Daily Brief Financials: SBI Sumishin Net Bank , Avjennings Ltd, CNY, KB Financial, Resona Holdings, Bank Central Asia, Berkshire Hathaway Inc Cl A, Travelers Cos, Wr Berkley Corp and more

• An article in Japanese weekly magazine Bunshun this morning sent shares inSBI Sumishin Net Bank (7163 JP) limit up +17% with a headline that NTT Docomo was interested to buy.
• Without access to the article, I can’t go deep, but the base concept is that NTT Docomo is “worried” about KDDI (which has a bank, as does Softbank Corp)
• It is not clear how serious it is, SBI Sumishin is super-expensive, and buying a bank isn’t the same as buying a company. Hmmm…

• Avjennings Ltd (AVJ AU) disclosed a non-binding indicative proposal from AVID at A$0.67 per share, a 103.0% premium to the undisturbed price. 
• The proposal is subject to due diligence (till 31 January 2025), entry into a scheme implementation deed, and shareholder and regulatory approvals (FIRB and OIO).
• The largest shareholder supports the offer, which represents a 20-year high. AVID has completed initial due diligence, lending confidence that a binding proposal will materialise.

• Last week, we missed an intriguing story that several clients have asked us to explore.
• China issued $2 billion worth of USD-denominated bonds, which might not seem groundbreaking at first glance—it’s not uncommon for China to issue bonds in dollars.
• However, two aspects of this issuance stand out:The Venue: These bonds weren’t issued in the typical financial hubs like New York or Shanghai but in Riyadh, Saudi Arabia—a first of its kind.

• Headline NPL figures at KB Financial (105560 KS) are already of major concern rising by 49% in the past year to 3Q24
• Granular loan classification data is of even greater concern, where substandard loans are up from KRW1,153bn to KRW1,715bn over the same period
• This more benign bucket of NPLs well overshadows loss loans, can migration can mean a substantial rise in credit costs

• On the 28th November, AVJennings Ltd (AVJ AU), a widely recognised home builder in Australia/New Zealand, entered into a deed granting the AVID consortium exclusive confirmatory due diligence.
• AVID, comprising Proprium Capital Partners and AVID Property Group, have pitched an NBIO (by way of a Scheme) of A$0.67/share, in cash, a punchy 103% premium to last close. 
• Apart from entering a SIA after DD (expected end-Jan completion), the Offer requires FIRB and OIO to sign off. AVJ’s board, controlled by Singapore’s SC Global (54.5% shareholder) is supportive.

• Market expectations that the BoJ’s monetary policy meeting will raise benchmark interest rates in December are reflected in the rising JGB yields, and in the domestic lending rate trends
• We reiterate our core recommendations of Resona and Mizuho for their leverage to higher interest rates, their low LDRs and their high share of strategic holdings relative to market capitalisation
• We reduce Chiba to neutral from buy, keep our buy on Concordia; we add Shizuoka for its gearing to higher interest rates and very high share of strategic shareholdings

• A company visit with Bank Central Asia (BBCA IJ) in Jakarta revealed a more cautious view on loan growth looking into 2025, with expectations for high-single-digit YoY growth.
• There is increasing caution amongst customers around the soft economy and the risk of more aggressive tax collection in 2025, reflected in strong growth in holdings of government bonds.
• A company visit with Bank Central Asia (BBCA IJ) in Jakarta revealed a more cautious view on loan growth looking into 2025, with expectations for high-single-digit YoY growth.

• Warren Buffett’s house in Omaha attracts fans from around the world, reflecting his legendary status as an investor
• Succession planning at Berkshire Hathaway raises questions about the future leadership and challenges facing the company after Buffett’s tenure.

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• Travelers Companies, Inc. reported strong financial performance for the third quarter of 2024, demonstrating a balanced strategy of growth, profitability, and prudent risk management, though not without its challenges.
• Key positives from the earnings call include a significant rise in core income, reaching over $1.2 billion or $5.24 per diluted share, which represents stellar results amidst complex market conditions.
• This increase was driven by a combination of factors such as a 73% surge in underlying underwriting income compared to the prior year, derived notably from net earned premiums at a record $10.7 billion, marking a 10% increase, and a marked improvement in the underlying combined ratio to 85.6%, down by 5 points year-over-year.

• W.
• R.
• Berkley Corporation demonstrated solid financial performance in its third quarter of 2024, despite sector-wide challenges, notably from natural catastrophes.