Daily Brief Financials: Kakaopay , Abacus Storage King, AMMB Holdings, Resona Holdings, Primary Health Properties, NatWest Group , Coinshares International, EML Payments Limited and more

• After the market close on 5 March, it was reported that Alipay will sell a 2.2% stake (2.95 million shares) in Kakaopay (377300 KS) in a block deal sale.
• A key component of this block deal sale is that there will be a lock up period of 90 days post the sale date.
• We would avoid this block deal sale. There is a high probability of Kakao Pay’s share price falling below the block deal price of 38,380 won after 90 days. 

• With the review period for the March rebalance complete, Abacus Storage King (ASK AU) could be deleted from the index and there will be capping changes.
• The index changes will lead to a one-way turnover of 3.6% resulting in a one-way trade of A$21m. There are three stocks with over A$4m to trade.
• Goodman Group (GMG AU) is an inclusion to a global index in March and that buying will far outweigh the selling from the Vaneck Vectors Australian Property ETF (MVA AU). 

• ANZ Funds is looking to raise around US$242m from selling a portion of its stake in AMMB Holdings (AMM MK).
• Having written down its carrying value earlier, we would argue that the deal now is somewhat well flagged, with ANZ attempting to record some gains on investment.
• That being said, there is an overhang and the deal would be a large one to digest at 111 days of AMBank’s three month ADV.

• The current “higher for longer” interest rates in the US and other developed markets adds to the Bank of Japan potentially ending its negative interest rate policy
• Domestically, news reports suggest that the BoJ’s 2% inflation target is increasingly likely to be met in the short term, which further drives the potential normalization of interest rate policy
• Growing expectation of the BoJ’s negative interest rate policy exit adds upside to Japanese bank shares, especially those geared into higher domestic interest rates; we like Resona, Mizuho and Concordia

The key feature of Primary Health Properties’ (PHP’s) 2023 results was the further acceleration in rental uplifts, rising at the fastest pace for 15 years. This is driving organic earnings growth to fully cover progressive dividends, which are now in the 28th year of unbroken increase.

Q423 earnings demonstrated the inherent profitability and resilience of returns at NatWest Group (NWG). PBT came in 25% ahead of consensus, with beats on both revenues and impairments along with good cost control. Despite continuing normalisation of credit and assuming around two more base rate cuts in 2024 than are currently priced into the bond market, management expects to deliver a return on tangible equity (RoTE) of c 12%. On consensus estimates, the shares trade at 0.8x tangible net asset value (TNAV) and P/E of 6.4x in 2024e. Without a re-rating, the consensus 10% TNAV growth and 6.4% yield imply a 16.4% 12-month total return.

CoinShares International (CS) concluded its latest financial year with Q423 adjusted EBITDA of £25.7m, which brought its FY23 earnings to £56.9m (the second-best result in its history). The company is now introducing a dividend policy, aiming to pay out 20–40% of its total comprehensive income adjusted for currency translation differences. We calculate that, based on the FY23 results and current share price, this implies a healthy dividend yield of c 3.4–6.8%. CS is looking to expand into the US by exercising its option to acquire Valkyrie Funds (which has a US spot bitcoin ETF in its offering) and through its newly launched Hedge Fund Solutions business.

EML Payments reported good growth in revenue and underlying EBITDA in H124, mainly due to the benefit of higher interest income. Management’s focus has been on the underperforming PCSIL General Purpose Reloadable (GPR) business, now in liquidation, resulting in the cost cutting programme shifting to H224. With that obstacle removed, management can now shift its sights to growing the remaining Gifting and GPR businesses and rightsizing the cost base.