Daily Brief Financials: Power Finance, Commonwealth Bank of Australia, Hana Financial, Hopson Development, SES AI Corp, Target Healthcare REIT PLC, Tetragon Financial Group Ltd/F and more

• Power Finance, Astral, IDFC First Bank, Cummins India, HDFC Asset Management, Ashok Leyland, Polycab India and Supreme Industries have all run up over the recent past and have investor attention.
• The increase in market cap has put the stocks on active manager radars and could also result in the stocks being added to global indices in the near future.
• We take a look at the positioning on the stocks and recommend pair trades to reduce market risk while trying to capture alpha.

• Credit cost surge in 1H23 is strangely tempered in 2H23 results, although still rising
• Despite rising credit costs, they remain at relatively low levels compared with history
• Data on credit metrics suggest to us that credit costs should have been higher in 2H23

• In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds
• NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most
• Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist

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.

• China SCE
• Hopson Development
• Sunny Optical Technology Group

Target Healthcare REIT’s Q423 shows a second consecutive quarter of NAV growth, as property yields stabilise and indexed rent uplifts drive valuation growth. Rental growth and near-full rent collection are supporting earnings and delivering full dividend cover. Audited full year results will be published in early October.

Tetragon Financial Group (Tetragon) reported a 1.7% ROE in H123 and its NAV increased by 1.7% in total return terms. The portfolio gained 3.0% on the back of TFG Asset Management (which remains Tetragon’s largest asset, representing 50% of its NAV), private equity assets and its direct listed equity investments, while the remaining asset classes had a limited impact on NAV. Tetragon targets returns uncorrelated with broader equity markets and a 10–15% ROE (9.9% on average over the last five financial years, and 11.4% pa since IPO). In H123 Tetragon was a net investor and increased its credit facility utilisation to 75% (US$300m), deploying capital predominantly into private equity assets and hedge funds, and further supporting the growth of TFG Asset Management.