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Sep 28
0

Most Read: EcoPro Materials, Korea Stock Exchange KOSPI 200, Haitong International Securities Group, System Information, SK Square , Kokusai Electric , HMM Co., Ltd., Doosan Robotics, Cainiao Smart Logistics and more

By | Daily Briefs, Most Read

In today’s briefing:

  • EcoPro Materials: IPO & Index Inclusion
  • Information Received Through KRX Officials Regarding Changes in the KOSPI 200 Methodology
  • Haitong Int’l Securities (665 HK): Possible Offer From Parent
  • System Information Co (3677 JP) “MBO” By Bain an Exit Trade for Founder+CEO+Employees
  • SK Square: M&A of 11st – Alibaba Out and Qoo10 In?
  • Kokusai Electric IPO – Don’t Worry, This’ll Be Fine Too
  • Seizing a Trading Opportunity Aimed at HMM’s New Stock Listing Date
  • Doosan Robotics (454910 KS): Listing & Index Inclusion Timeline
  • Cainiao Pre-IPO – The Postivies – Evolving into a Global Player, Decent Revenue Growth
  • Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

EcoPro Materials: IPO & Index Inclusion

By Brian Freitas

  • EcoPro Materials (ECO123 KS) was founded in 2017 and specializes in manufacturing cathode material precursors, a core material for lithium secondary cells.
  • EcoPro Materials (ECO123 KS) could raise between US$387m-US$492m, valuing the company between US$1.9bn-US$2.42bn. Float will depend on voluntary lock-ups and allocation to strategic investors.
  • Inclusion in global indices is likely to take place between February to June, while the highest probability of Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion is in December 2024.

Information Received Through KRX Officials Regarding Changes in the KOSPI 200 Methodology

By Sanghyun Park

  • The official announcement from KRX regarding the KOSPI 200 rebalancing rule change is expected to be released shortly after the end of October.
  • The rule change will take effect beginning with this year’s December rebalancing. An official from KRX has communicated that we can confidently regard this as confirmed.
  • It is essential to be aware that during this December review, there exists a significant potential for generating substantial price fluctuations within a narrow timeframe.

Haitong Int’l Securities (665 HK): Possible Offer From Parent

By David Blennerhassett

  • Haitong International Securities Group (665 HK) (HITSEC) is suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
  • The rumour doing the rounds is that Haitong Securities Co Ltd (A) (600837 CH) (HSC) may take private its 73.4%-held Hong Kong-listed investment banking unit.
  • HITSEC’s share performance since 1Q18 has been tragic. Financials have been dire since 2H20.  But expect a punchy premium if HTS does seek to take HITSEC private. 

System Information Co (3677 JP) “MBO” By Bain an Exit Trade for Founder+CEO+Employees

By Travis Lundy

  • The stock is down more than 50% from its high 3yrs ago. The founder is 79. The CEO is 75. Employees and former directors own another 10%.
  • This is an exit vs an MBO. And the Target Side negotiating the exit were rolled by Bain. This is NOT an expensive purchase. Bain’s equity check is 2.3x EBIT.
  • But it probably gets done anyway unless someone gets noisy. For that, they’d have to buy a 10-15% stake I expect. 

SK Square: M&A of 11st – Alibaba Out and Qoo10 In?

By Douglas Kim

  • On 27 September, Maeil Business Daily reported that SK Square signed an MOU with Qoo10 to pursue a joint management of 11st. 
  • It appears that Alibaba may have been reviewing this deal but it is no longer interested in pursuing 11st.
  • A deal between Qoo10 and 11st could occur, but this is not certain, which means some of the cash proceeds to FI would need to be burdened by SK Square.

Kokusai Electric IPO – Don’t Worry, This’ll Be Fine Too

By Mio Kato

  • Early last year there were articles suggesting that KKR would IPO Kokusai Electric at a valuation of about ¥700bn. 
  • A year plus later the company is now set to IPO for something on the order of ¥436bn. 
  • We are sure KKR is breathing a sigh of relief that they didn’t unload shares 60% higher and can now offer other investors some “value”.

Seizing a Trading Opportunity Aimed at HMM’s New Stock Listing Date

By Sanghyun Park

  • Should the stock conversion decision be reached this week, the new shares will be listed on the 15th of the upcoming month. So, they will officially debut on October 16th.
  • On the day of the new share listing during the immediate previous case, the price dropped by 2.36%, and on the very next trading day, it declined by 3.72%.
  • Given the present dilution rate of 30%, there is a higher probability of even more pronounced price movements in the same direction.

Doosan Robotics (454910 KS): Listing & Index Inclusion Timeline

By Brian Freitas

Cainiao Pre-IPO – The Postivies – Evolving into a Global Player, Decent Revenue Growth

By Sumeet Singh

  • Cainiao Smart Logistics ,  Alibaba Group Holding (9988 HK)’s logistics linked arm, is planning to raise at least US$1bn in its Hong Kong IPO.
  • Cainiao is the largest provider of cross-border e-commerce logistics services globally and a leader in China logistics services, according to CIC.
  • In this note, we talk about the positive aspects of the deal.

Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

By Oshadhi Kumarasiri

  • Alibaba (ADR) (BABA US)‘s logistics arm, Cainiao Smart Logistics (1437124D HK), filed for an IPO with HKEX yesterday, aiming to raise $1bn to $2bn.
  • Although efficient, Cainiao may face business challenges, as the majority of logistics costs and revenues stem from services outsourced to logistics partners.
  • Despite the proposed IPO, we believe that Cainiao will always operate in the shadow of Alibaba’s primary e-commerce business.

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Sep 27
0

Most Read: Lasertec Corp, Alibaba (ADR), Kokusai Electric , Rakuten Bank , Zhejiang Leapmotor Technologie, Toyo Construction, EcoPro Materials and more

By | Daily Briefs, Most Read

In today’s briefing:

  • The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
  • Alibaba Potential IPOs – Part 2 – An Early Look at Cainiao, US$10bn+
  • Alibaba’s Cainiao IPO: The First Look
  • Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
  • Rakuten Bank (5838) One Month Later
  • Leapmotor IPO Lock-Up – US$3.3bn Lockup Expiry, Everyone in the Money, CCASS Movement to Boot
  • YFO Reloads Toyo Construction Takeover Proposal at ¥1255/Share
  • EcoPro Materials: IPO & Index Inclusion
  • Kokusai Electric Pre-IPO – The Negatives – Can’t Avoid the Cycles
  • Toyo Construction (1890 JP): YFO’s Potential Revised Offer at JPY1,255

The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour

By Travis Lundy

  • Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
  • But there may be ¥800bn+ to buy on one day into the close later this month (+ another ¥200-300bn on two other days). Then a ¥500bn sell two days later.
  • Over the past ten years, the two day return on the March trade is great. In Sep, not so much. This year there are Extra Special Flows.

Alibaba Potential IPOs – Part 2 – An Early Look at Cainiao, US$10bn+

By Sumeet Singh

  • On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
  • Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
  • In our previous note, we highlighted which division could list. In this note, we will look at Cainiao.

Alibaba’s Cainiao IPO: The First Look

By Arun George

  • Alibaba (ADR) (BABA US) aims to complete the IPO of Cainiao Smart Logistics (1437124D HK) in the next 12 to 18 months. Alibaba holds a 67% stake in Cainiao. 
  • Cainiao’s revenue growth, while on a declining trend, remains in double digits. Encouragingly. narrowing losses set a path to profitability.
  • On 30 March, Bloomberg reported that Cainiao is currently valued at more than US$20 billion. Our valuation analysis suggests that such a valuation is justifiable.

Kokusai Electric (6525 JP) IPO – Index Demand On The Follow

By Travis Lundy

  • Niche Japanese Semiconductor Production Equipment specialist Kokusai Electric (6525 JP) last Thursday announced the TSE approved its late October IPO (with indicative pricing, shares to be sold, and initial prospectus).
  • This insight looks at initial shareholder structure, selling group, post-IPO shareholder structure with index inclusion timing, and follow-on flow possibilities. 
  • At ¥435bn indicative market cap, it will be the largest IPO in Japan since pre-covid, despite coming in a cycle trough. I expect it will be hot. 

Rakuten Bank (5838) One Month Later

By Travis Lundy

  • On 31 August, I published Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks. It’s up 40.6% since the day after I wrote, reasons unclear.  
  • TOPIX Banks Index is up 10.4% since then, with post-BOJ meeting price movements indicating a kind of momiai.
  • For Rakuten Bank, while growth means it may not be “expensive” it is no longer dirt cheap. And I cannot identify the culprit, so time to take profits. 

Leapmotor IPO Lock-Up – US$3.3bn Lockup Expiry, Everyone in the Money, CCASS Movement to Boot

By Sumeet Singh

  • Leapmotor (9863 HK) (LM) raised around US$800m in its Hong Kong IPO. The stock was listed in Sep 2022, its lockup on pre-IPO investors will expire on 29th Sep 2023.
  • LM is a smart EV company based in China, founded in 2015.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

YFO Reloads Toyo Construction Takeover Proposal at ¥1255/Share

By Travis Lundy

  • Last night Reuters teased a headline saying the Nintendo Family Office called YFO (and related entities) would raise its proposed takeover price for Toyo Construction to ¥1255/share.
  • Recently, the company had agreed to start an investigation and YFO had dropped its demands for an EGM. In Q1, the company reporetd Revenues +18.6%yoy, reasonably in-line with original guidance.
  • This new price comes at a 1% premium to previous close, and is meant to start discussions. The Board has indicated it will start deliberations tomorrow.

EcoPro Materials: IPO & Index Inclusion

By Brian Freitas

  • EcoPro Materials (ECO123 KS) was founded in 2017 and specializes in manufacturing cathode material precursors, a core material for lithium secondary cells.
  • EcoPro Materials (ECO123 KS) could raise between US$387m-US$492m, valuing the company between US$1.9bn-US$2.42bn. Float will depend on voluntary lock-ups and allocation to strategic investors.
  • Inclusion in global indices is likely to take place between February to June, while the highest probability of Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion is in December 2024.

Kokusai Electric Pre-IPO – The Negatives – Can’t Avoid the Cycles

By Sumeet Singh

  • KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In this note, we talk about the not-so-positive aspects of the deal.

Toyo Construction (1890 JP): YFO’s Potential Revised Offer at JPY1,255

By Arun George

  • YFO has returned with a potential tender offer price of JPY1,255 per share for Toyo Construction (1890 JP), 25.5% above its previous offer of JPY1,000 per share.
  • The offer is conditional on due diligence access to confirm the feasibility of the medium-term management plan and no material accounting, tax, or legal issues.
  • The due diligence will take a month, with the offer expected to commence in late December. Expect due diligence access as the revised offer represents a 10-year high. 

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Sep 26
0

Most Read: Mercari , Lasertec Corp, Thai Beverage, Golden Agri Resources, Water Oasis, Doosan Robotics, Kokusai Electric , EcoPro Materials, Taiwan Secom and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT
  • The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
  • Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst
  • Golden Agri-Resources (GGR SP): Could Outperform Peers
  • Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023
  • Doosan Robotics Institutional Lockups Breakdown Leaked Pre-Disclosure: Analyzing Flow Schedule
  • Kokusai Electric Pre-IPO – The Positives – Well Established with High Market Share
  • Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
  • Ecopro Materials IPO Prospectus Filed Today: Anticipating Inevitable Valuation Controversy
  • Quiddity Leaderboard TDIV Dec 23: Many Changes and One-Way Flows of US$1.2bn+!

Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT

By Brian Freitas

The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour

By Travis Lundy

  • Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
  • But there may be ¥800bn+ to buy on one day into the close later this month (+ another ¥200-300bn on two other days). Then a ¥500bn sell two days later.
  • Over the past ten years, the two day return on the March trade is great. In Sep, not so much. This year there are Extra Special Flows.

Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst

By Brian Freitas

  • Thai Beverage (THBEV SP) has trended lower over the last couple of years and the stock is trading very close to its lows.
  • There has been a contraction in multiples and Thai Beverage (THBEV SP) trades cheaper than a lot of its Asia listed peers.
  • A potential index inclusion could bring in significant passive inflows and result in a rerating of the stock.

Golden Agri-Resources (GGR SP): Could Outperform Peers

By Brian Freitas

  • Golden Agri Resources (GGR SP) has traded lower over the last year and trades cheaper than some of its peers.
  • Revenue, income and net profit margins have been moving higher over the last few years and EPS/DPS have increased sharply over the last two years.
  • Potential passive buying could result in Golden Agri Resources (GGR SP) outperforming peers in the near term.

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023

By Sameer Taneja

Doosan Robotics Institutional Lockups Breakdown Leaked Pre-Disclosure: Analyzing Flow Schedule

By Sanghyun Park

  • The immediate float rate on the listing date (October 5) has reached 19.25% as the institutional lockup volume is not as high as initially expected.
  • Even with a low institutional lockup level, there seems to be a possibility of a certain IPO day pop.
  • The first exit point we can look for in the short term would be the 1-month lockup release (1.44% of SO) one month after listing.

Kokusai Electric Pre-IPO – The Positives – Well Established with High Market Share

By Sumeet Singh

  • KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In this note, we talk about the positive aspects of the deal.

Kokusai Electric (6525 JP) IPO – Index Demand On The Follow

By Travis Lundy

  • Niche Japanese Semiconductor Production Equipment specialist Kokusai Electric (6525 JP) last Thursday announced the TSE approved its late October IPO (with indicative pricing, shares to be sold, and initial prospectus).
  • This insight looks at initial shareholder structure, selling group, post-IPO shareholder structure with index inclusion timing, and follow-on flow possibilities. 
  • At ¥435bn indicative market cap, it will be the largest IPO in Japan since pre-covid, despite coming in a cycle trough. I expect it will be hot. 

Ecopro Materials IPO Prospectus Filed Today: Anticipating Inevitable Valuation Controversy

By Sanghyun Park

  • The indicative price band is ₩36,200 to ₩46,000. Accordingly, the market capitalization implied by the price band is ₩2.68T to ₩3.40T.
  • The concern arises as to whether Ecopro Materials can consistently deliver a level of profitability that justifies receiving an equivalent valuation multiple to that of Ecopro BM.
  • The timing of this IPO coincides with the ongoing valuation correction in the local battery sector, making the valuation issue the most critical point to watch in this IPO.

Quiddity Leaderboard TDIV Dec 23: Many Changes and One-Way Flows of US$1.2bn+!

By Janaghan Jeyakumar, CFA

  • In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2023 review.
  • I currently see 5 ADDs and 4 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
  • The estimate for one-way capping flow in December 2023 is US$1.2bn.

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Sep 25
0

Most Read: Mercari , Lasertec Corp, Thai Beverage, Samsonite, Posco DX, China Mobile, Newcrest Mining, Doosan Robotics, ENM Holdings, China Vanke (H) and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT
  • The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
  • Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst
  • Index Rebalance & ETF Flow Recap: HSI, HSCI, ASX, SET50, Wharf, SK Tel, Tata Motors, Midea, PCOMP
  • KOSPI 200 Rebalance Candidates in December 2023 & Changes to the KOSPI 200 Rebalance Process
  • Quiddity HK Connect SOUTHBOUND Flows (Week to 22Sep23) : China Mobile, Meituan, Xpeng, Banks!
  • Last Week in Event SPACE: Newcrest/Newmont, PTT/PTTEP, Naspers/Prosus/Tencent, Itochu Techno
  • Doosan Robotics Institutional Lockups Breakdown Leaked Pre-Disclosure: Analyzing Flow Schedule
  • Merger Arb Mondays (25 Sep) – ENM, Poly Culture, Eoflow, Origin Energy, Symbio, Costa, InvoCare
  • Quiddity A/H Premium Weekly (To 22Sep23):  Financials & Communications Dominate Flows

Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT

By Brian Freitas

The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour

By Travis Lundy

  • Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
  • But there may be ¥800bn+ to buy on one day into the close later this month (+ another ¥200-300bn on two other days). Then a ¥500bn sell two days later.
  • Over the past ten years, the two day return on the March trade is great. In Sep, not so much. This year there are Extra Special Flows.

Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst

By Brian Freitas

  • Thai Beverage (THBEV SP) has trended lower over the last couple of years and the stock is trading very close to its lows.
  • There has been a contraction in multiples and Thai Beverage (THBEV SP) trades cheaper than a lot of its Asia listed peers.
  • A potential index inclusion could bring in significant passive inflows and result in a rerating of the stock.

Index Rebalance & ETF Flow Recap: HSI, HSCI, ASX, SET50, Wharf, SK Tel, Tata Motors, Midea, PCOMP

By Brian Freitas

KOSPI 200 Rebalance Candidates in December 2023 & Changes to the KOSPI 200 Rebalance Process

By Douglas Kim

  • Korea Exchange is planning to change the criteria for rebalancing stocks in the KOSPI 200 index. 
  • The purpose of this change is to prevent stocks that surge ahead of the actual KOSPI 200 inclusion but fall significantly after the inclusion announcement.
  • We think there is a 70-80%+ probability that POSCO DX and L&F Co will be included in KOSPI 200 index in December 2023.

Quiddity HK Connect SOUTHBOUND Flows (Week to 22Sep23) : China Mobile, Meituan, Xpeng, Banks!

By Travis Lundy

  • This is the brand spanking new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
  • The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
  • We like the nifty interactive tables and charts and welcome feedback. This week saw HKD 14.5bn+ of net buying. That makes ten weeks of net inflows.

Last Week in Event SPACE: Newcrest/Newmont, PTT/PTTEP, Naspers/Prosus/Tencent, Itochu Techno

By David Blennerhassett

  • The Newmont (NEM US) CDI selldown on 15 December will have to be bought by active shareholders, not passive; a relatively large reverse funding trade on the ASX rebal.
  • Naspers (NPN SJ)/Prosus NV (PRX NA)‘s CEO steps down. However, operations/investments, and the ongoing tweaking of the organizational structure with respect to Tencent (700 HK), should continue unabated. 
  • Activist shareholders and Toshiba Corp (6502 JP) stuck with each other for years. The takeover allows both sides to escape their mutual bearhug,

Doosan Robotics Institutional Lockups Breakdown Leaked Pre-Disclosure: Analyzing Flow Schedule

By Sanghyun Park

  • The immediate float rate on the listing date (October 5) has reached 19.25% as the institutional lockup volume is not as high as initially expected.
  • Even with a low institutional lockup level, there seems to be a possibility of a certain IPO day pop.
  • The first exit point we can look for in the short term would be the 1-month lockup release (1.44% of SO) one month after listing.

Merger Arb Mondays (25 Sep) – ENM, Poly Culture, Eoflow, Origin Energy, Symbio, Costa, InvoCare

By Arun George

Quiddity A/H Premium Weekly (To 22Sep23):  Financials & Communications Dominate Flows

By Travis Lundy

  • The Brand-Spanking New (7 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
  • We used to do it and brought it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 47 Trade Recommendations.
  • The last 6 weeks (since the start of the new Monitor and Portfolio 7 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%.

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Sep 24
0

Most Read: KB Financial, Western Superconducting Techno, Bloomberry Resorts, Samsonite, Intage Holdings, Keep Inc, Boss Resources, M&A Research Institute, Kum Yang, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Most Read

In today’s briefing:

  • FnGuide Top10 Index Rebalance Preview: Good Historical Performance; One Potential Change in December
  • CSI500 Index Rebalance Preview: ETF Inflows Lead to Performance Skew
  • PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added
  • Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
  • NTT’s Partial Offer for Intage (4326) Part Deux – Refining Pro-Ration Expectations
  • HSCI Index Rebalance Preview: Low Probability Add in December
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December
  • M&A Research Institute Holdings (9552) TOPIX Inclusion
  • KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening
  • Public Opinion Is Slowly Catching Up, but the Change Has Only Just Begun

FnGuide Top10 Index Rebalance Preview: Good Historical Performance; One Potential Change in December

By Brian Freitas

  • The Mirae Asset Tiger Top 10 ETF (292150 KS) tracks the FnGuide Top 10 Index and has an AUM of over US$1bn.
  • We currently forecast one potential change at the next rebalance in December. There is another set of changes that could also take place.
  • There has been a big increase in short interest on a couple of stocks while the rise has been more gradual on the other stocks.

CSI500 Index Rebalance Preview: ETF Inflows Lead to Performance Skew

By Brian Freitas

  • Over 85% of the way through the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 8 December.
  • There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.4% at the December rebalance resulting in a one-way trade of CNY 7.22bn.
  • With the market being stabilised through the ETF route, the index constituents have outperformed the non-index constituents over the last 6-7 weeks. That could reverse over the near term.

PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added

By Brian Freitas

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

By Brian Freitas

  • The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
  • Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
  • We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.

NTT’s Partial Offer for Intage (4326) Part Deux – Refining Pro-Ration Expectations

By Travis Lundy

  • Last week I wrote about NTT’s Partial Offer for Marketing Consultant Intage (4326) – (with a spurious hyphen at the end). 
  • In the last couple of days, there have apparently been a few blocks printed on the tape. I have received questions about pricing and pro-ration. 
  • So here I provide a set of 11 possible pro-ration cases, and suggest ways for traders and investors to think about the risks and possibilities.

HSCI Index Rebalance Preview: Low Probability Add in December

By Brian Freitas

  • There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
  • Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.

S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December

By Brian Freitas

  • Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
  • Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
  • The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.

M&A Research Institute Holdings (9552) TOPIX Inclusion

By Travis Lundy

  • Yesterday, M&A Research Institute (9552 JP) announced it would list on the TSE Prime section on 29 August, which means it will join TOPIX at the close of 28-Sep-2023.
  • This is NOT a surprise. On 27 June, the company announced a secondary offering of 1.631mm shares (by the founder/CEO), and said it had applied for TSE Prime transfer. 
  • I take a look at how this could play out. 

KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening

By Sanghyun Park

  • In addition to full market cap and trading value, float-adjusted market cap will be added as a quantitative screening tool. 
  • Regarding extreme price increases, KRX plans to utilize the deviation between the average daily market capitalizations for two, three, and six months leading up to the screening base date.
  • We should consider designing trading setups that target stocks with relatively low free-float rates and high price volatility in recent months.

Public Opinion Is Slowly Catching Up, but the Change Has Only Just Begun

By Aki Matsumoto

  • Activist investors’ proposals were consistently based on increasing shareholder returns. The change in the environment, in which ％ of foreign shareholders increased while cross-held shares decreased, had a major impact.
  • Regarding the selection of directors, discussion on contents of Skill Matrix should be more active, as it’s suspected that top management is selecting candidates who are aligned with their wishes.
  • The voting standards of domestic institutional investors are iridescent and still dependent on public opinion for each proposal. The change in public opinion has only just begun.

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Sep 23
0

Most Read: MOG Digitech Holdings , Toshiba Corp, Newcrest Mining, Kokusai Electric , Intage Holdings, Midea Group Co Ltd A, Kum Yang, LG Corp, Costa Group Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • MOG Digitech (1942 HK): What the Flow Is Going On?
  • Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
  • Newcrest-Newmont Merger: Fancy Index Shenanigans
  • Kokusai Electric (6525 JP) IPO: Listing in October, TPX Inclusion in November, Global Indices Later
  • Intage Holdings (4326 JP): NAVF Selldown and Proration for NTT’s Partial Offer
  • Midea A/H Listing – Early Look – Probably Raising Acquisition Currency
  • KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening
  • LG Corp: Updated NAV Analysis & Outperformance Likely Driven by Value Investors
  • Costa Backs Paine Schwartz’s Lower Bid
  • Costa Group (CGC AU): Binding Proposal Comes with Risks

MOG Digitech (1942 HK): What the Flow Is Going On?

By Brian Freitas

  • MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
  • MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
  • Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule

By Travis Lundy

  • The JIP Tender Offer for Toshiba Corp (6502 JP) closes today. I expect that we will see results announced as early as late tonight, but by law, by latest tomorrow.
  • There will be at least three major index downweights, and possibly deletions, most likely in the following five trading days.
  • This shows the approximate maximum share and dollar amounts to be sold, and approximate dates. 

Newcrest-Newmont Merger: Fancy Index Shenanigans

By Travis Lundy

Kokusai Electric (6525 JP) IPO: Listing in October, TPX Inclusion in November, Global Indices Later

By Brian Freitas

  • Kokusai Electric (6525 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
  • At the reported indicative IPO price of JPY 1890/share, Kokusai Electric (6525 JP) will be valued at JPY 435bn (US$2.94bn).
  • The stock should be added to the TPX INDEX at the close on 29 November where trackers will need to buy over 14% of the stock issued in the IPO.

Intage Holdings (4326 JP): NAVF Selldown and Proration for NTT’s Partial Offer

By Arun George

Midea A/H Listing – Early Look – Probably Raising Acquisition Currency

By Sumeet Singh

  • Midea Group Co Ltd A (000333 CH), one of the world’s largest home appliance producers, aims to raise up to  US$5bn in its H-share listing.
  • Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
  • In this note, we look at its past performance and other deal dynamics that might impact the listing.

KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening

By Sanghyun Park

  • In addition to full market cap and trading value, float-adjusted market cap will be added as a quantitative screening tool. 
  • Regarding extreme price increases, KRX plans to utilize the deviation between the average daily market capitalizations for two, three, and six months leading up to the screening base date.
  • We should consider designing trading setups that target stocks with relatively low free-float rates and high price volatility in recent months.

LG Corp: Updated NAV Analysis & Outperformance Likely Driven by Value Investors

By Douglas Kim

  • Our NAV analysis of LG Corp suggests an implied market cap of 16.9 trillion won or 107,217 won per share which is 28.4% higher than current share price. 
  • We believe that LG Corp could announce another share buybacks representing 2-3% of outstanding shares in the next 6-12 months. 
  • Another reason that could result in LG Corp’s shares outperforming other major LG related shares is due to the value investors increasing capital allocation to higher dividend paying LG Corp.

Costa Backs Paine Schwartz’s Lower Bid

By David Blennerhassett

  • On the 18 September, Costa Group Holdings (CGC AU) announced A$3.20/share best and final Offer from Paine Schwartz Partners (PSP) down from the A$3.50/share NBIO in July.
  • Costa’s shares wobbled – would they, won’t they be supportive? A break price beyond the undisturbed price loomed. Vanguard kicked out a chunk of shares below A$3.
  • This morning Costa and PSP entered into a Scheme Implementation Deed. The transaction is expected to close in 1Q24. Key conditions are Costa’s shareholder vote and FIRB/SAMR/EU approval. 

Costa Group (CGC AU): Binding Proposal Comes with Risks

By Arun George

  • Costa Group Holdings (CGC AU) has entered a scheme implementation deed with Paine Schwartz Partners (PSP) led consortium at A$3.20 per share. 
  • The key conditions are regulatory and shareholder approval. China SAMR regulatory approval poses a risk, primarily related to timing. Costa anticipates completion in 1Q24.
  • The headcount test related to the retail vote remains a risk. The risk/reward is unfavourable as the deal break downside (10%+) outweighs the offer’s upside (3.6% at last close).  

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Sep 22
0

Most Read: Toshiba Corp, Newcrest Mining, Bloomberry Resorts, Kokusai Electric , SK Square , Midea Group Co Ltd A, Intage Holdings, Hanwha Systems Co Ltd, LG Corp, Kum Yang and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
  • Newcrest-Newmont Merger: Fancy Index Shenanigans
  • PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added
  • Kokusai Electric (6525 JP) IPO: Listing in October, TPX Inclusion in November, Global Indices Later
  • SK Square: Updated NAV Analysis Amid Potential Sale of 11st to Alibaba
  • Midea A/H Listing – Early Look – Probably Raising Acquisition Currency
  • Intage Holdings (4326 JP): NAVF Selldown and Proration for NTT’s Partial Offer
  • A Proactive Long Short Basket Setup Targeting KOSPI Size Index’s Next Rebal
  • LG Corp: Updated NAV Analysis & Outperformance Likely Driven by Value Investors
  • KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening

Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule

By Travis Lundy

  • The JIP Tender Offer for Toshiba Corp (6502 JP) closes today. I expect that we will see results announced as early as late tonight, but by law, by latest tomorrow.
  • There will be at least three major index downweights, and possibly deletions, most likely in the following five trading days.
  • This shows the approximate maximum share and dollar amounts to be sold, and approximate dates. 

Newcrest-Newmont Merger: Fancy Index Shenanigans

By Travis Lundy

PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added

By Brian Freitas

Kokusai Electric (6525 JP) IPO: Listing in October, TPX Inclusion in November, Global Indices Later

By Brian Freitas

  • Kokusai Electric (6525 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
  • At the reported indicative IPO price of JPY 1890/share, Kokusai Electric (6525 JP) will be valued at JPY 435bn (US$2.94bn).
  • The stock should be added to the TPX INDEX at the close on 29 November where trackers will need to buy over 14% of the stock issued in the IPO.

SK Square: Updated NAV Analysis Amid Potential Sale of 11st to Alibaba

By Douglas Kim

  • In this insight, we provide an updated valuation analysis of SK Square (402340 KS) amid a potential sale of 11st to Alibaba (ADR) (BABA US).
  • Our NAV analysis of SK Square suggests NAV of 9.2 trillion won or NAV per share of 65,069 won, representing a 55% upside from current levels.
  • If SK Square is able to sell its stake in 11st to Alibaba, the capital inflow from the sale could be used to raise dividends and complete more share buybacks. 

Midea A/H Listing – Early Look – Probably Raising Acquisition Currency

By Sumeet Singh

  • Midea Group Co Ltd A (000333 CH), one of the world’s largest home appliance producers, aims to raise up to  US$5bn in its H-share listing.
  • Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
  • In this note, we look at its past performance and other deal dynamics that might impact the listing.

Intage Holdings (4326 JP): NAVF Selldown and Proration for NTT’s Partial Offer

By Arun George

A Proactive Long Short Basket Setup Targeting KOSPI Size Index’s Next Rebal

By Sanghyun Park

  • We need to focus on the top 2 candidates among the Mid→Large candidates in the screening table mentioned above and the bottom 4 candidates among the Large→Mid candidates.
  • Since they are relatively far from the borderline, there is a significant likelihood that their classification will change. So, flow trading timing on these candidates could be brought forward.
  • Monitoring Doosan Robotics’s market cap potentially nearing ₩3T and keeping an eye on the listing date of Ecopro Materials, we should make changes to the Mid→Large candidates from early December.

LG Corp: Updated NAV Analysis & Outperformance Likely Driven by Value Investors

By Douglas Kim

  • Our NAV analysis of LG Corp suggests an implied market cap of 16.9 trillion won or 107,217 won per share which is 28.4% higher than current share price. 
  • We believe that LG Corp could announce another share buybacks representing 2-3% of outstanding shares in the next 6-12 months. 
  • Another reason that could result in LG Corp’s shares outperforming other major LG related shares is due to the value investors increasing capital allocation to higher dividend paying LG Corp.

KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening

By Sanghyun Park

  • In addition to full market cap and trading value, float-adjusted market cap will be added as a quantitative screening tool. 
  • Regarding extreme price increases, KRX plans to utilize the deviation between the average daily market capitalizations for two, three, and six months leading up to the screening base date.
  • We should consider designing trading setups that target stocks with relatively low free-float rates and high price volatility in recent months.

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Sep 21
0

Most Read: Toshiba Corp, Samsonite, Itochu Techno Solutions, Bloomberry Resorts, Tata Motors DVR, Newcrest Mining, CellSource , Descente Ltd, PTT PCL, Naspers and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
  • Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
  • Itochu TOB on Itochu Techno Solutions – The Index Selldown Schedule for $700mm+ of Flows
  • PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added
  • Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb
  • Newcrest-Newmont Merger: Fancy Index Shenanigans
  • CellSource (4880) TOPIX Inclusion Coming Up
  • Descente a Key Part of Itochu’s Plans in Sports
  • StubWorld: PTT Public Is Trading Cheap
  • Naspers (NPN) & Prosus (PRX): Initial Market Reaction to Leadership Changes

Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule

By Travis Lundy

  • The JIP Tender Offer for Toshiba Corp (6502 JP) closes today. I expect that we will see results announced as early as late tonight, but by law, by latest tomorrow.
  • There will be at least three major index downweights, and possibly deletions, most likely in the following five trading days.
  • This shows the approximate maximum share and dollar amounts to be sold, and approximate dates. 

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

By Brian Freitas

  • The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
  • Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
  • We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.

Itochu TOB on Itochu Techno Solutions – The Index Selldown Schedule for $700mm+ of Flows

By Travis Lundy

  • In August, Itochu Corp (8001 JP) launched a Tender offer on Itochu Techno Solutions (4739 JP) to buy out minorities. 
  • That tender offer ended last week, with Itochu and the acquirer vehicle owning 85+%. 
  • Interestingly, there are near-term flow events as a result. Worth watching.

PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added

By Brian Freitas

Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb

By Brian Freitas

  • Tata Motors DVR (TTMT/A IN) now trades at a 32.9% discount to Tata Motors Ltd (TTMT IN) and there is another 4.4% in the trade following the scheme of arrangement.
  • Tata Motors DVR (TTMT/A IN) could be added to global indices in November and that will bring significant inflows to the stock.
  • The pre-positioning and passive buying could lead to the DVR discount narrowing further and provide trading opportunities for the next few weeks.

Newcrest-Newmont Merger: Fancy Index Shenanigans

By Travis Lundy

CellSource (4880) TOPIX Inclusion Coming Up

By Travis Lundy

  • Today, regenerative medicine service provider CellSource (4880 JP) announced a forecast revision lower for the year ending 31 October. It also announced a new dividend policy and dividend payout.
  • It also announced an equity offering of up to 3.542mm shares, increasing float by 60% followed by a move from the TSE Growth segment to TSE Prime. 
  • The dynamics of shareholder structure and flow mean one can wait this one out.

Descente a Key Part of Itochu’s Plans in Sports

By Michael Causton

  • Through all the upheavals in discretionary product distribution in the last decade, Itochu Corp (8001 JP)’s Itochu Textile subsidiary has managed to maintain huge power in the channel.
  • While the trading firm has traditionally focused on premium fashion brands, in the last few years it has invested heavily in the sports market, including its growing investment in Descente.
  • The move is part of wider plans to take lead share in sports, footwear and department store brands.

StubWorld: PTT Public Is Trading Cheap

By David Blennerhassett

  • The recent share price pullback sees PTT PCL (PTT TB) trading below its long-term averages, and with respect to peers. 
  • Preceding my comments on PTT are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Naspers (NPN) & Prosus (PRX): Initial Market Reaction to Leadership Changes

By Charlotte van Tiddens, CFA

  • Early on Monday morning, Naspers and Prosus announced the immediate resignation of CEO Bob van Dijk. Management hosted an investor call shortly after. Key takeaways are included below.
  • Ervin Tu, Group Chief Investment Officer, will take over as Interim CEO. Tu is a strong candidate for the permanent position.
  • After an initial bounce at the open, both counters sold off, widening the discounts by more than 1 percentage point intra-day.

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Sep 20
0

Most Read: Midea Group Co Ltd A, Keep Inc, Boss Resources, Korea Stock Exchange KOSPI 200, Prosus NV, Samsonite, Doosan Robotics, Integral Corporation, Seibu Giken , Tata Motors DVR and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Midea Group (000333 CH): H-Share Listing & Index Implications
  • HSCI Index Rebalance Preview: Low Probability Add in December
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December
  • Korea NPS’s Funds Influx into Local Stock Market Starting Next Year: What to Know
  • Prosus/Naspers: Business As Usual As CEO Steps Down
  • Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
  • Trading Strategy of Doosan Robotics in the First Day of Trading Post Book Building Results
  • Integral Corporation IPO Trading – Low Demand but Somewhat Cornered
  • Seibu Giken IPO – Quick Note – Not Particularly Enticing
  • Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb

Midea Group (000333 CH): H-Share Listing & Index Implications

By Brian Freitas

  • Midea Group Co Ltd A (000333 CH) could raise between HK$35-54bn (US$4.5-6.9bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
  • The H-shares could get Fast Entry to some global indices depending on the number of shares that are allotted to cornerstone and/or strategic investors.
  • The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.

HSCI Index Rebalance Preview: Low Probability Add in December

By Brian Freitas

  • There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
  • Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.

S&P/​​​​​​​​​ASX Index Rebalance Preview: Changes from Now to December

By Brian Freitas

  • Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
  • Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
  • The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.

Korea NPS’s Funds Influx into Local Stock Market Starting Next Year: What to Know

By Sanghyun Park

  • The proposal to increase NPS’s annual target investment return rate by 1%p by 2028. A rough mathematical estimate suggests the necessity of an additional investment of nearly ₩60T until 2028.
  • It augments the overall investment volume in local stocks to ₩200T. This projection implies an annual net purchase of approximately ₩12T from the forthcoming year through 2028.
  • Consequently, this matter is currently among the most captivating topics in the Korean local market, and efforts are underway to identify the sectors and stocks that stand to benefit.

Prosus/Naspers: Business As Usual As CEO Steps Down

By David Blennerhassett

  • Bob van Dijk, CEO of both Naspers (NPN SJ) and Prosus NV (PRX NA), has stepped down, effective 18 September. 
  • Van Dijk was instrumental in the 2019 listing of Prosus and the creation (and subsequent unwinding) of the highly-criticised Prosus/Naspers cross-holding structure. 
  • His departure should have minimal impact. Everything else basically stays the same. Continue to be long Prosus vs. NAV – that is, Prosus vs. Tencent (700 HK).

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

By Brian Freitas

  • The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
  • Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
  • We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.

Trading Strategy of Doosan Robotics in the First Day of Trading Post Book Building Results

By Douglas Kim

  • Doosan Robotics (454910 KS) reported excellent IPO book building results. The IPO price has been finalized at 26,000 won (upper end of the IPO price range). 
  • A total of 1,920 institutional investors participated in the IPO demand forecast survey and the demand ratio was 272 to 1. 
  • The trading strategy on the first day of IPO is to take some profits (25%-50% of total) if the share price shoots much higher than the IPO price by 70-100%+.

Integral Corporation IPO Trading – Low Demand but Somewhat Cornered

By Sumeet Singh

  • Integral Corporation (5842 JP) raised around US$123m in its Japan IPO.
  • Integral is a private equity management company advising funds that invest in both listed and unlisted companies in Japan, with a focus on mid-sized companies.
  • In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.

Seibu Giken IPO – Quick Note – Not Particularly Enticing

By Sumeet Singh

  • Seibu Giken (6223 JP) (SG) is looking to raise around US$93m in its Japan IPO via selling a mix of primary and secondary shares.
  • SG sells desiccant dehumidifiers and VOC concentrators in over fifty countries globally. Its two main products accounted for over 90% of its revenue in 2022.
  • In our previous note, we looked at the company’s past performance. In this note, we talk about valuations.

Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb

By Brian Freitas

  • Tata Motors DVR (TTMT/A IN) now trades at a 32.9% discount to Tata Motors Ltd (TTMT IN) and there is another 4.4% in the trade following the scheme of arrangement.
  • Tata Motors DVR (TTMT/A IN) could be added to global indices in November and that will bring significant inflows to the stock.
  • The pre-positioning and passive buying could lead to the DVR discount narrowing further and provide trading opportunities for the next few weeks.

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Sep 19
0

Most Read: Descente Ltd, Wharf Holdings, China Mobile, SK Telecom, Poly Culture Group Corp H, Lansen Pharmaceutical Holdings Co, Ltd., Costa Group Holdings, Keep Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Itochu Buying Descente (8114) – ANTA Selldown Offset Or Creeping Takeover?
  • Wharf Holdings (4 HK): Improved Liquidity & Passive Buying
  • Quiddity A/H Premium Weekly (15-Sep):  Utilities, Insurance, China Mobile, BYD
  • SK Telecom (017670 KS): Foreign Room & Passive Inflows
  • Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved
  • Poly Culture (3636 HK): H Share Class Meeting on 3 November
  • Lansen Pharma (503 HK): The Chairman Makes An Offer
  • Costa Mulls Paine Schwartz’s Lower Bid
  • Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements
  • HSCI Index Rebalance Preview: Low Probability Add in December

Itochu Buying Descente (8114) – ANTA Selldown Offset Or Creeping Takeover?

By Travis Lundy

  • Four years after Itochu got to 40.0% of votes in Descente (8114) in a hostile Tender Offer, Descente partner ANTA, which supported Itochu at the time started selling its stake.
  • A few months later, Itochu started buying shares of Descente in the market. As of 7 Sep, Itochu had bought Descente shares 81 days straight (9.7% of ADV).
  • This begs the question: Is Itochu ensuring they maintain voting control as ANTA sells? Or are they buying to lift their stake prior to another bid?

Wharf Holdings (4 HK): Improved Liquidity & Passive Buying

By Brian Freitas

  • Improved liquidity and a higher stock price could see passive trackers buying Wharf Holdings (4 HK) within the next couple of months.
  • Wharf Holdings (4 HK) trades cheaper than the average and median of its peers on EV/Sales, EV/EBITDA and price to book value.
  • Wharf Holdings (4 HK) has already started to move higher and there could be a bigger move in the stock over the next month.

Quiddity A/H Premium Weekly (15-Sep):  Utilities, Insurance, China Mobile, BYD

By Travis Lundy

  • The Brand-Spanking New (6 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
  • We used to do it and decided to bring it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 41 Trade Recommendations.
  • The last five weeks (since the instantiation of the new Monitor and Portfolio 6 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%.

SK Telecom (017670 KS): Foreign Room & Passive Inflows

By Brian Freitas

  • Foreign room in SK Telecom (017670 KS) increased above 15% in July and is currently just above 16%. Foreign investors have resumed buying again and foreign room is moving lower.
  • Foreign room staying above 15% for another month could result in passive buying at the end of November. SK Telecom (017670 KS) has outperformed peers over the last few weeks.
  • Foreign buying over the next month could lead to foreign room dropping below 15% in which case there will be no passive inflows. But the stock could be higher.

Poly Culture (3636 HK)’s Offer: 3rd Nov Shareholder Vote. Still Get Involved

By David Blennerhassett

  • Back on the 23 June, SOE-backed Poly Group tabled an HK$8.88 bid per Poly Culture Group (3636 HK) H Share and RMB8.17386240 per Domestic Share. Terms were declared final.
  • This Merger by Absorption Offer incorporates a Scheme-like vote. There is no tendering condition. The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.
  • The Composite Doc is out. Independent H-shareholders get to vote on the transaction on the 3rd of November. Payment is expected on or before the 23 November. I’d get involved. 

Poly Culture (3636 HK): H Share Class Meeting on 3 November

By Arun George

  • The Poly Culture Group Corp H (3636 HK) H Shareholders’ class meeting is scheduled for 3 November. The IFA considers the HK$8.88 per H share offer fair and reasonable.
  • The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
  • The offer’s 77.6% premium to the undisturbed price and shareholder structure helps the vote. At the current price and for the 23 November payment, the gross/annualised spread is 3.3%/19.2%.

Lansen Pharma (503 HK): The Chairman Makes An Offer

By David Blennerhassett

  • Specialty prescription drug manufacturer Lansen Pharmaceutical Holdings Co, Ltd. (503 HK) has been a perennial takeover target. And now we have an Offer.
  • Wu Zhen Tao, NED and Chairman of Lansen, has made an Offer for shares not indirectly held, of HK$1.80/share, by way of a Scheme, a 26.76% premium to last close.   
  • This looks done. Get involved if small-cap illiquid arbs are your thing. 

Costa Mulls Paine Schwartz’s Lower Bid

By David Blennerhassett

  • Back on the 4 July, Paine Schwartz Partners (PSP) made an A$3.50/share NBIO for Costa Group (CGC AU) by way of a Scheme.  PSP held 14.84% at the time.
  • The due diligence period came and went, or so it appeared, but Costa said it remained ongoing.  Rumours circulated that PSP had gone cold. 1H23 results were also delayed. 
  • Costa has now announced this morning that PSP has returned with a $3.20/share Offer – best and final – reduced for any permitted dividend of up to A$0.04, if declared. 

Analyzing Proactive Flow Trading Targeting SK Telecom’s Passive Movements

By Sanghyun Park

  • As of last Friday, SKT has utilized 86.2 billion won out of the allotted 300 billion won for share buybacks, resulting in the acquisition of 1,810,242 shares.
  • If there are indications of the foreign room potentially falling to a risky level, SKT will likely proceed with an aggressive buyback, targeting 20-30% of the daily trading volume.
  • Another particularly intriguing observation is the absence of local retail flow directed towards SKT. This indicates there is still potential momentum for an upward price movement at this juncture.

HSCI Index Rebalance Preview: Low Probability Add in December

By Brian Freitas

  • There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
  • Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.

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