Daily Brief Financials: Rakuten Bank , Daiwa House Reit Investment, Abacus Group, China Jinmao Holdings, Bank Rakyat Indonesia, Five Star Business Finance, Blackrock Inc, Aflac Inc, Agile Property Holdings, American International Group and more

• Four months ago, Rakuten Bank (5838 JP) was IPOed too low, then the price went up. It would appear foreign active ownership is relatively high.
• Rakuten Bank stands out with high ROE and earnings growth. Banks stand out because, well, they’re going up. 
• Given expected 5yr earnings growth, Rakuten Bank at current price is probably “wrong.” But it has much less “bankness” than most banks, so you have to think about it differently.

• Daiwa House Industry (1925 JP) is looking to raise US$175m from trimming a portion of its stake in Daiwa House Reit Investment (8984 JP).
• Given that a selldown in the REIT hadn’t been explicitly guided, we would thus argue that the deal here isn’t particularly well flagged.
• Overall, the base deal would represent 4.09% of the REIT’s total outstanding shares, representing 20 days of three month ADV.

• The review period for the September rebalance ended yesterday. There could be one deletion from the index and a bunch of capping changes.
• The index changes will lead to a one-way turnover of 3.4% resulting in a one-way trade of A$21m. There are two stocks with over A$5m to trade.
• Short interest has increased on a few REITs recently while decreasing on most of the other names.

China Jinmao’s H1/23 results were in line with projections, with the company reporting robust contracted sales and cash collections despite the industry downturn. The gross margin narrowed to 14% (H1/22: 22%), albeit this was in line with industry trends. We expect the gross margin to remain weak, as Jinmao has to clear existing inventory (with higher land costs) in the subdued market.

We expect Jinmao’s debt to remain largely stable going forward, as the company will likely control land spending to shore up its balance sheet. Positively, the land bank has remained sufficiently large and should provide for 4-5 years of development. We expect Jinmao to continue reducing its offshore borrowings, and to redeem the perpetual securities.

Overall, Jinmao’s credit profile is underpinned by its SOE status, which supports the company’s access to financing. Moreover, the CHJMAO bonds are supported by the presence of cross-acceleration clauses with parent Sinochem Holdings’ offshore notes in the event of default. We move our recommendation to “Buy” from “Hold” on the CHJMAO notes, with a preference for the 2024 and 2025 notes (both yielding close to 15%).

• Bank Rakyat Indonesia (BBRI IJ) continues to be the key and unique proxy for micro and ultra-micro lending in Indonesia, with 1H2023 reflecting its increasingly strategic positioning in the space.
• Microloans now account for 48% of loans and of this higher-yielding Kupedes microloans make up an increasingly larger portion, as it diversifies its KUR exposure. 
• The bank is set to see improving returns in 2H2023, with loan growth expected to pick-up and NIMs should also improve. 2.6x PBV with an ROE of 20.0% is attractive.

• Three PE investors are looking to raise up to US$158m via selling 5.9% of Five Star Business Finance (FIVESTAR IN) (FSB).
• Five-Star Business is a non-banking financial company that provides secured business loans to micro-entrepreneurs and self-employed individuals. FSB had raised around US$190m in its India IPO in Nov 2022.
• In this note, we will talk about the deal dynamics and updates since our last note.

• BlackRock delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
• BlackRock achieved $190 billion in total net inflows, indicating favorable flows from wealth and institutional customers across regions.
• BlackRock generated $48 billion in net inflows during the quarter, taking the leading market share of ETF industry flows.

• Aflac managed to exceed analyst expectations in terms of revenue and earnings.
• The company’s diligent efforts and strategic initiatives in the United States and Japan have yielded strong results, positioning Aflac for future growth.
• In Japan, the rollout of new products like WINGS cancer insurance and refreshed policies have contributed to significant sales growth, particularly in the cancer insurance segment.

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.

• Country Garden Holdings Co

• AIG delivered a solid result and managed an all-around beat in the quarter, marked by robust financial performance and significant progress on strategic initiatives.
• Strategic actions, including divestitures and establishing a Private Client, Select as an MGA, further position AIG for future success.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.