Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The review period for the LQ45 Index July rebalance ended 30 June. The changes should be announced the last week of July, becoming effective after the close on 31 July.</li>
<li>Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat (BBRI)</a> and <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA)</a>.</li>
<li>For a change, the impact on the potential inclusions will be higher since they will join the index with higher weights compared to the potential deletions.</li>
</ul>


The review period for the LQ45 Index July rebalance ended 30 June. The changes should be announced the last week of July, becoming effective after the close on 31 July.
Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
For a change, the impact on the potential inclusions will be higher since they will join the index with higher weights compared to the potential deletions.


LQ45 Index Rebalance Preview (July): Identifying Potential Index Changes

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Japfa Comfeed's H1/23 results remained weak, with a large drop in profitability on account of an oversupply of poultry, higher raw-material costs and lower consumer demand. While there was sequential improvement in Q2, the overall H1 results remained significantly weaker y-o-y. The company's financial risk profile continued to deteriorate, while liquidity worsened. We revise our LARA on Japfa to "High Risk" from "Medium Risk", given the company's quickly deteriorating liquidity profile and increasing leverage. The inadequate liquidity position and fast-rising leverage are no longer in line with that of a "Medium Risk" credit.

  Japfa Comfeed's H1/23 results remained weak, with a large drop in profitability on account of an oversupply of poultry, higher raw-material costs and lower consumer demand. While there was sequential improvement in Q2, the overall H1 results remained significantly weaker y-o-y. The company's financial risk profile continued to deteriorate, while liquidity worsened.   We revise our LARA on Japfa to "High Risk" from "Medium Risk", given the company's quickly deteriorating liquidity profile and increasing leverage. The inadequate liquidity position and fast-rising leverage are no longer in line with that of a "Medium Risk" credit.  

Japfa Comfeed - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

External broker reports(aggregated public sources), BRI Danareksa Research

BRI Danareksa Research

External broker reports(aggregated public sources)

As a one-stop financial solution with the vision to be the most valuable securities house, BRI Danareksa Sekuritas (BRIDS) has maintained an excellent track record and extensive experience in the capital market as an underwriter, broker, and financial advisor for individual, institutional, foreign and domestic, private and government clients. Established in 1992, PT Danareksa Sekuritas is a securities company that performs activities as a securities broker, underwriter, or arranger and financial advisor.

Thematic (Sector/Industry)

<ul><li>Despite the potentially lower LB pricesin Suro month, we remain bullish given the expected higher margin from lower feed costs.</li><li>The relatively light position of funds suggests 2Q24 earnings beat could re-rate the sector in our view.</li><li>We maintain our Overweight rating on the sector, foreseeing higher margins to support growth. CPIN remains our top pick in the sector.</li></ul>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.

Despite the potentially lower LB pricesin Suro month, we remain bullish given the expected higher margin from lower feed costs.The relatively light position of funds suggests 2Q24 earnings beat could re-rate the sector in our view.We maintain our Overweight rating on the sector, foreseeing higher margins to support growth. CPIN remains our top pick in the sector.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.

Poultry: Potential Re-Rating Intact from Strong FY24-25F Earnings Growth

<ul><li>Following sector underperformance due to the weakness in LB prices, we think the recent rebound may act as a potent catalyst.</li><li>With the strong earnings growth outlook intact and the relatively light position of funds, we believe the sector could re-rate in FY24-25F.</li><li>We maintain our Overweight rating on the sector, foreseeing higher margins from lower feed costs. CPIN remains our top pick in the sector.</li></ul>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.

Following sector underperformance due to the weakness in LB prices, we think the recent rebound may act as a potent catalyst.With the strong earnings growth outlook intact and the relatively light position of funds, we believe the sector could re-rate in FY24-25F.We maintain our Overweight rating on the sector, foreseeing higher margins from lower feed costs. CPIN remains our top pick in the sector.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.

<ul><li>The NFA issued a new regulation to increase the reference prices of livebirds and local corn, effective from Jun24 until amendment.</li><li>Although we view this positively, we only expect a minimum impact from reference prices on actual market prices. </li><li>We maintain our Overweight rating on the sector, foreseeing higher feed margins; CPIN remains our top pick.</li></ul>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.

The NFA issued a new regulation to increase the reference prices of livebirds and local corn, effective from Jun24 until amendment.Although we view this positively, we only expect a minimum impact from reference prices on actual market prices. We maintain our Overweight rating on the sector, foreseeing higher feed margins; CPIN remains our top pick.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.

Poultry: New Reference Prices to Support the Industry, Albeit Unlikely to Be a Game Changer

Indonesia

PT Siantar Top Tbk manufactures a variety of snack food products.  The Company produces snack noodles, crackers, and candies under the brand names Fuji Mie, Mie Goreng, Olala, Tamiku, Twistko, Tic-Tic, Twistball, Fuji Chips, Tovie Candy, Balico-Kelapa, and XUXU.

PT Ultrajaya Milk Industry and Trading Company Tbk operates in the food and beverage industry. The Company produces aseptic drinks such as liquid milk, fruit juices and health drinks. Ultrajaya Milk also produces butter, powder milk and sweet condensed milk.

PT Astra Agro Lestari Tbk operates rubber plantations and manufactures cooking oil. Through its subsidiaries,  the Company also operates a variety of other plantations such as palm oil, tea, and cocoa plantations.

PT Sawit Sumbermas Sarana Tbk operates in the agriculture industry. The Company trades in palm oil.

Sinar Mas Agro Resources and Technology Tbk PT and its subsidiaries develops oil palm and tea plantations.  The Company produces and trades crude palm oil, palm kernel oil, tea, and refined palm products such as cooking oil and margarine.  Sinar Mas also manufactures packaging products such as bottles and caps as well as provides management services.

Sinar Mas Agro Resources and Technology Tbk PT (SMAR IJ)

Sinar Mas Agro Resources and Technology Tbk PT

PT Dharma Satya Nusantara TBK is a palm oil and wood processing company. The Company is currently concentrating on three types of integrated businesses: wood products, timber estates and plantations.

PT Salim Ivomas Pratama Tbk produces, manufactures and distributes cooking oil, margarine, and shortening. The Company has its own palm plantation and factories. Salim distributes its product worldwide.

PT Nippon Indosari Corpindo Tbk produces baked goods.  The Company produces bread, cakes, bread pudding, lasagna, and other foods.

PT Nippon Indosari Corpindo Tbk. (ROTI) (ROTI IJ)

PT Perusahaan Perkebunan London Sumatra Indonesia Tbk cultivates, harvests, and processes palm oil, rubber, coconut, cocoa, coffee, and tea.

PT Bisi International Tbk cultivates and markets corns, vegetable and rice seeds.

Xinjiang Tecon Animal Husbandry Bio-Technology Co., Ltd. is engaged in producing and distributing feeds and feed additives. The Company also produces and sells veterinary drugs, agricucutural and milk products.

Xinjiang Tecon Anml Hsbndry Bio Tchnlgy (002100 CH)

Visionox Technology Inc. manufactures electronic components. The Company researches, develops, produces, and sells organic light emitting displays. Visionox Technology markets its products domestically and overseas.

FGV Holdings Bhd is an agricultural and agri-commodities company. The Company owns and operates an oil palm plantation producing oil palm and rubber plantation products, soybean and canola products, oleochemial products and sugar products.

Hunan New Wellful Co., Ltd. operates pig farms and trades pigs. The Company exports pigs to Hong Kong and Macau as well as sells them domestically.

ARIAKE JAPAN Co., Ltd. produces natural seasonings and flavorings from meat products.  The Company sells the products to major food makers such as Ajinomoto Co., Ltd. and Myojo Foods Co., Ltd.  Ariake also has a plant in the United States.

Shree Renuka Sugars Limited is an integrated manufacturing company with a focus on sugar, distillery products and ethanol. The Company also generates power which is used for captive consumption besides being sold externally.

Del Monte Pacific Limited produces and markets packaged vegetable and fruit, beverage and culinary products. The Group has the exclusive right to use the Del Monte brand for packaged products in the USA, South America, Philippines, the Indian subcontinent and Myanmar, and the S&W brand for both packaged and fresh products globally except Australia and New Zealand.

Triveni Engineering & Industries Limited conducts operations in sugar manufacturing and engineered-to-order mechanical equipment.

Triveni Engineering & Industries (TRE IN)

China Foods Limited, through its subsidiaries, operates food processing businesses.  The Company processes and refines edible oil and fats, produces confectionery products, wine and beverage as well as flour including wheat and other grain products.  In addition, China Foods Limited trades food products.

Ottogi Corporation manufactures food seasonings and instant food, such as mayonnaise, ketchup, salad dressing, sesame and cooking oils, and instant curry. The Company also produces frozen salads, fruit preservatives, instant noodles, and canned tuna.

PT Japfa Comfeed Indonesia Tbk manufactures animal feed, breeds and processes chickens, and operates aquaculture farms.  The Company trades its products domestically and internationally.

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Japfa Comfeed Indonesia (JPFA IJ)

LQ45 Index Rebalance Preview (July): Identifying Potential Index Changes

We have identified 5 potential changes for the LQ45 Index in July. There will also be capping flows for BBCA and BBRI. Historically, adds and...

Brian Freitas

Japfa Comfeed - Earnings Flash - H1 FY 2023 Results - Lucror Analytics

Japfa Comfeed's H1/23 results remained weak, with a large drop in profitability on account of an oversupply of poultry, higher raw-material costs...

Lucror Analytics

Poultry: Potential Re-Rating Intact from Strong FY24-25F Earnings Growth

Despite the potentially lower LB pricesin Suro month, we remain bullish given the expected higher margin from lower feed costs.

BRI Danareksa Research

Poultry - Thursday, 20 June 2024

We maintain our Overweight rating on the sector, foreseeing higher margins from lower feed costs. CPIN remains our top pick in the sector.

BRI Danareksa Research

Poultry: New Reference Prices to Support the Industry, Albeit Unlikely to Be a Game Changer

The NFA issued a new regulation to increase the reference prices of livebirds and local corn, effective from Jun24 until amendment.

BRI Danareksa Research

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