Daily Brief Financials: Ichigo Inc, Digital Core REIT, Hopson Development, Ping An Insurance Group of, Greentown China, RE Royalties and more

• Today after the close, Ichigo Inc (2337 JP) announced a stock buyback to go through the next 6 months. It is ¥3bn, which is not huge, but not nothing.
• It seems like a constant refrain, but shareholder structure matters. 
• Ichigo has a history of doing buybacks (10% of shares out are in treasury), and the historical patterns are interesting when comparing announced intention and actual result. 

• After underperforming since listing, Digital Core REIT (DCREIT SP) has outperformed Keppel DC REIT (KDCREIT SP) over the last few months.
• However, Digital Core REIT (DCREIT SP) still trades at cheaper valuations as compared to Keppel DC REIT (KDCREIT SP). 
• There could be relative outperformance over the next few weeks and any underperformance can be used to enter positions in the pair. There is an important catalyst.

Hopson’s H1/23 results were strong as expected, and will likely outperform those of many other POE developers. The top line grew 14% y-o-y to HKD 15.1 bn. Gross profit surged 75% to HKD 5.4 bn, with the gross margin rising by 12 ppts to 36%.

The company also managed to cut net debt by HKD 5 bn. We expect Hopson’s contracted sales and cash collection to be supported in the next 1-2 years by its high-quality land bank and CNY 47 bn of saleable resources. In addition, we believe the company faces low near-term repayment risk, given the limited ST bond maturities.

Our Credit Bias on Hopson is “Stable”. That said, we believe the bond price could be volatile amid the weak market sentiment and poor technicals. We maintain our “Hold” recommendation on the HPDLF curve.

• Weak results at Ping An Insurance across many divisions, with banking most important
• Life and Health negative insurance revenue delta, not offset by insurance cost delta
• Net asset growth is now at 5% YoY, from 9% YoY last year, from ~29% avg for years

• Greentown China (3900 HK) is a high quality China property developer that is unfairly suppressed given the extreme pessimism of the sector. 
• Even though the overall sales of China property industry will likely continue to decline, the market is large enough that some developers could stand to gain massive market share. 
• The company trades at 2.5x 2024E PE, and 71% discount to NAV, with expected growth in net profit in 2023 and 2024. 

• RE Royalties reported 2Q23 revenue of C$3.4 million, up 291.0% Y/Y from C$0.9 million in 2Q22.

• The company bought back the royalty from Teichos Energy and the loan repaid in the current quarter, driving a gain of $1.5 million in revenue.

• The company’s finance income has seen a decrease as a result of the repayment of the Teichos loan in May 2023 and no additional loan was advanced during the quarter.