Financials

• Local institutional investors were disappointed Kiwoom omitted COE from their value-up disclosure. They seek clearer plans to address low-yield assets and reduce COE.
• Rapidly rising interest in COE among local institutional investors is now shaping the screening criteria for the Korea Exchange’s value-up index, possibly using COE as a primary factor for inclusion.
• Competition likely centers on selecting and weighting stocks, including those beyond KOSPI 200. Key metric: COE linked with ROE.

• The majority of its revenue comes from selling float glass, which is used in buildings and construction. 
• The Chinese government has started home ownership relaxation that will reinvigorate the real estate market. 
• It is still trading at 67% lower to 3 years ago. 

• With Indian capital markets booming, companies are tapping capital markets regularly for fundraising even though they have recently raised funds.
• There are also cases where company after concluding IPO in recent years are going for fund raise
• The market are jittery about possible equity dilution and unclear fund raising objectives

• April monthly data on pre-tax income shows slowing YoY growth compared with YTD growth
• NIM pressure was severe in past six months and this can be a key driver of less profit growth
• Credit costs in decline supported net profit delta, but this may not longer be sustainable

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess China Vanke’s ESG as “Adequate”. The company has “Adequate” scores for all three pillars. Controversies are “Immaterial” and Disclosure is “Strong”.

• American International Group Inc. (AIG) reported a solid performance for the first quarter of 2024, showing significant improvements.
• Peter Zaffino, the company’s Chairman and CEO, remarked on the steady growth witnessed this year, with the report indicating a 9% year-on-year increase in adjusted after-tax income, seeing it to $1.2 billion or $1.77 per diluted common share.
• Some key factors driving this growth include the expansion of AIG’s operations, particularly via its General Insurance underwriting segment, which experienced a 19% year-over-year increase, translating to underwriting income of $596 million in Q1 2024.

• MetLife Inc. delivered solid financial results for the first quarter of 2024 with strong top-line growth, consistent execution, and sustained momentum.
• The company reported adjusted earnings of $1.3 billion or $1.83 per share, up 20% per share from the prior year period, reflecting a partial rebound in variable investment income led by private equity gains.
• Net income for the first quarter was $800 million, taking a sharp rise from $14 million from the prior year period.

• ANZ Funds is looking to raise around US$149m from selling its remaining stake in AMMB Holdings (AMM MK).
• ANZ has sold the majority of its stake in AMMB earlier in Mar 2024. Coming to markets again to sell its remaining stake, the deal here should be well flagged.
• In this note, we run the deal through our ECM framework and comment on deal 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.

• Shui On Land

• Recently, we have discussed the significant positive shift in the U.S. regulatory environment for crypto.
• You might be weary of regulatory discussions, but we need to address the European Union’s Markets in Crypto-Assets Regulation (MiCA) framework.
• This framework is set to take full effect on December 30, 2024.

• The value-up index aims to align closely with the KOSPI 200’s composition, adjusting stock weights based on factors from KRX Governance Leaders 100 and KRX ESG Dividend Opportunities Index.
• Insiders confirm NPS will create new funds to track the value-up index, needing SAA adjustments and Fund Management Committee approval. Despite hurdles, government backing suggests smooth NPS involvement.
• Buybacks could cause passive outflows in KOSPI 200 rebalancing and inflows in value-up index rebalancing. This timing discrepancy could create a consistent passive flow pattern for these stocks.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock 
• These block deals generally include selling promoters and big funds at a price discount to its current market price 
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Ally remains confident in their ability to navigate challenges with a focus on pricing and underwriting discipline
• Ally’s strong capital position and strategic focus on digital banking position them well to benefit from potential economic recovery and rising interest rates
• Author believes Ally’s stock has significant long-term growth potential and could triple in value, with limited downside risk in the short term

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.

• Part of our housing finance checks, we have been visiting Aavas Financiers Ltd (AAVAS IN)  branches for over two years now.
• While the situation was grim early on post the management change and increased competitive intensity, the current channel inputs are encouraging.
• Key areas that warrant attention are growth trajectory, yields, and tech upgrade. 

• RaaS Research Group has published an update report on diversified financials company Bell Financial Group (ASX:BFG) following the company’s presentation at the Bell Potter Emerging Leaders’ Conference yesterday.
• An April YTD trading update provided at the conference points to revenue growth of 23% and Profit After Tax (PAT) growth of 135%, an acceleration on Q1 CY24 Profit Before Tax (PBT) growth rates provided at the AGM, with all divisions profitable.
• This compares to a RaaS H1 CY24 PAT growth estimate of 90%, placing the group on track to achieve our H1 estimates.

• BTC Spot ETFs Fuel Bull Rally: ETF inflows drive Bitcoin’s rally, signaling strong bullish momentum and potential all-time highs.
• Market Structure Shift Supports BTC: Positive ETF flows correlate with Bitcoin price gains, indicating crucial market structure changes.
• ETH Spot ETF Ignites Alt Season: Unexpected ETH spot ETF approval boosts Ethereum, sparking a potential altcoin surge.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock. 
• These block deals generally include selling promoters and big funds at a price discount to its current market price. 
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• On the 12th March, Aussie-based investment plays QV Equities Ltd (QVE AU) and WAM Leaders Ltd (WLE AU)  entered into a Scheme. 
• The current scrip terms are 0.739 new WAM shares per QVE share; OR A$0.989/share cash. Terms will be adjusted for updated pre-tax NTA/shares of both companies after the Scheme Meeting. 
• The Scheme Booklet is now out, with a Scheme Meeting to be held on the 28th June. Expected implementation on the 15 July. The IE says fair & reasonable.

• On 24 May, Banco Bilbao Vizcaya Argentari (BBVA SM) submitted the authorisation request for its all-stock offer for Banco De Sabadell SA (SAB SM). Closing expected to take 6-8 months.
• Gross spread (CSP 27 May) is 7.6%, which This translates in a 52% implied probability of deal success. The fixed income market appears to share this view.
• Nevertheless, from a long-only perspective, the risk/reward of Sabadell is interesting. The deal values Sabadell’s shares at €2.07 each, an implied equity value of €11,187 million, for a 0.92 P/TBV.

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

Deutsche Beteiligungs (DBAG) reported an NAV total return of 3% in H124 (to March 2024) following the first-time recognition of 2024 portfolio company budgets and 2024 consensus forecasts for peers in Q124. Its H124 return includes a net €19m negative effect from the incorporation of additional portfolio valuation factors. DBAG’s H124 performance was supported by the successful sale of in-tech at a healthy 3.2x multiple on invested capital (MOIC). DBAG also closed the initial investment in a 51% stake in ELF Capital. Its shares now trade at a c 22% discount to NAV.

• After entering a trading halt on the 16th May pursuant to the Takeover’s Code, property manager Huafa Property Services (982 HK) has now announced a privatisation by way of a Scheme. 
• The cancellation price of A$0.29/share is a 30.63% to last close, a 70.59% premium over the 30-day average close, and a life-time high price. The price is final.
• The Offeror, Zhuhai Huafa, a state-owned enterprise wholly-owned by Zhuhai SASAC, plus concert parties hold 42.63% of shares out. Clean deal.

• In January this year, Argyle Street, a (now) 8% shareholder of China Merchants China Direct Investments (133 HK) (CMCDI), a closed-end investment company, proposed a solution to boost shareholder value.
• Two months later, Rydal Value Fund (stake unknown) also proposed a means to boosting shareholder value along similar lines.
• CMCDI is currently trading at a ~63% discount to NAV. But it is up 78% since Argyle’s initial proposal, and recently touched a six-year high. Argyle is still buying.

• Huafa Property Services Group (982 HK) announced a privatisation offer from Huafa Industrial Co., Ltd. Zhuhai (600325 CH) at HK$0.29 per share, a 30.6% premium to the undisturbed price.
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
• The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.  

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
• Today is the base date for the June 2024 index review. We expect five changes and some of these names are different from our previous set of expected ADDs/DELs.
• We estimate one-way flow to be around US$1.3bn which translates to a turnover of around 20%.

• Singapore-based Linnovate Partners, an asset servicing and fintech company for the alternative investment industry, has received a US$40 million funding commitment led by Temasek-owned SeaTown Private Capital Master Fund.
• This capital infusion will enable Linnovate to scale operations and drive innovation.
• Henry Lin, founder and CEO of Linnovate Partners, said: “This investment will be instrumental in accelerating our growth trajectory, providing us with the necessary resources to enhance our service offering, and continue delivering cutting-edge solutions to our clients and the industry itself.”

• Do we even need to mention the most significant news from last week? Probably not.
• However, here is a brief summary: the U.S. Securities and Exchange Commission (SEC) approved an Ethereum spot ETF on Thursday.
• Almost as significant as the approval itself is the shift in the U.S. regulatory environment’s tone toward crypto.

• Starting May 27th, KRX-listed firms can voluntarily disclose value-up details, publicly available on the website. Additionally, view five investment indicators for all KRX-listed companies below.
• Finalized version similar to draft, with added content requested by listed companies, like R&D investment growth rate. Tax incentives excluded, awaiting alignment with Ministry’s plan in July.
• KRX keeps a screening framework for the index akin to March’s criteria, with ROE likely having the highest weight. Recent signals hint at increasing dividend weighting.

• Hoshino Resorts Reit (3287 JP) is looking to raise US$125m from a primary follow-on. Proceeds will be used to acquire the OMO7 Osaka asset.
• The REIT has been active on the acquisition front, undertaking a number of capital raisings in recent years.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Multiple factors help IVs stabilize after last week’s spike. “High & Up” vol state to persist until elections results on 04-June-2024.
• SEBI makes changes to Dynamic Price-band Mechanism. Will impact options market-making & should have an overall Vol suppressing effect. 
• Nifty50 10-delta Risk-reversals extend to -8.5% as the Index reaches 23000. Risk-premia favouring puts over calls is looking over-extended.

• Recommendation to buy ISEC shares at Rs 840 per share with a price target of Rs 1200 per share
• Dissatisfaction among minority shareholders due to insider’s attempt to acquire remaining shares at a lower price
• Illiquidity and limited institutional investors due to Parent owning 75% of shares, potential merger poses a risk but shareholders can extract fair value even in a merger scenario

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.

• StoneCo Ltd., a financial technology company in Brazil, provided its Q1 2021 results with an updated outlook on the business.
• The company’s business performed strongly, delivering strategic priorities with significant growth in financial services across all client offerings.
• StoneCo also launched instant payments in Ton, which fulfills a key request from micro-merchant clients.

• The Hang Seng Index has been rallying for 3 weeks but then last week the rise was halted and the index gave up a good chunk of the gains.
• It seems the index has become quite volatile but this week it could go up again, or otherwise next week, the reversal is imminent given its oversold condition.
• It’s hard to predict if the rally can continue after the bounce, the index seems a bit long-term overbought, albeit short-term oversold. A contradiction, but that is the situation now.

• The continued “higher for longer” interest rates in the US, along with widening JGB yields adds weight to the Bank of Japan potentially raising benchmark rates further
• In this report, we expand our coverage of the bigger cap banks’ metrics to include the equity holdings of the top six market caps and the banks’ BoJ deposits
• We see further upside for Japanese bank shares, especially those geared into higher domestic rates and with the potential for equity holdings disposals; we like Resona, Mizuho, SMFG and Concordia

• We are slightly decreasing our diluted EPS estimate for 2024 by a penny, from $2.20 to $2.19, a 2% gain from 2023’s actual diluted EPS of $2.15.
• Our initial estimate for 2025 is $2.35 per diluted share, representing a 7% gain over our 2024 estimate.
• We expect moderate gains in net interest income in 2024 and 2025 as solid loan growth, estimated at 8% in 2024 and 8% in 2025, will be partly offset by a lower net interest margin.

• DBS, OCBC and UOB have booked S$500 million in combined net institutional inflow for the 2024 year through to 23 May.
• Combined net interest income (NII) for the trio was S$8.3 billion in 1QFY24, the sixth consecutive quarter combined NII surpassed S$8.0 billion, and up 46% from the combined S$5.7 billion in 4QFY19.
• This compares to the trio averaging 5.8% total returns for the full 2023 year, with S$2.5 billion of combined net institutional outflow.

• Lee urgently appeard on TV today and said, “In June, we will explain whether and when short selling will be resumed, and what criteria we might use for the resumption.”
• He noted considering flexible partial short selling resumption even if only some conditions are met, contrasting the Presidential Office’s stance from two days ago.
• Presidential Office led short selling ban, now likely under FSC/FSS jurisdiction for resumption.

• Chailease is facing pressure in all of its markets, Taiwan, China and Asean, with no signs of easing.
• High frequency data (HFD) from Chailease gives us April monthly numbers, with double digit  net profit decline and a greater EPS decline
• Credit costs are now elevated at peak levels since early FY19 for the past two quarters, and we wonder if FY24 will see far higher figures, given economic weaknesses?

• China International Capital Corporation (3908 HK) is a laggard among the Chinese securities companies. With the rebound in HSI and Shanghai Composite, such divergence should narrow.
• The investment banking business should recover following the rebound in the secondary market and equity valuations. HK’s IPO funds raised are forecast to double in 2024.
• At 0.4x 12-month P/B, the market has deeply discounted CICC’s earnings outlook. However, as earnings recovery will be fast, its share price will react rapidly.

• Ryan Specialty Holdings (RYAN) is a leading wholesale insurance broker founded in 2010 by former AON CEO Pat Ryan
• RYAN generates 65% of revenue from wholesale insurance brokerage and 35% from underwriting and binding authority programs
• The company has achieved consistent double-digit organic growth through over 45 acquisitions, majority owned by Pat Ryan and employees, focusing on long-term value creation

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.

• China Vanke
• Lippo Malls Indonesia Retail Trust

• The launch of bitcoin ETFs, specifically ibit, ibiz, and Blackrock software, has seen unprecedented success and rapid growth
• Ibid ETF reached $10 billion in assets in just 49 days, breaking records previously held by other ETFs
• Robbie Michnick, head of digital assets at Blackrock, discusses the journey of bringing bitcoin and Blackrock together and the potential transformative impact on the industry

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

• Indeed, this has been a remarkable week.
• In last week’s Crypto Moves #28, we noted that the tight race between President Biden and Trump in the 2024 Presidential Election, along with Trump’s unexpected pro-crypto stance, might push Biden to publicly support the crypto industry.
• This move would aim to attract the growing number of pro-crypto voters.

• According to market information confirmed so far, the resumption is set for July 1st, and short selling will be restricted to the constituents of KOSPI 200 and KOSDAQ 150.
• The surge in trading volume likely stemmed from the return of long-short positions post-short-selling ban, leading to an overall market volume increase.
• Another critical factor is the buying pressure on value-up stocks resuming in early July. We should aim at the price impacts of intersecting long-short flows and value-up stock purchases.

• Go Digit General Insurance raised around US$315m in its India IPO.
• Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
• We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.

• We add value plays Bandhan and UBI to the buy list alongside HDFC Bank and Baroda, turning neutral from negative on SBI. Bandhan is our core Indian bank pick, UBI benefits from improving return trends

• Philippine Stock Exchange (PSE PM) reported a slow Q1 2024, with revenue growth of -8% YoY but profit growth of 20% YoY, led by gains on investment income
• Cash and Investments at 4 bn pesos account for 24% of mkt cap. It is cheap on EV-EBITDA at 15.7x FY24e. The dividend yield at the current price is 5%. 
• Multiple catalysts, such as the acquisition of PDS and the implementation of lower clearing fees, the addition of depositary receipts, and derivatives, will also be implemented over time. 

For Q124, Regional REIT (RGL) has maintained the rate of quarterly DPS at 1.2p. We expect DPS for the year will partly depend on RGL’s chosen re-financing route. Meanwhile, RGL’s asset disposal programme continues to progress. Portfolio EPC ratings have continued to show good improvement and, adjusted for disposals, rent roll and occupancy were robust. We have made no changes to our forecasts.

Triple Point Social Housing REIT’s (SOHO’s) Q124 update confirms a continuing improvement in rent collection. The newly set FY24 DPS target is unchanged compared to FY23 at 5.46p as the board considers the impact of asset sales and transfers. This represents a yield of 9.0%. Strong indexed rental income continues to support income and capital values.