In today’s briefing:
- Swire Coke Sale Special Div Impacts B/A Ratio
- Home First Finance (HOMEFIRS IN) | Irrelevant Mission, Fading Moat
- Meeting SPX and NDX Buy Levels
- EM & Japan Neobanks – Stick with Rakuten Bank (5838 JP), but Time to Take Profits on Nubank (NU US)
Swire Coke Sale Special Div Impacts B/A Ratio
- Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
- I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
- This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.
Home First Finance (HOMEFIRS IN) | Irrelevant Mission, Fading Moat
- Home First Finance (HOMEFIRS IN) is a technology-driven affordable housing finance company (HFC) focused on first-time homebuyers in low and middle-income groups.
- We believe access to finance is more relevant rather than quick TAT and hence question the relevance of wanting to be the fastest provider.
- Considering the fading competitive advantage, borrower profile and segment dynamics, HOMEFIRS may be the fastest but not necessarily the safest.
Meeting SPX and NDX Buy Levels
- Cycle: Near term pullback a buy for a push into late June/early July (cycle has shifted right). Equities remain well supported. Increased volatility expected in July.
- Met the SPX 4,370 buy level with firmer support at 4,350. Rally bias for a minor new high in the coming week+.
- Measuring rally momentum for signs of a bigger stall cycle in July.
EM & Japan Neobanks – Stick with Rakuten Bank (5838 JP), but Time to Take Profits on Nubank (NU US)
- We remain positive on Rakuten Bank, with its group ecosphere as a source of customer growth, its low cost base, and extremely low NPL ratio
- Rakuten Bank trades on the lowest PE multiple of the neobank peer group , with the low ROE to PBV ratio close to the best of its neobank peers
- Nubank shares have done well since we upgraded to a buy in January; we recommend investors to take profits given Nubank’s limited potential for positive surprises and its stretched valuations
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