Daily Briefs

• Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.
• We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.
• Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.

• A new tax support framework for Korea’s value-up policy was introduced, but local markets argue that proportionate protection for minority shareholders is crucial for a significant market value increase.
• Korean political leaders are united in supporting this amendment to the Commercial Act, with recent events increasing the likelihood of bipartisan support for this crucial change.
• Given the administration’s commitment to the value-up and recent negative sentiment towards recent restructurings at Doosan and SK, there’s growing potential for minority shareholder protection to take root in Korea.

• Murakami’s entity, City Index Eleventh, and daughter reported a 5.05% position in Heiwa Real Estate (8803 JP). The shares were purchased from 24 May to 22 July.
• Murakami’s average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to Taisei Co Ltd (4649 JP).
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.

• Implied Volatilities (IVs) sold off dramatically post Budget Event – in spite of weaker underlying indices. Larger break of trading ranges likely needed to stall the slide in IVs.
• Wait-And-See approach to tactical decisions justified. Vol-Regime avoids a switch from “High & Down” state. Protracted grind lower in IVs projected.
• Vol Surface Smile has compressed alongside lower IVs. Skew remains unaffected by change in IV levels. Vol Term-structure has flattened.

• Shinhan Financial announced that it plans to increase shareholder return ratio to 50%, improve ROE to 10%, and reduce outstanding shares by 50 million+ by 2027.
• Shinhan Financial Group’s new, outstanding shareholder return policy has been one of the most impressive since the roll-out of the Corporate Value Up program in Korea a few weeks ago.
• The improved corporate governance policy is likely to lead to Shinhan Financial Group outperforming other financial stocks in Korea and KOSPI overall in the next 6-12 months. 

• Lot’s of confusion for me around Lufax (LU).
• I took my dividend in shares being under the impression the scrip price was $2.15 (1 ADR is 2 shares):“Option 2: Elect Stock – You may elect to receive the dividend paid in new ADRs of LUFAX HLDG LTD at rate USD 1.073647 per share held on record date.”
• But apparently it is actually $2.25? Did IBKR make a mistake, will I get my shares at $2.15 or did I misread the above? 

• Consolidated net operating revenue: JPY17.0bn (-16.0% YoY; -2.7% QoQ), with commissions received at JPY8.7bn (-11.5% YoY; +10.0% QoQ).
• US segment: Net operating revenue USD74.1mn (+4.5% YoY; +0.7% QoQ), SG&A expenses USD59.4mn (-1.1% YoY; -4.5% QoQ).
• Crypto Asset segment: Net operating revenue JPY3.1bn (+164.3% YoY; -29.6% QoQ), SG&A expenses JPY2.5bn (+55.3% YoY; +22.4% QoQ).

Record reported steady progress in its Q125 trading update. Assets under management (AUM) grew $0.5bn in the quarter to $102.7bn, driven by market and other movements of +$1bn offset by a modest net $0.5bn outflow. The AUM progression is in line with our end-FY25 estimate of $104.7bn. Performance fees surprised positively at £1.6m in the quarter, not much below our £2m estimate for the full year. We are not changing our estimates at this stage.

• Discover Financial Services is a successful business with strong financial performance and ownership of the Discover Network and Pulse debit card scheme in the US
• DFS focuses on prime customers and has a high-quality deposit base, remaining profitable during challenging economic times
• A merger announcement with Capital One Financial Corp. could reshape the financial services industry, with DFS set to be acquired at a significant premium to its undisturbed price

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.

• Krung Thai is our sole best value pick among the Thai banks, having solid post-provision profitability, near double digit ROE, a sound balance sheet and attractive PBV and PE ratios
• We downgrade Kasikorn from buy to neutral, as it has an unattractive PEG and we believe it is more exposed to credit quality deterioration and potential cost of risk reversal
• Bank Ayudhya is suffering from further credit quality deterioration which led to spike in its cost of risk; it now has the lowest NPL coverage relative to the peer group