Daily Briefs

• Evidently the influence of a younger hip third-generation tycoon-scion was not the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
• As widely expected, Adrian Cheng is stepping down as NWD’s CEO, to be replaced by Eric Ma,  Hong Kong’s former secretary for development.
• NWD will also sell the rights to provide property management services under the K11 brand to Adrian; and potentially sell its stake in Kai Tak Sports Park to its parent.

• Commerzbank’s incoming CEO Bettina Orlopp announced talks with UniCredit on September 27 regarding a potential merger. Despite opposition from management and Chancellor Scholz, some investors support the discussions.
• Since UniCredit’s entry into Commerzbank on September 10, Commerzbank’s stock has surged 30%, outperforming UniCredit’s 9.2% rise and the European banking sector’s 6.3% gain.
• Buying Commerzbank is strategically and financially logical. In conclusion, I maintain my recommendation to buy Commerzbank speculatively.

• One of the areas of fintech innovations, seeing significant growth is insurtech. Big data, AI, and IoT have enabled innovations in customer experience, risk assessment, and personalized products.
• Skyward Specialty Insurance Gr (SKWD US)‘s focus on underserved and complex markets, with unique risks, should give the company better growth and margins runway. 
• Integration of proprietary  and collaborative technologies to enhance operational efficiency and customer experience in specific niches makes Skyward very competitive in admitted and  specialty insurance segments. 

• I am quite sick so I will keep it short.
• I am closing Lufax (LU) here and would at least take something off the table for JD holdings (JD) 
• Honestly Lufax business is too much of a black box, and the forward PE multiple isn’t low enough anymore for my taste.

• Hana Financial, along with KB Financial did not make the cut for the Korea Value-up index announced on the 24th September; Hana apparently fell short of the PBV ratio threshold
• Despite being excluded from the Value-up Index, Hana remains our core South Korean bank pick for its attractive valuations, low PEG, solid core capital ratio and strong credit quality credentials
• We believe Hana stands out positively on fundamentals and return trends versus its peers, and there is also potential for its inclusion in a planned rebalancing scheduled in December

New World Development’s (NWD) FY 2023-24 results were weak, but in line with expectations as flagged by the company’s profit warning earlier in September. We expect the company’s revenue and EBITDA to improve in FY 2024-25, supported by new project launches in Hong Kong as well as contributions from new K11 commercial assets in Hong Kong and Mainland China.

While NWD has continued to reduce net debt, leverage weakened on account of the weaker earnings and smaller asset base (due to disposals). Cash/ST Debt is inadequate, though we believe the company’s liquidity is manageable due to its continued access to financing. In particular, we note positively NWD’s receipt of a HKD 1 bn unsecured loan, as well as its ability to tap the USD bond market in August 2024.

The resignation of Adrian Cheng as NWD’s CEO (as well as from the Boards of NWD’s sister companies) is surprising in our view, though we believe the impact is credit neutral.

We move to “Buy” from “Hold” on the NWDEVL notes, as we view the yields as attractive.

New World Development’s (NWD) FY 2023-24 results were weak, but in line with expectations as flagged by the company’s profit warning earlier in September. We expect the company’s revenue and EBITDA to improve in FY 2024-25, supported by new project launches in Hong Kong as well as contributions from new K11 commercial assets in Hong Kong and Mainland China.

While NWD has continued to reduce net debt, leverage weakened on account of the weaker earnings and smaller asset base (due to disposals). Cash/ST Debt is inadequate, though we believe the company’s liquidity is manageable due to its continued access to financing. In particular, we note positively NWD’s receipt of a HKD 1 bn unsecured loan, as well as its ability to tap the USD bond market in August 2024.

The resignation of Adrian Cheng as NWD’s CEO (as well as from the Boards of NWD’s sister companies) is surprising in our view, though we believe the impact is credit neutral.

We move to “Buy” from “Hold” on the NWDEVL notes, as we view the yields as attractive.

• The 2024 U.S. Presidential election is fast approaching, set for November 5.
• On this day, voters will choose whether to elect current Vice President Kamala Harris, a Democrat, for her first full term, or return Republican Donald Trump to the White House.
• In Crypto Moves #28, we highlighted how this year’s presidential election is more centered on the crypto industry than ever before.

• The last 2 weeks’ upswing in the Nikkei 225 INDEX does not change our view: it is WEEKLY overbought and October is a coin flip according to our seasonal models.
• The index could rise further at this point, herd behavior may force investors to pile up into the rally, but our models say rising well past 40k will be hard.
• A pullback is not necessarily a great occasion to buy, as already explained in our previous insight, the N225’s trend does not look good, at the moment.