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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

S&amp;P Dow Jones Indices have <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20200903-1214159/1214159_2020.09.04-quarta-200.pdf" target="_blank" rel="noopener">announced</a> changes to the <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> as part of the September index review. The changes are effective after the close of trading on 18 September.There are 5 inclusions and 5 exclusions as part of the review.The inclusions are <a href="https://www.smartkarma.com/entities/auckland-intl-airport-ltd-8c26dbc6-035c-46ae-84c3-6401a1d454e4" target="_blank" data-smartkarma-citation="entities:24928:1" rel="noopener">Auckland Intl Airport (AIA AU)</a>, <a href="https://www.smartkarma.com/entities/aub-group-ltd" target="_blank" data-smartkarma-citation="entities:11179:1" rel="noopener">Austbrokers Holdings (AUB AU)</a>, <a href="https://www.smartkarma.com/entities/ramelius-resources-ltd" target="_blank" data-smartkarma-citation="entities:5968:1" rel="noopener">Ramelius Resources (RMS AU)</a>, <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a> and <a href="https://www.smartkarma.com/entities/zip-co-ltd-3708706d-4978-4e29-acbc-d9702b971da9" target="_blank" data-smartkarma-citation="entities:29126:1" rel="noopener">Zip Co Ltd (Z1P AU)</a> and the exclusions are <a href="https://www.smartkarma.com/entities/mcmillan-shakespeare-ltd" target="_blank" data-smartkarma-citation="entities:3023:1" rel="noopener">Mcmillan Shakespeare (MMS AU)</a>, <a href="https://www.smartkarma.com/entities/new-hope-corp-ltd" target="_blank" data-smartkarma-citation="entities:4414:1" rel="noopener">New Hope Corp (NHC AU)</a>, <a href="https://www.smartkarma.com/entities/ooh-media-ltd" target="_blank" data-smartkarma-citation="entities:8662:1" rel="noopener">oOh!Media Ltd (OML AU)</a>, <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and <a href="https://www.smartkarma.com/entities/southern-cross-media-group-ltd" target="_blank" data-smartkarma-citation="entities:10374:1" rel="noopener">Southern Cross Media (SXL AU)</a>.Most of the names were expected to be included/excluded from the index. For us, <a href="https://www.smartkarma.com/entities/auckland-intl-airport-ltd-8c26dbc6-035c-46ae-84c3-6401a1d454e4" target="_blank" data-smartkarma-citation="entities:24928:1" rel="noopener">Auckland Intl Airport (AIA AU)</a> was a surprise among the inclusions and <a href="https://www.smartkarma.com/entities/mcmillan-shakespeare-ltd" target="_blank" data-smartkarma-citation="entities:3023:1" rel="noopener">Mcmillan Shakespeare (MMS AU)</a> was a surprise among the deletions.Quite a few stocks have more than 2 days of passive buying/selling. The one stock that does not is <a href="https://www.smartkarma.com/entities/zip-co-ltd-3708706d-4978-4e29-acbc-d9702b971da9" target="_blank" data-smartkarma-citation="entities:29126:1" rel="noopener">Zip Co Ltd (Z1P AU)</a> where volumes have been elevated over the past week following Paypal's entry into the Buy Now Pay Later (BNPL) market that has sent Z1P's stock around 26% lower.Short interest is elevated on <a href="https://www.smartkarma.com/entities/new-hope-corp-ltd" target="_blank" data-smartkarma-citation="entities:4414:1" rel="noopener">New Hope Corp (NHC AU)</a>, <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and <a href="https://www.smartkarma.com/entities/southern-cross-media-group-ltd" target="_blank" data-smartkarma-citation="entities:10374:1" rel="noopener">Southern Cross Media (SXL AU)</a> at more than 8 days to cover. Some of these stocks may rise before implementation day as borrows are recalled by passive funds/ index arb desks.

S&amp;P Dow Jones Indices have announced changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the September index review. The changes are effective after the close of trading on 18 September.There are 5 inclusions and 5 exclusions as part of the review.The inclusions are Auckland Intl Airport (AIA AU), Austbrokers Holdings (AUB AU), Ramelius Resources (RMS AU), Westgold Resources (WGX AU) and Zip Co Ltd (Z1P AU) and the exclusions are Mcmillan Shakespeare (MMS AU), New Hope Corp (NHC AU), oOh!Media Ltd (OML AU), Orocobre Ltd (ORE AU) and Southern Cross Media (SXL AU).Most of the names were expected to be included/excluded from the index. For us, Auckland Intl Airport (AIA AU) was a surprise among the inclusions and Mcmillan Shakespeare (MMS AU) was a surprise among the deletions.Quite a few stocks have more than 2 days of passive buying/selling. The one stock that does not is Zip Co Ltd (Z1P AU) where volumes have been elevated over the past week following Paypal's entry into the Buy Now Pay Later (BNPL) market that has sent Z1P's stock around 26% lower.Short interest is elevated on New Hope Corp (NHC AU), Orocobre Ltd (ORE AU) and Southern Cross Media (SXL AU) at more than 8 days to cover. Some of these stocks may rise before implementation day as borrows are recalled by passive funds/ index arb desks.

ASX200 Index Rebalance: More Changes Than Expected

S&amp;P Dow Jones Indices will announce changes to the <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> as part of the September index review on 4 September. The changes are effective at the close of trading on 18 September and passive funds will need to complete their rebalancing activity at or by the close on that day.The data cutoff for the September review is 21 August.We see a high probability of <a href="https://www.smartkarma.com/entities/ramelius-resources-ltd" target="_blank" data-smartkarma-citation="entities:5968:1" rel="noopener">Ramelius Resources (RMS AU)</a> and <a href="https://www.smartkarma.com/entities/zip-co-ltd-3708706d-4978-4e29-acbc-d9702b971da9" target="_blank" data-smartkarma-citation="entities:29126:1" rel="noopener">Zip Co Ltd (Z1P AU)</a> being included in the index and of <a href="https://www.smartkarma.com/entities/southern-cross-media-group-ltd" target="_blank" data-smartkarma-citation="entities:10374:1" rel="noopener">Southern Cross Media (SXL AU)</a> and <a href="https://www.smartkarma.com/entities/ooh-media-ltd" target="_blank" data-smartkarma-citation="entities:8662:1" rel="noopener">oOh!Media Ltd (OML AU)</a> being excluded from the index.Sitting right at the edge of the buffer zone, there is a lower probability of <a href="https://www.smartkarma.com/entities/aub-group-ltd" target="_blank" data-smartkarma-citation="entities:11179:1" rel="noopener">Austbrokers Holdings (AUB AU)</a> and <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a> being included and <a href="https://www.smartkarma.com/entities/orocobre-ltd" target="_blank" data-smartkarma-citation="entities:3572:1" rel="noopener">Orocobre Ltd (ORE AU)</a> and <a href="https://www.smartkarma.com/entities/western-areas-ltd" target="_blank" data-smartkarma-citation="entities:15497:1" rel="noopener">Western Areas (WSA AU)</a> being excluded.

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 200 (AS51 INDEX) as part of the September index review on 4 September. The changes are effective at the close of trading on 18 September and passive funds will need to complete their rebalancing activity at or by the close on that day.The data cutoff for the September review is 21 August.We see a high probability of Ramelius Resources (RMS AU) and Zip Co Ltd (Z1P AU) being included in the index and of Southern Cross Media (SXL AU) and oOh!Media Ltd (OML AU) being excluded from the index.Sitting right at the edge of the buffer zone, there is a lower probability of Austbrokers Holdings (AUB AU) and Westgold Resources (WGX AU) being included and Orocobre Ltd (ORE AU) and Western Areas (WSA AU) being excluded.

ASX200 Index Rebalance Preview - Couple of High Probability Changes; Couple on the Cusp

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Corrections across global ex-US markets continue to limit attractive investment opportunities from both a price and relative strength perspective.  We provide a recap and outlook for global equity markets and highlight individual opportunities across various markets within the Health Care, Communications and Transportation sectors.

Corrections across global ex-US markets continue to limit attractive investment opportunities from both a price and relative strength perspective.  We provide a recap and outlook for global equity markets and highlight individual opportunities across various markets within the Health Care, Communications and Transportation sectors.

Global Strategy: Carnage Continuation Amid Turkey Turmoil and US Dollar Breakout

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<a href="https://www.smartkarma.com/entities/708" target="_blank" data-smartkarma-citation="entities:708:1">Nine Entertainment Co Holdings (NEC AU)</a> and <a href="https://www.smartkarma.com/entities/8996" target="_blank" data-smartkarma-citation="entities:8996:1">Fairfax Media (FXJ AU)</a> have entered into a Scheme Implementation Agreement in which the two companies will merge (albeit a Nine takeover) via a cash/scrip structure, in an A$4bn deal, creating Australia's largest integrated media player.
Fairfax shareholders will receive 0.3627 Nine shares and A$0.025/share in cash, valuing Fairfax at A$0.94/share, a 21.9% premium to last close. That places a value on Fairfax of ~8x FY19E EV/EBITDA, according to…

Nine Entertainment Co Holdings (NEC AU) and Fairfax Media (FXJ AU) have entered into a Scheme Implementation Agreement in which the two companies will merge (albeit a Nine takeover) via a cash/scrip structure, in an A$4bn deal, creating Australia's largest integrated media player.
Fairfax shareholders will receive 0.3627 Nine shares and A$0.025/share in cash, valuing Fairfax at A$0.94/share, a 21.9% premium to last close. That places a value on Fairfax of ~8x FY19E EV/EBITDA, according to…

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/19341" target="_blank" data-smartkarma-citation="entities:19341:1">Television Broadcasts Ltd (511 HK)</a>, Hong Kong's largest free-to-air broadcaster, touched a ten-year low last week, three months after the <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0123/LTN20180123698.pdf" target="_blank">lapse of its buyback offer</a>.Following the release of <a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0321/LTN20180321703.pdf" target="_blank">FY17 results</a> - where the adjusted earnings paint a more positive tilt than the headline numbers - I met with management to discuss the latest business developments. Management has recently completed an NDR in London and Singapore.The takeaway is largely positive. Revenues are stabilising, although growth would not be considered robust. Apart from its <a href="https://promo.bigbigchannel.com.hk/en/" target="_blank">Big Big Channel</a> (social media platform, 1% of revenue), all remaining segments are expected to be profitable and/or break even in FY18.And the opportunity to relaunch the buyback cannot be ruled out.

Television Broadcasts Ltd (511 HK), Hong Kong's largest free-to-air broadcaster, touched a ten-year low last week, three months after the lapse of its buyback offer.Following the release of FY17 results - where the adjusted earnings paint a more positive tilt than the headline numbers - I met with management to discuss the latest business developments. Management has recently completed an NDR in London and Singapore.The takeaway is largely positive. Revenues are stabilising, although growth would not be considered robust. Apart from its Big Big Channel (social media platform, 1% of revenue), all remaining segments are expected to be profitable and/or break even in FY18.And the opportunity to relaunch the buyback cannot be ruled out. 

Australia

Enero Group Limited provides specialist marketing services.  The Company's services build and leverage customer relationships, develop brands and generate sales.  Enero's services include advertising services, media planning and communications, public relations, research services, direct marketing, specialist design and event management.

Brisbane Broncos Limited is a sporting franchise company which manages and operates the Brisbane Broncos rugby league football team.

GTN Limited is a supplier of traffic information reports to radio stations in Australia, United Kingdom, Canada, and Brazil. The Company receives commercial advertising spots adjacent to traffic, news, and information reports from its network of affiliates and these spots are bundled together and sold to advertisers on a national, regional, or specific market basis.

Prime Media Group Limited is a television broadcaster offering programming services in regional New South Wales, Victoria, Western Australia and the Gold Coast.Prime offers a variety of programming including news, sports and entertainment.

Aspermont Limited publishes branded print and Internet trade publications to the mining, oil and gas, construction and related markets.

Victor Group Holdings Ltd provides marketing consulting services to enterprises. The Company focuses on marketing management training, brand planning and marketing strategic planning.

Seven West Media Limited is a national multi-platform media business based in Australia.  The Company's operations include a television network, magazines, newspapers, radio, and Internet.

IVE Group Limited provides advertising and marketing services. The Company offers promotional merchandising, third party sourcing, printing, retail display, and business communication services. IVE Group conducts its business in Australia.

oOh!media Ltd is a media company. The Company provides advertising and marketing solutions, campaign production, campaign management, creative and digital solutions.

Event Hospitality and Entertainment Limited owns and operates motion picture exhibition cinemas, drive-in theaters and film processing laboratories.  The Group also owns and operates the Thredbo Alpine Resort, Sydney harbor ferry services and the Feather -dale Wildlife Park along with operating hotels, resorts and restaurants.

Event Hospitality and Entertainment (EVT AU)

Mei Ah Entertainment Group Limited, through its subsidiaries, distributes films and programs in audio visual products formats.  The Company also sub-licenses film exhibition and rights, and provides internet and related services.  In addition, Mei Ah Entertainment operates television station.

Saga Communications, Inc. acquires, develops, and operates broadcast properties. The Company owns and operates FM and AM radio stations, state radio networks, a farm radio network, and television stations in the United States.

Plexure Group Ltd has developed a smartphone based digital wallet and cloud based m-commerce platform.

Shenghua Entertainment Communication Co., Ltd. is a media and entertainment company engaging in the production and filming of TV drama.

TOW CO., LTD. plans, advertises, produces, and manages various types of events. The Company manages exhibitions, ceremonies, festivals, products promotion campaigns, public service announcements, sporting events, and expositions.

FreakOut Holdings, inc. operates as a digital marketing technology company. The Company offers demand side platform development and sales, trading desk development, and design and implementation of RTB infrastructure. FreakOut markets its products and services internationally.

Chorokbaem Media Co., Ltd. operates in an entertainment business and also manufactures non-woven fabrics for artificial leather reinforcement, filter fabrics, industrial filter fabrics, and needle felts. The Company provides its products to domestic market as well as overseas markets.

Hindustan Media Ventures Ltd. is a publishing company. The Company publishes the "Hindustan" Hindi newspaper which covers news across the entire spectrum of international, national and local news relating to politics, business, entertainment, sports and other general interests.

Korea Cable T.V. Chung-buk System Co., Ltd. (CCS) operates a cable television system for Chungbuk area.  The Company also provides high-speed Internet services.

Zee Media Corporation Limited operates in the media industry. The Company's programming covers all genres, such as news, social service programming, entertainment and sports.

Southern Cross Media Group Limited operates broadcasting and publishing businesses. The Company operates regional radio and television stations in Australia, and publishes community newspapers in the United States.

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Southern Cross Media (SXL AU)

ASX200 Index Rebalance: More Changes Than Expected

SP Dow Jones Indices have announced changes to the SP/ASX 200 (AS51 INDEX) as part of the September index review.

Brian Freitas

ASX200 Index Rebalance Preview - Couple of High Probability Changes; Couple on the Cusp

S&P Dow Jones Indices will announce changes to the S&P/ASX 200 (AS51 INDEX) as part of the September index review on 4 September. The...

Brian Freitas

Global Strategy: Carnage Continuation Amid Turkey Turmoil and US Dollar Breakout

Corrections across global ex-US markets continue to limit attractive investment opportunities from both a price and relative strength perspective. ...

Vermilion Research

Nine & Fairfax - Integrated Advertising

Nine Entertainment Co Holdings (NEC AU) and Fairfax Media (FXJ AU) have entered into a Scheme Implementation Agreement in which the two companies...

David Blennerhassett

TVB: A Discussion with Management

Television Broadcasts Ltd (511 HK), Hong Kong's largest free-to-air broadcaster, touched a ten-year low last week, three months after the lapse of...

David Blennerhassett

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