Daily Brief Financials: TSE Tokyo Price Index TOPIX, Korea Stock Exchange Kospi Index, KOSDAQ 150 Index, Chongho Bridge, Philippine Stock Exchange, First Financial Ban, China Jinmao Holdings and more

• For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
• The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
• Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

• Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
• Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
• Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

• Korea’s authorities aim to streamline delisting and tighten rules for smooth market funds. 71 companies (17 in KOSPI, 54 in KOSDAQ) under review, about 8 trillion won tied up.
• It’s unclear if this ties directly to the FSS chief’s mention of kicking non-compliant firms of the Value-up Program. Rumors hint at FSS-FSC differences. Impact on Value-up trading seems minimal.
• Nonetheless, we must explore stocks that may gain from expediting delisting for the 71 companies under review.

• Chongho Bridge (2314866D CH) is looking to raise up to US$500m in its upcoming HK IPO. The deal will be run by CICC.
• Chongho Bridge (CB) is an integrated services provider to China’s rural population. It offers rural inclusive credit services, agricultural production services, rural consumer goods and rural clean energy services.  
• According to F&S, CB is the largest non-traditional financial institution targeting China’s rural market in terms of total loan balance as of FY22 (31st Dec 22).

• Philippine Stock Exchange (PSE PM) reported a slow Q4 2023/FY23, with revenue down 9.5%/8% YoY and profits down 30% YoY for Q4 FY23 but up 4% YoY for FY23. 
• We are excited by the recent passing of a bill to reduce the tax on stock transactions and a proposed law for lowering the tax on dividends for non-residents.
• Trading at 19x FY24e with a 5% dividend yield, EBITDA/PAT margins >55%/40%, and 25% of the market cap in cash with an acquisition angle, this stock is a must-watch

Key points

• FFB Bancorp is expanding its reach across California by offering remote banking services
• The bank has a niche market in payment processing as an acquiring bank, generating additional income
• CEO Steve Miller, with a diverse background in banking, is leading the company towards a larger market share role in California and beyond

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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.

• Adaro Energy
• China Jinmao Holdings