In today’s briefing:
- Portfolio Update: February 2024
- EQD | The Hang Seng Index’s Turning Point
- Macrotech Developers Placement – Large Deal, and Not Cheap Per Se
- Crypto Crisp: Two Scenarios
- CCB- Housing Rental Subsidiary Listing May Be Overshadowed By Weak Credit Metrics
- Agile Group – ESG Report – Lucror Analytics
- AGBA – US$5m placement at a premium
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Portfolio Update: February 2024
- Recently, a friend of mine asked me why I own positions in Markel and Brookfield, as they do not align with my typical investment style of small niche companies trading at attractive free cash flow yields.
- I consider both companies as alternatives to index funds, benefiting from the expertise of two exceptional capital allocators, Tom Gayner and Bruce Flatt, at no additional cost.
- Over time, if my investment process proves itself as sound, the positions in Markel and Brookfield should naturally decrease in size.
EQD | The Hang Seng Index’s Turning Point
- The Hang Seng Index closed the month of February up, printing a +6.63% return, after months of uninterrupted downtrend.
- The big question at this point is: has the index reached the turning point that many have been waiting for?
- In this insight we will try to analyze what the possible short-term trend could be for the index after the recent trend reversal.
Macrotech Developers Placement – Large Deal, and Not Cheap Per Se
- Macrotech Developers (LODHA IN) is looking to raise around US$398m via a QIP.
- The deal here will be a well flagged one with LODHA’s board having announced its intention of raising up to INR50bn via a QIP earlier in Jan 2024.
- That being said, while representing just 3% of LODHA’s shares outstanding, the deal would be a large one to digest at 30 days of its three month ADV.
Crypto Crisp: Two Scenarios
- Last week was notably positive for the cryptocurrency market, particularly for Bitcoin and Ethereum, which both experienced impressive gains.
- Bitcoin’s price has surged to $65,000, marking an increase of over 25%, while Ethereum has increased to $3,510, up by approximately 15%.
- This puts Bitcoin close to its highest ever price, just below $69,000.
CCB- Housing Rental Subsidiary Listing May Be Overshadowed By Weak Credit Metrics
- The large SOE bank indicates that it will list its housing rental subsidiary, although the proceeds may be inconsequential given the size of CCB.
- CCB shows lower (and very low) credit costs despite what appears to be a major weakening in its NPL distribution.
- Loss NPLs are up 2.5x from FY19 to 1H23 much more than its 1.5x rise in total NPLs, so that its declining and benign credit costs may not last.
Agile Group – ESG Report – Lucror Analytics
Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Agile Group’s ESG as “Adequate”. The company’s Environmental and Social scores are “Adequate”, while Governance is “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.
AGBA – US$5m placement at a premium
On 15 February AGBA announced term sheets have been executed on a US$5.1m private placement of ordinary shares plus warrants to an institutional investor and AGBA’s group president and management. The terms are similar to the announcement made at the Q323 results with the shares priced at US$0.70 per share, a 62% premium to the previous day’s closing share price. The significant premium signals management’s confidence in AGBA’s long-term value, with group president Mr Wing-Fai Ng taking up 53% of the offer. Moreover, on 27 February AGBA released an investor update signalling a strong recovery in Mainland Chinese visiting Hong Kong over the 2024 Chinese New Year holiday, above 2018 levels. With its continuing focus on costs and sales of non-core activities, AGBA is streamlining itself to benefit from the anticipated continuing recovery in 2024 and beyond.