Financials

• On Friday, the S&P index committee announced the June 2024 changes to the three major indices in the S&P1500 universe. 
• KKR, Crowdstrike (CRWD), and GoDaddy (GDDY) replace Robert Half (RHI), Comerica (CMA), and Illumina (ILMN) in the S&P500. There are 6 ADDs to S&PMidCap400, 13 DELETEs from Sm600. 
• There are some BIG and impactful flows here. Some are very big. Netted 2-way flow on 21 June is ~US$66-80bn. But as always, details matter. 

• Here is to another week in crypto, following an exceptionally strong performance for U.S.-based Bitcoin spot ETFs last week.
• Over the five trading sessions, these Bitcoin spot ETFs saw total net inflows of $1.829 billion.
• Last Tuesday was particularly notable, with the ETFs experiencing their second-best day since their launch on January 11, bringing in a net inflow of $887 million.

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

• There are 3 changes for the S&P 500 INDEX, 7 changes for the S&P Midcap400 Index and 13 changes for the S&P SmallCap600 Index at the June rebalance.
• There is huge size to trade in KKR & Co (KKR US) and Crowdstrike Holdings (CRWD US) and both stocks were up big in the after-hours market.
• There has been positioning in some stocks recently but stocks including KKR & Co, RB Global and Texas Pacific Land could see further positioning in the next week.

• The ASX 20/50/100 index changes for the June 2024 index rebal event was announced after market close on Friday 7th June 2024.
• In this insight, we take a look at our flow expectations for the ADDs/DELs and the trends in short interest buildup for these names.
• Separately, the completion of the CSR Ltd (CSR AU) M&A deal could trigger an intra-review deletion in June 2024 and the potential replacement name could have very high-impact.

• IVs were crushed in the aftermath of Election results & in spite of lingering political instability & significant moves in RV.
• Vol-Regime Switching Model is holding at “High & Up” state. Probability of switching to “High & Down” state has increased significantly.
• Vol term structure is still in Backwardation – should transition to Contango as IV & RV drift lower.

• High potential for additional recoveries with longer liquidation period
• Solvent receivership of Signature Bank offers compelling investment opportunity
• Potential for substantial upside for common equity, preferred equity, and unsecured bonds

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.

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.

• Lippo Malls Indonesia Retail Trust
• Meituan
• Yuexiu Property

• Chubb Limited showcased a strong performance in its Q1 2024 update, with notable growth across multiple segments and a robust financial posture.
• The demonstrated acceleration in core operating income by over 20% to $2.2 billion and an operating EPS increase of nearly 23% to $5.41 underlines a solid upward trajectory.
• Particularly impressive was the company’s Property & Casualty (P&C) segment where underwriting income rose over 15% to $1.4 billion, underscoring a combination of earned premium growth and favorable underwriting margins.

• Manulife Financial Corporation has posted a strong first quarter of 2024, exemplifying solid strategic execution and financial performance across its diversified operations.
• The company reported a 16% growth in core earnings and a significant 20% increase in core EPS, supported by robust contributions from its Asian markets and Global Wealth and Asset Management (WAM) segments.
• Furthermore, core return on equity (ROE) advanced by nearly two percentage points year-over-year to 16.7%, surpassing the medium-term target of 15%.

• Progressive Corporation reported strong first quarter results for 2024, marking a period of robust growth and profitability.
• This quarter was highlighted by an 18% increase in net premiums written and an impressive combined ratio of 86.1%.
• These results represent both growth and a sound strategic approach to rate revisions and risk management, reflective of the company’s core values and business strategy.

• Sun Life Financial’s first quarter of 2024 delivered mixed financial outcomes, indicative of diverse operational strengths and challenges across its array of business lines and geographical areas.
• The company’s broad diversification strategy remains a fundamental pillar, helping to absorb regional and segment-specific volatilities.
• On the positive spectrum, the company witnessed a robust 30% growth in individual protection underlying earnings in Asia, driven by significant sales increases in Hong Kong and stable performance in India.

• Travelers Companies Inc.’s first quarter 2024 results exhibit a strong financial performance characterized by solid growth in both top-line and bottom-line metrics, further strengthened by strategic initiatives and investments that bolster its market position.
• The company reported core income of $1.1 billion, reflecting a notable increase from the previous year, despite facing a $211 million one-time tax benefit in the prior year’s quarter.
• This performance was bolstered by a core return on equity of 15.4%, showcasing effective capital utilization.

• It should come as no surprise that 2022 was rife with contagion in the crypto industry.
• Numerous crypto companies went bankrupt, many due to fraud.
• Now, the majority of these bankruptcy cases are nearing their conclusion, and some have already been completed, allowing creditors – primarily clients with assets stuck in these firms – to receive the remaining assets.

• The NIFTY Index has been swinging wildly as of lately, but the odds look good for a continuation of the rally at the moment.
• The index is in a pattern where it can rally for 1-2 more weeks.
• Wait for prices in the 23500/23700 resistance area before considering a SHORT trade.

• Unipol Gruppo S.p.A (UNI IM) has reached 95% of the share capital of UnipolSai SpA (US IM), therefore the conditions for the squeeze-out are met.
• The dividend-adjusted offer price is €2.535. Unipol has three months from 26 April to implement the squeeze-out. The holding discount, as expected, has closed.
• Spread to cash offer is 0.51%/3.85% (gross, annualized assuming settlement of squeeze-out by 26 July). The share alternative is now trading at a premium.

• Allstate Corporation reported a strong financial performance in the first quarter of 2023, indicating a significant improvement in net income which reached $1.2 billion.
• This results from effective execution of the auto insurance profit improvement plan, maintaining attractive margins in homeowners’ insurance, and experiencing lower catastrophe losses.
• Net investment income also saw a notable increase of almost 33%, mainly due to repositioning into longer duration, higher fixed income yields, and improved performance-based valuations.

• Citizens Bancshares Corporation is a well-managed bank based in Atlanta, Georgia trading for less than six times its earnings and 64% of its adjusted tangible book value
• The bank has potential for significant earnings growth in the next few years, is overcapitalized, minority-owned, and caters to minority customers
• Citizens has a profitable history spanning over 100 years, received funds from the Emergency Capital Investment Program, and is a member of the Community Development Financial Institutions Fund.

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.

• Mercury General, founded by George Joseph in 1961, is a major player in the insurance industry, specializing in personal auto, homeowners, and commercial auto insurance
• George Joseph, now 102 years old, remains actively involved in the company as chairman and owns 35% of the company, with his wife holding another 16.5%
• The Josephs have held onto their stock for decades, with George’s compensation remaining modest at around $1.5 million a year, relying on dividends for income

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.

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.

• Greentown China
• HPCL-Mittal Energy Ltd
• Lippo Karawaci
• Citicore Renewable Energy

• Following up on our earlier cross-shareholding notes, in this note we look at Sumitomo Mitsui Financial Group (8316 JP) cross-shareholding.
• SMFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$17bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

• CK Asset Holdings (1113 HK) has traded lower recently and shorts have exploded in the stock in the last few months.
• CK Asset Holdings (1113 HK) has underperformed its peers in the last 6 months and trades cheaper on forward PE and price to book.
• There will be passive selling in the stock in just over two weeks. There will be positioning, but not enough to meet passive supply. Expect a further move lower.

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The rankings used for the June 2024 index rebal event will be decided based on the opening prices tomorrow (6th June 2024).
• In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.

• Onewo (2602 HK), a leading China property management company with the controlling shareholder being China Vanke (H) (2202 HK), announced a major share repurchase mandate last night.
• The company intends to repurchase its shares in the open market up to HKD5.8bn, which is around 20% of the current market cap. 
• The company is trading at 13x 2024E PE on around 15% net profit growth in 2024E, and at 5% forward dividend yield. 

• Of the six Malaysian banks screened, we keep value play CIMB, whose share price has positive momentum, and quality play Maybank on the buy list
• Value pick CIMB has undemanding valuations whilst second from top in post-provision profitability; it has strong capital adequacy and its cost of risk is now more in line with peers
• Quality pick Maybank also has relatively undemanding PE multiples and PBV ratio, as well as strong balance sheet credentials and improving returns

• Registering record sales and earnings – Q1 FY12/24 results recorded the highest quarterly operating profit to date, demonstrating a brisk start to the FY.
• The core earnings driver was Wealth Consulting, chiefly in Business Succession which closed a large M&A transaction.
• The Real Estate Solutions business also saw strong sales growth (+24.2% YoY), driven by rental income and other real estate transactions, while the core ADVANTAGE CLUB (real estate fractional ownership product) saw flat sales YoY.

Invesco Asia Trust (IAT) posted a one-year NAV total return (TR) to end-May 2024 of 3.8%, below its benchmark return of 8.7%, as some of IAT’s Chinese stock picks de-rated significantly over the period. That said, IAT’s managers remain confident in their current Chinese holdings (and the trust’s overweight position to China/Hong Kong), as they believe that the widespread weakness in local equities has allowed them to build a portfolio of high-quality names at attractive valuations. IAT also remains overweight South Korea, and the trust could benefit from the recently announced government initiative aimed at enhancing the appeal of local equities through reforms to corporate governance and enhanced distributions to shareholders (inspired by the recent success in Japan).

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
• NagaCorp Ltd
• Citicore Renewable Energy
• Yuexiu Property

• Unexpectantly, Great Eagle Holdings (41 HK) said it would not proceed with an Offer; and Hong Kong hotel-play Langham Hospitality (1270 HK) promptly cratered. But why the flip flop?
• Preceding my comments on GE, Langham and Champion REIT (2778 HK), are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• The review period for the June rebalance ended last week. There could be one deletion from the index and a bunch of capping changes.
• There is one stock that is close to inclusion zone but may not make it in June.
• The expected index changes will lead to a one-way turnover of 2.5% resulting in a one-way trade of A$14m. That will increase if there is an inclusion.

• Tosei achieved record revenue and profit, driven by robust growth in its fund management business and a balanced portfolio of stable and sales-driven operations.
• Activist investor Dalton acquired a 5.02% stake, highlighting concerns over recent governance decisions and potential Board independence dilution due to the Nagoya Railroad alliance.
• Dalton’s involvement ensures heightened scrutiny, promising better governance, and potentially favorable outcomes for minority shareholders amid Tosei’s continued strong business performance.

• The rankings for the F100/250 June 2024 index rebalance event will be decided based on the full market cap rankings at the close of trading today (4th June 2024).
• Since there have been a couple of intra-review index changes and some ranking changes due to price movements, we have decided to update our expectations for the June 2024 review.
• We currently see 2 changes for the F100 index and 3 separate changes for the F250 index. However, the rankings can still change if prices move sharply today.

• BTC Spot ETFs Net $2Bn in May: Discover how consistent ETF inflows are driving Bitcoin’s impressive rally and near all-time highs.
• BTC Market Structure Insights: Learn about the consolidation patterns and market scenarios that could lead to Bitcoin breaking new highs.
• Upcoming Token Unlocks: Stay informed about significant upcoming token unlocks and their potential market impact.

• In the past one and a half months, exchange-traded crypto funds have been launched in two countries.
• Hong Kong introduced both Bitcoin and Ethereum exchange-traded products in late April, followed by the UK doing the same last week.
• Tomorrow, Australia will launch its Bitcoin spot ETF, but like the recent launches in Hong Kong and the UK, we do not expect it to be a major success.

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

• In mid-January 2024, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
• The TSE list shows which companies have disclosed a policy/consideration. But no data/links. We are weeks ahead of the TSE and we have all the links (and the shame list).
• We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.

• Indiabulls Housing Finance (IHFL IN) Raised INR 3,693 crores through rights issue, issued $350 million bond.
• Strong balance sheet, low NPAs, poised for growth in the retail housing via its asset light model.
• Rebranding to Samman Capital signals new phase of the company with multi-year growth guidance.

• Expectation of a 25 basis point cut from the ECB with a focus on delivering on that commitment
• Market pricing in an incomplete cutting cycle, with potential for further easing depending on inflation dynamics
• Long duration valuations attractive in both short and intermediate sectors of the curve, with limited risk of a significant sell-off.

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

• Alipay will come out of its placement linked lockup for its remaining stake in Kakaopay (377300 KS) today.
• Alipay (i.e. Alibaba Group (9988 HK)) had earlier sold some of its stake in Jun 2022 and Mar 2024. It still has over US$1bn worth of shares left to sell.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
• The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
• The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

• The changes to the CSI All Share Investment Banking & Brokerage Index were announced after market close on 31 May and will be implemented at the close on 14 June.
• Guosen Securities (002736 CH) will be added to the index while Northeast Securities (000686 CH) will be deleted from the index.
• There is a lot of flow and impact for both stocks and the stocks could outperform/underperform their peers over the next couple of weeks.

• IVs Spike with Election Results release on 04-June-2024. Post event there’s a risk of large IV-crush regardless of the result.
• Current Vol-state is “High & Up”. Wait for the switch to “High & Down” before initiating new risk-premia harvesting strategies
• Weekly IVs have received large markups due to elections. Entire Vol Curve is now in Backwardation –  curve inversion at extreme levels

• ASM is a hedge fund with a strong track record of investor activism in taking over distressed assets and closed-end funds. 
• Lazard, the second largest CMCDI shareholder, bought shares last week at a multi-year high sending a strong message to the market.
• CMCDI can also explore announcing a discount management program besides agreeing to ASM’s claim to sell assets to pay dividends and offer a share buyback to reduce the NAV discount.

• Atour reported C1Q23 revenue 4.6%/6.8% higher than our est./cons., and non-GAAP NI 6.9%/8.8% higher than our est./ cons, driven by hotel expansion and new retail products.
• The company raised total revenue guidance from 30% to 40% YoY for 2024 due to a strong retail sales trend. 
• We believe retail sales is a form of increase in Atour’s same store sales. We thus raise TP to US$39 to reflect this retail-driven increase of same store sales.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, we undertook a peer comparison and looked at valuations for Shift Up (462870 KS). 
• On the placement front, it was another busy week with a number of blocks in India along with Asmedia Technology (5269 TT)‘s GDR offering and Exedy Corp (7278 JP). 

• KE Holdings (BEKE) reported C1Q24 revenue/non-GAAP NI in-line/35% above consensus and guided a modest revenue growth of 10% YoY in C2Q24
• We maintain our view that C1Q24 would be the trough as subsequent improvement, albeit at slower magnitude, should happen from C2Q24
• We maintain the stock as BUY rating but lower TP to US$21 to reflect a postponed recovery schedule.

• The Discounts to NAV of covered holdcos did not follow a clear trend during May. Discounts to NAV: C.F.Alba, 46.8% (vs. 49.1%); GBL, 42.9% (vs. 39%); Heineken Holding, 18.3% (vs. 17.3%); 
• Industrivärden C, 2.5% (vs. 4.7%); Investor B, 12% (vs. 8.3%); Porsche Automobile Holding, 35.3% (vs. 41.1%). Rio DLC spread widened to 23% (vs. 22.5%).
• What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• For the month of May 2024, 10 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$6.6bn.
• The average premium for the new transactions announced (or first discussed) in May was ~60%. The average premium YTD is ~46%. Japan is well up yoy. Hong Kong is down.
• This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.