Daily Brief Financials: Rakuten Bank , Santander Bank Polska SA, Prudential PLC, Tether, Jingdong Property, Picton Property Income, Morgan Stanley, Target Healthcare REIT PLC, Hopson Development and more

• The sharp run-up in the share price since its IPO does not, in our view, mean that Rakuten Bank’s rally is done; there is further fundamental justification for a re-rating
• Rakuten Bank trades on a LTM PE multiple of 14.4x, LTM PBV ratio of 1.6x and an ROE of 13.2%, which is the best return of our neobank peers
• Relative to its peer group, Rakuten Bank has premium long-run growth prospects; conservatively estimating Rakuten Bank’s growth (8% pa), implies a PEG ratio in the range of 1.2x to 1.3x

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the STX Europe 600 and EUROSTX Indices for the March 2023 Rebalance.
• There is roughly one more month left to the base date. At present, I see around 3 ADDs/DELs in the June 2023 review.
• Separately, STX Europe 600 members Credit Suisse (CSGN SW) and Vantage Towers (VTWR GR) could possibly get deleted in the next few months triggering intra-review index changes.

• Given Pru’s demerger in 2021, it now offers investors a good alternative to AIA to tap into the development and the growth potential of the life insurance sector in Pan-Asia.
• AIA has a more balanced business across so many markets in APAC, while Pru skews toward Southeast Asia.
• Pru’s P/BV is currently at a 30% discount to AIA’s and is trading at the same level as the year-end when China just announced the re-opening of its borders.

• There are few, if any banks, in Japan that compare with Rakuten’s 65% loan growth
• The newly listed interbank stands out with exceptional ROE, not from leverage
• Credit metrics remain strong, with NPL cover especially high vs peers

• Last week, Coinbase received approval to operate an offshore derivatives exchange, based in Bermuda.
• This move makes a lot of sense, particularly when looking at Coinbase’s share of total spot volumes.
• Since the start of 2022, Coinbase’s share of volumes has almost halved, falling from 10% to 5% while Binance gained as much as 30% market share over the same time period, before losing some in the last couple of weeks with their reintroduction of fees.

• Jingdong Property (JDP HK) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• JD Property (JDP) develops and manages modern infrastructure, consisting primarily of logistics parks, as well as business parks and other assets in China and in Asia.
• In this note, we will talk about the not so positive aspects of the deal.

Picton Property Income has published an encouraging trading update ahead of results for the year-ended 31 March 2023 (FY23), to be released on 25 May. This shows stabilising property valuations, mirroring broad market trends so far in 2023, and progress with a range of asset management initiatives. We will review our forecasts with the results.

• Despite a more difficult environment, Morgan Stanley had a strong quarter and managed an all-around beat.
• The merging of Eaton Vance and E-Trade increased the company’s potential to gain new clients, increase assets, and support its stability.
• We initiate coverage on Morgan Stanley with a ‘Hold’ rating with a revised target price.

Target Healthcare REIT’s decision to rebase the quarterly DPS targeted for H223 (-17% to 1.4p per quarter) established full DPS cover from a base that we forecast will grow, driven by indexed rental growth. The yield remains attractive and rather than the rebase signalling new challenges, operational performance continues to strengthen.

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.

• Adani Ports & Special Economic Zone
• Hopson Development
• Vedanta Resources