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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

Delta Electronics Thailand  / Event-Driven

<ul>
<li>SET conducted a market consultation in September/October and amended the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">SET50 INDEX</a> index methodology earlier this month. These changes could see an extra 'targeted' deletion from the index.</li>
<li>The review period ends today and we see two high probability inclusions which means there will be at least two deletions. One of the deletions is a high probability name.</li>
<li>The changes should be announced mid-December and will be implemented at the close of trading on 30 December.</li>
</ul>


SET conducted a market consultation in September/October and amended the SET50 INDEX index methodology earlier this month. These changes could see an extra 'targeted' deletion from the index.
The review period ends today and we see two high probability inclusions which means there will be at least two deletions. One of the deletions is a high probability name.
The changes should be announced mid-December and will be implemented at the close of trading on 30 December.


SET50 Index Rebalance Preview: Revised Methodology & Potential Changes

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/ane-logistics" target="_blank" data-smartkarma-citation="entities:34119:1" rel="noopener">ANE Logistics (1292621D CH)</a> operates a leading express freight network in China’s less-than-truckload (LTL) market. ANE operated the largest express freight network in China as measured by annual total freight volume in each of 2017, 2018, 2019 and 2020, according to iResearch. ANE’s shareholders include Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.</p>
<p>At the proposed IPO price range of HK$13.88-16.88 per share, ANE will have a market cap of HK$16,137-19,625 million ($2.1-2.5 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,124.1 million ($144 million), materially below the rumoured target of $500 million.</p>
<p>A single cornerstone investor, Harvest Prosperity SP, will purchase $12.5 million worth of the offer shares (7.88% of the offer shares at the mid-point of the IPO price range). </p>
</div><div><p>In <a href="https://www.smartkarma.com/insights/ane-logistics-ipo-initiation-home-delivery" target="_blank" data-smartkarma-citation="insights:57807" rel="noopener">ANE Logistics IPO Initiation: Home Delivery</a>, we stated that ANE is a play on China’s LTL market which offers substantial opportunities for market consolidation as the top 10 LTL operators in China had a market share of 5.7% by shipper spend in 2020, according to iResearch. As the largest (by freight volume), fastest-growing and most profitable player, ANE is well-positioned to be a market consolidator. We concluded that ANE’s fundamentals are solid. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ane-ipo-the-freight-debate" target="_blank" data-smartkarma-citation="insights:57957" rel="noopener">ANE IPO: The Freight Debate</a>, we stated that the PHIP continues to support our view that the ANE IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. Our valuation analysis, suggests that the IPO price range is attractive particularly at the low-end.</p></div></div></div>


ANE Logistics (1292621D CH) operates a leading express freight network in China’s less-than-truckload (LTL) market. ANE operated the largest express freight network in China as measured by annual total freight volume in each of 2017, 2018, 2019 and 2020, according to iResearch. ANE’s shareholders include Centurium, Carlyle, CDH, CPE, NWS, Ping An, Goldman Sachs and Yili.
At the proposed IPO price range of HK$13.88-16.88 per share, ANE will have a market cap of HK$16,137-19,625 million ($2.1-2.5 billion). At the mid-point of the IPO price range, the net proceeds are HK$1,124.1 million ($144 million), materially below the rumoured target of $500 million.
A single cornerstone investor, Harvest Prosperity SP, will purchase $12.5 million worth of the offer shares (7.88% of the offer shares at the mid-point of the IPO price range). 
In ANE Logistics IPO Initiation: Home Delivery, we stated that ANE is a play on China’s LTL market which offers substantial opportunities for market consolidation as the top 10 LTL operators in China had a market share of 5.7% by shipper spend in 2020, according to iResearch. As the largest (by freight volume), fastest-growing and most profitable player, ANE is well-positioned to be a market consolidator. We concluded that ANE’s fundamentals are solid. In ANE IPO: The Freight Debate, we stated that the PHIP continues to support our view that the ANE IPO is worth a look for investors willing to brave the current weak sentiment on HKEx IPOs. Our valuation analysis, suggests that the IPO price range is attractive particularly at the low-end.

Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

Kerry Express Thailand / Equity Bottom-Up

<p><strong>We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters.</strong></p><div>• The growth will be supported by an increase in revenue to Bt5.2bn (+15%YoY +12%QoQ), the five quarter high. This will be driven by an increase in number of delivered parcels at roughly 25%YoY amid implementation of price-cutting strategy in order to secure 1st place market share.</div><div></div><div>• However, gross margin is assumed to drop QoQ and YoY due to continuous fall in revenue per parcel, a rise in fuel cost, and, increasing outsourced staffs hiring.</div><div></div><div>• We expect KEX’s profit to hit the highest level in 4Q21 following a recovery in people’s purchasing power, seasonal promotion campaign from online-shopping platforms, and, benefit from extending promotion for S-sized parcel delivery at lowest price of Bt26/parcel. This will help offset the impact from rising fuel cost.</div><div></div><div><strong>We maintain KEX with a BUY rating and a target price of Bt51.0, derived from DCF or equivalent to 52.0xPE’22E, 50% discount to Thai transportation peers. We still like KEX as it will continue to be the price setter in the market given its leading position in terms of its scale and being the industry cost leader.</strong></div>

We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters.• The growth will be supported by an increase in revenue to Bt5.2bn (+15%YoY +12%QoQ), the five quarter high. This will be driven by an increase in number of delivered parcels at roughly 25%YoY amid implementation of price-cutting strategy in order to secure 1st place market share.• However, gross margin is assumed to drop QoQ and YoY due to continuous fall in revenue per parcel, a rise in fuel cost, and, increasing outsourced staffs hiring.• We expect KEX’s profit to hit the highest level in 4Q21 following a recovery in people’s purchasing power, seasonal promotion campaign from online-shopping platforms, and, benefit from extending promotion for S-sized parcel delivery at lowest price of Bt26/parcel. This will help offset the impact from rising fuel cost.We maintain KEX with a BUY rating and a target price of Bt51.0, derived from DCF or equivalent to 52.0xPE’22E, 50% discount to Thai transportation peers. We still like KEX as it will continue to be the price setter in the market given its leading position in terms of its scale and being the industry cost leader.

KEX: Expect Earnings to Grow Strongly in 2H21

<p>In this weeks recap, we look at:</p><ul>
<li>the <a href="https://www.smartkarma.com/entities/santos-ltd" target="_blank" data-smartkarma-citation="entities:711:1" rel="noopener">Santos Ltd (STO AU)</a> / <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> merger and the impact on the S&amp;P/ASX 100 and <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> </li>
<li>the spread on the <a href="https://www.smartkarma.com/entities/keppel-corp-ltd" target="_blank" data-smartkarma-citation="entities:12:1" rel="noopener">Keppel Corp (KEP SP)</a> / <a href="https://www.smartkarma.com/entities/singapore-press-holdings-limited" target="_blank" data-smartkarma-citation="entities:9952:1" rel="noopener">Singapore Press Holdings (SPH SP)</a> deal and potential index flows</li>
<li>the listing of <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries-co-ltd" target="_blank" data-smartkarma-citation="entities:33808:1" rel="noopener">Hyundai Heavy Industries (329180 KS)</a> and the potential Fast Entry into the <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> </li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the December rebalance</li>
<li>the potential changes to the <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng Tech Index (HSTECH INDEX)</a> at the December rebalance</li>
<li>the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances</li>
</ul><p>There are no major index events in the coming week - there were enough in the last week!</p><p>There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from <a href="https://www.smartkarma.com/entities/kraneshares-csi-china-internet-fund" target="_blank" data-smartkarma-citation="entities:28208:1" rel="noopener">KraneShares CSI China Internet Fund (KWEB US)</a>. </p>

In this weeks recap, we look at:
the Santos Ltd (STO AU) / Oil Search Ltd (OSH AU) merger and the impact on the S&amp;P/ASX 100 and S&amp;P/ASX 200 (AS51 INDEX) 
the spread on the Keppel Corp (KEP SP) / Singapore Press Holdings (SPH SP) deal and potential index flows
the listing of Hyundai Heavy Industries (329180 KS) and the potential Fast Entry into the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) 
the potential changes to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the December rebalance
the potential changes to the Hang Seng Tech Index (HSTECH INDEX) at the December rebalance
the potential changes to the Hang Seng Composite Index (HSCI) at the December and March rebalances
There are no major index events in the coming week - there were enough in the last week!There were substantial inflows to onshore China ETFs in the last week, while there was finally an outflow (albeit a small one) from KraneShares CSI China Internet Fund (KWEB US). 

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>On the 9 February, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> ("KLN") <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> ("SFH"). SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price is HK$18.80/share - a 19.83% discount to last close, although KLN's shares gained 25% prior to the suspension.</p>
<p>Pre-conditions were numerous - 17 all-told - including approvals from SAMR, NDRC, MoC, CFIUS, FTC, and a waiver from the relevant Thai authorities not to make a downstream Offer for <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a>.</p>
<p>The Partial Offer was also conditional on KLN selling its Hong Kong and Taiwan warehouses to its parent company. Proceeds from that sale would be paid to shareholders on the Record Date (means the date immediately prior to the Final Closing Date of the Partial Offer) as a special dividend totalling HK$7.28/share. Shareholders who tender will get HK$7.28 on <em>all</em> their shares and HK$18.80 for the shares taken up under the Partial Offer. </p>
<p>Below is a timeline of events since the initial announcement:</p>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 108.135px;">
<h3>Date</h3>
</td>
<td style="width: 637.877px;">
<h3>Data in that Date</h3>
</td>
</tr>
<tr>
<td style="width: 108.135px;">30-Mar-21</td>
<td style="width: 637.877px;">
<p>The controlling shareholders of KLN, including <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a>, plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0330/2021033003206.pdf" target="_blank" rel="noopener">fulfilled</a> - this forms part of the pre-conditions.</p>
<p> </p>
<p>Elsewhere, KLN/ SF Holdings transaction is understood to be under a SAMR simple case review.</p>
</td>
</tr>
<tr>
<td style="width: 108.135px;">9-Apr-21</td>
<td style="width: 637.877px;">
<a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener"></a>KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0409/2021040901991.pdf" target="_blank" rel="noopener">announced</a> that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.</td>
</tr>
<tr>
<td style="width: 108.135px;">3-May-21</td>
<td style="width: 637.877px;">KLN announced it will hold an SGM on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0503/2021050300069.pdf" target="_blank" rel="noopener">26 May</a> for shareholders to vote on the sale of the Hong Kong and Taiwan warehouse businesses to Kerry Holdings. </td>
</tr>
<tr>
<td style="width: 108.135px;">26-May-21</td>
<td style="width: 637.877px;">At the SGM KLN shareholders overwhelmingly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0526/2021052600981.pdf" target="_blank" rel="noopener">approved</a> the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.</td>
</tr>
<tr>
<td style="width: 108.135px;">7-Jun-21</td>
<td style="width: 637.877px;">The free float waiver from the SFC was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0607/2021060701185.pdf" target="_blank" rel="noopener">received</a>. </td>
</tr>
<tr>
<td style="width: 108.135px;">15-Jun-21</td>
<td style="width: 637.877px;">Shareholders of Kerry Props <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061501141.pdf" target="_blank" rel="noopener">approve</a> the Partial Offer. </td>
</tr>
<tr>
<td style="width: 108.135px;">29-Jun-21</td>
<td style="width: 637.877px;">CFIUS approval <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062900794.pdf" target="_blank" rel="noopener">received</a>. </td>
</tr>
<tr>
<td style="width: 108.135px;">20-Jul-21</td>
<td style="width: 637.877px;">
<a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener"></a>KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0720/2021072000823.pdf" target="_blank" rel="noopener">announced</a> approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.</td>
</tr>
<tr>
<td style="width: 108.135px;">2-Aug-21</td>
<td style="width: 637.877px;">
<p>KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0802/2021080201361.pdf" target="_blank" rel="noopener">announced</a> NDRC and MoC approval has been received as to the partial offer.</p>
</td>
</tr>
<tr>
<td colspan="2" style="width: 108.135px;"><em>Source: Various HKEx announcements</em></td>
</tr>
</tbody>
</table>
</div>
<div>
<p>Exactly on the Long Stop date, KLN has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0809/2021080901151.pdf" target="_blank" rel="noopener">announced</a> all of the pre-cons have been met - or waived (the Thai waiver in particular) - and that the Composite Document is expected to be dispatched, on or before, the 16 August.</p>
<p>The timing of that Record Date and the Close of the Offer suggests the FY21 Interim Dividend will likely be added to terms.</p>
</div>
<div>
<p>More below the fold.  Plus Ye Olde Arb Grids - or at least one of them. </p>
</div>


On the 9 February, Kerry Logistics Network (636 HK) ("KLN") announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH"). SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price is HK$18.80/share - a 19.83% discount to last close, although KLN's shares gained 25% prior to the suspension.
Pre-conditions were numerous - 17 all-told - including approvals from SAMR, NDRC, MoC, CFIUS, FTC, and a waiver from the relevant Thai authorities not to make a downstream Offer for Kerry Express Thailand (KEX TB).
The Partial Offer was also conditional on KLN selling its Hong Kong and Taiwan warehouses to its parent company. Proceeds from that sale would be paid to shareholders on the Record Date (means the date immediately prior to the Final Closing Date of the Partial Offer) as a special dividend totalling HK$7.28/share. Shareholders who tender will get HK$7.28 on all their shares and HK$18.80 for the shares taken up under the Partial Offer. 
Below is a timeline of events since the initial announcement:




Date


Data in that Date



30-Mar-21

The controlling shareholders of KLN, including Kerry Properties (683 HK), plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been fulfilled - this forms part of the pre-conditions.
 
Elsewhere, KLN/ SF Holdings transaction is understood to be under a SAMR simple case review.



9-Apr-21

KLN announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.


3-May-21
KLN announced it will hold an SGM on the 26 May for shareholders to vote on the sale of the Hong Kong and Taiwan warehouse businesses to Kerry Holdings. 


26-May-21
At the SGM KLN shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.


7-Jun-21
The free float waiver from the SFC was received. 


15-Jun-21
Shareholders of Kerry Props approve the Partial Offer. 


29-Jun-21
CFIUS approval received. 


20-Jul-21

KLN announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.


2-Aug-21

KLN announced NDRC and MoC approval has been received as to the partial offer.



Source: Various HKEx announcements





Exactly on the Long Stop date, KLN has announced all of the pre-cons have been met - or waived (the Thai waiver in particular) - and that the Composite Document is expected to be dispatched, on or before, the 16 August.
The timing of that Record Date and the Close of the Offer suggests the FY21 Interim Dividend will likely be added to terms.


More below the fold.  Plus Ye Olde Arb Grids - or at least one of them. 


Kerry Logistics (636 HK): Pre-Cons Done. Partial Offer To Commence Next Week

Thailand

Kerry Express Thailand is a parcel delivery provider in Thailand

Price Gauge
52-week Range	0.00 - 0.00
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Kerry Express Thailand (KEX TB)

SET50 Index Rebalance Preview: Revised Methodology & Potential Changes

TIDLOR and BANPU are high probability inclusions to the SET50 in Dec while STA is a high probability deletion. DELTA and BJC could be deletes on...

Brian Freitas

ANE IPO: Valuation Insights

At the proposed IPO price range of HK$13.88-16.88 per share, the net proceeds are $144 m. Our valuation analysis, suggests that the IPO price range...

Arun George

KEX: Expect Earnings to Grow Strongly in 2H21

We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters. We maintain KEX with a BUY rating...

Pi Securities PCL, Thailand

Index Rebalance & ETF Flow Recap: STO/OSH, KEP/SPH, HHI, SET50, HSTECH, HSCI

This recap highlights Insights covering the index rebalance space in Asia as well as announcements that could result in index changes. We also look...

Brian Freitas

Kerry Logistics (636 HK): Pre-Cons Done. Partial Offer To Commence Next Week

As it is, and taking the view the Controlling Shareholders will not tender more than the Irrevocable Quantity, buying around here looks reasonable.

David Blennerhassett

Price Gauge

52-week Range

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