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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div><p>The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of 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> in mid-June and the changes will be effective after the close of trading on 30 June.</p></div><div>
<p>The review period for market cap calculations runs from 1 March to 31 May, while the liquidity calculations run from 1 June 2020 to 31 May 2021.</p>
<p>We see three potential changes at the current time with an estimated one-way turnover for the rebalance at 2.19%.</p>
<p>Potential inclusions are <a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a>, <a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> and <a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a>.</p>
<p>Potential deletions are <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a>, <a href="https://www.smartkarma.com/entities/com7-pcl" target="_blank" data-smartkarma-citation="entities:27411:1" rel="noopener">Com7 PCL (COM7 TB)</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a>.</p>
<p><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> will not completed six months of trading history by the end of the review period and will not be eligible for inclusion at the June rebalance.</p>
<p>There is a possibility that 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> methodology is changed to make it a free float weighted market cap index from a full market cap index. That will see a lot of passive flow on some stocks that have a low free float.</p>
</div>

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in mid-June and the changes will be effective after the close of trading on 30 June.
The review period for market cap calculations runs from 1 March to 31 May, while the liquidity calculations run from 1 June 2020 to 31 May 2021.
We see three potential changes at the current time with an estimated one-way turnover for the rebalance at 2.19%.
Potential inclusions are Sri Trang Gloves (Thailand) Public Company Limited (STGT TB), Sri Trang Agro Industry (STA TB) and IRPC PCL (IRPC TB).
Potential deletions are VGI PCL (VGI TB), Com7 PCL (COM7 TB) and TOA Paint (Thailand) (TOA TB).
Kerry Express Thailand (KEX TB) will not completed six months of trading history by the end of the review period and will not be eligible for inclusion at the June rebalance.
There is a possibility that the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) methodology is changed to make it a free float weighted market cap index from a full market cap index. That will see a lot of passive flow on some stocks that have a low free float.


SET50 Index Rebalance Preview: Potentially Three Changes & Move to Free Float Weighting

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/jd-logistics" target="_blank" data-smartkarma-citation="entities:31500:1" rel="noopener">JD Logistics (JDL HK)</a> is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a>’s in-house logistics department in 2007. JD Logistics is seeking to raise up to $4 billion at a $40 billion valuation, according to press reports. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/jd-logistics-ipo-initiation-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:48279" rel="noopener">JD Logistics IPO Initiation: The Flow of Things</a>, we opined that JD Logistics' fundamentals are attractive and remain well-placed to address consumers' demand for faster and more flexible supply chain logistics services. In this note, we take a first look at JD Logistics' valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.</p></div></div></div>

JD Logistics (JDL HK) is the largest player in China’s integrated supply chain logistics services market, with a 2.2% revenue market share in 2019, according to CIC. JD Logistics was founded with the formation of JD.com Inc (ADR) (JD US)’s in-house logistics department in 2007. JD Logistics is seeking to raise up to $4 billion at a $40 billion valuation, according to press reports. In JD Logistics IPO Initiation: The Flow of Things, we opined that JD Logistics' fundamentals are attractive and remain well-placed to address consumers' demand for faster and more flexible supply chain logistics services. In this note, we take a first look at JD Logistics' valuation. Overall, based on our valuation analysis, we think that the rumoured IPO valuation can be justified.

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 are positive toward KEX’s core strategy to run the business in 2021 amid the uncertainty over unfavourable macroeconomic condition and competitive forces created by new entrants. The company 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></p><div>• The management maintain the company’s objective to expand delivery volume along with growing e-commerce rather than maximizing margin per parcel.</div><div></div><div>• Expect 1Q21 profit to slightly soft down QoQ following a low season factor. YoY increase could be challenging due to poor macroeconomic environment.</div><div></div><div>• Revising up earnings in 2021-23E by 1-7%</div><p></p><p><strong>We upgrade KEX to HOLD with a new target price of Bt53.0 (Previous TP: Bt43.0) derived from DCF methodology or equivalent to 57.0xPE’21E. Upward TP revision reflected lower-than-expected degree of competition in the industry and CAPEX allocation amount. We apply HOLD rating for KEX due to limited upside to our target with the absence of positive short-term catalysts.</strong></p>

We are positive toward KEX’s core strategy to run the business in 2021 amid the uncertainty over unfavourable macroeconomic condition and competitive forces created by new entrants. The company 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.• The management maintain the company’s objective to expand delivery volume along with growing e-commerce rather than maximizing margin per parcel.• Expect 1Q21 profit to slightly soft down QoQ following a low season factor. YoY increase could be challenging due to poor macroeconomic environment.• Revising up earnings in 2021-23E by 1-7%We upgrade KEX to HOLD with a new target price of Bt53.0 (Previous TP: Bt43.0) derived from DCF methodology or equivalent to 57.0xPE’21E. Upward TP revision reflected lower-than-expected degree of competition in the industry and CAPEX allocation amount. We apply HOLD rating for KEX due to limited upside to our target with the absence of positive short-term catalysts.

KEX: Maximizing Parcel Volume as the Priority

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>After <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> ("KPL") and <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") were both <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0205/2021020500081.pdf" target="_blank" rel="noopener">suspended</a> ahead of trading on the 5 February, KLN has now <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").</p>
<p>SFH intends to acquire 931.21mn shares or 51.8% of shares outstanding, of Kerry Logistics Network. The Offer price is HK$18.80/share - a 19.83% discount to last close. KLN's shares gained 25% prior to the suspension.</p>
<p>There is a side transaction which is conditional on the Partial Offer becoming Unconditional. The transaction is to sell KLN's warehouses to its parent company. A substantial portion of the proceeds would be paid to shareholders on the Record Date 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. </p>
<p>The timing of that Record Date and the Close of the Offer may mean that Shareholders will get the FY20 Final Dividend as well, and if it stretches on, perhaps even the FY21 Interim Dividend.</p>
<p>Pre-conditions are numerous, including approvals from SAMR, NDRC, MoC, CFIUS, FTC, 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>,  amongst other conditions, a number of which are waivable. </p>
<p>The controlling shareholders of KLN, including KPL, 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. In addition, the document suggests Executive Directors and their affiliates will tender another 22.757mn shares. </p>
<p>The Partial Offer is conditional on 51.8% of shares out tendering, and the minimum acceptance of 336.706mn shares (18.7% of shares out) from shareholders <em>other than</em> the controlling shareholders and executive directors (at least that is what it says in bold, but other language in the document could lead one to believe that isn't an absolute). </p>
<p>Should the Partial Offer complete, SFH will outlay HK$17.55bn or US$2.25bn.</p>
</div>
<div>
<p>Lots more below the fold.  Plus <em><strong>Ye Olde Arb Grids </strong></em>(or at least one of them). </p>
</div>


After Kerry Properties (683 HK) ("KPL") and Kerry Logistics Network (636 HK) ("KLN") were both suspended ahead of trading on the 5 February, KLN has now announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH").
SFH intends to acquire 931.21mn shares or 51.8% of shares outstanding, of Kerry Logistics Network. The Offer price is HK$18.80/share - a 19.83% discount to last close. KLN's shares gained 25% prior to the suspension.
There is a side transaction which is conditional on the Partial Offer becoming Unconditional. The transaction is to sell KLN's warehouses to its parent company. A substantial portion of the proceeds would be paid to shareholders on the Record Date 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. 
The timing of that Record Date and the Close of the Offer may mean that Shareholders will get the FY20 Final Dividend as well, and if it stretches on, perhaps even the FY21 Interim Dividend.
Pre-conditions are numerous, including approvals from SAMR, NDRC, MoC, CFIUS, FTC, a waiver from the relevant Thai authorities not to make a downstream Offer for Kerry Express Thailand (KEX TB),  amongst other conditions, a number of which are waivable. 
The controlling shareholders of KLN, including KPL, 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. In addition, the document suggests Executive Directors and their affiliates will tender another 22.757mn shares. 
The Partial Offer is conditional on 51.8% of shares out tendering, and the minimum acceptance of 336.706mn shares (18.7% of shares out) from shareholders other than the controlling shareholders and executive directors (at least that is what it says in bold, but other language in the document could lead one to believe that isn't an absolute). 
Should the Partial Offer complete, SFH will outlay HK$17.55bn or US$2.25bn.


Lots more below the fold.  Plus Ye Olde Arb Grids (or at least one of them). 


Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer

APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

PTT Oil & Retail Business  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/ptt-oil-and-retail" target="_blank" data-smartkarma-citation="entities:28939:1" rel="noopener">PTT Oil and Retail (OR TB)</a> raised about US$1.6bn at THB18 per share, the top-end of the IPO price range.</p>
<div>
<p>PTTOR is a market leader in the oil business as well as F&amp;B business. It has leveraged its service station network to build out its brand, Amazon Cafe, which has a strong presence even beyond service stations. </p>
</div>
<div>
<p>We have previously covered the IPO in:</p>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-ipo-f-b-business-is-the-profit-driver" target="_blank" data-smartkarma-citation="insights:39105" rel="noopener">PTT Oil and Retail IPO - F&amp;B Business Is the Profit Driver</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-ipo-updated-financials-and-competitive-landscape" target="_blank" data-smartkarma-citation="insights:47002" rel="noopener">PTT Oil and Retail IPO - Updated Financials and Competitive Landscape</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-ipo-thoughts-on-valuation" target="_blank" data-smartkarma-citation="insights:47003" rel="noopener">PTT Oil and Retail IPO - Thoughts on Valuation</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-ipo-attractive-valuation-with-favorable-deal-dynamics-index-inclusion" target="_blank" data-smartkarma-citation="insights:47073" rel="noopener">PTT Oil and Retail IPO - Attractive Valuation with Favorable Deal Dynamics (Index Inclusion)</a> </li>
</ul>
<p>In this note, we will look at the deal dynamics and provide implied valuations at different share price levels.</p>
</div>

PTT Oil and Retail (OR TB) raised about US$1.6bn at THB18 per share, the top-end of the IPO price range.

PTTOR is a market leader in the oil business as well as F&amp;B business. It has leveraged its service station network to build out its brand, Amazon Cafe, which has a strong presence even beyond service stations. 


We have previously covered the IPO in:


PTT Oil and Retail IPO - F&amp;B Business Is the Profit Driver 

PTT Oil and Retail IPO - Updated Financials and Competitive Landscape 

PTT Oil and Retail IPO - Thoughts on Valuation 

PTT Oil and Retail IPO - Attractive Valuation with Favorable Deal Dynamics (Index Inclusion) 

In this note, we will look at the deal dynamics and provide implied valuations at different share price levels.


PTT Oil and Retail IPO Trading - Still Reasonably Priced at the Top-End

Thailand

Kerry Express Thailand is a parcel delivery provider in Thailand

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Kerry Express Thailand (KEX TB)

SET50 Index Rebalance Preview: Potentially Three Changes & Move to Free Float Weighting

There could be 3 changes to the SET50 at the June review with STGT, STA & IRPC joining the index at the expense of VGI, TOA & COM7. The methodology...

Brian Freitas

JD Logistics IPO: Valuation First Look

JD Logistics is seeking to raise up to $4 billion at a $40 billion valuation, according to press reports. We think that the rumoured IPO valuation...

Arun George

KEX: Maximizing Parcel Volume as the Priority

We are positive toward KEX’s core strategy to run the business in 2021 amid the uncertainty over unfavourable macroeconomic condition and...

Pi Securities PCL, Thailand

Kerry Logistics (636 HK): SF Holdings' Pre-Conditional Partial Offer

Undisturbed is ~HK$16.92/sh, or $9.64/sh ex-SpecDiv. At HK$24.75, there are a lot of assumptions embedded. If public shareholders hold on b/c a...

David Blennerhassett

PTT Oil and Retail IPO Trading - Still Reasonably Priced at the Top-End

PTTOR raised about US$1.6bn at THB18 per share. In this note, we will look at the deal dynamics and provide implied valuations at different share...

Zhen Zhou, Toh

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