cash.
• The consideration is a solid 38% premium to undisturbed. And shareholders backed terms at the 22nd May Court Meeting. Plus UK’s CMA signed off on the 19th July. 
• What now? FCA/PRA approvals are the key remaining conditions. These regulatory approvals are imminent.

• Capitaland Integrated Commercial Trust (CICT SP) is looking to raise around S$350m (US$267m) in its primary placement. Included in the issuance is a preferential offering to raise an additional S$757m.
• The proceeds will be geared towards acquiring a 50% interest in the ION Orchard mall from its Sponsor.
• In this note, we run the deal through our ECM framework and comment on deal dynamics.

• Dell Technologies (DELL US) is the main addition by transition candidate with a reduced probability due to no longer passing the S&P 500 transition threshold.
• Erie Indemnity (ERIE US) and Lennox International (LII US) are the main addition by migration candidates with an increased probability due to weak transition candidates.
• Addition by migration candidates have more inconsistent selection patterns. Other addition candidates include Texas Pacific Land (TPL US), Carlisle Cos (CSL US) and Dick’s Sporting Goods (DKS US) .

• Asia Ex-Japan fund managers continue to reduce their positions in Hong Kong Exchanges & Clearing.
• Percentage of funds invested and the average weight of the stock in portfolios have been on a downward trend since the recent peak in early 2023
• Wave of position closures in 2024 by Allianz, T Rowe Price, and Baillie Gifford has resulted in over half of the historical investor base exiting the stock

• As we enter a new month, it is a good time to reassess the market outlook.
• Throughout August, we held the belief that the crypto market would gradually recover from its early-month lows.
• While this expectation was partly fulfilled, we now recognize several indicators suggesting a downward trend or, at best, sideways movement throughout September.

• Travelers Companies Inc. has reported its second quarter 2024 earnings with quite robust financial outcomes, characterized by strength across most of its operational dimensions.
• The firm registered substantial top line growth, with net written premiums increasing by 8% to reach $11.1 billion compared to the previous periods.
• This positive trajectory was primarily fueled by effective field execution and strong retention rates across all business segments.

• W.R. Berkart Corporation began the year 2024 with exceptionally strong quarterly financial performance, marked by record levels of operating income, net investment income, and underwriting income.
• The positive outcomes from this first quarter reveal a company that is harnessing its capabilities effectively across various areas of its operations.
• During the quarter, W.R. Berkley Corporation manifested a commendable growth in net premiums written, which escalated to nearly $2.9 billion, marking an increase of 10.7% over the previous period.

Georgia Capital’s (GCAP’s) net asset value (NAV) per share decreased by 12.8% quarter-on-quarter in Q224 in Georgian lari (down 16.5% in sterling terms). This was mostly due to the widening of bond yields and credit spreads amid the latest political turmoil in Georgia. The de-rating of Bank of Georgia’s (BoG’s) shares had a 7.1pp impact on GCAP’s NAV, while higher discount rates applied to value the private portfolio companies contributed a further 7.5pp drag. Meanwhile, portfolio companies continue their expansion and dividend distributions, with GEL105m collected by GCAP to 12 August 2024, and management reiterated its dividend income outlook of GEL180–190m in FY24 (c 5% yield on the opening portfolio value). GCAP has recently increased its share buyback programme, with US$16.7m remaining to be repurchased as of 30 August 2024.

• MetLife demonstrated strong financial performance in its second quarter of 2024, reflecting robust underwriting results and solid variable investment income.
• Despite navigating economic fluctuations, MetLife’s diversified business operations played a key role.
• The company reported adjusted earnings of $1.6 billion or $2.28 per share, marking an 18% increase from the prior year.

• In the second quarter of 2024, Old Republic International Corporation showcased a mix of strong financial performance and ongoing challenges.
• The company reported a consolidated pretax operating income of $254 million, an improvement from $227 million in the same period of 2023, indicating a positive trend in profitability.
• The consolidated combined ratio was 93.5%, slightly higher than last year’s 92.6%, but still below 100%, which is a sign of continued underwriting profitability.

• Nearly US$100bn has flowed into mainland China listed ETFs year to date and could be driven by the National Team led by Central Huijin supporting the market.
• Nearly all the net inflows have been focused on the CSI 300, CSI 1000, CSI 500, SSE50, ChiNext and STAR50 indices. Flows to sector ETFs have been mixed.
• Over 70% of the net inflows have gone to the CSI 300 Index with another 18% going to the CSI 500 Index and CSI 1000 Index.

• June/July/August saw 1,673/825/202 new Corporate Governance Reports filed and 8/5/9 new “Mgmt Conscious of Capital Cost/Stock Price” policies filed, respectively. The TSE’s very simple tool comes in 15 days.
• Our tools show every report, links to every document, and now a new diff file tool. input a name, see the difference between the Old/New Reports. We hope it helps.
• This tool is designed to be a shelf reference. We update it once a month, and every CorpGovReport and new “Management Conscious” report updated since a CGR update is here.

• On 22 August, the Psc Insurance (PSI AU) IE considered Ardonagh’s A$6.19 offer fair and reasonable as it is within the A$5.69 to A$6.65 valuation range. 
• The offer is conditional on shareholder approval of the scheme. No disinterested shareholder holds the 25% blocking stake. The scheme meeting is on 26 September.
• The offer is attractive and represents an all-time high. At the last close and for the 11 October payment, the gross/annualised spread is 1.3%/12.1%.

• Following SEBI’s review of eligibility criteria for entry/exit of stocks in the derivatives segment, there could be 18 deletions/79 inclusions in the F&O segment over the next 6 months.
• The introduction of some stocks in the F&O segment could lead to their inclusion in the NIFTY, SENSEX, Nifty Bank and CNXIT indices and weight changes in the Nifty Next50.
• The inclusion of stocks in indices with a fixed number of constituents will result in deletion of some stocks from these indices. There should be methodology changes too.

• Back on the 8th May, PSC Insurance (PSI AU), a diversified insurance service provider, entered into a Scheme with Ardonagh Group, at A$6.19/share, in cash.
• That’s a 27.6% premium to undisturbed, and a lifetime high. Directors and key executives holding ~39.6% of shares out, are supportive. 
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 26th September. Expected implementation on the 11 October. The IE says fair & reasonable.

• In last week’s Crypto Moves #40, we highlighted that we are on the verge of a significant surge in interest toward decentralized finance, or DeFi. We believe that only a select few DeFi-focused cryptocurrencies truly have the potential to benefit from this anticipated increase in DeFi interest, as this interest is likely to translate into greater monetary rewards for their token holders.
• As we have consistently emphasized, apart from Bitcoin, we only invest in productive cryptocurrencies – those that offer monetary rewards to their token holders, much like dividends from equities.
• In some cases, we may consider investing if we are confident that the cryptocurrency in question will soon become productive.

• In a previous insight we have postulated that a pullback may be behind the corner for the Hang Seng Index (HSI INDEX).
• We said the pullback could come the week after the insight was published, or the following week (i.e. this week). Last week closed up, the index could retrace this week.
• In this insight we want to update the levels to buy LONG for this week, to benefit from a highly probable continuation of the rally in September.

China Vanke’s H1/24 results were weak in our view. Revenue from the core property development business fell meaningfully amid fewer project deliveries. In addition, the 5% gross margin from property development was weaker than that reported by peers, as Vanke likely carried out aggressive discounting to boost sales. Cash flows were weaker than expected, leading to higher net debt and leverage deterioration. Moreover, liquidity was inadequate.

We note negatively that management did not mention its debt reduction plans. Still, we view positively that the company has reiterated its strong commitment to timely repayment of public debts and ensuring no defaults occur. In addition, Vanke’s proportion of offshore debt has decreased, which could enhance the recovery value against offshore assets in the event of a restructuring. We estimate that the company’s offshore assets may cover offshore debt by 0.7x.

We do not expect Vanke to default in FY 2024, as the company is able to obtain onshore loans for refinancing. Going forward, we believe Vanke’s ability to stave off default in FY 2025 may depend on the progress of its asset sales and asset monetisation initiatives.