Daily Brief Financials: IREIT Global, Swire Pacific (A), Kasikornbank PCL, Hopson Development, HDFC Bank and more

For our next Corporate Webinar we are glad to welcome IREIT Global’s CEO, Louis d’Estienne d’Orves.

In the upcoming webinar, Louis will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Jesus Rodriguez Aguilar. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Thursday, 6 July 2023, 17:00 SGT.

About IREIT Global

IREIT Global, which was listed on 13 August 2014, is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets. IREIT Global’s current portfolio comprises five freehold office properties in Germany, five freehold office properties in Spain and 27 freehold retail properties in France.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited. Tikehau Capital is global alternative asset management group listed in France, while City Developments Limited is a leading global real estate company listed in Singapore.

• Swire Pacific (19 HK) has announced it is selling its US Coca-Cola ops to its parent for HK$30.4bn (US$3.9bn). That’s 40% of its market cap.
• Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Bangkok Bank Public (BBL TB) is trading very close to its historic highs versus Kasikornbank PCL (KBANK TB) and keeps hitting a wall at that level.
• The number of NVDRs issued on Bangkok Bank Public (BBL TB) has been rangebound while there has been a steady decrease for Kasikornbank PCL (KBANK TB). 
• At current level, the risk/reward looks favourable to a short Bangkok Bank Public (BBL TB) / long Kasikornbank PCL (KBANK TB) position for the near to medium term.

We view Hopson Development as “High Risk” on the LARA scale. Our assessment primarily reflects the company’s constantly evolving business strategy and financial risk profile. Positives include Hopson’s high-quality land bank in premium locations (acquired at low cost) and the cash-generating investment property portfolio. Margins are robust given the company’s positioning as a high-end property developer, although this also exposes Hopson to high regulatory and market risk.

Our “Stable” Credit Bias is underpinned by the company’s resilient contracted sales, which are supported by the large and high-quality land bank, improving sales and abundant saleable resources. That said, we remain cautious on Hopson’s aggressive expansion and increasing involvement in equity investments, which may be debt-funded and could introduce significant performance volatility. Controversies are “Material”, while the ESG Impact on Credit is “Moderately Negative”.

While the company’s credit fundamentals appear to be healthy, we believe its bond price could be volatile due to negative impact from weak market sentiment and poor technicals. We therefore maintain our “Hold” recommendation on the HPDLF curve.

• What sets HDFC Bank apart from peers is stability, strength in profit, ROA, NPLs, NIM
• Peers see volatile, high NPL ratios, where HDFC Bank may see NPLs at less than 1% soon
• Amalgamation HDFC into HDFC Bank can see more interest, supported by fundamentals