Financials

• During the period under consideration, i.e. February 28th 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
• The MA-10 line at the beginning of the period considered was moving above the MA-20 line.
• From March 7th until March 22nd the MA-10 line trend changed and was moving below the MA-20. 

• The HSI INDEX is currently down for the 2nd week in a row and it is quite oversold on a WEEKLY basis.
• A temporary reversal could come as soon as this week or next week, but we don’t think this will mark a restart of the previous rally.
• Look at the 16250-16050 area to go LONG, this is the area where the index most likely will print a temporary bottom.

IP Group’s NAV declined by 13% in total return (TR) terms in FY23, affected by continued soft valuations across venture capital (VC) markets, as well as funding delays at some of its holdings. That said, management indicated that many of IP Group’s portfolio companies continued to make strong progress. Its maturing portfolio offers a number of potential NAV triggers and is now available at a wide 59% discount to NAV. We note that, as at end-2023, only 14% of IP Group’s portfolio was valued based on funding rounds completed more than 12 months ago and 46% of its private portfolio was valued by a third-party specialist. IP Group’s holding-level liquidity was solid, with gross cash of £227m (or 19% of NAV) and 87% of its portfolio holdings (by value) had a cash runway to 2025 or beyond.

Tetragon Financial Group (Tetragon) posted a 6.4% net asset value (NAV) per share total return (TR) in US dollar terms in FY23. Tetragon’s returns normally have a low correlation with broader markets, and therefore its FY23 performance was below the 26.3% return of the S&P 500 Index, which rallied on the artificial intelligence (AI) theme. Tetragon’s FY23 return on equity (RoE) of 5.5% was below its target of 10–15% pa. That said, its performance since listing was within the target range at 11.3%. Tetragon continues payouts to its shareholders, distributing US$83.6m in FY23 through buybacks and dividends (3.0% of opening NAV), with the dividend yield standing at 4.4%.

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.

• Vista Land & Lifescapes

• The weekend did not go as expected.
• The attack on Israel by Iran, which occurred overnight between Saturday and Sunday, had a noticeable impact on the crypto market.
• This led to Bitcoin and Ethereum dropping by 8% and 12% respectively by Sunday.

• We look at Asia, and see where there are interesting trade idea.  While HK/CH see investors’ capitulation, there are some interesting ideas in Singapore
• We focus on real estate and look at S-REITs, which just wrap up their 4Q 23 results.  We see divergence in terms of industry fundamentals
• Within S-REITs, we like industrial and retail given stronger industry fundamentals and stable asset valuation

• Findi is an illiquid Australian microcap company that controls TSI India, one of the largest owners and operators of ATMs in India
• TSI India has shown signs of improvement and is expected to perform well in the future
• Findi plans to list its operating business in India on the Indian stock market and issued convertible bonds in preparation for its IPO at a valuation of A$190.6 million

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.

• During the period under consideration, i.e. February 28 th , 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
• The MA-10 line at the beginning of the period considered was moving above the MA-20 line. From March 7 th until March 22 nd , the MA-10 line trend changed and was moving below the MA-20.
• By the end of the examined period, the MA-10 line ended up above the MA-20 line.

• With HK/China continue to see risk-off sentiment; we switch our focus to Japan.  Nikkei is up 19% YTD, one of the best performing markets in the world
• Among Japan real estate names, Mitsui Fudosan is a well held name with the largest market cap.  8801 is up 45% YTD while 8802 is up 57% YTD
• Valuation is un-demanding, it is an interesting name to own if investors want exposure to Japan.  It is still not too late to chase the rally

• Downtrend in IVs stall as market sentiment deteriorates. Vol Regime Model sticks to “High & Down” state.
• Consider Equity Tail hedges/ buying OTM puts in current environment. Roll strikes lower if/when equities weaken further.
• Skew compression seen in BankNifty options as preference for out-of-money puts wane. Skew selling an unsuitable strategy at current levels.

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.

• Anton Oilfield
• Greentown China

• While most HK/China stocks continue to be traded at depressed valuation, we view ESR as an interesting play among most real estate stocks
• The investment highlights of ESR are: 1) as a leading fund manager with growing AUM and fee income 2) leader in new economy sector, and 3) APAC focused
• ESR’s EBIT mainly comes from 3 segments: investment, fund management and new economy development.  ESR is now trading at deep discount to NAV

• 9 weeks ago, the FT reported Elliott Management had a stake in Mitsui Fudosan (8801 JP) and had asked them to sell cross-holdings and do a ¥1trln buyback. Mitsui responds.
• Lawrence Ho is buying Melco(200 HK). While it often pays to follows where the family invests, Melco is trading too tight for what is a simple holding company structure.
• Avoid being long Aozora Bank Ltd (8304 JP) vs the Banks Index, a portfolio of other cheaper banks, etc. Minimal/negligible upside in following Murakami-san here. And Activism on Banks is difficult.

• We explore Citibank’s upcoming division of CitiBanamex and the forthcoming legacy Banamex IPO; given the market’s premium PBV ratios, this should support the Banamex IPO valuation
• Sector trends to January show continued loan growth, but headwinds are building; rising funding costs are eroding credit spreads and credit costs are worsening, even though NPL coverage is healthy
• BanBajio generates an ROE of 28%+, whilst highly capitalized and on more modest multiples than Banorte; we stay cautious on Banorte, due to the growing risks to returns and valuation

• The Nikkei 225 Index last week bounced back, after a 2-weeks down pullback.
• The index is at a fork in our view: it could go higher from here, but we would like to see a sustained, multi-week rally to be convinced.
• If doubt about this potential rally continuation is strong, target the 40500-40800 price area to place SHORT trades against the index.

EML Payments has entered into an agreement to settle all the outstanding deferred consideration payments relating to the acquisition of Prepaid Financial Services Group (PFS) for £15.0m/A$28.8m, which represents a £7.9m/A$15.2m discount to the originally agreed amount. This agreement concludes all outstanding actual and potential liabilities relating to the PFS acquisition in 2020. Combined with the agreed sale of Sentenial for A$54m, this substantially strengthens EML’s balance sheet and simplifies the group’s structure.

• 9 weeks ago, the FT reported Elliott Management had a stake in Mitsui Fudosan (8801 JP) and had asked them to sell cross-holdings and do a ¥1trln buyback. 
• The stock popped 7% the next day to ¥1302, on the highest volume since the covid crash, hesitated a day, then powered almost 20% higher through the end of March. 
• Today, Mitsui Fudosan responded with an Amendment to their Plan out to 2030. It has a higher dividend, a share buyback, higher EPS target growth, and higher ROE target. But…

• Canara Bank (CBK IN) should replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the September rebalance.
• Passive trackers will need to buy nearly 2 days of ADV in Canara Bank (CBK IN) while selling over 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN). 
• Canara Bank (CBK IN) is one of the best performing banking stocks while Bandhan Bank Ltd (BANDHAN IN) has been the worst performer over the last two years.

• 2024 stands out as the landmark year for exchange-traded crypto products, especially those related to Bitcoin.
• After years of existing somewhat separately from traditional finance, the crypto market is finally being recognized as a legitimate part of the broader financial landscape.
• The United States set the stage in January by securing approval from the US Securities and Exchange Commission (SEC) for the first US-based Bitcoin spot ETFs. To any observer, it is unmistakably clear that the United States has triggered a wave of global approvals for exchange-traded crypto products.

• Chesnara has announced its 2023 results.
• Positive returns from equity markets and gains from acquisitions in the first half were somewhat offset by adverse changes to operating assumptions in the second.
• Economic Value profit of £59.1m marked a good turnaround from a loss of £85.1m in 2022.

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 Jinmao Holdings
• Yuexiu Property

• Just under 6 weeks ago, Japanese activist Murakami-san’s company and daughter reported a 5+% stake in Aozora Bank Ltd (8304 JP). They bought after a sharp dip caused CRE-related writedowns. 
• As is normal, they bought more (now 8.92%) post-5%-filing-trigger, but before the actual first filing. And as is normal these days, the stock popped on the first filing.
• Then it fell, and hasn’t recovered much. So far, on a weighted basis, they are up 1% vs TOPIX Banks Index. 

For our next Corporate Webinar we are glad to welcome Elite Commercial REIT’s CEO, Mr Joshua Liaw.

In the upcoming webinar, Joshua will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Sumeet Singh. 

Sumeet will also be providing an industry overview, featuring landscape commentary and returns analysis. The Corporate Webinar will include a live Q&A session.

In the spirit of giving back to our community, one of the attendees will also be awarded an Amazon Kindle as part of our exclusive lucky draw. 

The Corporate Webinar will be hosted on Monday, 15 April 2024, 19:00 SGT.

About Elite Commercial REIT

Elite Commercial REIT (“Elite REIT”) is a Singapore real estate investment trust established with the investment strategy of principally investing, directly or indirectly, in commercial real-estate related assets in the United Kingdom (“UK”). Elite REIT is the only UK REIT listed in Pound sterling on the Singapore Exchange.

Elite REIT’s portfolio (“Portfolio”) comprises predominantly freehold properties strategically located mainly in town centres, and near amenities and transportation nodes. The Portfolio offers a stable government-backed income stream with over 99% of the gross rental income derived from the UK Government, backed by AA-rated sovereign credit strength. The leases are on triple net basis and Elite REIT is one of the largest providers of critical social infrastructure to the Department for Work and Pensions (“DWP”) and other UK Government departments. The DWP is the UK’s largest public service department that is responsible for welfare, pensions and child maintenance policy, serving over 20 million claimants and customers. The Portfolio is part of the crucial social infrastructure through which the DWP provides services to local communities.

• With the review period nearing completion, 6 stocks are in inclusion zone and 8 are in deletion zone. However, there can be a maximum of 5 changes at a review.
• We estimate a one-way turnover of 7% at the June rebalance leading to a one-way trade of CNY 9.7bn (US$1.34bn). Index arb balances could increase the impact on the stocks.
• The inflows into mainland China ETFs have further increased the flow and impact on the potential changes. The potential adds have continued to outperform the potential deletes.

• The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
• Sompo Holdings (8630 JP) had a stake over US$100m in at least 16 listed Japanese stocks, amounting to a total of around US$6bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

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
• Melco Resorts and Entertainment (Philippines)

Utilico Emerging Markets Trust’s (UEM’s) manager Charles Jillings, at specialist investor ICM, is very excited about the prospects for the trust’s investee companies. He believes that investors underappreciate the quality of these businesses and the teams that manage them. Jillings travels extensively, along with deputy portfolio managers Jacqueline Broers and Jonathan Groocock, meeting with current portfolio and other firms and relevant organisations in emerging markets. They report first hand that companies in the fund are performing very well, with robust top-line growth and cost reductions leading to higher margins. Because of the nature of UEM’s holdings in infrastructure and utility assets, the fund has a consistently low beta. Successful stock selection has led to the trust’s NAV outperformance versus the MSCI Emerging Markets Index over the last one, three, five and 10 years – most notably over the last three years. Since inception in 2005, UEM’s NAV total return compounded at 9.5% per year.

• Every year in April there is an interesting phenomenon with TOPIX. It is what Janaghan Jeyakumar, CFA calls “The Big April Basket.” The TSE re-assesses Liquidity Factor Coefficients.
• It also does a FFW change, and this year it has Phased Weight Reductions for those slowly leaving TOPIX and PWR re-inclusions for those identified last October as going back.
• Janaghan had 18 “High Conviction” LF removals. All were hits. They are upweights. Then there are 34 changes to FFW coefficients.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
• According to my estimates, the SSE 50 expected ADDs and DELs could see US$1.7bn index buying and US$828mn index selling respectively (leaving nearly $900mm of funding sales to do).

• Market momentum continues to be strong. As we head into earnings season, the momentum is likely to continue.
• Strong operational updates Info Edge India (INFOE IN); Aavas Financiers Ltd (AAVAS IN) & Sula Vineyards (SULA IN).  
• The overall market sentiment, represented by the average revisions across all sectors, is nearly flat, with a slight positive revision for FY1E at 0.02% and essentially stable for FY2E.

• As of end of Q1, NAV was SEK 166.8 billion (SEK 386/share). NAV increased by 11% due to a sharp decrease in leverage, while the portfolio value rose by 6%.
• Industrivärden C shares are trading at a 5.5% discount to NAV (vs. 8.8% average for the last 5 years). It seems risky to bet on a further discount reduction.
• My target NAV is SEK 173,116 million (SEK 400.8/share). My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 361.7.

• The KOSPI 200 INDEX is currently pulling back for a 2nd week in a row.
• This could be an opportunity to go LONG,  if the pullback is limited to this (or at most the next) week closing down and reaching targets between 365 and 338.
• If the index goes down for 3 weeks and reached below 343 caution is advised: the pullback may be larger than expected in that case.

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.

• Pakuwon Jati
• Sunny Optical Technology Group

Picton Property Income has agreed the sale of Angel Gate, its second largest office asset, and largest portfolio void, with an agreed consideration above the Q323 valuation. The sale is part of its strategy to repurpose selective office assets and accretively recycle the capital. This sale supports NAV, and we expect a positive impact on earnings. Further repurposing asset management initiatives are being progressed.

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

• Author has a negative outlook on self-storage REITs, particularly EXR
• Valuations are high despite challenging outlook and higher interest rates
• Predicts industry’s long-term prospects are unfavorable due to institutionalization and increased competition

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.

• 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.