Daily Brief Financials: Bajaj Finance Ltd, Matsui Securities, Rakuten Securities, Aurora Acquisition Corp, Henderson Land Development, Coinshares International, Atlantis Japan Growth Fund, Futu Holdings Ltd, India Shelter Finance, Aoyama Zaisan Networks Co Lt and more

• Bajaj Finance (BAF) reported a strong Q1FY24 earnings, led by an all-time-high quarterly AUM growth of INR 22718cr. With this, BAF has upgraded its FY24 AUM growth guidance to 29-31%.
• AUM growth was aided by the highest ever new loans in a quarter. New loans booked at 9.94mm in Q1FY24 were up 34% YoY and 31%+ QoQ.
• Opex-To-NII has come down to 34.0% vs 35%+ earlier, led by operational leverage and deceleration in investments. This has helped the ROE to jump to 24.0% vs 23.1% YoY.

• Japan online retail stock broker, better average daily volume and rising new accounts
• Monthly data shows strong July average daily volume after an exceptional June
• Granular data on monthly new accounts is strong, now  at +31% in July YoY

• Rakuten Group (4755 JP) announced last month that its consolidated subsidiary, Rakuten Securities (RAKUSEC JP), has applied for a listing on the Tokyo Stock Exchange.
• In the last eight quarters, the Securities business has experienced more than 100% profit growth, thanks to linear revenue growth while costs remained relatively stable.
• The previous private market valuation of ¥400bn implies a PE ratio of 15.0x, assuming the company maintains its current 2Q23 profitability level.

• I am short AURC (Aurora Acquisition Corp), the SPAC that will be bringing Better.com to market next week. I think the fair value of the company is ~81 cents – it is currently trading at $32.
• Yes, borrow is hard to come by – but it does exist in small quantities. When the DeSpac occurs next week, if the stock doesn’t collapse 98% on day one, then borrow should be accesible.
• Better CEO/founder Vishal Garg has a long history of bankruptcies, deception and fraud accusations.

• Henderson Land is one of the largest RE developers in Hong Kong, with investment properties portfolio in Central, as well as HK DP, China DP and IP.
• Major share price drivers include (1) farmland conversion in Hong Kong (2) US rate hike as it has the second highest gearing among HK real estate companies
• However, we see limited catalysts and therefore limited re-rating potential, thus bearish on the stock.

CoinShares International (CS) delivered another solid set of quarterly results, with Q223 EBITDA of £12.8m versus £8.4m in Q123. Its asset management business generated fee revenue of £10.6m (down from £14.2m in Q222, but up from £9.2m in Q123) as total AUM rebounded to £2.14bn at end-June 2023 from £1.44bn at end-2022. Its capital market infrastructure activities (CSCM) posted a £10.0m gain in Q223, bolstered primarily by fixed income, staking and decentralised finance (DeFi) activities. CS is continuing to develop its active asset management business, starting with running its first strategy to generate a track record ahead of the formal launch towards the end of 2023.

The Atlantis Japan Growth Fund (AJG) board has announced that it has agreed heads of terms for a proposed combination of its assets with those of Nippon Active Value Fund (NAVF). The proposal is intended to address AJG’s relatively small size – current assets under management (AUM) total c £78m ¬– and follows recent disappointing relative performance. The combination, which is subject to the approval of the shareholders of both AJG and NAVF, offers AJG shareholders ongoing exposure to the attractive investment opportunities available in the Japanese market, especially among cash-rich smaller companies. They may also benefit from the expertise of NAVF’s managers. NAVF has been the top-performing Japanese fund since its inception in February 2020 and its managers have over 30 years’ experience as active managers in this market. The proposal also includes the option for AJG’s shareholders to realise a portion of their cash if desired. The enlarged NAVF will offer all shareholders greater liquidity, as well as a likely reduction in ongoing costs.

• We think Futu has proved its ability to retain its mainland China users. The DAU remained stable, and the growth rate of clients’ HK assets outpaced the market in July.
• Futu’s overseas expansion is quickly ramping up in Japan, Malaysia, and is progress steadily in Singapore and Australia. We expect the monetization in Malaysia begin in 2024.
• We expect Futu 2Q23 revenue 4.5% higher than consensus, our non-GAAP NI 8.7% higher than consensus. We maintain BUY rating on FUTU and raise TP by US$4 to US$55.

• India Shelter Finance (0570670D IN) is looking to raise up to US$217m in its upcoming India IPO. The deal will be run by Ambit, Citigroup, ICICI Securities and Kotak Mahindra.
• India Shelter Finance (ISF) is a retail focused affordable housing finance company. Between FY21-23, the firm registered a two-year CAGR growth of 40.8% in terms of AUM, according to CRISIL. 
• Its target segment comprises self-employed customers, focusing on first time home loan takers in the low and middle income group in Tier II and Tier III cities in India.