Daily Brief Financials: Singapore Treasury, Bluerock Residential Growth, Befimmo SA, Banco Inter SA, Country Garden Holdings Co, Nesco Ltd, Itausa-Investimentos Itau-Pr, A-Living Services, Peer Metaverse Coin, Hopson Development and more

• Singapore recently announced the pricing of its inaugural sovereign green bond issue marking Singapore’s momentous entrée into the growing global sovereign green bond market.
• Big deal, and big impact. Singapore’s S$2.4 billion 50-year green bond ranks among the largest inaugural sovereign issuances and the proceeds are funding impactful “green projects.”
• Proceeds will fund two Clean Transportation projects (electric rail mass transit) and contribute to an 80% reduction in land transportation-related greenhouse gas emissions by 2050.

• Bluerock Residential Growth’s (BRG US) spin-off of its single-family rentals business, Bluerock Homes (BHM) is set for October 26, 2022
• Although this is a delay on the initial target of 2Q 2022, BRG has proved to be a very defensive holding during a period of high market volatility
• While financial information on BHM needs to be updated, there does appear to be significant hidden value waiting to be realized post October 6. 

• Brookfield now controls 84.94% (including treasury shares), which means that REIT status will be lost. Brookfield thus will seek to reopen acceptance periods until reaching 95% (squeeze out threshold in Belgium).
• Bidco reopened the acceptance period on 29 August, with closing on 16 September, and settlement on 7 October. Gross spread is 0.21%, with an estimated annual return of 2.07%.
• Shareholders should tender, liquidity has been greatly reduced and the REIT tax advantages will disappear sooner rather than later.

• Among the EM digital banks covered, we turn constructive on Inter, we remain cautious on Nubank and see Bank Jago as an over-valued growth play; we are neutral on Kakaobank
• Client penetration is key, yet digital banks also need to achieve loan and other banking product penetration to drive revenue growth and ultimately better returns
• We believe that neobanks’ key hurdles to enhanced profitability are “old school” banking metrics; delinquency and cost of risk charges, as well as high capital absorption from fast loan growth

Country Garden’s H1/22 results were in line with our expectations. Contracted sales plunged 40% y-o-y, in line with the industry average of 30-40%. Positively, the company managed to maintain the cash collection rate at above 90%, and the leverage metrics remained broadly stable. That said, the H1/22 gross margin came under pressure at 11% (lower than most peers). Additionally, the average sell-through rate stood at only 50%, which could result in cash being trapped in developments with low demand.

• Nesco’s Bombay Exhibition Center (BEC) business where revenues declined to almost negligible during the last couple of years due to COVID, is now recovering as COVID restrictions have receded.
• During Q1FY23, BEC business did INR 16.8cr in revenues (annualized INR 65cr+) and is on track to normalize to pre-COVID levels of INR 150cr+.
• Nesco’s IT Park business continues to remain strong with 90%+ occupancy in Tower 4 and 80% occupancy in Tower 3.

• Itausa is trading at a HoldCo NAV discount in excess of 25%, which is historically rare; we reiterate our positive view on Itausa
• We believe that the NAV is under-estimated; separate from Itausa’s stake in XP, Itaú Unibanco, which is Itausa’s core holding with a 37.2% stake, has a direct 9.96% XP stake
• Adding its indirect XP stake share to Itausa’s NAV implies a discount of 27%; since December 2008, only on 11% of the month end datapoints has Itausa’s discount exceeded 25%

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website. 
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute. 
• These insights may also flag those companies where shares have been pledged, both recently and ongoing. Stocks mentioned include A-Living Services (3319 HK) and Hang Lung (10 HK).

• An alternative to ICOs that actually vets projects is needed. That is why Peer, a Web3 social network and blockchain company, recently announced an alternative to the Initial Coin Offering (ICO) called the Initial Coin Exchange (ICX). 
• The ICX provides a framework for an evidence-based fundraising standard for established blockchains and decentralized apps that promotes responsible innovation, global participation, and rapid validation. 
• Essentially, an ICX is for crypto companies and projects past the prototyping phase and looking for their next round of funding before seeking seed-stage investors.

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.

• Hopson Development
• KWG Living Group
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