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In today’s briefing:
- China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion
- SET50 Index Rebalance Preview: Four Potential Changes in December
- Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale
- DTAC/True Merger to Proceed but Without the VTOs
- KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates
- Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December
- GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO
- EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index
China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion
- China Huarong Asset Management (2799 HK) has announced the full conversion of 8.358bn Domestic Shares to H-shares. The increased float could help the stock get added to the MSCI/FTSE indices.
- Depending on when the conversion is completed, the stock could be added to the MSCI China Index at the February QCIR though inclusion in May is more likely.
- There is a high probability of inclusion in the FTSE indices at the March SAIR – though it remains to be seen if that’s to the All-World or All-Cap Index.
SET50 Index Rebalance Preview: Four Potential Changes in December
- The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ends in 6 trading days.
- Following the market consultation and reduction in the turnover ratio, there could be four changes to the index. The DTAC/TRUE merger could result in another inclusion in Q1 2023.
- Estimated one-way turnover at the December rebalance is 8.1% and will result in a one-way trade of THB 7.4bn. More than 1x ADV to trade on most stocks.
Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale
- Link Administration (LNK AU) has released the explanatory memorandum regarding the PEXA Group (PXA AU) in-specie distribution.
- Link shareholders will receive one PEXA share for every 7.52 Link shares. Shareholders will vote on the distribution on the 23 December. The IE, rightfully, deemed the process fair.
- If D&D buys Link’s BCM/CM ops for A$1.27bn, Link would be net cash of ~A$1.40/share versus an ex-entitlement price of ~A$1.58/share. And Link would still hold the lucrative RSS ops.
DTAC/True Merger to Proceed but Without the VTOs
- Telenor and CP Group will proceed with the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger but without the VTO due to missing the VTO conditions precedent deadline.
- The likely real reason for the VTO cancellation was the realisation that the VTO prices were too generous, particularly in the context of the NBTC’s harsh conditions.
- Completion is targeted for 1Q23. The current share price ratio of 8.750x vs the exchange ratio of 10.221x is attractive. Timing and potential tweaks to the exchange ratio are risks.
KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates
- Meritz Financial Group’s decision to delist Meritz Fire & Marine Insurance and Meritz Securities in 1H 2023 will result in at least two new additions to KOSPI 200.
- We highlight five companies which could be potential additions to KOSPI 200 in 1H 2023.
- Five potential additions to KOSPI 200 in 1H 2023 include Jb Financial Group, Hyundai Construction Equipment, Dentium, Samyang Foods, and Lotte Rental.
Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December
- The IE considers Perpetual Ltd (PPT AU)‘s cash and scrip offer for Pendal Group (PDL AU) to be fair and reasonable as it is within its valuation range of A$4.87-5.71.
- Perpetual shareholders are getting the short end of the stick. While possible, Regal Partners (RPL AU)/BPEA EQT riding to the rescue of Perpetual shareholders is low.
- Pendal shareholders, who are the net beneficiaries, will be supportive of the offer. At the last close prices, the gross spread to the offer is 11.3%.
GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO
- In Mar 2022, GoTo raised around US$1bn from what was essentially a domestic Indonesian IPO. Its pre-IPO shareholders will be released from their lockup soon.
- GoTo was formed in May 2021 as a result of a merger between two of Indonesia’s largest unicorns Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
- In this note, we will talk about the upcoming lockup expiry.
EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index
- SX7E spot has rallied and vols have sold off significantly
- The spread between the sector and SX5E Index has converged and there are still many reasons to expect volatility in banking stocks into next year
- Trade a 6M relative value vol spread to take advantage of the recent vol compression
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