Daily Brief Financials: Rakuten Bank, S&P/ASX 200, Country Garden Holdings Co, IP Group PLC, Utilico Emerging Markets Ltd and more

• Rakuten Bank (5838 JP) has set its IPO price at JPY1,300-1,400 per share which is 20%-29% lower than the IPO reference price range of JPY1,630-1,960 per share.
• We previously discussed the IPO in Rakuten Bank IPO: The Investment Case, Rakuten Bank Vs SBI Sumishin Net Bank and Rakuten Bank IPO: Valuation Insights.   
• The new price range values Rakuten Bank at a discount vs peers for the ROE it delivers. SBI Sumishin Net Bank (7163 JP) strong post-IPO performance suggests strong sector sentiment.

• Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), aims to raise up to around US$630m in its Japan listing in April 2023.
• RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
• In our earlier notes, we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations in the IPO price range.

• Taiwan has been our top long but showing momentum deterioration. ASX and Kospi met rally targets to finesse a dip and secondary push. HSI long struggling. Short near 21,000.
• Japan and India are our immediate short plays. NKY dip and rally with bigger top due at 28,500.
• April is a bullish month but once the buoyant cycle terminates, we will turn more aggressive on the short side (NKY, HSI, Korea and even Taiwan is on our radar.

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.

• Adaro Energy
• Country Garden Holdings Co
• Gajah Tunggal
• NagaCorp Ltd
• Yuexiu Property

IP Group’s NAV per share came in at 132.9p at end-2022, only 2% below the end-June 2022 level. The NAV decline during 2022 was primarily due to the £428.5m loss from listed holdings (before foreign exchange (FX), mostly Oxford Nanopore Technologies, ONT), while private holdings posted gains before FX of c £101.4m (or 5.8% of opening NAV). Excluding ONT, IP Group posted a £25.2m profit in 2022. Most notably, its four major cleantech holdings posted a valuation uplift of c £120m in FY22. IP Group now trades at a 58% discount to end-2022 NAV which, together with a strengthened balance sheet, largely up-to-date portfolio marks and several potential portfolio catalysts, provides a certain degree of downside protection.

Utilico Emerging Markets Trust’s (UEM’s) manager Charles Jillings, at value-focused ICM Group, is excited about the prospects for the trust as he strongly believes that the operational strength of investee companies is not reflected in their current share prices. He has good visibility into the businesses in UEM’s portfolio, and a recent trip to Latin America reinforced his view that their management teams are taking advantage of available growth opportunities. Jillings and his team are making a dedicated effort to introduce UEM to a wider audience, including retail investors, via a greater number of presentations and an active social media presence. Up to 10% of the portfolio may be held in unlisted securities, which includes top 10 holding Petalite, whose recent revaluation has led to a meaningful uplift in UEM’s NAV.