Daily Brief Financials: KakaoBank , Ngern Tid Lor , Bank Rakyat Indonesia, Information Services, Record PLC and more

• In this insight, we discuss the increasing probability of Kakao Corp (035720 KS) losing its controlling shareholding of KakaoBank (323410 KS).
• The FSS Chairman Lee Bok-Hyun emphasized that the FSS may punish Kakao Corp for a potential stock manipulation of S.M.Entertainment amid the M&A tender offer process earlier this year.
• At this point, the higher probability event appears to be a combination of fine and Kakao Corp selling at least 10% of its stake in Kakao Bank to another company.

• The SET50 index tracks the performance of the top 50 largest and most liquid names listed in the Stock Exchange of Thailand (SET).
• In this insight, we take a look at the potential ADDs/DELs for Thailand’s SET50 index rebalance in December 2023.
• I currently see two ADDs and two DELs for the SET50 index but if prices fluctuate significantly in the next month or so there could be more changes.

• Bank Rakyat Indonesia’s numbers made for positive reading with loan growth coming through in productive areas, especially for Kupedes commercial micro-loans but also from its PNM and Pegadaian subsidiaries.
• The bank maintained its funding costs at highly competitive levels despite rising rates and time deposit growth with NIMs improving due to a better loan mix in micro.
• Bank Rakyat Indonesia (BBRI IJ) remains the most direct way to get exposure to greater financial inclusion and the underbanked in Indonesia. Valuations remain attractive with rising ROA and ROE. 

Information Services Corporation (ISC) has a strong track record of proficiently acquiring and innovating registries and related information services to benefit citizens and businesses in Canada and on a global scale. We expect ISC to continue to generate predictable and growing cash flows due to the non-discretionary nature of its core registry services, bolstered by its recent extension of the Master Service Agreement (MSA) with the Saskatchewan government by 20 years to 2053. Our DCF valuation of C$37/share implies 88% upside to the current share price, reflecting the sustainable, cash-generative nature of the company, encompassing a large, steady-growth Registry business and a fast-growing Services division.

In its Q224 update, Record reported core inflows of US$1.5bn that were more than offset by US$3.4bn of negative market and FX movements. Consequently, Record experienced a 2% net decline in assets under management equivalent (AUME) of US$1.9bn versus Q124. Record also earned performance fees of £1m in Q224 as the group continued to benefit from interest rate differentials. Management stated that the higher-margin asset management product rollout continues to progress, albeit at a slower pace than initially planned. Due to the shift in timing, we have scaled back our FY24 and FY25 PBT forecasts by 9% and 22%, respectively. Record will give further details on its growth initiatives at its H124 results on 17 November.