In today’s briefing:
- ESR Group (1821 HK): Steady Progress
- Bottom Fishing: SoftBank (9984 JP) Looks Attractive After -18% Drop
- Knowledge Realty Trust Pre-IPO Tearsheet
- Brazil Banks – Buy Bradesco for Value and Improving Returns, Nubank Is Stretched on Valuations
- Lucror Analytics – Morning Views Asia
- Assura’s Takeover: Buy as KKR’s Final Offer Nears Completion
- CRE Inc/Japan (3458 JP): 1H FY07/25 flash update
ESR Group (1821 HK): Steady Progress
- ESR Group (1821 HK)’s preconditional scheme offer from the consortium is either cash (HK$13.00), scrip or a combination of cash/scrip. The offer is final.
- On 7 March, the consortium disclosed two additional irrevocable (3.47% of outstanding shares) and satisfied two regulatory preconditions (UK FCA and Singapore MAS).
- Since announcing the offer, peers have materially derated, lowering the vote risk. At the last close and for an end August payment, the gross/annualised spread is 4.5%/10.1%
Bottom Fishing: SoftBank (9984 JP) Looks Attractive After -18% Drop
- Softbank Group (9984 JP) has lost nearly 18% of its stock value since February 7th. The stock has been falling for 4 weeks, our model indicates a very oversold condition.
- SoftBank’s has a number of strategic investments and initiatives that make it an attractive investment.
- Below, we outline key fundamental factors that align with our quantitative model’s view, suggesting the stock is oversold and could be a compelling buy at its current price.
Knowledge Realty Trust Pre-IPO Tearsheet
- Knowledge Realty Trust (258259D IN) looks to raise about US$712m through its upcoming India IPO. The lead bookrunners for the deal are Kotak, Axis, BoFA, ICICI, IIFL, JMFin, MS, SBI.
- Knowledge Realty Trust (KRT) owns and manages a high-quality office portfolio in India. KRT covered 87% of India’s office supply and gross absorption between FY16-9M24, as per CBRE report.
- The portfolio includes 6 city-center offices and 24 business parks/centers. These assets are spread across 6 cities — Hyderabad, Mumbai, Bengaluru, Chennai, Gurugram, and GIFT City.
Brazil Banks – Buy Bradesco for Value and Improving Returns, Nubank Is Stretched on Valuations
- We stay negative on Nubank, even after the recent share correction; our rationale is tough competition, especially in Mexico, and worsening credit quality to remain a key risk in Brazil
- We believe that the fundamental outlook for Bradesco should improve further, supported by its strong insurance operations; conservatively, we estimate insurance could account for two thirds of group value
- Our neutral on Banco do Brasil is due largely to heightened political risk; holding company Itausa is the best indirect vehicle through which to gain equity exposure in Banco Itaú
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: China Jinmao, Nickel Industries, Vedanta Resources, Bharti Airtel
- In the US, JOLTS job openings increased slightly to 7.74 mn (7.60 mn e / 7.51 mn revised p) in January, with the job openings rate little changed m-o-m at 4.6%. Layoffs declined for a fourth straight month to the lowest level since June 2024.
- Overall, the JOLTS report showed that the labour market was steady in January, albeit demand for labour could soften in the months ahead.
Assura’s Takeover: Buy as KKR’s Final Offer Nears Completion
- With a 75.6% estimated probability, the Assura takeover by KKR and Stonepeak is highly likely, given board support and minimal offer sweetening, signaling no further bid increases.
- Fair Valuation: The 49.4p per share offer represents a 32% premium to pre-bid trading levels, aligning with Assura’s NAV, and exceeding PHP’s rejected 43p per share merger proposal.
- KKR may extract cost savings from Assura’s 12% EPRA cost ratio, potentially saving £3+ million annually, alongside additional efficiencies from delisting and financial restructuring.
CRE Inc/Japan (3458 JP): 1H FY07/25 flash update
- In 1H FY07/25, the company reported sales of JPY22.6bn (-3.9% YoY) and business profit of JPY3.1bn (+124.0% YoY).
- The company resolved to support a Tender Offer by SMFL MIRAI Partners and plans to delist its stock.
- As of end-January 2025, floor space under management reached approximately 6.6mn sqm with high occupancy rates.
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