Daily BriefsFinancials

Financials: Futu Holdings Ltd, Bajaj Finance Ltd, Korea Stock Exchange Kospi 200 Index, LIC Housing Finance, Shriram Transport Finance, SBI Life Insurance Co Ltd, Geojit Financial Services and more

In today’s briefing:

  • Futu Holdings – An Inflection Point Imminent?
  • Bajaj Finance: Undergoing Major Transformation Towards Becoming a Fintech Company
  • Asia Short Rotation
  • LIC Housing Finance – Unmitigated Disaster
  • Shriram Transport Finance Company Ltd. Rs Q1FY22 Result Update
  • Sbi Life Insurance: Robust Performance; Outlook Positive
  • Geojit Financial Services: Cash Focused Business Model Best Suited

Futu Holdings – An Inflection Point Imminent?

By Jason Yap, CFA

A pandemic fuelled retailed trading frenzy and strong market performance in 2020 enabled Futu Holdings Ltd (FUTU US) to benefit from unprecedented growth in paying client additions and trading activities.  A recent USD1 trillion selloff of China offshore equities and a shift in investor sentiment however, compounded by escalating regulatory scrutiny, has led to concerns whether the high growth seen in 2020 and early 2021 would persist in coming quarters.  We lay out 4 hypotheses for a potential negative re-rating focused on growth declines, continued investments, regulations, and licensing concerns. 

Bajaj Finance: Undergoing Major Transformation Towards Becoming a Fintech Company

By Ankit Agrawal, CFA

Bajaj Finance Ltd (BAF IN) reported weaker than expected Q1FY22 earnings led by weakening asset quality and subdued growth due to adverse impact from the second wave of COVID. On the other hand, it reported strong advancement in its next phase transformation of becoming an app based fintech ecosystem. With this app based ecosystem, we think BAF is gearing up to be the next big fintech in the country. If all goes well, we won’t be surprised to see BAF getting bigger than Paytm, PhonePe, etc. over time. BAF has an inherent advantage over its peers in the form of a large vetted and wealthy customer base as well as in-house products that can be tailored as per customer requirements. BAF’s fintech peers, on the other hand, acquire customers through significant discounts and cash burn. Also, these peers have limited in-house products and have to rely mostly on third-party products that provide limited leeway for customization. While, BAF’s current valuations are around fair at 65-70x on a normalized profit base (i.e. ex of COVID impact), we think BAF still has potential to surprise on earnings growth led by its new Fintech avatar. 


Asia Short Rotation

By Thomas Schroeder

As China/HK and Japan reach for oversold cycle lows, our attention shifts to Korea and Taiwan as short rotation candidates as both have backed of of key resistance zones and vulnerable into an exhaustive US rally cycle.

Nikkei lower wedge support remains our ideal downside target. HSI undershoot to 24,600 but 27,000 is now formidable resistance.

Korea and Taiwan are closer to key has and backing off of resistance zones, making them more vulnerable to an exhaustive NDX cycle.

Key takeaway – Nikkei and HSI expected to outperform Korea and Taiwan from noted low zones after the next leg down is complete.

LIC Housing Finance – Unmitigated Disaster

By Thomas J. Monaco

*Credibility Gap Widens: LIC Housing Finance (LICHF.IN) [LIC] reported FY 1Q22 bottom-line results of INR 1.5 bn, declining INR 2.5 bn (61.5%) linked quarter. Negative operating jaws, were the culprit, as costs increased INR 469 mn (21.1%) whilst revenues declined INR 2.6 bn (16.7%); and

*Very Negative Credit Delta: Despite the limited NCOs, net new NPLs at LIC still skyrocketed INR 44.7 bn or 190.3% on an annualized basis linked quarter significantly accelerating from a very high INR 12.6 bn (62.0%) during FY 4Q21. By our calculation, if the large blip in credit continues, LIC management ought to think about adding another INR 158 bn to the reserve – which amounts to 78% of stated equity at just 50% cover of NPLs.


Shriram Transport Finance Company Ltd. Rs Q1FY22 Result Update

By Edelweiss

Asset quality outcome better than expectations

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sbi Life Insurance: Robust Performance; Outlook Positive

By Geojit BNP Paribas

SBI Life Insurance Company Limited, is a joint venture between SBI and BNP Paribas formed in 2001, which offers individual and group insurance plans, including traditional and unit linked plans. Its products cover life, health,…

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Geojit Financial Services: Cash Focused Business Model Best Suited

By ICICI Securities Limited

About the stock: Geojit Financial Services is an investment service company in India with a presence in Middle East via subsidiaries, JVs and partnerships and has 466 offices throughout India and the Middle East.

  • The company has a total client base of 11.2 lakh as on June 2021
  • Cash ADTO market share for the company was at 0.92%
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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