Daily Brief Financials: SBI Shinsei Bank, Futu Holdings Ltd, PICC Property & Casualty H, Appreciate Group, Banco Santander Brasil SA, Times China, Sprott Focus Trust and more

• SBI Shinsei Bank (8303 JP) was my High Conviction reco in late 2020 for 2021 at ~¥1200/share. It was my High Conviction reco in late 2021 for 2022 at ¥1900/share.  
• I did not get around to writing it in late December 2022, but on the first day of trading I offer Shinsei as a 2023 high conviction recommendation. 
• What’s new? Not a lot, but Reading Between The Lines is still top drawer stuff. 

• Just one day ahead of its dual primary listing in Hong Kong, Futu Holdings Ltd (FUTU US) postponed its Listing by Introduction. 
• According to the China Securities Regulatory Commission, Futu has been illegally operating cross-border securities trading without approval.
• Suitably, the share prices of Futu and UP Fintech (TIGR US), another online brokerage forced to quit accepting new onshore investors. It’s probably too premature to buy the dip.

• The insurance sector should definitely warrant more investor attention going forward as some insurance names in the region have had a very strong year in 2022.
• Two key markets we view positively in 2023 are China’s P&C and Korea’s L&H insurance markets, given their favorable industry catalysts and tailwinds. 
• Among all the insurance stocks in these two markets, we believe PICC P&C and Samsung Life will continue to have an exciting year ahead.

• PayPoint has launched an agreed cash and shares offer for closest rival Appreciate. On completion, PayPoint shareholders will hold c. 95% and Appreciate shareholders c. 5% of the merged firm. 
• The offer price doesn’t seem generous (my fair value estimate is 53p vs. 43.45p package value). Event-driven investor Samson Rock is the top shareholder with a 19.7% stake.
• Gross spread is 5.9% (including dividend). I believe there are grounds for an offer sweetening, and although both stocks are illiquid, the risk/reward looks appealing, in my view.

• In November most consumer NPL ratio categories, except credit cards, worsened with corporate delinquencies, especially in micro and SME, also deteriorating; the system NPL ratio is approaching its pre-pandemic high
• System loan growth continues to decelerate; +14.7% for the twelve months to November is a further reduction from the October rate (+15.7%), due to slower corporate and consumer loan growth
• New system credit spreads rose further MoM, and we expect average loan spreads to remain elevated into 2023; we favour Banco do Brasil, and are cautious on Santander Brasil

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.

• Times China

• The Sprott Focus Trust exhibits outstanding risk attribution metrics.
• The fund’s constituents typically host high earnings yields, and ROIC ratios, suggesting that a value trap is unlikely.
• This is a high-conviction closed-end fund with little emphasis on sector rotation. Thus, beware of recession risk.