Financials

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.

• Greentown China

• Greetings from a sunny Copenhagen, where it feels like summer is just around the corner, and the warm weather seems to be spreading to the crypto market as well.
• Bitcoin has risen by approximately 4.5%, reaching $72,250, and Ethereum has seen an increase of nearly 4%, up to $3,620 during the same timeframe.
• We would like to reiterate our optimistic outlook from last week, as highlighted in both Crypto Crisp and Crypto Moves #22.

• The saying goes, the proof of the pudding is in the eating.
• ABG’s 2023 results proved that the strategic positioning of the group, as a relationship bank, has created enormous value.
• Key highlights were i) PBT £47.1m (2022: £20.0m), ii) operating income £178.9m (2022: £137.4m), iii) average net margin 5.7% (2022: 5.1%), iv) EPS +103% to 222.8p, v) total dividend for the year of 46p (2022: 42p), vi) net assets of £252.4m (2022: £212.0m), NAV per share of 1,547p (2022: 1,411p), vii) CET1 ratio of 13.0% (2022: 11.6%), and total capital ratio of 15.2% (2022: 14.0%).

JDC Group (JDC) reported FY23 results that were in line with the preliminary results published on 8 March. After a very strong Q423, JDC expects FY24 revenue growth to accelerate to c 17% (FY23: 10.0%) and EBITDA to grow by 36% (FY23: 30.2%) at the midpoint of guidance. To reach the FY25 target of €246m in revenue, JDC also needs 17% top-line growth in FY25. JDC trades at an FY25e EV/EBITDA multiple of 13.7x on our estimates, which we believe is undemanding for what is essentially a fast-scaling platform business. Our DCF provides a valuation of €34.04/share (versus €34.09/share previously).

• Writer reflects on past experience selling leads to Oportun and shares insights on company’s loan performance
• Receives letter from Findell Capital in March 2023, sparking interest in potential changes at Oportun
• Believes company’s board and management may comply with Findell’s requests, especially with additional shareholder pressure, and anticipates significant changes in the near future.

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.

• Tiptree plans to IPO its subsidiary, The Fortegra Group, potentially driving over 50% upside for investors
• Fortegra filing recent S1s and strong syndicate team indicate IPO in late January at 17.5x 2023 Adjusted Net Income
• Estimates suggest Tiptree’s ownership in Fortegra could be worth around $31.87/share, making it a valuable asset for investors.

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.

• Equities shrug off hawkish RBI rhetoric – eye on $3 Billion inflows from MSCI rejig & June Elections results
• Short dated IVs trade lower. Quarterly-expiry IVs continue to hold at >13.0% levels as they capture multiple event risks
• Short vega positions recommended as “High & Down” vol state persists. Use current scenario to buy tail hedges as protection for long Equity positions. 

• Crypto market is driven by narrative in the short term, and capital favors new narratives. Ethereum restaking is the brand new narrative and biggest investment opportunity in this cycle.
• Restaking and Liquid Restaking will bring upward pressure to ETH, and tokens of Liquid Restaking protocols will benefit from the growing restaking market.
• DeFi use cases related to Liquid Restaked Tokens introduce increased financial leverage to the Ethereum DeFi ecosystem, which also entails heightened risks.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, the focus remained on HD Hyundai Marine Solution (443060 KS) and Bharti Hexacom (6597372Z IN).
• On the placement front, India remained at the forefront with JSW Energy Ltd (JSW IN) and the potential share sale of Vodafone Idea (IDEA IN). 

• This last week was packed with deals, amendments, and merger breakups.
• A SPAC is set to merge with an electric utility firm, and a blank-cheque firm is taking a critical metals supply chain-focused firm.
• Also, Sam Altman’s SPAC surges as it nears a deal, and a SPAC terminates a merger with a hydrogen energy firm. Read on to find out the latest about all things SPACs. 

• Bread Financial (formerly Alliance Data) has experienced a drop in stock price since 2015 but has improved its balance sheet.
• The future earnings outlook is uncertain due to pending regulations, but the company is expected to generate a high return on equity.
• Bread Financial issues private label and co-brand credit cards with major partners, making it a potentially valuable investment opportunity at its current price.

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.

• Affirm Holdings, Inc had a strong performance in its second quarter of fiscal 2024.
• A sense of optimism pervaded the call, as the company’s Founder and CEO, Max Levchin, and CFO, Michael Linford, highlighted the impressive run of results, attributing it to the strength of business across their merchant base and favorable economic conditions.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• The Hang Seng Index has been rising for 2 weeks but the uptrend seems slow and weak. The rally may have stalled, a pullback may be behind the corner.
• Based on our MONTHLY seasonal studies for the HSI, the index has a extremely high chance to close April in negative territory.
• You can go SHORT now, or during this coming week if the index keeps rising, target the 17000 to 17300 areas.

• Ramsdens Holdings PLC is a pawnbroker offering pawnbroking, precious metal buying, FX currency exchange, and retail jewelry sales services
• They have a diverse customer base from lower-income households to higher income customers interested in premium watches and jewelry
• With 158 stores in the UK, Ramsdens is the second largest pawnbroker behind H&T Group, focusing on increasing store estate and distributing dividends for further growth, making it an appealing investment opportunity.

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.

• 10+ Months ago, Suruga Bank Ltd (8358 JP) announced it would sell a large chunk of its treasury shares to Credit Saison and would then buy back ¥22bn of stock.
• I liked the odds in Suruga Bank (8358) To Sell, Then Buy Back 17% of the Bank, but HOW Is Key. They spent the ¥22bn. The stock rose a lot.
• Today, we get a div hike for H2 (implying a div hike for this year too), another buyback, a huge share cancellation, and new KPIs. As always, details matter.

• Hong Kong hotel-play Langham Hospitality (1270 HK) was spun-off from Great Eagle (41 HK) on the 30 May 2013. Now GE intends to take the company back into the fold. 
• Covid was devastating to the hospitality sector. As were the 2019 demonstrations. Langham’s share price never recovered, and is currently trading at a lifetime low and a P/B of 0.21x.
• No price was mentioned in the announcement. Expect a healthy premium to undisturbed, should a firm Offer unfold. But I wouldn’t expect a knockout price.

• ZhongAn Online P&C Insurance C (6060 HK) is benefiting from the cross-selling opportunities  generated through the eco-systems of Alibaba Group Holding (9988 HK) and Tencent (700 HK), its parent companies
• Largest solely online insurance company in China with Rmb 30B gross premiums written in 2023.
• Expertise and cross-selling from Ping An Insurance (H) (2318 HK) , another parent company with a jointly run auto insurance business.

• In our 15 March 2023 initiation, ‘Pawnbroking royalty, with strong, profitable growth’, and subsequent notes, we have highlighted the strong market for pawnbroking and why H&T, as the market leader, is uniquely placed to take advantage of these opportunities.
• These results reconfirmed both, with the pledge book up 28% and net pawnbroking revenue up 36%.
• Like many in the retail space, H&T faced the challenge of customers focusing on lower-value, lower-margin items in the key run-up to Christmas 2023.

• We are swiftly approaching the fourth Bitcoin halving, which is expected to take place at block number 840,000.
• Currently, the network has reached a block height of approximately 837,700.
• Bitcoin experiences a halving event every 210,000 blocks.

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.

• China Vanke
• Indika Energy
• Vedanta Resources

• Langham Hospitality Inv Ss (1270 HK) received a notice from Great Eagle Holdings (41 HK), the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.
• The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.
• Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.

• In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in June 2024.
• The index changes for the June 2024 index rebal will be announced on 17th May 2024.
• The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.

• Our popular, text-only weekly is back, hopefully in an improved version, and aims to be more consistent throughout this financial year.
• The market structure and momentum seem to be positive. Upcoming earnings season and elections are likely to be key drivers going forward.
• Stocks discussed include Bajaj Finance Ltd (BAF IN), SBI Cards & Payment Services (SBICARD IN), Honasa Consumer (HONASA IN) and Delta Corp Ltd (DELTA IN) 

• It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
• CBA’s past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
• Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL

China Vanke’s FY 2023 numbers were somewhat soft in our view. While its top line and profitability declined in tandem with industry trends, the company’s property development gross margin remained robust (relative to peers) at c. 15%. Negatively, OCF (after interest and tax) was weak and net debt continued to rise. Leverage and coverage metrics deteriorated, but remained at reasonable levels (vs. peers).

Vanke’s liquidity at the holdco level is likely tight. In particular, the migration of bank borrowings to the project level has pressured the company’s holdco-level financing. The development may also indicate lenders’ reduced risk appetite towards Vanke. In addition, we view negatively that management did not disclose the amount of cash held under escrow restrictions. Moreover, it is unclear whether the Shenzhen government would provide extraordinary support (above and beyond market-oriented measures) to the company.

• ABL’s SPAC merger did not generate significant proceeds, leading to limited research coverage and low visibility in the market
• Investors have identified ABL as a promising long-term investment with the potential for a 20% return on equity over the next five years
• ABL’s unique trading setup, with only 1.5 million shares available for trading due to insider ownership and a staggered lock-up period, presents challenges and opportunities for investors. Additionally, a $15 million share repurchase program has been announced, further adding to the intrigue surrounding the company.

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.

• As we predicted in the last few weeks’ Crypto Crisp, the crypto market has been relatively stable in recent weeks.
• However, things are beginning to shift.
• During a speech in San Francisco on Friday, Federal Reserve Chairman Jerome Powell mentioned that robust economic growth in the US allows Federal Reserve officials to take their time with interest rate cuts.

• CLS Holdings is a vertically integrated cannabis company with core operations in Nevada.
• The company owns and operates Oasis cannabis dispensary, one of the leading stores in Las Vegas.
• CLS also has a state-of-the art extraction and manufacturing facility in Nevada and a suite of top-performing brands.

In FY23, Information Services Corporation (ISC) enjoyed year-on-year top-line and adjusted operating profit growth, augmented by consistent organic expansion of its Services division and incremental earnings from fee uplifts linked to the Master Service Agreement (MSA) extension. Management’s encouraging FY24 guidance reflects organic growth potential from the Services division, alongside a full-year impact of earnings accretion from fee adjustments. We have raised our valuation modestly from C$37/share to C$40/share, which implies 48% upside.

• On-The-Run Quarterly Options now capture India General Elections. Position buildup can be seen in the 21,000 put and 24,000 call strikes
• Weekly and Monthly contract risk premia being squeezed lower due to holiday shortened trading but Quarterly contracts exhibit vol richness
• Scale back short gamma exposure as reward-risk unappealing at current IV levels

• The Italian Treasury sold an additional 12.5% stake in Banca Monte dei Paschi di Sien (BMPS IM), raising €650 million as part of re-privatization efforts following the 2021 failed attempt.
• The Treasury’s divestment makes BMPS more appealing for buyers. BMPS still trades at attractive valuation multiples. The bank announces approval from the ECB for a €0.25 cash dividend per share. 
• Economy Minister Giorgetti and PM Meloni aim to boost competition through privatization, favoring a merger with another mid-sized Italian bank, possibly BPER Banca or Banco BPM.

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.

• China Vanke
• First Pacific Co
• Xiaomi Corp

• Atour reported C4Q23 revenue vs. our estimate/consensus by 18%/21% and guided a robust 30% yoy revenue growth for 2024, outpacing the consensus by 12% and our estimate by 7%
• C4Q23 operating margin decline was due to one-off leased hotel impairment and seasonality in retail marketing. We foresee stable margin in 2024;
• We maintain our BUY rating and keep our TP at US$37.5, implying a 2024 P/E of 34x, vs. currently trading at 16x.

• Kawasan Industri Jababeka released a strong set of FY2023 results, with revenue growth of 20% overall and EBITDA increasing by +15% YoY due to higher land sales at Kendal.
• KIJA also saw strong recurrent revenue from its infrastructure pillar making up 44% of sales. Marketing sales came in above its target and it is projecting a higher 2024 number.,
• The company’s Kendal Estate is a key beneficiary of shifting supply chains from China with 81% of sales to foreign companies and marketing sales increasing 68% YoY in 2023. 

• The NIFTY Index has been rallying for months, but in the last few weeks there has been a considerable slow down in its rising pace.
• Currently the index is at a point where it could pull back this coming week, based on our MRM patterns reading.
• A possible alternative scenario would be a continuation of the rally for a total of 4-5 weeks up in a row.