Daily Brief Financials: Link REIT, Japan Post Bank, DGB Financial Group, Hang Seng China Enterprises Index, Sabana Industrial REIT, Shum Yip Property Operations Group, IP Group PLC, Georgia Capital PLC, Seazen (Formerly Future Land) and more

• In early February, Link REIT (823 HK) announced it would do a 1 for 5 rights offering, with the Exercise Price well below TERP.
• The REIT units dropped in price as the already unlevered REIT was not seen to be needing further deleverage and early debt repayment in a rising rate environment.
• Units went ex-Rights on 24 February. The rights start trading tomorrow. That means flows. Of multiple kinds. Worth thinking about.

• Since the offer announcement, Japan Post Bank (7182 JP)/JPB’s shares have risen by 4.4%. On 1 March, JPB completed the ToSTNeT-3 buyback by acquiring 59.5 million shares for JPY70 billion.
• To understand JPB’s trading pattern, it is instructive to look at Japan Post Insurance (7181 JP)/JPI’s 2019 offering and Japan Post Holdings (6178 JP)/ JPH’s 2021 offering.
• JPB’s shares should follow the trading pattern playbook of JPI’s 2019 and JPH’s 2021 offerings and start trading below the pre-offer last trading price during the subscription period.

• K200 ad hoc change announcement date should be March 30 as the buyback ends on March 28, and rebalancing trading should occur on March 31.
• From a juice-level perspective, the entry point and timing for JB Financial showed much better performance from EGM approval rather than the announcement.
• We should consider gradually building up positions from this point until March 30 announcement or one day after (T-1 effective) while utilizing Kodex Banks ETF to hedge our long positions.

• The HSCEI 2023 dividend futures have moved up over the last few months though there was a sharp move lower in the last couple of weeks.
• With results and dividends scheduled to be announced in the next few weeks, we take a look at the fair value estimate for the 2023 dividend futures.
• We also list out the things to watch for over the next few weeks and months that could impact the 2023 dividend futures and the 2023/24 dividend steepener.

• Sabana Industrial REIT (SSREIT SP)’s partial offer from Volare of S$0.4504 per unit (S$0.465 in cash – S$0.0146 2H2022 distribution) is now unconditional. The final closing date is 24 March.
• On the assumption that ESR Cayman and Quarz Capital did not tender, acceptances representing 16.16% of outstanding units imply current proration is 61.87%.
• Based on the current proration of 61.87% and at the last close price of S$0.420 per unit, the breakeven price is S$0.373 per unit.

• Shum Yip Property Operations Group (SYPOG HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
• Shum Yip Property Operations Group (SYPOG) is a property management, commercial operational and city services provider in China.
• As per Frost & Sullivan (F&S), the firm was eighth among comprehensive property management, commercial operational and city services providers in China as per 2021 revenue.

IP Group’s NAV per share came in at 132.9p at end 2022, down 20% year-on-year in total return terms but only 2% below the end-June 2022 level. The NAV decline during 2022 was primarily due to the £428.5m loss from listed holdings (before FX changes, mostly Oxford Nanopore Technologies, ONT), while private holdings contributed gains before FX of c £101.4m (or 5.8% of opening NAV). Excluding ONT, IP Group posted a £25.2m profit in 2022. The company will focus on driving short- to medium-term returns from its more developed holdings and devote resources to its ‘priority companies’, which it believes will underpin its self-sustaining model (its top 20 holdings make up 71% of portfolio value).

Georgia Capital’s (GCAP’s) NAV per share total return in Q422 was 14.9% in Georgian lari (GEL) terms (8.5% in sterling), bringing the full year return to 4.0% (33.2% in sterling terms due to the significant appreciation of GEL). The portfolio value uplift in the quarter was mainly driven by the strong share price performance of Bank of Georgia (BoG), up 31% in sterling terms. This allowed GCAP to bring holding leverage closer to its target level, while maintaining a good liquidity position (up 14% y-o-y in US dollar terms). Meanwhile, GCAP shares continue to trade at a wide discount to NAV, currently 61%, based on GCAP’s ‘live’ NAV estimate, implying that the value of BoG shares and the put option on the water utility business is currently higher than GCAP’s market capitalisation.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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