Daily Brief Financials: Hong Kong Hang Seng Index, Mori Trust Sogo Reit, Kolte Patil Developers, Hopson Development, Nesco Ltd, KakaoBank, NU Holdings Ltd and more

• After Asian indexes met targets we have now turned negative in a domino sequence.
• Our table pounding inflationary higher USD and higher yield thesis is seeing the dollar on the move with yield in hot pursuit.
• Bull divergence in yield and the USD warn or a multi month rise. This is just the beginning of the pain trade to unwind peak inflation and peak rate positioning.

• Mori Trust Sogo Reit (8961 JP) and Mori Trust Hotel Reit (3478 JP) will merge at the end of this month. 
• They pay divs, there is a unit split, then NEWCO. 
• If you are in the biz and you care, there is a small index thing to do.

• Kolte Patil reported weaker than expected Q3FY23 accounting earnings due to slight delay in arrival of OC for some projects. However, sales velocity and business development activity was robust.
• Reported Q3FY23 earnings had weak margins due to revenue contribution from two low-margin projects.
• Q4FY23 is on track to be strong both in terms of reported earnings (which depends on the timing of OC) and sales velocity.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Alam Sutera Realty
2. China SCE
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…

• BEC revenues continue to match the pre-COVID level suggesting that the business has now normalized fully post-COVID. COVID led shift in working habits has had no structural impact.
• IT Office Leasing revenues grew 6%+ QoQ, led by the improvement in occupancy rates. Profitability also improved led by operating efficiencies. 
• BEC’s EBIT margin came in significantly lower than expected due to one-off expense of INR 15cr for demolition of a factory shed to build a new exhibition hall.

• We discuss the increasing likelihood of formation of another Internet bank, challenger banks, and other measures to foster competition and increase social contribution on the Korean banking sector in 2023.  
• The Korean banks underperformed in the past week due to President Yoon pointing out “banks and telcos need to share the increasing living costs.”
• We believe Kakao Bank is likely to underperform the market in the next several months as investors fear about greater competitive pressure, especially on the existing Internet banks.

• 4Q22 results confirm that Nubank is the benchmark among EM neobanks in terms of activity rates, as well as trends in revenues and costs per client and digital efficiencies
• We see further potential for broadening and deepening the product offer to customers, at little incremental cost especially in Brazil, to drive cost effective revenue growth
• Our proprietary Nubank model forecasts are broadly in sync with positive consensus estimates; we forecast group ROE of close to 30% in FY 2025, despite high cost of credit assumptions