Daily Brief Financials: MS&AD Insurance, China Merchants China Direct Investments, ASX Ltd, Japan Post Holdings, Atour Lifestyle Holdings, Ethereum, New World Development and more

• The new excitement of the MS&AD story is the company’s commitment to sell down all of its cross-shareholdings and to use proceeds to fund growth and dividends.
• ROE is already far higher now than in recent years, and this can continue with rising dividends.
• Monthly insurance sales figures give a good window on the core business, with growth rates in May YoY and YTD accelerating.

• The recent news on China Merchants China Direct Investments (133 HK) was director Elizabeth Kan narrowly getting re-elected. Of interest, ISS recommended shareholders vote AGAINST. Glass Lewis was FOR re-election.
• The key takeaway here is that the majority of the minorities want change. The next development may occur in the lead up to the management agreement renewal in November. 
• In addition, Argyle Street Management, CMSCI’s key shareholder activist, is also requesting the company buy back 20% of shares outstanding at 90% of NAV. 

• ASX is seeing the number of listed companies in decline, although there are some positives with average daily turnover and secondary listings.
• Higher costs are keeping positives from reaching the bottom line fully, with costs to revenue are now 40% in 1H24 where this was 29% in recent interim periods.
• Capex plans for ASX and sticky inflationary figures on staff costs, the current year and following year net profit can see reasonable pressure.

• The company’s targets are underwhelming given the opportunity but low expectations built in
• A revamped strategy to increase profitability and shareholder returns is “radical” for this old-school company
• Execution is key for certain parts of the plan, but the market can do the rest

• Atour recorded steep product sales growth during 618. We raised our C2Q24 revenue by 7.5% and full year by 5.1%, driven by (1) stronger pillow sales during the 618 promotions; 
• Thanks to retail, Atour’s RevPAR after including retail sales maintained positive growth of 1.7% YoY, although pure hotel RevPAR dropped 2.9% YoY due to a decline in hotel price.
• We raise TP by US$1 to US$36/ADS and keep the rating as BUY, factoring in the strong growth momentum of Atour’s retail business.

• Just over a month ago, on May 23, the U.S. Securities and Exchange Commission (SEC) approved U.S.-based Ethereum spot ETFs.
• However, these ETFs have not yet launched because the SEC still needs to approve the necessary S-1 filings, in addition to the already approved 19b-4 filings from May 23.
• This final approval is largely a formality, suggesting that a launch is imminent.

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.

• New World Development
• Softbank Group