Financials

• Jafco Co Ltd (8595 JP) announced the reference period VWAP for the Tender Offer Buyback was ¥2,362.4136 vs target ¥2,525. Murakami-san refused to play, so the Tender Offer is cancelled.
• This is good news and bad news. The announcement wording doesn’t make JAFCO look good, but they will continue discussions with City Index Eleventh. But there is potential.
• I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection (Jonathan Swift, 1729)

• Tian Tu Capital (1390587D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Tiantu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
• The fund manages capital from investors including institutional investors, multinational corporations, financial institutions, and high net-worth individuals. It also directly invests through its own capital as well.

• Chainlink provides essential data-feeding services for blockchains, providing a bridge between blockchains and real-world information and data sources for both crypto and non-crypto use cases.
• LINK token captures Chainlink’s network value, and new tokenomics 2.0 introduce staking further improve the supply & demand dynamic.
• LINK price is supported by the growing usage of Chainlink network as onchain activity continues growing despite the bear market.

• Sunshine Insurance (6963 HK) priced its IPO at HK$5.83 per share to raise net proceeds of HK$6.4 billion (US$824 million). The shares will start trading tomorrow.
• We previously discussed the IPO in Sunshine Insurance Group IPO: The Bull Case, Sunshine Insurance Group IPO: The Bear Case and Sunshine Insurance Group IPO: Valuation Insights. 
• Peers have modestly re-rated and the IPO price continues to imply a premium to the median peer CY2022 P/EV and P/B multiples. Therefore, the IPO price remains unattractive.

• KOSPI2 Index failed to break above the 200dma and has retreated
• The index has now fallen back towards the 50dma and we see an short-term opportunity to play the upside
• Use weekly options to play a short-term bounce and get the best risk-reward

• Credit costs at present are only 20bps of loans, these can move to 100bps or higher
• Population data even before 2H22 shows contraction, with negative implications
• Property prices are turning down even faster, which is banks’ loan collateral

• The ousting of Peruvian President Pedro Castillo follows his failed attempt to dissolve Congress; Vice-President Dina Boularte was sworn in yesterday as the new first female Peruvian President
• Political instability is not uncommon in Peru, but an end to Castillo’s chaotic, market-unfriendly administration with its high turnover in ministerial posts should improve investor sentiment and encourage increased FDI
• When we screen Peruvian bell-weather Credicorp against its LatAm peers, we conclude that, although it is not deep value, it is attractive versus its own history and selected peers

• After a 50 bp hike three times a row, RBI softened and increased the repo rate by 35 basis points to 6.25%.
• Consequently, the standing deposit facility (SDF) rate stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%
• The basic facts on the ground have not changed much since the last policy in September-end: global headwinds, inflationary pressures arising from both exogenous and endogenous sources, and adverse terms of trade balanced against an economy exhibiting nascent growth with all the growth engines – industrial, agricultural and service sectors – in early stages of combustion.

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
• CIFI Holdings
• Greentown China
• Hopson Development
• Sino-Ocean Service

• Abrdn PLC (ABDN LN) is looking to sell its entire 10.21% stake in HDFC Asset Management (HDFCAMC IN) following which it will no longer be a sponsor of HDFC MF.
• Depending on who the stake is sold to, there could be an immediate increase in the investability weight in the FTSE All-World Index.
• More importantly, the increased free float will result in an increase in the FIF for the MSCI Standard Index and index inclusion could take place in February.

• We’d better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.
• For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.
• They are Hyosung TNC (298020), HD Hyundai (267250), BNK Financial (138930), Woori Financial (316140), DL E&C (375500), LX Semicon (108320), KB Financial (105560 KS), and HDC Hyundai Development (294870).        

• A conversation with Bank Central Asia post results revealed some interesting near term and longer-term trends and initiatives as the economy recovers and it takes the brakes off lending.
• BIFAST for instant transfers 24-7 with lower fees will impact the bank’s fee income, although volume increases offset the impact plus BCA is gaining a share of transactions.
• Bank Central Asia‘s strategy is to follow its customers and enable their financial journey through connecting to an ever broader ecosystem. Valuations look more reasonable rolling into 2023.

• The announcement of easing most Covid restrictions resulted in a new rally high, but the close was below at least the previous two-day open/closes, making it an outside day reversal pattern.
• This note highlights the reversal patterns in HSI, HSTECH, AIA, and Tencent. These have some of the cleanest reversal patterns.
• In real estate, SOEs like China Resource Land [-11.75% from 30th November intraday peak] and China Overseas Land [-9.7% from 29th intraday peak] reversed before the China Mainland Property index [6th December], a reflection of a short squeeze as a crucial driver of sector rally. Longfor peaked on 6th December and is down 17% after a 276% rally.

• Sunshine Insurance Group (SIG), a life, health and P&C insurance company, raised around US$850m in its HK IPO.
• SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
• We have looked at various aspects of the deal in our previous notes. In this note, we will talk about the trading dynamics.

• Bank sector trends to October continue to be sound, but return headwinds are emerging; further tightening credit spreads and initial signs of worsening in consumer credit quality
• To October, funding costs are rising faster than loan yields, crimping credit spreads, and the rising credit card cost of risk indicates a worsening outlook for consumer credit quality
• BBVA Mexico generates consistent premium ROE of 25%+, investors can gain exposure through BBVA equity; we continue to be cautious on Banorte, and we recommend taking profits on BanBajio

• The difference is obvious when compared to Fancl’s case. While Fancl chose to form capital alliance with Kirin (less than 1/3 ownership), All DHC shares will be transferred to ORIX.
• We believe that many of the buyer companies were concerned about the negative impact of consolidating DHC with Yoshida, who has repeatedly made discriminatory remarks.
• ORIX is required to show the future management strategy of DHC, and ORIX is responsible for explaining the transformation of DHC into a company that respects human rights.

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
• Greenland Holdings Corp
• Sunac China Holdings

• Country Garden Holdings Co (2007 HK)  aims to raise around US$500m via a primary placement
• This will be the third placement by the company this year and the second one within a month’s time.
• In this note, we will run the deal through our ECM framework and talk about the recent updates.

• Late last month, JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback and set the large buyback from Murakami-san to occur through a Tender Offer.
• The TOB price would be set at a 1% discount to the average 30 Nov – 7 Dec VWAP if VWAP was between ¥2,525 and ¥2,828/share. That’s not happening.
• So now we read the fine print, look at waive-ability of conditions, and look at contingencies.

• A recent rally in property management companies due to measures taken by the government has set Binjiang Service Group (3316 HK) for a big move upwards.
• The stock is cheap and trades at 10.5x/8.1x FY22/23e PE with 37% of the market cap in cash and a 5.8%/7.4% FY22e/23e dividend yield.
• Catalysts for the company are further loosening on the property by the government and a profit alert of 38-40% earnings growth for FY22.

• Nippon Prologis Reit (3283 JP) is looking to raise around US$175m in its global follow-on offering to acquire three logistics properties.
• Acquisitions are well flagged, having been in the REIT’s pipeline for some time now. Past offerings have performed well in the first month as well.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

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
• Times China

• SI US declined 78.5% from its August 2022 high of 108.11 to its November 2022 low of 23.20. 
• Our Trend Sustainability Score (TSS) methodology has triggered a TSS < 10, highlighting extreme short-term momentum failure.
• A new downtrend low, below 23.20, in the coming 1-2 days will likely fail quickly and deliver a 10% to 20% reversal in the coming 1-2 weeks.

• Tian Tu Capital (1390587D CH) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Tiantu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
• The fund manages capital from investors including institutional investors, multinational corporations, financial institutions, and high net-worth individuals. It also directly invests through its own capital as well.

• Japan has been a top long in Asia, the rising wedge had us reducing our long. Friday saw a pronounced RSI bear wedge break and price crack.
• Japan faces rotation pressure into core Asia and will shift Japan into the bear camp on a muted recovery attempt.
• Japan’s macro cycle remains trapped in a sideways range. Buy support near 26,000 and sell resistance near 29,000.

• Japan’s largest logistics REIT Nippon Prologis Reit (3283 JP) (“NPR”) announced a US$170mn follow-on equity offering to fund their recent acquisition of three logistics facilities.
• The primary offer quantity will be 76,570 units out of which 44,410 units and 32,160 units are expected to be allocated for domestic and international investors, respectively. 
• Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

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
• Jingrui Holdings

• Investment Banks and Advisory firms have thrived over the past two years as the rapid pace of dealmaking induced by the post-pandemic era led to significant profits.
• New York City-based Perella Weinberg Partners took advantage of the free-flowing capital market conditions by closing some of the biggest M&A deals over the last decade and choosing to list on public markets through a SPAC.
• With all the talk of an economic slowdown going into 2023, Investment Banks are cautious heading into next year, focusing on preserving cash and switching to ancillary advisory services rather than staying on the hunt for big deals.

• In Dec 2021, Star Health (STARHEAL IN) (SHAI), the largest private health and retail health insurance company in India, raised around US$851m in its India IPO.
• SHAI insured 20.5m people in FY21. SHAI primarily offers retail health insurance which accounted for 87.9% of its FY21 GWP. Individual agents accounted for 97% of its FY21 GWP.
• In this note, we will talk about the upcoming lockup expiry.

• Instead of going on a long rant about why this next iteration of NFTs is important more broadly – let’s contextualise this for the sports industry.
• After all, this is a newsletter called Sporting Crypto.
• The sports industry has seen some pretty amazing things when it comes to Web3.

• Price Movements: The tokens for the decentralized derivatives exchanges dYdX and GMX have surged since the collapse of FTX.
• Market Liquidity: Dollar trading volumes for BTC markets dropped to two year lows relative to Tether. 
• Derivatives: BNB funding rates dip to their most negative this year.

• SK REITs (395400 KS) will now be added to the FTSE EPRA Nareit Global Real Estate Index Series after market close on 16 December.
• Based on the passive assets estimated to track the FTSE EPRA Nareit Index, there could be around 3.11m shares (US$11.3m; 19.2x ADV) to buy on SK REITs (395400 KS).
• SK REITs (395400 KS) trades expensive as compared to ESR Kendall Square REIT (365550 KS) and we’d use an index inclusion driven rally to pare positions in the stock.

• This trade is based on historical patterns described in the FTSE TWSE Taiwan Dividend+ Index: A Rare Gem for Index Rebal Trades AND additional considerations.
• Those additional considerations were discussed in Taiwan Dividend+ Index Rebal Trades – Offsets Other Index Risk and subsequent insights. So far, the trade is +7.1% since 26 October. 
• The announcement of FTSE TWSE Dividend+ names described in FTSE TWSE Dividend+ Dec 22: Confirmed Index Changes and Revised Capping Flow Expectations changes the basket slightly for the home stretch.

• Our SPX bull view to 4,100 was satisfied, (Layer out of weaker longs) and now shifting to a more tactical stance of buying the 3,950-support zone to retest 4,100.
• The current rise shares a number of characteristics with the summer counter trend rally. Weak spots are noted in small caps, NDX and Japan.
• DXY 103 is our turn zone for a low in yield and SPX peak and topping process in December head of a more bearish Q1

• KKBank is one of the only major internet banks in Asia-Pacific
• Operating metrics show increasing core income momentum and strong ALM
• Credit metrics have not yet proven to be a concern, as we near end of rising rates

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
• China Datang Corp Renewable Power
• Shui On Land

• Last year Etherbridge published a Web3 mini report where we reviewed some of the most significant Web3 sectors and a few up-and-coming ones. 
• The year has been challenging for all markets in general, and crypto has been no exception. Internal human errors and poorly designed token mechanics resulted in a crypto credit crisis, exacerbating the market crash further.
• Nevertheless, the underlying technology across the blockchain stack has continued to evolve and improve, with some fundamental breakthroughs happening in scaling and other critical infrastructure. 

• Our high conviction USD sell call at DXY 114/113 comprised the AUD, ZAR, Euro, KRW and JPY. Our focus today is the USD/JPY undershooting our 135 target.
• AUD is near our 0.6850 but could stretch to 0.69. USD/ZAR met the 17.10 PT. Euro target remains at 1.0650 just under the 1.07 MT resistance. USD/KRW 1,298 PT met.
• DXY 103 downside target with risk to 102 while aligning the US 10yr yield target of 3.50%/45%. NFP is the swing factor for yield today.

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.

• FTX collapsed causing the crypto market to fall into shambles.
• FUD (Fear, uncertainty, and doubt) are spreading like wildfire throughout the industry and people have every right to be scared.
• The fallout of the FTX collapse will be the battle for the soul of crypto. 

• Included in bank earnings is a provision for loan losses.
• In a perfect world, management would know exactly which loans would go bad and how much money they would lose on those loans.
• In reality, estimates are required. Like insurance companies, banks typically apply a statistical model based on the risk rating classification of their loan book plus any specific reserves.

• Familiar names in Singapore landed in the top five of a list featuring crypto exchanges with strong anti-money laundering (AML) systems.

• Blockchain.com and Independent Reserve, which are both licensed to operate in Singapore, ranked first and third place respectively. Crypto.com, which has in-principle approval, placed fifth.

• Binance, the largest crypto exchange in the world, in the 42nd  spot.

• Lending and borrowing in DeFi follows the same basic principles as it does in traditional finance: I supply some asset as collateral and I am able to borrow a certain amount of some other asset.
• However, this being DeFi, there are some important differences from TradFi.
• The most important is that the protocol has no way of knowing how trustworthy I am, and thus will require any loan to be overcollateralized.

• Igloo provides “competitively-priced” insurance for delivery riders in Thailand, Singapore, and the Philippines, and Vietnam
• Singapore-headquartered insurtech startup Igloo announced an additional US$27 million to close its Series B round at US$46 million
• The additional funds will provide Igloo with a comfortable multi-year runway

• There are no adds for the FTSE EPRA Nareit Developed Asia Index in December. The only deletion is Home Consortium Ltd (HMC AU). 
• Passive trackers are estimated to sell 12x ADV on Home Consortium Ltd at the close 16 December. Short interest is nearly the same and there could be some covering.
• Home Consortium Ltd (HMC AU) has underperformed its peers over the last 12 months and still trades more expensive to its peer group.

• We try to stay away from the fool’s errand of forecasting the economy;
• But often, we notice that high-quality businesses actually benefit from harsh economic conditions in terms of (long-term) shareholder value;
• We provided an example of a company that we own to illustrate how.

• The December 2022 Rebalance of the FTSE UK Index series will be based on the closing prices of 29th November 2022. 
• The results will be announced after market close later today (30th November 2022).
• Below are Quiddity’s final expectations for index changes and flow parameters for the December 2022 Rebalance event. You have the day to trade this.

• Chinese equities have been on a volatile path but are finally gaining some upside momentum
• Dollar seems to have peaked and USDCNH is retreating with renewed optimism for the Chinese economy reopening. 
• We revisit the trade and look at potential restructuring options

• Saratoga Investama Sedaya (SRTG IJ) is the leading listed investment company with stakes in a number of leading companies across sectors in Indonesia with some of the highest growth potential.
• Investments include stakes in Adaro Energy, Merdeka Copper Gold, Tower Bersama Infrastructure, Mitra Pinasthika Mustika, and Aneka Gas (AGII IJ), and a number of tech companies providing unique thematic exposure.
• Saratoga Investama Sedaya (SRTG IJ) provides a one-stop shop to get well-rounded exposure to high-growth areas of the Indonesian economy and to early-stage growth companies in the digital space.

• Sunshine Insurance (6963 HK) has launched its HKEx listing at HK$5.83-6.45 per share to raise up to US$951 million. Books are open from 30 November to 5 December.
• We previously discussed the IPO in Sunshine Insurance Group IPO: The Bull Case and Sunshine Insurance Group IPO: The Bear Case. 
• At the IPO price range, Sunshine trades at a significant premium to median peer multiples. Therefore, we would avoid the IPO. 

• Six of the seven South Korean banks screen favourably on valuation versus returns metrics to September 2022; we add Hana Financial, to our buy rating on KB Financial
• Hana has undemanding valuations, and improving pre-provision and post-provision returns,  it also has sound core capital ratio of close to 13%
• We remain neutral on digital bank KakaoBank where we are deterred by high cost of risk metrics relative to its peers; we continue to seek positive catalysts on this name

• Our call has centered around buying a dip in HK at HSCEI 5,800 and HSI 17,000 for a final upside drive into December to form at top.
• H shares (our long vehicle) – Met 5,800 long entry. 6,030 is the level to clear and hold above. PT at 6,600 just under the 6,700 MT barrier.
• Macro trend remains down. HSI 19,400 represents an excellent short opportunity for Q1 weakness. December is touted to be a topping/ range ahead of a more bearish Q1.

• Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
• SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
• We have looked at the company’s past performance in our previous notes. In this note, we will undertake a peer comparison.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-November 2022.

• Sunshine Insurance (SUN HK), a Chinese life and P&C insurance company, is pre-marketing a US$1.0 billion HKEx IPO, according to press reports.
• In Sunshine Insurance Group IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.  
• The key elements of the bear case rest on Sunshine Life’s VNB margin decline and agent channel pressure; Sunshine P&C’s regulatory pressure on premiums and the group’s declining investment yield.

• Sunshine Insurance (SUN HK) is looking to raise between US$859m-US$950m by selling 1.15bn shares in its IPO. At the top end, the company will be valued at HK$74bn.
• All of the pre-IPO shares are Domestic Shares and there appear to be no immediate plans to convert them to H-shares. The only H-shares will be the IPO shares.
• MSCI China inclusion requires a higher stock price or conversion of Domestic Shares to H-shares; FTSE inclusion is likely in June; HSCI and Stock Connect inclusion is expected in March.

• We interact with Home First Finance (HOMEFIRS IN)  branch managers to understand the reason behind the increase in bounce rates.
• The overall NACH data also shows a high rejection rate in October despite being a festive month, which is surprising.
• With 92% of Home First Finance (HOMEFIRS IN) loans being disbursed in less than 48 hours, this focus on TAT could lead to higher than industry-average asset quality issues. 

• Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise around US$950m in its HK IPO.
• SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
• We have looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we will talk about valuations.

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