Smartkarma Daily Briefs, Author at Smartkarma

Jan 18

Daily Brief Energy/Materials: EcoPro Materials, Geopark Ltd, Southern Energy Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

KOSPI Size Indices – The Outperformance Continues
GeoPark Limited (NYSE: GPRK): Further exploration success in Colombia
Southern Energy Corp. (SOUC LN/SOU CN): Positive Results at First DUC

KOSPI Size Indices – The Outperformance Continues

By Brian Freitas

The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

GeoPark Limited (NYSE: GPRK): Further exploration success in Colombia

By Auctus Advisors

The Perico-1 exploration well at CPO-5 encountered hydrocarbons in the Barco (Guadalupe) formation.
The well is currently producing 650 bbl/d of 14 deg API oil with 8% water cut.
This is an important well that confirms the extension of the Llanos-34 Guadalupe play into CPO-5 and is probably derisking further prospects.

Southern Energy Corp. (SOUC LN/SOU CN): Positive Results at First DUC

By Auctus Advisors

The recently completed GH 14-06 #3 Upper Selma Chalk well at Gwinville has delivered average natural gas flow rate in excess of 6.5 mmcf/d over the first days of production.
By comparison, the 18-10#2 Upper Selma Chalk well completed in 1Q23 had an IP rate of only 3.3 mmcf/d.
The three wells that are awaiting completion include the first two Lower Selma Chalk laterals, along with the second City Bank lateral.

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Jan 18

Daily Brief Industrials: Renewi PLC, Samsung C&T and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Quiddity Leaderboard F100/250 Mar 24: Intra-Review Replacements for NETW and LXI REIT
A 140% Increase in Share Cancellations by Korean Companies from 2021 to 2023

Quiddity Leaderboard F100/250 Mar 24: Intra-Review Replacements for NETW and LXI REIT

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the March 2024 index rebal event.
Although I do not see any regular ADDs/DELs for the March 2024 rebalance, there might be one or two intra-review changes during the first quarter of 2024.
These intra-review changes will be triggered by the completion of M&A events and it is important to know which names are leading the race to become intra-review ADDs.

A 140% Increase in Share Cancellations by Korean Companies from 2021 to 2023

By Douglas Kim

The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in 2023 represented a 140% increase from 2021.
Although the total amount of share cancellations of 6.1 trillion won in 2023 seems fairly large, this represented only 0.24% of total market caps of Korean companies.
We also provide a list of seven Korean companies that have been targeted by activist investors to cancel more shares and improve corporate governance.

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Jan 18

Daily Brief Financials: Axis Bank Ltd, HSBC Holdings, S&P 500 INDEX, Yanlord Land, Prudential , LuxUrban Hotels , Freshworks, Picton Property Income and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Is Axis Capital an Investment Bank or a Hedge Fund?
HSBC – Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More
EQD | SPX DAILY LONG Reversal Probability Increasing
Morning Views Asia: Yanlord Land
APAC Insurers Series (#4): How We See the 3 Insurance Stocks in 2024
LuxUrban Hotels (LUXH) : The Bed Sheets Should Be Made Out Of Red Flags
Freshworks Inc: Initiation of Coverage – 4 Reasons Responsible For Their Future Growth! – Major Drivers
Picton Property Income – Focused on growing earnings

Is Axis Capital an Investment Bank or a Hedge Fund?

By Hemindra Hazari

Axis Capital is a 100% subsidiary of Axis Bank Ltd (AXSB IN) and one of its businesses is structured finance
The Sojo Infotel is a high-risk transaction undertaken by Axis Capital which was underwritten by the company with the implicit support of the bank as per the credit rating agency
When the transaction was done it was 50% of Axis Capital’s equity and default risk is high as the redemption date is on March 25, 2024

HSBC – Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More

By Daniel Tabbush

HSBC holds 19% of BoCom and still carries it with a value of USD23.3bn despite the stock market valuation putting it closer to USD8.1bn on YE22 figures.
The bank cites its Value In Use testing as the justifiable reason for this gap, and this testing will include major assumptions like discount rates and long term growth rates.
Goodwill and other intangible charges were USD10.6bn in FY08, USD3.4bn in FY16, and USD7.4bn in FY19 for HSBC.

EQD | SPX DAILY LONG Reversal Probability Increasing

By Nico Rosti

The S&P 500 INDEX at the moment has lost its momentum and is pulling back towards the Q2 (4751) and Q3 (4713) support levels, where it would be DAILY OVERSOLD.
A DAILY reversal could happen today or tomorrow from prices between 4750 and 4700.
This trade is a quick scalp, the goal is to profit from a 1-bar reversal, after that we cannot predict the market direction, so caution is advised.

Morning Views Asia: Yanlord Land

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Yanlord Land

APAC Insurers Series (#4): How We See the 3 Insurance Stocks in 2024

By Alec Tseung

PICC P&C’s Q3 underwriting profitability deteriorated due to typhoon/catastrophe-related losses in both motor and non-motor business.
Samsung Life’s new business growth momentum continued in Q3’23; new business CSM margin slightly improved QoQ.
Prudential disclosed limited details in its Q3 results but we can see the growth trend of new business volume and profits continuing in the quarter.

LuxUrban Hotels (LUXH) : The Bed Sheets Should Be Made Out Of Red Flags

By Bleecker Street Research

LuxUrban Hotels (NASDAQ: LUXH) is a Miami-based hotel lessee and operator.
Founded in 2017, LuxUrban (then called CorpHousing Inc) initially focused on the short-term corporate housing market, leasing and then re-leasing houses to business travelers.
The pandemic severely impacted demand in that market and in 2021 LuxUrban exited the corporate rentals space.

Freshworks Inc: Initiation of Coverage – 4 Reasons Responsible For Their Future Growth! – Major Drivers

By Baptista Research

This is our first report on Freshworks Inc, a renowned customer service software player.
Increased free cash flow along with a rise in the free cash flow margin to 14% likewise surpassed estimates.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Picton Property Income – Focused on growing earnings

By Edison Investment Research

Having previously updated on Picton Property Income’s H124 results, we are re-instating forecasts following the cessation of merger discussions with UKCM. In a challenging environment, H124 financial performance was resilient, supporting fully covered DPS. Meanwhile, the company continues to believe that there are strategic and financial benefits to combining complementary businesses, particularly within an internal management structure, including economies of scale and enhanced earnings.

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Jan 18

Daily Brief Health Care: Basilea Pharmaceutica Ag, Hisamitsu Pharmaceutical Co, InMed Pharmaceuticals and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Basilea Pharmaceutica – Antibiotic addition to further replenish pipeline
Hisamitsu Pharmaceutical (4530 JP): OTC Business Is on Strong Footing; FY24 Guidance Raise
InMed Pharmaceuticals, Inc. – Strategic Priorities Laid Out for 2024

Basilea Pharmaceutica – Antibiotic addition to further replenish pipeline

By Edison Investment Research

Basilea has announced a preclinical antibiotic programme asset purchase agreement, aligning with management’s pre-emptive efforts to refill its pipeline with novel anti-infectives. This follows on the heels of three antifungal and antibacterial acquisitions/in-licensing, including fosmanogepix. As part of the agreement, Basilea will pay Spexis (SIX: SPEX) up to CHF2m, consisting of an upfront payment, an asset-transfer payment and a potential final milestone payment related to the availability of near-term funding to further develop the programme. Basilea will also assume the rights and obligations of Spexis, including potential low single-digit percentage royalties on sales. The programme is based on an Outer Membrane Protein Targeting Antibiotics (OMPTA) platform and the compounds have shown in vitro and in vivo activity against Gram-negative bacteria (GNB), including multidrug-resistant strains, several of which are listed as priority pathogens by the World Health Organization (WHO).

Hisamitsu Pharmaceutical (4530 JP): OTC Business Is on Strong Footing; FY24 Guidance Raise

By Tina Banerjee

Hisamitsu Pharmaceutical Co (4530 JP) has reported double-digit revenue and net profit growth in Q3FY24, mainly driven by 21% YoY growth in Salonpas focused OTC pharmaceutical products.
The company attributes OTC product revenue growth to aggressive sales promotion activities in Japan and overseas, recovery of domestic economic activity and inbound demand, and impact of the weaker yen.
Encouraged by Salonpas revenue recovery, Hisamitsu has raised FY24 guidance. The company has revised FY24 revenue guidance upward by 7% to ¥141 billion (up 10% YoY) from ¥132 billion.

InMed Pharmaceuticals, Inc. – Strategic Priorities Laid Out for 2024

By Water Tower Research

Building on a year of progress. Following a banner year for InMed in 2023, including significant advancement and expansion of its rare cannabinoids-focused pharmaceuticals development programs and a breakout year for BayMedica’s commercial operations, the company has laid out its strategic priorities for 2024.
Advancing a potentially novel approach to treating Alzheimer’s.
In October 2023, InMed took a significant step forward in its INM-900 series program targeting neurodegenerative diseases after confirming that it has made its final selection of a lead Alzheimer’s disease drug candidate.

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Jan 18

Daily Brief Consumer: Yamae Group Holdings, Weiqiao Textile Co, Mixue Group, Emperador, Naspers , Luckin Coffee, Perfect Medical Health, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong
Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake
MIXUE Group Pre-IPO – The Positives – Leading by a Mile
STTF Rebalance Preview: One Potential Change in March
Weiqiao Textile (2698 HK): Pre-Cons Done. Payment (Perhaps) Late March
Naspers (NPN) X Prosus (PRX) Pairs Trade Opportunity as Naspers Comes Under Pressure
[Luckin Coffee(LKNCY US, BUY, TP US$43) TP Change]: Weak Earnings in 4Q23 but Better Outlook in 2024
Perfect Medical: Updates, Stock at 10% Dividend Yield Post Correction
MIXUE Group Pre-IPO – The Negatives – Declining GMV Share
Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong

By Clarence Chu

Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake

By Arun George

Weiqiao Textile Co (2698 HK)’s offer pre-condition is satisfied. Prudence has increased its shareholding to 3.39% of the outstanding shares (9.79% of H Shares), marginally short of a blocking stake.
The HK$3.50 offer has been declared final, which rules out a bump. Therefore, Prudence’s strategy could be to play the gross spread or to block the deal.
The Shandong Luoxin Pharmaceutical (8058 HK) precedent supports the gross spread play view. However, unlike the precedent, Prudence is marginally short of a blocking stake in Weiqiao Textile.

MIXUE Group Pre-IPO – The Positives – Leading by a Mile

By Sumeet Singh

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In this note, we talk about the positive aspects of the deal.

STTF Rebalance Preview: One Potential Change in March

By Brian Freitas

Emperador (EMI SP) currently fails the liquidity test and could be removed from the SPDR Straits Times Index ETF (STTF SP) in March.
Frasers Centrepoint Trust (FCT SP) is currently the highest ranked non-constituent and could be added to the ETF. FCT has a 6% higher market cap compared to Olam (OLG SP).
We estimate trackers will need to buy 5 days of ADV in Frasers Centrepoint Trust (FCT SP) and sell over 37 days of ADV in Emperador (EMI SP).

Weiqiao Textile (2698 HK): Pre-Cons Done. Payment (Perhaps) Late March

By David Blennerhassett

Back on the 4th December, Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation at HK$3.50 per H-share, a chunky 104.68% premium to last close and around a six-year high
Pre-Conditions – regulatory approval from NDRC, MoC and SAFE – have now been fulfilled. The Composite Doc is expected to be dispatched on or before the 24 January.
This Offer is a Merger by Absorption incorporating a Scheme-like vote. There is no tendering condition. Prudence Investment Management, which has now built a 9.79% stake, will be supportive.

Naspers (NPN) X Prosus (PRX) Pairs Trade Opportunity as Naspers Comes Under Pressure

By Charlotte van Tiddens, CFA

Naspers (NPN SJ) has underperformed Prosus NV (PRX SJ) by 3.9% since the start of the year.
This has widened Naspers’ discount to Prosus’ market value to 13.3% from 9.9%, a level last seen during July 2023.
Opportunity to put on a pairs trade, long NPN short PRX as we believe the relative underperformance is overdone and a structural shift in the discount is underway.

[Luckin Coffee(LKNCY US, BUY, TP US$43) TP Change]: Weak Earnings in 4Q23 but Better Outlook in 2024

By Eric Wen

In 4Q23, we expect Luckin Coffee revenue to increase 93% YoY to RMB7.1bn, and expect GPM/OPM to decline (5.8)/(1.3) ppt YoY to 19.0%/8.2%, respectively.
We cut 4Q23 operating income by 12%. In 2024, we raised our revenue estimate by 5% due to the speed up of new store opening schedule.
Furthermore, as price competition eased, we expect Luckin to offer less low-priced drinks, thus driving up OPM in 2024.

Perfect Medical: Updates, Stock at 10% Dividend Yield Post Correction

By Sameer Taneja

Negative China sentiment from where Perfect Medical Health (1830 HK) derives about 15-20% of its revenue is causing the company’s share price performance to remain lackluster.
Stock trades on a 10% dividend yield with 15% of the market capitalization in cash, despite the outlook for HK, where it derives >75% of its revenue, is slightly better.
With a 10-year average ROE of the business >40% and a 10.8x PE for FY24e, this stock is a dividend gem worth exploring.

MIXUE Group Pre-IPO – The Negatives – Declining GMV Share

By Sumeet Singh

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In this note, we talk about the not-so-positive aspects of the deal.

Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital

By Aki Matsumoto

Although there’s range in the cost of capital, a sense of level is shared among investors, so even if a company estimates lower, it will be found to be incorrect.
The essential problem isn’t scrutiny of the cost of capital, but rather that many companies produce low returns. Investors are skeptical that companies produce returns above their cost of capital.
If stock prices do not rise, investors will continue to demand that companies improve their management, attributing this to the negative gap between the cost of capital and return.

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Jan 18

Daily Brief ESG: Is Axis Capital an Investment Bank or a Hedge Fund? and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Is Axis Capital an Investment Bank or a Hedge Fund?
Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital

Is Axis Capital an Investment Bank or a Hedge Fund?

By Hemindra Hazari

Axis Capital is a 100% subsidiary of Axis Bank Ltd (AXSB IN) and one of its businesses is structured finance
The Sojo Infotel is a high-risk transaction undertaken by Axis Capital which was underwritten by the company with the implicit support of the bank as per the credit rating agency
When the transaction was done it was 50% of Axis Capital’s equity and default risk is high as the redemption date is on March 25, 2024

Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital

By Aki Matsumoto

Although there’s range in the cost of capital, a sense of level is shared among investors, so even if a company estimates lower, it will be found to be incorrect.
The essential problem isn’t scrutiny of the cost of capital, but rather that many companies produce low returns. Investors are skeptical that companies produce returns above their cost of capital.
If stock prices do not rise, investors will continue to demand that companies improve their management, attributing this to the negative gap between the cost of capital and return.

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Jan 18

Daily Brief ECM: Yamae Group Placement – Would Result in a Large Dilution and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong
MIXUE Group Pre-IPO – The Positives – Leading by a Mile
MIXUE Group Pre-IPO – The Negatives – Declining GMV Share
Pre-IPO Guming Holdings – The Current Market Position Is Not Secure

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong

By Clarence Chu

Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

MIXUE Group Pre-IPO – The Positives – Leading by a Mile

By Sumeet Singh

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In this note, we talk about the positive aspects of the deal.

MIXUE Group Pre-IPO – The Negatives – Declining GMV Share

By Sumeet Singh

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In this note, we talk about the not-so-positive aspects of the deal.

Pre-IPO Guming Holdings – The Current Market Position Is Not Secure

By Xinyao (Criss) Wang

Guming generates revenue mainly from the sales of goods/equipment to its franchisees (or ToB business). So, Guming’s future growth depends significantly on its ability to operate and expand store network.
China’s freshly-made beverage market is highly competitive. Guming is unlikely to catch up with MIXUE, but Guming will be overtaken by the rest players if it fails to compete effectively.
Due to Guming’s business model, investors’re hard to see the real picture of Guming solely based on its revenue/profits. Guming’s valuation should be higher than Nayuki but lower than MIXUE.

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Jan 18

Daily Brief Thematic (Sector/Industry): Ohayo Japan | 10Y Back Above 4%; Weak China GDP and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | 10Y Back Above 4%; Weak China GDP
China Property – Today’s NBS Macro-Property Data for December 2023
Only 27 New Malls Now Due in 2024
Tech Talk: Smart Cities Delivering on the Promise

Ohayo Japan | 10Y Back Above 4%; Weak China GDP

By Mark Chadwick

US Stocks lower as Treasury yields continued to climb, with 10Y back above 4%, on back of strong retail spending. Odds of March cut fall 61%→50%
Nikkei Futures point to flat open; A weak print for China GDP likely to weigh on Japan exporters; MHI to trial carbon capture pilot at KEPCOs plant.
Japan recorded 25m tourists in 2023, reaching 80% of pre-pandemic peak; Yen remains weak at 148/$ – good rate for visitors

China Property – Today’s NBS Macro-Property Data for December 2023

By Robert Ciemniak

Today’s NBS data for December points to further weakness in the housing market year-to-date year-on-year while turning less negative on most indicators on a 12M rolling basis
But the main caveat persists – the 2022 data (March-December) continued to be revised down (officially) for some key metrics like new home sales
Land sales /acquisitions figures, however, show a clear improvement on multiple (non-NBS) metrics, especially for major 13 developers

Only 27 New Malls Now Due in 2024

By Michael Causton

Shopping mall development improved a little in 2023 but looks set to dip again as developers hold back investment in new builds in favour of refurbishment.
Sales continue to climb and are now at parity with 2019.
A smaller, but more efficient, mall sector will emerge in the next few years.

Tech Talk: Smart Cities Delivering on the Promise

By Water Tower Research

The global Smart Cities market size was valued at $1.5 trillion in 2020 and is projected to grow to $11 trillion by 2030, a CAGR of more than 20%.
While North America is currently the largest market, Asia-Pacific is projected to overtake it in a few years.
Smart Cities are urban areas that utilize digital infrastructure and interconnected systems, most likely using artificial intelligence (AI).

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Jan 18

Daily Brief Event-Driven: TOPIX Jan FFW Change – Visional (4194) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)
Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake
KOSPI Size Indices – The Outperformance Continues
STTF Rebalance Preview: One Potential Change in March
Quiddity Leaderboard F100/250 Mar 24: Intra-Review Replacements for NETW and LXI REIT
A 140% Increase in Share Cancellations by Korean Companies from 2021 to 2023
EQD | SPX DAILY LONG Reversal Probability Increasing
Weiqiao Textile (2698 HK): Pre-Cons Done. Payment (Perhaps) Late March
Naspers (NPN) X Prosus (PRX) Pairs Trade Opportunity as Naspers Comes Under Pressure

TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)

By Travis Lundy

Late last week, the TSE announced the changes in FFW for companies which have FY-end in the calendar Q2. Changes at 30 Jan close also include Phased Weighting Changes.
There are two additions and 61 upweights (including net effect of PWR/PWIs). There are 456 down-weights with two-way flows of about US$1bn. There is a tiny funding trade.
Visional (4194 JP) and Furuya Metal (7826 JP) are the two adds. Other large dollar upweights are Asahi Intecc (7747 JP) and Anycolor (5032 JP).

Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake

By Arun George

Weiqiao Textile Co (2698 HK)’s offer pre-condition is satisfied. Prudence has increased its shareholding to 3.39% of the outstanding shares (9.79% of H Shares), marginally short of a blocking stake.
The HK$3.50 offer has been declared final, which rules out a bump. Therefore, Prudence’s strategy could be to play the gross spread or to block the deal.
The Shandong Luoxin Pharmaceutical (8058 HK) precedent supports the gross spread play view. However, unlike the precedent, Prudence is marginally short of a blocking stake in Weiqiao Textile.

KOSPI Size Indices – The Outperformance Continues

By Brian Freitas

The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

STTF Rebalance Preview: One Potential Change in March

By Brian Freitas

Emperador (EMI SP) currently fails the liquidity test and could be removed from the SPDR Straits Times Index ETF (STTF SP) in March.
Frasers Centrepoint Trust (FCT SP) is currently the highest ranked non-constituent and could be added to the ETF. FCT has a 6% higher market cap compared to Olam (OLG SP).
We estimate trackers will need to buy 5 days of ADV in Frasers Centrepoint Trust (FCT SP) and sell over 37 days of ADV in Emperador (EMI SP).

Quiddity Leaderboard F100/250 Mar 24: Intra-Review Replacements for NETW and LXI REIT

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the March 2024 index rebal event.
Although I do not see any regular ADDs/DELs for the March 2024 rebalance, there might be one or two intra-review changes during the first quarter of 2024.
These intra-review changes will be triggered by the completion of M&A events and it is important to know which names are leading the race to become intra-review ADDs.

A 140% Increase in Share Cancellations by Korean Companies from 2021 to 2023

By Douglas Kim

The total amount of share cancellations by Korean companies increased sharply in the past three years. Share cancellations of 6.1 trillion won in 2023 represented a 140% increase from 2021.
Although the total amount of share cancellations of 6.1 trillion won in 2023 seems fairly large, this represented only 0.24% of total market caps of Korean companies.
We also provide a list of seven Korean companies that have been targeted by activist investors to cancel more shares and improve corporate governance.

EQD | SPX DAILY LONG Reversal Probability Increasing

By Nico Rosti

The S&P 500 INDEX at the moment has lost its momentum and is pulling back towards the Q2 (4751) and Q3 (4713) support levels, where it would be DAILY OVERSOLD.
A DAILY reversal could happen today or tomorrow from prices between 4750 and 4700.
This trade is a quick scalp, the goal is to profit from a 1-bar reversal, after that we cannot predict the market direction, so caution is advised.

Weiqiao Textile (2698 HK): Pre-Cons Done. Payment (Perhaps) Late March

By David Blennerhassett

Back on the 4th December, Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation at HK$3.50 per H-share, a chunky 104.68% premium to last close and around a six-year high
Pre-Conditions – regulatory approval from NDRC, MoC and SAFE – have now been fulfilled. The Composite Doc is expected to be dispatched on or before the 24 January.
This Offer is a Merger by Absorption incorporating a Scheme-like vote. There is no tendering condition. Prudence Investment Management, which has now built a 9.79% stake, will be supportive.

Naspers (NPN) X Prosus (PRX) Pairs Trade Opportunity as Naspers Comes Under Pressure

By Charlotte van Tiddens, CFA

Naspers (NPN SJ) has underperformed Prosus NV (PRX SJ) by 3.9% since the start of the year.
This has widened Naspers’ discount to Prosus’ market value to 13.3% from 9.9%, a level last seen during July 2023.
Opportunity to put on a pairs trade, long NPN short PRX as we believe the relative underperformance is overdone and a structural shift in the discount is underway.

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