Smartkarma Daily Briefs

• The Yuexiu Property (123 HK) Rights start trading today. Last day is next Monday. There is a general pattern to the flows and it behooves investors to be aware.
• There is a pattern to these trades which is worth understanding.
• In this case, I expect it is worth going long Yuexiu Rights vs Short peer basket equity earlier in the cycle.

• GLP J-REIT (3281 JP) is looking to raise around US$220m through a primary follow-on offering. The deal is a large one to digest, at 17 days of three month ADV.
• The proceeds will be used to acquire three new properties and obtain a 30% co-ownership interest in a fourth one. 
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

• There are unlikely to be any inclusions to the index in June while there are three stocks that are close to the deletion threshold.
• Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of over 4% and a one-way trade of A$78m.
• Short interest on AMP Ltd (AMP AU) has been increasing as the stock has dropped and a further decline in the stock could lead to deletion.

• The USD debt ceiling is a returning topic and it’s typically not overly important for markets, but this time is likely to be different. 
• He repercussions for USD funding markets may be material and in sharp contrast to consensus expectations the USD may stage the biggest comeback since Lazarus.
• In this piece we elaborate why you should expect volatility in USD funding rates in coming weeks

• Five Star Business Finance (FIVESTAR IN) raised around US$190m in its India IPO in Nov 2022.
• Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Last week, some of the biggest market makers in crypto, Jane Street and Jump Crypto, announced they were winding down some of their crypto exposure, particularly in the U.S due to regulatory uncertainty.
• This move should have major implications for liquidity in the industry which has already lost several big players over the last year.
• Interestingly, market depth for BTC has barely shifted since the announcement or over the past month, remaining at depressed levels.

Georgia Capital (GCAP) continued to make progress on its strategic priorities in Q123: reduction in the net capital commitment (NCC) ratio, deleveraging its portfolio companies, selling subscale businesses, executing tactical buybacks (a US$10m programme was announced in April 2023), further investments in the renewable energy and education businesses and moving to the LSE standard listing. GCAP operates against the backdrop of strong GDP growth in Georgia at 7.2% y-o-y in Q123 (after 10.1% in 2022), where inflation seems largely contained, with headline and core inflation rates of 2.7% and 4.7% in April 2023, respectively. GCAP’s share price has been rising but is yet to catch up with the growing NAV and implies a 64% discount to the ‘live’ NAV estimate.

The Brunner Investment Trust (BUT) is led by a very strong team at Allianz Global Investors (AllianzGI). Its two co-managers, Christian Schneider (deputy CIO Global Growth) and Julian Bishop (global equity specialist), are supported by deputy managers Marcus Morris-Eyton (European equity specialist) and Simon Gergel (CIO UK Equities). The trust has notably outperformed its benchmark over each of the last four financial years despite significant market rallies and falls and periods of growth and value stock leadership. BUT’s NAV total return is above the average of the 13 funds in the AIC Global sector over the last one, three and five years (ranking second over three years). The trust has delivered 51 consecutive years of higher dividends plus capital growth for investors.

JDC Group (JDC) reported Q123 results in line with management’s expectations. Despite the relatively low year-on-year revenue growth of 1.4% in Q1, JDC reiterated its FY23 guidance for revenue of €175–190m based on cooperation agreements that have been signed. This translates to 17% top-line growth at the midpoint of guidance. EBITDA is still expected to be in the range of €11.5–13.0m. We have made no changes to our estimates, which are more or less at the midpoint of guidance. JDC trades at an FY24e EV/EBITDA multiple of 12.0x on our estimates, which we believe is undemanding for what is essentially a fast-scaling platform business.