Daily Brief Financials: Nifty Next 50 Index, M & T Bank Corp, Atour Lifestyle Holdings, Bajaj Finance Ltd, Secure Trust Bank and more

• Top longs have been India and Australia. Top shorts HSI and Korea. Korea’s bearish wedge is maturing and stands out as macro risk.
• Turned neutral the Nikkei above 29,200. 29,500 represents from buy support to threaten 31,000. Near term top at 31k for a pullback try.
• USD upside breakout is front running a softer equity bias in Asia for June. SPX 4,200/20 top zone throw over probable.

• US banks tightening standards for loans, as well as the downturn in loan demand, provides a silver lining for banks by reducing funding pressures as well as the increasing spreads
• Among the regional banks, Western Alliance is seeing deposit inflows in 2Q23; more generally, the usage of the Fed’s BTFP and issuance by the FHLB seem well controlled
• We stick with our picks M&T Bank and Western Alliance, adding First Horizon to the buy list, where valuations stand out along with solid capital ratios and above average returns

• Atour reported its 1Q23 revenue 2.8%/4.3% higher than our est./cons., and non-GAAP NI 22.7%/38.8% higher than our est./cons. The bottom-line beat is driven by strong sales growth from Occ. 
• We expect 2Q23/2023 rev. to grow 75%/65% YoY, implying 115%/112% of RevPAR recovery rate vs. 2019 and 85/291 net new hotels. 
• We maintain the BUY rating, and raise TP by US$1 to US$35 to factor in the higher gross margin expectation at 40% in 2023.

• BAF ended FY23 with a PAT of INR 11508cr in line with our estimate of INR 11500cr+. BAF has guided for 5.1%+ ROA and 25%+ growth for FY24.
• Despite heightened competitive intensity from banks, Bajaj Finance Ltd (BAF IN) has managed to grow well as per its targeted levels without comprising on profitability. 
• BAF’s growing omnipresence via its digital platforms, branch expansion and deepening of product suite across branches will be key drivers of its next phase of growth.

Secure Trust Bank (STB) announced a robust trading update with net lending exceeding £3bn, driven by a 17.7% sequential increase in new business lending. Deposits also significantly increased year-on-year by 16.2%. STB has expanded its capital position through the issuance of £90m tier 2 capital bonds, which is now complete. The augmented capital will provide the bank with growth opportunities in its lending activities. Management states that STB is trading in line with expectations and remains confident in delivering on FY23 and medium-term targets as well as improving its cost income ratio by the end of the year. We maintain our estimates for FY23 and FY24 and highlight that STB should be trading at c 0.45x price-to-book value (P/BV), based on our FY24 estimates, to be fairly valued compared to peers. STB currently trades at a P/BV of 0.31x.