Daily Brief Financials: Daishin Securities, Road King Infrastructure, CI Financial, Foxtons and more

• After the market close on 21 March, Daishin Securities announced a capital raise worth 230 billion won through RCPS. Daishin Securities currently has a market cap of 901 billion won. 
• Through this issue of 230 billion won in RCPS, Daishin Securities achieved 3 trillion won in equity capital, which is a condition for applying as a comprehensive financial investment business.
• We are Negative on Daishin Securities in the next 6-12 months as the concerns about RCPS capital raise related shares dilution are likely to weigh negatively on its stock price.

Road King’s FY 2023 results were poor, with the company’s gross margin plunging to negative 5% (FY 2022: 17%). The EBITDA and net profit margins were negative 13% and negative 30%, respectively. While Road King has continued to reduce net debt, liquidity is poor. In addition, we view negatively the company’s downbeat statement of “significant debt repayment pressure due to a lack of refinancing channels”.  

We believe it is difficult to ascertain management’s willingness to honour repayments, amid the bleak business prospects. Road King has a small and dwindling land bank that might suffice for only another 1-2 years of development. Moreover, the negative gross margin suggests that the business is no longer profitable. In our view, this increases the risk that the company may opt for a holistic restructuring of the USD notes (which account for 65% of total debt) to reduce its debt load.

We move to “Not Recommended” from “Hold” on the ROADKG 6.7 ’24s. 

• CI Financial Corp is a low-risk investment manager with a highly appealing valuation at 4x FCF
• The company has improved business operations, including reduced debt levels, share buybacks, and support from shareholders like the chairman
• With a current stock price of $14.55 and a reasonable SOTP valuation of $24-29, CI Financial Corp offers significant value for investors, especially considering potential in its various business segments.

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.

The new strategic vision set out by the CEO is gaining significant momentum, driven by investment in staff and in best-in-class bespoke IT and data platforms, and implies that medium-term targets are now coming into focus. Market share is being gained in all divisions, which is likely to be boosted if the sales market stabilises in 2024. We have modestly raised forecasts and our valuation to 132p/share and believe that if interest rates stabilise or ease further, there are upside risks to our forecasts.