Financials

• On 8 November, major Japanese life insurer Dai Ichi Life Insurance (8750 JP) announced it would buy out leading pet insurer ipet Holdings (7339 JP). Yes, you read that right.
• Japanese listed VC/PE firm and incubator Dream Incubator Inc (4310 JP) owns 55% and agreed to tender. Tender success is dependent on getting 66.7%. 
• Today the buyer extended for 10 days because it had received approval under Article 271-22 Para 1 of the Insurance Business Act, triggering a requirement to refile/extend.

• In early November, Dai Ichi Life Insurance (8750 JP) announced it would buy ipet Holdings (7339 JP), of which listed VC/PE/incubator Dream Incubator (4310 JP) owned 55%. DI agreed. 
• Dream Incubator’s exit is worth ¥21.54bn in cash and ¥18.2bn in extraordinary gains on the consolidated financial statements for March 2023. 
• That is nice. They have promised to deliver ¥10bn of proceeds to shareholders and reinvest the other ¥5bn to grow their consulting business. It’s a nice little asset.

• CIFI Holdings (884 HK) is looking to raise US$127m in a top-up placement. Proceeds from the raising are expected to refinance its existing loans and for general corporate purposes.
• While the deal represents just 2.1 days of three month ADV, total shares offered would amount to 7.5% of current mcap. 
• In this note, we will run the deal through our ECM framework and talk about the recent updates.

• Price Movements: Binance’s BUSD stablecoin, BNB token, and staking token bETH have had a volatile week amid mass withdrawals.
• Market Liquidity: Throughout December, BTC market depth on Coinbase has increased 46% while on Binance, depth is down 5%.
• Derivatives: Open interest for BTC and ETH perpetual futures has nearly halved since November. 

• The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
• Stocks with buy flows dropped 1.82% on average on Friday while the stocks with sell flows rose 1.03%. On a flow weighted basis, the numbers were -2.01% vs +1.09%.
• Given the large volumes at auction and the large moves on stocks, we cannot rule out the possibility that a lot of pre-positions were unwound at the close on Friday.

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

• KFin Technologies (1804170D IN) is looking to raise around US$180m in its India IPO.
• KFin Technology (KFin) is a technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem.
• In this note, we will look at its RHP updates, peer comparison, earnings assumptions, and share our thoughts on valuation.

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. Kawasan Industri Jababeka
2. Tata Motors Ltd
3. Yuzhou Group
4. Powerlong Real Estate Holdings
5. Sunac China Holdings

and more…

• After getting ‘unprecedented access’ to inspect and investigate audit firms in the PRC, the PCAOB is vacating their 2021 determinations; there will be no ADR delistings in the near future.
• PCAOB inspectors have identified numerous potential deficiencies that are consistent with what the PCAOB has encountered in other first-time inspections around the world.
• The iShares MSCI China ETF (MCHI US), KraneShares CSI China Internet ETF (KWEB US) and NASDAQ Golden Dragon China Index (HXC INDEX) are trading lower in the U.S.

• SPX 4,150 turn target met. Our game plan focused on longs established near SPX 3,940 with an ideal sell zone at 4,150 on a brief spike above 4,100. 
• We established shorts at that SPX 4,150 (NDX, RTY, CAC, NKY, HSI). Ladder shorts on strength and use dips to reduce.
• Mid December cycle peak may need some top building work into January where we range before a more prominent down leg.

• The swap arb spread has been consistently within the 3% to 5% band since November 23, when arb trading should have actually started.
• Meritz Financial’s buyback seems to be making it difficult to build positions on expectations that the price gap relative to Fire and Securities will converge quickly with the swap ratio.
• As the actual risk of repaying financial borrows is small, we should start building up positions two weeks before the end of January, aiming to exit in early or mid-February.

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.

• Kawasan Industri Jababeka

• Aave and Compound are two of DeFi’s stalwarts: the two largest lending and borrowing protocols on Ethereum, each with a TVL over ten times larger than the third largest protocol.
• Both protocols have functioned nearly flawlessly this year while a growing number of centralized entities have been failing in often spectacular fashion.
• Aave has accumulated just $2.17mn of bad debt (most of which was generated in a recent, likely unprofitable, exploit covered here) relative to its $3.2bn TVL, while Compound has just $65,000 to its $1.5bn TVL. 

• Block share price continued to underperform on a risk-adjusted basis, even it delivered double digit returns.
• Topline growth is slowing down as macroeconomic environment is no longer supportive and competition intensifies.
• Block’s business model seems ill-positioned to deliver, according to the company.

• Credit costs in September quarter are showing steep delta YoY and QoQ
• Accelerated credit growth in past six months may mean there is more to come
• Funding cost surge is keeping net interest income growth near zero despite swelling loans

• Singapore-based Ohmyhome has filed for an initial public offering (IPO) in the US at about US$88 million valuation, according to multiple reports.
• The property-tech company seeks to raise up to US$16.25 million and offer 3.25 million shares at a price range of US$4-5 apiece.
• Spartan Capital Securities is the lead managing underwriter and book-runner for the IPO.

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.

• Country Garden Holdings Co

• We analyse key trends to October 2022 for Banorte and Banco del Bajio, two of the top three ROE generating banks in Mexico which also trade on premium PBV ratios
• For both, the challenges are funding costs that rise faster than loan yields, crimping credit spreads, as well as the indications that cost of risk may have bottomed out
• Although the operating expenses ratio is well controlled so far, it seems unlikely that it can improve much more; these data trends add weight to our cautious view on Banorte

• The Gordon’s Growth Model suggests National Retail Properties is severely undervalued.
• In addition, a seasonal ARIMA model indicates the REIT’s dividend yield might be sustainable.
• The REIT could be an outlier in 2023, according to the Gordon’s growth model.

• We currently see one change each for the ASX20 and ASX100 indices, 4 changes for the S&P/ASX 200 and 10 adds/ 6 deletes for the ASX300 Index in March.
• There could be an addition to the S&P/ASX 200 (AS51 INDEX) in January following Pendal Group (PDL AU)‘s acquisition by Perpetual Ltd (PPT AU).
• PEXA Group (PXA AU) is a potential inclusion to the S&P/ASX 200 (AS51 INDEX) if Link Administration (LNK AU)‘s in-specie distribution of PEXA shares to its shareholders is approved.

• Cromwell Property (CMW AU) is a deletion from the MVIS Australia A-REITS Index at the close on 16 December.
• Passive trackers will need to sell 13.9m shares (5 days ADV) of Cromwell Property (CMW AU) and there appears to be little to no pre-positioning on the stock.
• There are a few other stocks that will have over 0.5 days of ADV to buy from passive trackers.

• KFin Technologies (1804170D IN) is looking to raise around US$300m in its India IPO.
• KFin Technology (KFin) is a technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem.
• Under its offering, it primarily serves asset managers and corporate issuers domestically, while providing investor solutions for mutual funds and private retirement schemes in other regions.

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.

• Yuexiu Property

• Akros Technologies, a South Korea-based fintech firm, has raised US$2.3 million in a strategic funding round.
• The fundraise was led by ZVC – the investment arm of Line Corporation parent Z Holdings.
• Founded last year, Akros Technologies manages its own exchange-traded funds (ETFs) powered by machine learning models. 

• Home Consortium Ltd (HMC AU) is a Super Stapled Security, having developed HomeCo Daily Needs REIT (HDN AU), overseen the Aventus Group (AVN AU) merger, IPOed HealthCo REIT (HCW AU). 
• The current market cap is 1.6x book and probably closer to 2x tangible book as a large “management and development capability premium” is baked in. 
• There is a FTSE EPRA Nareit index deletion on Friday. That could prompt further underperformance.

• Price Movements: BTC’s correlation with BNB has dropped significantly since FTX’s collapse, a sign that Binance’s token is diverging from wider markets. 
• Market Liquidity: Curve, the DEX optimized for stablecoin swaps, is still mostly used by whale traders. 
• Derivatives: Tron futures skew bearish after the network’s native stablecoin, USDD, depegged to $.97.

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
• Greenko Energy Holdings
• Powerlong Commercial Management Holdings
• Tata Motors ADR
• Yuzhou Group

• Our long in H shares is looking stretched and we need to fine tune an exit strategy with counter balance pivots. HSI is the short on strength at trendline.
• A50 13,400 intermediate resistance stands out to cap near term strength and USD/CNH 9.0/01 is our USD buy support that aligns with an A50 top.
• Consensus is now bullish China (wrinkles to work through) as we face a more uncertain global cycle in Q1. HSI faces wedge and trendline resistance!

• We’ve all been there. At some point in the Christmas supper, maybe between the roast turkey and the mince pies, Aunty Hilda or Granda Joe inadvertently starts a heated debate around this “bitcoin thing.”
• There may be a tech-savvy cousin who tries to come to the rescue and explain how blockchain works or why people value jpegs on the internet, to no avail. 
• This year the Etherbridge team thought we would do a holiday special titled “Crypto At The Christmas Table” so you are fully prepared to handle any blockchain conversation that may arise. So let’s dive in.

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
• Kawasan Industri Jababeka
• Sunac China Holdings

• On 6 December we determined that a new interim downtrend low below 23.20 would likely fail and produce a 10% to 20% correction in 1-2 weeks. 
• SI US subsequently bottomed at 21.32 and produced a 10.69% gain in the following 3 days to a high of 23.60. 
• Note that this result was at the lower end of our expectations, however we must acknowledge a positive result. Gains were quickly given up in the following session however.

• We have outlined our bullish DXY zone at 103 but what if the dollar front runs a bull turn as the bulk of near-term yield weakness is baked in.
• USD lows versus Asian FX shows the ability to turn USD bullish early.
• SPX rise off of 3,900 pivot support after cracking RSI and price wedge supports a concern if we cannot muster a near term reaction rise.

The Chinese Property Weekly focuses on providing updates in the Chinese real-estate sector, including recent regulatory and company developments, top and bottom performers, rating actions, as well as a list of bond maturities in the next 30 days.

• Of the six Malaysian banks screened, we highlight RHB Bank and retain CIMB on the buy list; PB Bank and Maybank are quality but seem fairly valued
• RHB Bank has, in the September quarter, meaningfully improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio suppresses its ROE, and it is attractive on PE and PEG
• CIMB once again improved its positive post-provision returns which is constructive for CIMB’s share price given its modest valuations versus its peers; its high NPL ratio is fully provisioned

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. China SCE
2. Hopson Development
3. Sino-Ocean Group
4. Greentown China
5. China Jinmao Holdings

and more…

• Seazen (Formerly Future Land) (1030 HK) is looking to raise US$175m from its top-up placement.
• The deal is a relatively small one at just 9.5 days of three month ADV and 4.9% of current mcap.
• In this note, we will run the deal through our ECM framework and talk about the recent updates.