Bayon Financial

Graeme Cunningham

Independent Insight Provider

Bayon Financial provides industry and company analysis focusing on mid and small cap equity research coverage across a range of sectors including mining, financials and telecoms.

Equity Bottom-Up

<ul>
<li>Nickel Asia is market leader for Philippines nickel ore and will remain a top player with decades of reserves leaving it well-positioned for the country’s move up the value chain  </li>
<li>However, short-term its share price has slumped on continued weakness in nickel, from a global oversupply and weakening demand, but also its removal from the PSEi </li>
<li>While the 2025E P/B at 0.85x on a 6.4% ROE is likely near cyclical lows and the valuation is inexpensive for such a major player, there are few immediate catalysts </li>
</ul>


Nickel Asia is market leader for Philippines nickel ore and will remain a top player with decades of reserves leaving it well-positioned for the country’s move up the value chain  
However, short-term its share price has slumped on continued weakness in nickel, from a global oversupply and weakening demand, but also its removal from the PSEi 
While the 2025E P/B at 0.85x on a 6.4% ROE is likely near cyclical lows and the valuation is inexpensive for such a major player, there are few immediate catalysts 


Nickel Asia: Valuation Low On Cyclical Slump But Limited Catalysts

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

Index Rebalance

<ul>
<li>In a surprise development, <a href="https://www.smartkarma.com/entities/unionbank-of-the-philippines" target="_blank" data-smartkarma-citation="entities:23192:1" rel="noopener">UnionBank of the Philippines (UBP PM)</a> will be deleted from the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> and replaced with <a href="https://www.smartkarma.com/entities/nickel-asia-corp" target="_blank" data-smartkarma-citation="entities:10379:1" rel="noopener">Nickel Asia (NIKL PM)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/unionbank-of-the-philippines" target="_blank" data-smartkarma-citation="entities:23192:1" rel="noopener"></a>There will be a BIG impact on both stocks as a result of the change with passive trackers need to trade in excess of 30 days ADV.</li>
<li>Expect both stocks to move today and then continue that move for the next few days till the changes are implemented.</li>
</ul>


In a surprise development, UnionBank of the Philippines (UBP PM) will be deleted from the Philippines Stock Exchange PSEi Index (PCOMP INDEX) and replaced with Nickel Asia (NIKL PM). 

There will be a BIG impact on both stocks as a result of the change with passive trackers need to trade in excess of 30 days ADV.
Expect both stocks to move today and then continue that move for the next few days till the changes are implemented.


PCOMP Adhoc Index Rebalance: NIKL to Replace UBP in a BIG Move

<ul>
<li>From December 2022, the minimum free float requirement to be a part of the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> increases from 15% to 20%.</li>
<li>This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.</li>
<li>The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.</li>
</ul>


From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
This could result in three deletions from the index which will result in three stocks being added to the index. Passive trackers selling the deletes will push the stocks lower.
The three current constituents could remain in the index if they sell stock to increase the free float. That would in turn put downward pressure on the stocks.


PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes

<ul>
<li>Based on data to the close on 27 April, we do not expect any changes to the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> at the August rebalance.</li>
<li>However, the <a href="https://www.smartkarma.com/entities/metro-pacific-investments-co" target="_blank" data-smartkarma-citation="entities:1054:1" rel="noopener">Metro Pacific Investments Co (MPI PM)</a> tender offer and voluntary delisting will open up an index spot that will need to be filled.</li>
<li>At the current time, <a href="https://www.smartkarma.com/entities/bloomberry-resorts-corp" target="_blank" data-smartkarma-citation="entities:17961:1" rel="noopener">Bloomberry Resorts (BLOOM PM)</a> is the highest ranked non-index constituent and is the most likely replacement.</li>
</ul>


Based on data to the close on 27 April, we do not expect any changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the August rebalance.
However, the Metro Pacific Investments Co (MPI PM) tender offer and voluntary delisting will open up an index spot that will need to be filled.
At the current time, Bloomberry Resorts (BLOOM PM) is the highest ranked non-index constituent and is the most likely replacement.


PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot

<ul>
<li>As forecast, <a href="https://www.smartkarma.com/entities/areit-ayalaland-reit" target="_blank" data-smartkarma-citation="entities:28856:1" rel="noopener">Areit (AyalaLand REIT) (AREIT PM)</a> and <a href="https://www.smartkarma.com/entities/china-banking-corporation" target="_blank" data-smartkarma-citation="entities:22788:1" rel="noopener">China Banking (CBC PM)</a> will replace <a href="https://www.smartkarma.com/entities/nickel-asia-corp" target="_blank" data-smartkarma-citation="entities:10379:1" rel="noopener">Nickel Asia (NIKL PM)</a> and <a href="https://www.smartkarma.com/entities/wilcon-builder-s-supply" target="_blank" data-smartkarma-citation="entities:23685:1" rel="noopener">Wilcon Depot (WLCON PM)</a> in the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index</a>.</li>
<li>Passive trackers will need to buy between 14-44 days of ADV in the adds while selling between 17-54 days of ADV in the deletes.</li>
<li>The stocks have already moved a lot over the last few months and positioning has built up over that period. There could still be outperformance ahead of the passives trading.</li>
</ul>


As forecast, Areit (AyalaLand REIT) (AREIT PM) and China Banking (CBC PM) will replace Nickel Asia (NIKL PM) and Wilcon Depot (WLCON PM) in the Philippines Stock Exchange PSEi Index.
Passive trackers will need to buy between 14-44 days of ADV in the adds while selling between 17-54 days of ADV in the deletes.
The stocks have already moved a lot over the last few months and positioning has built up over that period. There could still be outperformance ahead of the passives trading.


PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON

Philippines

Nickel Asia Corporation explores for and produces nickel in the Philippines.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Nickel Asia (NIKL PM)

Nickel Asia: Valuation Low On Cyclical Slump But Limited Catalysts

While the Philippines' nickel leader is well positioned for the country’s move up the value chain, weak nickel has driven down the ROE and P/B...

Graeme Cunningham

PCOMP Adhoc Index Rebalance: NIKL to Replace UBP in a BIG Move

In a surprise, NIKL will replace UBP in the PCOMP at the close on 2 October. The impact on both stocks is huge and there will be large moves today...

Brian Freitas

PCOMP Index Rebalance Preview Feb 23: Updated Methodology to Drive Changes

A methodology change that increases the minimum free float from 15% to 20% could result in 3 changes to the index. The three constituents will need...

Brian Freitas

PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot

The MPI tender offer and voluntary delisting could see Bloomberry Resorts added to the PCOMP. Passive trackers will need to buy a lot of stock and...

Brian Freitas

PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON

AREIT and CBC will replace NIKL and WLCON in the PCOMP this week. Passive trackers will need to buy between 14-54 days of ADV in the changes. Adds...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)