Daily Brief Financials: Shinhan Financial, S&P/ASX 200, Bitcoin, Greentown China, Binjiang Service Group, BRP Group , Bakkt and more

• BNP Paribas (BNP FP) is looking to raise around US$680m via selling 3.5% of its stake in Shinhan Financial (055550 KS).
• This will be the fourth selldown for the stock since the start of the year. It will also be the largest one of the lot, so far.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares). 
• The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
• We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons. 

• The S&P/ASX 200 Index has reached a specific resistance level that often precedes a short-term pullback, when this pattern is encountered.
• The pullback may happen next week, but this week is also a potential candidate since the 2nd week up is usually pretty weak when this pattern is encountered.
• Hold your LONG positions and cover them to hedge. Going SHORT is probably best at the end of the week, on Friday, if the week is closing up.

• We are witnessing an unexpected showdown in the crypto world.
• On one side stands Larry Fink, co-founder and CEO of BlackRock, the world’s largest asset manager.
• On the opposite side is Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC).

Greentown China’s FY 2023 performance was satisfactory in our view, given the above-industry sales, stable top line and acceptable (albeit reduced) gross margin. Importantly, its access to onshore financing appears healthy and liquidity is adequate. In addition, the company remains active in land acquisitions and has a good quality land bank, mostly in high-tier cities in the Yangtze River Delta.

That said, leverage remained somewhat weak. Moreover, Greentown is more exposed to a prolonged industry downturn (vs. peers such as Longfor Group and China Vanke), due to its low recurring income and outsized exposure to the property development segment. This means that the company’s contracted sales and margins are likely to remain soft despite outperforming the industry. In the meantime, Greentown will likely focus on improving operating efficiency by maintaining a high sell-through rate and fast churn for its projects.

We revise our fundamental Credit Bias to “Negative” from “Stable”, and move our trade recommendation on the GRNCH 5.95 ’24s to “Buy” from “Hold” .

• Binjiang Service Group (3316 HK) posted a 42% YoY increase in revenue and 19% YoY in profits for FY23, aided by 170% revenue growth in VAS services (24% of revenues).
• Margin decline remains a concern, with a GPM(%) decline of 510 bps to 24.8%, with declines across all business segments. 
• Net cash increased to 74% of market capitalization, with the company declaring a dividend of 1.37 HKD/share ( implying an 8% trailing yield). 

• This is our first report on powersport vehicles and marine products, BRP Inc. The company’s fiscal year 2024 third quarter results conference call highlighted mixed performances across its categories of operation.
• Revenue reached $2.5 billion, which fell short of expectations due to softer demand in international markets and a temporary slowdown at the Texas-Mexico border.
• Although these conditions negatively impacted deliveries of its off-road vehicles and ETVs over three weeks, normalcy has been restored.

• Bakkt’s new President and CEO Andy Main led the earnings call, where net revenue of $16.7 million was better than pre-announced, while the GAAP EPS loss of $0.29 was worse than our expectation of a $0.19 loss, driven by higher restructuring and goodwill write-downs.
• While 4Q23 was pretty much old news, Main highlighted how strong tailwinds in 1Q24 have led to significant notional crypto trading volume increases.
• He stated that, “QTD notional traded volumes have been very strong, with March QTD up over ~260% from 4Q23 versus overall market activity up ~65%.”