India

• Utkarsh Small Finance Bank (1639303D IN) IPO opens for subscription this week.
• The company currently is fifth largest SFB in India and has demonstrated robust growth in loan portfolio, deposits and improved productivity in the last two years.
• However, one must be cautious of the write offs worth INR 6 bn done in the last two years which benefitted the NPAs

• Dr Lal PathLabs Ltd (DLPL IN) reported 14% and 16%, YoY, revenue growth from its non-COVID business in 4QFY23 and FY23, respectively.
• The company’s base business is now back to pre-COVID trajectory. Margins are also nearing pre-COVID level. Going ahead, the company has couple of margin levers.
• Due to lesser competitive threat and uncertainty over COVID, FY24 is lesser challenging than the previous year. The company expects higher revenue growth in FY24 than FY23.

• Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
• The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
• There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.

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. Greentown China
2. First Pacific Co
3. Vedanta Resources
4. China Jinmao Holdings
5. Lifestyle International Holdings

and more…

• The investor spotlight is on the HDFC Bank-HDFC merger, and we continue to favour HDFC Bank with its positive passive investor momentum, premium returns and merger synergy potential
• Bank of Baroda, although not in the limelight like HDFC bank, is our value stand-out among the Indian bank peer group and it warrants increasing investor attention, in our view
• Bank of Baroda is delivering on improving asset quality and returns; the shares have positive momentum, and we see great value on its 1x PBV ratio to ROE of 15%

• Hero Motocorp (HMCL IN)  & Harley Davidson (HOG US) launched their collaborative creation, the Harley-Davidson X440, in India.
• While this is a step in the right and anticipated direction, there are potentially grave mistakes that need to be corrected.
• For HOG, there is more to lose than to gain from this development. Additionally, Eicher Motors (EIM IN) moat around the brand and a strong riding culture is likely underrated.

• Following HDFC Limited (HDFC IN)‘s delisting, JSW Steel Ltd (JSTL IN) will be added to the S&P BSE SENSEX Index (SENSEX INDEX EQUITY) at the close on 12 July.
• The change was largely expected, but passive trackers need to buy over 5 days of ADV and nearly 12 days of delivery volume of JSW Steel Ltd (JSTL IN) .
• The HDFC Limited (HDFC IN) delisting could help Wipro Ltd (WPRO IN) in avoiding deletion from the S&P BSE SENSEX Index (SENSEX INDEX EQUITY) in December.

• Macrotech Developers (LODHA IN) had several issues on the balance sheet and governance front earlier. While, the debt levels have significantly come down since the time, governance however needs improvement. 
• Flat sales and margin contraction, driven by some bizzarre expenses needs attention including some elongated debtors.
• We suggest investors should remain cautious about future uncertainty, as impairment of loans and adverse outcome of contingent liabilities may have a dent on the balance sheet. 

• HDFC Limited (HDFC IN) will stop trading at the close on 12 July and will be deleted from all indices at the close on that day.
• As expected, LTIMindtree (LTIM IN) will be added to the NIFTY Index while Jindal Steel & Power (JSP IN) will be added to the NSE Nifty Next 50 Index.
• Importantly, HDFC Limited (HDFC IN)‘s foreign shareholding has dropped over the quarter ended 30 June and that has index implications for future passive flows to HDFC Bank (HDFCB IN). 

• Q1FY24 AUM growth came in stellar at 9%+ QoQ, led by highest-ever quarterly AUM addition of INR 22700cr vs INR 16537cr QoQ. 
• BAF recorded its highest-ever quarterly increase in customer franchise at 3.84mm, taking the total to 72.98mm vs 69.14mm QoQ. New loans booked were also strong at 9.94mm vs 7.56mm QoQ.
• Deposits book grew strong to INR 49,900cr vs INR 44,666cr, a growth of 11.7%+ QoQ. Liquidity surplus is at INR 12,700cr vs INR 11,852cr QoQ.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
• The HDFC/HDFC Bank Merger is expected to trigger index changes in the next few days and we take a look at our expectations for these intra-review changes.
• Apart from that, I see no other changes for SENSEX in December 2023. However, there could be up to six changes for both BSE 100 and BSE 200.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Senco Gold (0655443D IN) ‘s long awaited IPO is scheduled to open this week.
• The company is the largest organized retail jewellery player in the East and has a pan India presence. 
• A look at its IPO filing and current financials reveal several key takeaways, including ongoing litigations, inability to generate cash and register key trademarks, etc.

• News out this morning that HDFC Bank and HDFC merger became effective 1 July 
• This occurred after the Boards approved the merger scheme on 30 June
• Funding cost benefits, operating cost synergies, product cross-sale: major benefits

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.

• MGM China Holdings
• Sino-Ocean Service
• Vedanta Resources

• Rise into late June/early July cycle peak on track with scope to overshoot after the 4th of July break (then expect a more volatile mid-July period). Reducing on strength.
• SPX kissed our 4,500 target with an overshoot projection at 4,547. Recent long from 4,470.
• Top Asia longs: NKY, Taiwan and India. Top shorts have been HSI and Kospi 200 (heavy bias to add on upticks). July will usher in a more volatile phase.

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.

• Tata Motors ADR
• Vedanta Resources

• The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
• There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
• There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

• Bank analysts sometimes like a story with high NPLs; recoveries can be powerful to profit
• For the past 7 quarters, NPLs are in decline at PNB, but most recent quarter is strongest
• There remains a large pool of NPLs at 8.7% of loans, for possible ongoing recoveries

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. Central China Real Estate
2. Sino-Ocean Group
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…