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>Nikkei has started a market consultation on amendments to the methodology of the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> focusing on the stepwise addition of lower liquidity stocks and on technical listings.</li>
<li>Stocks that have relatively low ADTV compared to the expected index weight will be added at half the originally planned PAF with the full PAF implemented at the next review.</li>
<li>If the proposed changes are implemented, some of the potential inclusions in September will be added at half their PAF with the increase to full PAF coming in March 2024.</li>
</ul>


Nikkei has started a market consultation on amendments to the methodology of the Nikkei 225 (NKY INDEX) focusing on the stepwise addition of lower liquidity stocks and on technical listings.
Stocks that have relatively low ADTV compared to the expected index weight will be added at half the originally planned PAF with the full PAF implemented at the next review.
If the proposed changes are implemented, some of the potential inclusions in September will be added at half their PAF with the increase to full PAF coming in March 2024.


Nikkei 225 Market Consultation: Stepwise Additions & Technical Listings

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>In May 2022, <a href="https://www.smartkarma.com/entities/yamada-denki-co-ltd" target="_blank" data-smartkarma-citation="entities:641:1" rel="noopener">Yamada Denki (9831 JP)</a> announced a very large buyback. GINORMOUS - in fact - at 23.9% of shares out ex-Treasury if maximum shares were bought.</li>
<li>So far, YDH is 83.5% through, and at the recent pace, they will end it 8 May having bought 183-184mm shares (21.9% of TSO) spending 86.6% of funds allocated.</li>
<li>That's why the announcement lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.</li>
</ul>


In May 2022, Yamada Denki (9831 JP) announced a very large buyback. GINORMOUS - in fact - at 23.9% of shares out ex-Treasury if maximum shares were bought.
So far, YDH is 83.5% through, and at the recent pace, they will end it 8 May having bought 183-184mm shares (21.9% of TSO) spending 86.6% of funds allocated.
That's why the announcement lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.


Yamada Denki (9831) Buyback Almost Done and Odd Dividend "Cut", and a Lightbulb Dilemma

<ul>
<li>With 3.5 months left in the dataset, the data is pretty close to settled. The interesting bits are elsewhere. There are three auto DELETEs and two auto ADDs. Maybe.</li>
<li>One auto-ADD is Toshiba, which may have a deal on it. That leaves two to add for sector balance. That could be Nitori (9843 JP) and Zozo (3092 JP).</li>
<li>Friday's move on Fast Retailing brings in the issue of the new capping function. That would be a different US$2bn selldown. Lots of gory details here. </li>
</ul>


With 3.5 months left in the dataset, the data is pretty close to settled. The interesting bits are elsewhere. There are three auto DELETEs and two auto ADDs. Maybe.
One auto-ADD is Toshiba, which may have a deal on it. That leaves two to add for sector balance. That could be Nitori (9843 JP) and Zozo (3092 JP).
Friday's move on Fast Retailing brings in the issue of the new capping function. That would be a different US$2bn selldown. Lots of gory details here. 


Nikkei 225 Sep 2023 Rebalance Gets Interestinger - Possible Fast Retailing Cap and Zozo Stretch

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.</li>
<li>There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.</li>
<li>Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.
There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.
Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.


Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>Consensus estimates suggest that <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a>'s gross margin will experience a sudden change affecting profitability for a few quarters, before returning to 6-8% below the long-term trend.</li>
<li>We see no apparent reason for a drastic change in Nitori's profitability and expect it to remain slightly below trend, in line with guidance.</li>
<li>Nitori is expected to reach ¥140bn and ¥150bn OP for FY24 and FY25, with valuation at 13.3x and 12.4x OP. This is reasonable given Nitori's rare history of low multiples.</li>
</ul>


Consensus estimates suggest that Nitori Holdings (9843 JP)'s gross margin will experience a sudden change affecting profitability for a few quarters, before returning to 6-8% below the long-term trend.
We see no apparent reason for a drastic change in Nitori's profitability and expect it to remain slightly below trend, in line with guidance.
Nitori is expected to reach ¥140bn and ¥150bn OP for FY24 and FY25, with valuation at 13.3x and 12.4x OP. This is reasonable given Nitori's rare history of low multiples.


Nitori: Low Valuation Multiples and A Strong Potential to an Earnings Beat

Japan

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

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

Nitori Holdings (9843 JP)

Nikkei 225 Market Consultation: Stepwise Additions & Technical Listings

Nikkei has started a consultation on stepwise adds to the index & on treatment of technical listings. The stepwise inclusion could result in...

Brian Freitas

Yamada Denki (9831) Buyback Almost Done and Odd Dividend "Cut", and a Lightbulb Dilemma

Yamada Denki/Holdings is cheap. It is 8x earnings and 0.55x book. And that is AFTER a GINORMOUS buyback which has been disappointing. Now the...

Travis Lundy

Nikkei 225 Sep 2023 Rebalance Gets Interestinger - Possible Fast Retailing Cap and Zozo Stretch

The Sep 2023 Nikkei 225 Review is changing shape. Toshiba deal is announced, which pushes two of three ADDs outside the top 75 - sector balance...

Travis Lundy

Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses

There could be 3 changes to the NKY in Sep. Lasertec, ZOZO, Nitori could replace MatsuiSec, MitsuiE&S, NipponSheetGlass. There are other stocks...

Brian Freitas

Nitori: Low Valuation Multiples and A Strong Potential to an Earnings Beat

With strong potential for growth, a history of generous shareholder returns and a strong potential for an earnings beat, Nitori has rarely seen...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)