Daily Brief Financials: AUB Group Limited, Krungthai Card, HDFC Bank, Union Bank Of India, HDFC Life Insurance, HSBC Holdings, Philippine Stock Exchange, Henderson Land Development, Moody’s Corp, Guoco Group Ltd and more

• In response to an AFR article, AUB Group Limited (AUB AU) confirmed that on 26 September, it received a non-binding proposal from EQT (EQT SS) at A$45.00.
• While the offer represents an all-time high, it is arguably light compared to precedent transactions and peer multiples. EQT’s history of unsuccessful ASX tilts warrants some caution. 
• The Board has granted a six-week exclusive due diligence period, which ends on 20 November. The shareholder structure reduces the vote risk. 

• As first discussed back in May (see here), shares in Krungthai Card (KTC TB), XSpring (XPG TB), BEC (BEC TB), and The Practical Solution (TPS TB) all went limit down. Twice.
• As widely reported at the time, Mongkol Prakitchaiwattana reportedly pledged his holdings in all four companies. Pledged shares in KTC ballooned in June versus May, but since fallen.
• All four were mostly flat in Sept vs. August. Elsewhere, recent big moves were seen in BCPG (BCPG TB) (up), and Thai Foods Group (TFG TB) (down).

• HDFCB’s balance sheet has been normalizing post the merger, allowing it to accelerate its growth trajectory. The demand and liquidity environment have also improved. 
• NIMs are likely to expand led by rate cut tailwind that will reflect fully over the next 18 months. Shift to CASA from term-deposits should further help. 
• Merger synergies are now being leveraged, especially for cross-selling and up-selling. At the current valuation, an investment in HDFCB offers 25%+ IRR over a holding period of two years.

• Context: The Bank Of India (BOI IN) vs. Union Bank Of India (UNBK IN) price-ratio has deviated more two standard deviations from its one-year average, signaling a potential pair trade.
• Highlights: Going long Union Bank Of India and short Bank Of India targets a 5% return. Union Bank Of India is set to report on 30 October.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Context: The HDFC Life Insurance (HDFCLIFE IN) vs. SBI Life Insurance (SBILIFE IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
• Highlights: Going long HDFC Life Insurance (HDFCLIFE IN) and short SBI Life Insurance (SBILIFE IN) targets a 7% return.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• We focus on the worsening credit metrics at HSBC, especially where stage 2 loan growth is not being matched by ECL
• There appears to be great deterioration in 3Q25 alone for its HK and CH commercial real estate lending, just as it raises its investment in Hang Seng Bank
• With migration from stage 2 to stage 3 in some regions being likely, there is every likelihood that HSBC will see continued high growth in credit costs

• Monopolistic Position with Diversifying Revenue Streams: The Philippine Stock Exchange (PSE) operates as the sole securities exchange in the Philippines, a position that affords it a wide economic moat. The recent acquisition of the Philippine Dealing System (PDS) diversifies its operations into the fixed-income market, reducing its reliance on equity trading volumes.
• Robust Growth Catalysts on the Horizon: A record initial public offering (IPO) pipeline, expected to surpass ₱200 billion in 2025, presents a significant revenue growth opportunity. Furthermore, the Capital Markets Efficiency Promotion Act (CMEPA) aims to enhance market liquidity by reducing transaction taxes, which could stimulate trading activity.
• Attractive Financials and Shareholder Returns: The PSE maintains a strong financial position, with a significant portion of its market capitalization held in cash. The company offers an attractive dividend yield, which stood at approximately 6% according to recent analyst commentary, supported by consistent net income growth.

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• Dominant Hong Kong Developer with Unmatched Land Bank: Henderson Land is a premier property developer in Hong Kong with a vertically integrated model and a substantial, strategically acquired land bank. Its most significant competitive advantage lies in possessing the largest agricultural land holdings among its peers, positioning it uniquely to benefit from government-led development initiatives like the Northern Metropolis.
• Resilient Financials and Attractive Shareholder Returns: Despite challenging market conditions that have impacted net income, the company has demonstrated strong growth in operating and free cash flow. It maintains a commitment to shareholders, evidenced by a stable dividend policy and a high dividend yield, which is a key attraction for income-focused investors.
• Navigating a Cyclical Market with a Clear Strategy: The company faces headwinds from Hong Kong’s volatile property market and a high interest rate environment. However, its strategic focus on urban renewal, converting its extensive farmland reserves, and launching new, high-quality projects like ‘The Henderson’ provides a clear path for future growth and value creation.

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Key points (machine generated)

• Moody’s Corporation has not been discussed on VIC for over 15 years despite strong performance.
• The company operates through two segments: Moody’s Investor Services (70% EBITDA) and Moody’s Analytics (30%).
• Moody’s Investor Services is the second largest credit rating agency, with over 80% market share held by Moody’s and S&P Global.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Guoco Group is a diversified investment holding company with a strong presence in property development, hospitality, and financial services across key Asian and European markets. It serves as the overseas investment flagship for Malaysia’s Hong Leong Group.
• The company exhibits a stark contrast between its recent operational performance and long-term market valuation. While 3-year compound annual growth rates for revenue (15.33%) and net income (27.06%) are robust, its market capitalization has declined over 3, 5, 7, and 10-year periods, suggesting a significant valuation discount.
• Valuation appears attractive, highlighted by a low price-to-book ratio of 0.33. This, combined with a consistent dividend and strong recent cash flow growth, presents a potential value opportunity, albeit with risks associated with its conglomerate structure and exposure to cyclical industries.

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