In today’s briefing:
- HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade
- Japan Hotel REIT: Interest Rate Hike Will Hurt Tourism, with More Hikes to Come. We Turn Bearish
- Nikkei Index Options Weekly (Feb 17 – 21): USD/JPY at Inflection Point
- Coinbase Global Inc.: The Bitcoin ETF Boom That’s Reshaping Crypto Investing!
- Nifty Index Options Weekly (Feb 17 – 21): Low Volatility Strangles Price Action
- Siam Commercial Bank (SCB TB) – Creating Wealth Inside and Out
- Moody’s Corporation: The Hidden Power of Credit Ratings That Fuels Its Billion-Dollar Business!
- Strategic Shifts and Financial Updates: CURN, SGRP, SAGE, WOW, and EMBRAC-B:ST Developments
- Weekly Update (SNDK, LBTYA, MRP, HHH, GTX)
- Bell Financial Group Ltd – Diversification continues to drive growth
HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade
- As expected, Horizon Robotics (9660 HK) replaces East Buy Holding (1797 HK) in the Hang Seng TECH Index (HSTECH INDEX) in March.
- In a surprise, Tencent Music Entertainment Group (1698 HK) will be added and ZhongAn Online P&C Insurance C (6060 HK) will be deleted.
- Horizon Robotics (9660 HK) is also an inclusion to the HSIII Index and HSCI Index and will be added to Southbound Stock Connect in May.
Japan Hotel REIT: Interest Rate Hike Will Hurt Tourism, with More Hikes to Come. We Turn Bearish
- In April 2024, we published a few notes on Japan REITs on the back of interest rate cut cycle and weaker Asian currencies
- Today, the macro environment has shifted, Japan has started a rate hike cycle.
- Japan Hotel REITs will suffer due to negative impact on tourism and higher cap rate assumptions
Nikkei Index Options Weekly (Feb 17 – 21): USD/JPY at Inflection Point
- The 150 level on USD/JPY seems to be an area of heightened interest. We see potential for greater disparity of Nikkei returns below this level.
- Nikkei 1-month implied vol is at the 17th percentile; while not currently monetizing, caution is warranted on short vol positions as USD/JPY vol trends higher.
- Call volume dropped sharply vs total volume, with Puts outpacing Calls every day this week.
Coinbase Global Inc.: The Bitcoin ETF Boom That’s Reshaping Crypto Investing!
- Coinbase Global, Inc. reported substantial growth in its 2024 financial results, showing significant strategic progress and adaptability in the rapidly evolving cryptocurrency landscape.
- The company achieved over $6.6 billion in total revenue, more than doubling from the previous year, along with $3.3 billion in adjusted EBITDA.
- This affirmative financial trajectory marks two consecutive years of positive adjusted EBITDA, reinforcing its transition into a resilient company that performs in diverse market conditions.
Nifty Index Options Weekly (Feb 17 – 21): Low Volatility Strangles Price Action
- Nifty’s prolonged downtrend continues, making it the worst-performing market year-to-date.
- Low volatility dominated price action, with 1-week historic vol at just 3.54 ranking in the 4th percentile since 2021. Possible precursor to a break from here.
- Traders may consider letting deltas run, as daily delta hedging offers little benefit in this low vol environment.
Siam Commercial Bank (SCB TB) – Creating Wealth Inside and Out
- Siam Commercial Bank stands out from its peers for its focus on its new-generation businesses, which have started to bear fruit, whilst the bank provides a solid base.
- The bank’s key focus is improving efficiency and asset quality, with the meaningful deployment of AI across the group, while targeting stable growth in its core banking business.
- Siam Commercial Bank also expects growing contributions from its 2nd generation businesses including Cardd X and Auto X. Valuations are attractive given the bank’s relatively high ROE and future prospects.
Moody’s Corporation: The Hidden Power of Credit Ratings That Fuels Its Billion-Dollar Business!
- Moody’s Corporation reported highly commendable financial results for the fourth quarter and the full-year 2024, highlighting robust revenue growth and profitability across its major business segments.
- Moody’s achieved total revenue growth of 20% for the year, surpassing $7 billion, significantly driven by the Moody’s Investors Service (MIS) and Moody’s Analytics (MA) divisions.
- The company managed to expand its adjusted operating margin by over 400 basis points, translating into a 26% increase in adjusted diluted earnings per share (EPS).
Strategic Shifts and Financial Updates: CURN, SGRP, SAGE, WOW, and EMBRAC-B:ST Developments
- Currency Exchange International (CURN) exits Canadian operations, incurring discontinuation costs, but expects $5-$6m profit tailwind by 2026.
- SPAR Group (SGRP) faces a third financing delay, suggesting Highwire Capital’s potential funding issues or hesitance.
- Embracer Group’s (EMBRAC-B:ST) valuation update post-Asmodee spin-off indicates potential 20%-80% upside if market recognizes Asmodee stake.
Weekly Update (SNDK, LBTYA, MRP, HHH, GTX)
I want to use my introduction to provide some comments on Howard Hughes (HHH).
Bill Ackman’s Pershing Square Capital Management has disclosed a new offer related to Howard Hughes.
The proposal is that Pershing Square Capital Management purchases 10 million newly issued shares at $90 each, totaling $900 million, which would increase Pershing Square’s stake from 37.6% to 48%.
Bell Financial Group Ltd – Diversification continues to drive growth
- RaaS has published an update report on diversified financials company Bell Financial Group (ASX:BFG) following the release of its FY24 audited results which demonstrated H2 CY24 acceleration in NPAT relative to H1 in the key recurring revenue businesses of Technology & Platforms (+18% vs. +2%) and Products & Services (+9% vs. +3%) as scale benefits continue.
- The Retail & Institutional business benefited from improved ECM activity and equity volumes, with H1 FY24 NPAT growth ~290% and H2 FY24 +6% off a strong base.
- Products & Services delivered 10% NPAT growth in CY24, with H2 growth accelerating to 16% following 3% growth in H1 as scale benefits kicked in.
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