Daily Brief Financials: Aichi Financial Group , Huatai Securities Co Ltd (A), Aavas Financiers Ltd, Industrivarden AB, Korea Stock Exchange KOSPI 200, Seazen (Formerly Future Land), Picton Property Income, Regional REIT Ltd, Extra Space Storage and more

• Every year in April there is an interesting phenomenon with TOPIX. It is what Janaghan Jeyakumar, CFA calls “The Big April Basket.” The TSE re-assesses Liquidity Factor Coefficients.
• It also does a FFW change, and this year it has Phased Weight Reductions for those slowly leaving TOPIX and PWR re-inclusions for those identified last October as going back.
• Janaghan had 18 “High Conviction” LF removals. All were hits. They are upweights. Then there are 34 changes to FFW coefficients.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
• According to my estimates, the SSE 50 expected ADDs and DELs could see US$1.7bn index buying and US$828mn index selling respectively (leaving nearly $900mm of funding sales to do).

• Market momentum continues to be strong. As we head into earnings season, the momentum is likely to continue.
• Strong operational updates Info Edge India (INFOE IN); Aavas Financiers Ltd (AAVAS IN) & Sula Vineyards (SULA IN).  
• The overall market sentiment, represented by the average revisions across all sectors, is nearly flat, with a slight positive revision for FY1E at 0.02% and essentially stable for FY2E.

• As of end of Q1, NAV was SEK 166.8 billion (SEK 386/share). NAV increased by 11% due to a sharp decrease in leverage, while the portfolio value rose by 6%.
• Industrivärden C shares are trading at a 5.5% discount to NAV (vs. 8.8% average for the last 5 years). It seems risky to bet on a further discount reduction.
• My target NAV is SEK 173,116 million (SEK 400.8/share). My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 361.7.

• The KOSPI 200 INDEX is currently pulling back for a 2nd week in a row.
• This could be an opportunity to go LONG,  if the pullback is limited to this (or at most the next) week closing down and reaching targets between 365 and 338.
• If the index goes down for 3 weeks and reached below 343 caution is advised: the pullback may be larger than expected in that case.

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.

• Pakuwon Jati
• Sunny Optical Technology Group

Picton Property Income has agreed the sale of Angel Gate, its second largest office asset, and largest portfolio void, with an agreed consideration above the Q323 valuation. The sale is part of its strategy to repurpose selective office assets and accretively recycle the capital. This sale supports NAV, and we expect a positive impact on earnings. Further repurposing asset management initiatives are being progressed.

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

• Author has a negative outlook on self-storage REITs, particularly EXR
• Valuations are high despite challenging outlook and higher interest rates
• Predicts industry’s long-term prospects are unfavorable due to institutionalization and increased competition

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.