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Most Read

Aug 30
0

Most Read: SSE STAR50, Jio Financial Services, Prosus NV, Tcc Steel, East Buy Holding , Sinopharm Group Co Ltd H, VNG (VinaGame), Posco Future M, Shougang Fushan Resources, Core Concept Technologies Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • China: Huge ETF Inflows & Impact on Stocks
  • Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
  • Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
  • KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
  • Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
  • HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
  • VNG Pre-IPO – The Positives – Vietnam’s Mini-Tencent
  • Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
  • Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
  • Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion

China: Huge ETF Inflows & Impact on Stocks

By Brian Freitas

  • Nearly US$20bn has flowed into mainland China listed ETFs since 18 July and could be driven by the National Team supporting the market.
  • Most of the inflows have been focused on large cap indices including CSI 300, STAR50, CSI 500, SSE50, ChiNext and other sectoral and thematic ETFs.
  • The largest impact has been on the SSE STAR50 (STAR50 INDEX) constituents, but that has not stopped the slide in the stocks.

Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing

By Brian Freitas

Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!

By Travis Lundy

  • Shareholders of Prosus NV (PRX NA) and Naspers (NPN SJ) approved AGM agenda items late last week to enable the two Capitalisation Issues and Naspers’ Share Consolidation to move forward.
  • What Will Happen: Prosus will issue new N shares to its shareholders and Naspers will reject them. Naspers will issue new shares to its shareholders, and Prosus will reject them.
  • Naspers will own ~42.9% of Prosus, Prosus will own 0.02% of Naspers. Sales of Tencent shares will continue. Share Buybacks too. But the ouroboros will have spit out its tail. 

KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December

By Brian Freitas

  • Nearly two-thirds of the way through the review period, we see nine potential changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
  • The potential adds are dominated by the Materials sector while the potential deletions are mainly from the Consumer Discretionary sector.
  • The impact on the potential inclusion ranges from 0.14-12 days of ADV while the impact on the potential deletions varies from 3.1-30 days of ADV.

Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)

By Travis Lundy

  • The Hang Seng announces changes along with prospective flows 2wks before the actual change. Capping flows are calculated off the close three days before implementation. That was today.
  • There have been some minor movements in the rankings. Nothing major. There is still just over US$1bn to trade, one-way.
  • Enclosed are totals for each of the three major indices (Hang Seng, HSCEI, and HS Tech) and then netted flows. The biggest is US$470mm of BABA to sell. Spreadsheet attached.

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)

By Brian Freitas

VNG Pre-IPO – The Positives – Vietnam’s Mini-Tencent

By Sumeet Singh

  • Vng (VNG US), Vietnam’s leading internet platform, aims to raise up to US$300m in its US IPO.
  • VNG is Vietnam’s leading homegrown digital ecosystem, as per the company, with diverse product offerings across games, communications and media, fintech and other opportunities
  • In this note, we talk about the positive aspects of the deal.

Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts

By Sanghyun Park

  • KB Asset Management has announced the release of an inverse ETF, containing the top 10 core stocks in the secondary battery sector.
  • Given the substantial fluctuations in SSF trading volume in Korea, the flow increase of this ETF might temporarily lead to an unusually high level of backwardation.
  • Also, we may observe a phenomenon known as ‘wag-the-dog’ as the flow of this inverse ETF could act as a triggering factor for a temporary spark.

Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional

By Arun George

  • Shougang Fushan Resources (639 HK) shareholders approved the partial offer to acquire a maximum of 125.0 million shares (2.47% of outstanding shares) at HK$2.40 per share and the whitewash waiver.
  • The partial offer is now unconditional and will close on 12 September. Considering the irrevocables not to tender, a 100% minority participation rate implies a minimum proration of 2.98%.
  • If the partial offer’s acceptance rate mirrors today’s general meeting minorities participation rate of 63.6%, it would imply a minimum proration of 4.69%. 

Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion

By Travis Lundy

  • Last week I wrote about another situation, noting Equity Offering Into TOPIX Inclusion is a standard construct. Here we have another. 
  • DX and HR Support company Core Concept Technologies Inc (4371 JP) today announced a large (it ups Real World Float by 64%, and is 33 days of ADV) secondary offering.
  • The “reason” for the offering mentions a desire to move to TSE Prime in future.

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Aug 29
0

Most Read: SSE STAR50, Jio Financial Services, Piotech , HLB Inc, China Conch Venture Holdings, Tcc Steel, Vingroup Jsc, Seven & I Holdings, Doosan Robotics, Nikkei 225 and more

By | Daily Briefs, Most Read

In today’s briefing:

  • China: Huge ETF Inflows & Impact on Stocks
  • Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
  • STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
  • Positioning for the Timing of HLB, the Latest Target in the KOSDAQ Exodus
  • StubWorld: China Conch Plumbs New Lows
  • KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
  • Vingroup: VinFast’s Valuation Makes No Sense
  • Seven & I: An Update on Investor Activism
  • Doosan Robotics IPO – The Positives – More than Doubled Its Revenue
  • EQD | Nikkei 225 (NKY) Rising but for How Long?

China: Huge ETF Inflows & Impact on Stocks

By Brian Freitas

  • Nearly US$20bn has flowed into mainland China listed ETFs since 18 July and could be driven by the National Team supporting the market.
  • Most of the inflows have been focused on large cap indices including CSI 300, STAR50, CSI 500, SSE50, ChiNext and other sectoral and thematic ETFs.
  • The largest impact has been on the SSE STAR50 (STAR50 INDEX) constituents, but that has not stopped the slide in the stocks.

Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing

By Brian Freitas

STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light

By Brian Freitas

Positioning for the Timing of HLB, the Latest Target in the KOSDAQ Exodus

By Sanghyun Park

  • HLB’s process of selecting a lead underwriter for the KOSPI listing has been witnessed in Yeouido.
  • The price impact becomes most evident on the board approval date as the point at which this impact is most pronounced is substantially accelerated due to the market’s learning effect.
  • There is a strong likelihood that HLB will have its board decision by mid-September, necessitating our preparation for a position setup targeting this timing.

StubWorld: China Conch Plumbs New Lows

By David Blennerhassett

KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December

By Brian Freitas

  • Nearly two-thirds of the way through the review period, we see nine potential changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
  • The potential adds are dominated by the Materials sector while the potential deletions are mainly from the Consumer Discretionary sector.
  • The impact on the potential inclusion ranges from 0.14-12 days of ADV while the impact on the potential deletions varies from 3.1-30 days of ADV.

Vingroup: VinFast’s Valuation Makes No Sense

By David Blennerhassett

Seven & I: An Update on Investor Activism

By Oshadhi Kumarasiri

  • Sogo & Seibu’s labor union threatens strike if job protection talks stall. This emphasizes the number of considerations Seven & I Holdings (3382 JP) had to consider during changes.
  • Had ValueAct shown more patience, they might have worked with Seven & I to improve the struggling Eto Yokado supermarkets business.
  • Thus, ValueAct’s investor activism campaign seem unlikely to achieve a full restructuring of underperforming businesses at Seven & I.

Doosan Robotics IPO – The Positives – More than Doubled Its Revenue

By Ethan Aw

  • Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO. 
  • Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module 
  • In this note, we will talk about the positive aspects of the deal.

EQD | Nikkei 225 (NKY) Rising but for How Long?

By Nico Rosti

  • Rebound on Nikkei 225 INDEX may not last for long, 2-3 weeks tops, it will encounter resistance no later than mid of September (most unfavorable month for stocks gains).
  • Resistance levels to watch vary, depending on number of weeks up. For this week and the next, a new pullback could start from 32476 and 32817.
  • If the index goes =>33000, it means it is rallying and will not correct into September, the rally then could last into October.

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Aug 28
0

Most Read: JSR Corp, Soulbrain, Accton Technology, Jio Financial Services, FP Partner, Great Wall Motor, Golden Eagle Retail, Piotech , Medical Data Vision and more

By | Daily Briefs, Most Read

In today’s briefing:

  • JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
  • Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
  • Index Rebalance & ETF Flow Recap: HSCEI, HSI, HSTECH, Yuanta ETFs, China ETFs, REMX, KOSPI
  • Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
  • FP Partner (7388 JP) Offering-To-Get-Float-To-Get-TOPIX-Inclusion
  • Quiddity A/H Premium Monitor 🦄 (As of 25 Aug 2023)
  • Weekly Deals Digest (27 Aug) – Golden Eagle, Costa, Boustead, UMW, ARM, Integral, S.F. Holding
  • STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
  • Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity
  • Ohayo Japan|US Equities Gain Post Powell’s Speech; JAPAN X: JP Bank’s $7bn Boost for Local Startups

JSR (4185 JP) Takeover – Why So Wide? FUD and Flows

By Travis Lundy

  • In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally. 
  • It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too. 
  • FUD and Flows mean that it is likely to continue to trade wide for the near future.

Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea

By Sanghyun Park

  • In the inaugural constituent selection, FnGuide revealed a noteworthy pattern. Given the smaller market capitalization of the electrolyte suppliers, FnGuide has included only the largest among them in this ETF.
  • SoulBrain, categorized by FnGuide as an electrolyte supplier like Chunbo, has significantly outperformed Chunbo. As a result, there is a considerable likelihood that SoulBrain will replace Chunbo in December.
  • The price impact from ETF rebalancing trading has disappeared substantially in Korea. We should focus on the first rebalancing of newly listed ETFs that haven’t yet established a learning effect.

Index Rebalance & ETF Flow Recap: HSCEI, HSI, HSTECH, Yuanta ETFs, China ETFs, REMX, KOSPI

By Brian Freitas

Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing

By Brian Freitas

FP Partner (7388 JP) Offering-To-Get-Float-To-Get-TOPIX-Inclusion

By Travis Lundy

  • On 22 August, TSE Growth-listed insurance agent  FP Partner (7388 JP) announced a special dividend, a secondary offering of 1.4mm shares, and a move to TSE Prime.
  • The equity offering is designed to raise tradable share percentage to meet the TSE Prime listing requirement. The move to Prime on 11 September means a TOPIX inclusion end October. 
  • The pattern of “Offering To Get Float to Get TOPIX Inclusion” is well-trod. This one has some interesting dynamics.

Quiddity A/H Premium Monitor 🦄 (As of 25 Aug 2023)

By Travis Lundy

  • This week it is changed from H/A Discount to A/H Premium, by popular demand. Some Northbound data is added. We kept the unicorn.
  • Last week saw a win/loss ratio of 21:13. Average recommended pair on the week earned 0.9% if Sunday recos executed Monday close, 1.35% if executed Monday VWAP. 
  • 6 Unwinds and 3 new trades recommended this week. As always, feedback desired to make this even better.

Weekly Deals Digest (27 Aug) – Golden Eagle, Costa, Boustead, UMW, ARM, Integral, S.F. Holding

By Arun George

STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light

By Brian Freitas

Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity

By Travis Lundy

  • On Friday after the close, SBI Holdings (8473 JP) – which currently owns 24.63% of Medical Data Vision (3902 JP) – announced it would buy another 2,043,200 shares.
  • This market purchase would lift them to just under 30% by year-end.
  • There have been similar trades done by others in the past and they were worth looking at.

Ohayo Japan|US Equities Gain Post Powell’s Speech; JAPAN X: JP Bank’s $7bn Boost for Local Startups

By Mark Chadwick

  • OVERSEAS:  US Equities rise for the first week in four; Jackson Hole: Powell leaves open possibility of further hikes/ECB’s Largarde strikes hawkish tone for EU;  China’s Economic Pain to Continue
  • JAPAN: NKY Futures +0.7% Premium vs Cash; USDJPY 146.4; BOJ’s Ueda at Jackson Hole says Japan inflation below target; Kishida’s Approval rating improves; Japan to double EV Charging Stations.
  • JAPAN X: Japan Post Bank’s Trillion Yen Boost set to propel the Japan start up ecosystem to new highs – while creating a new revenue stream for the bank. 

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Aug 27
0

Most Read: Sinopharm Group Co Ltd H, East Buy Holding , ZJLD Group , Trip.com Group , UMW Holdings, Soulbrain, Grab Holdings , iShares MSCI ACWI ETF, Medical Data Vision and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Hang Seng Index Rebalance: Sinopharm (1099 HK) Added, Country Garden (2007 HK) Deleted
  • HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks
  • HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect
  • HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)
  • Sime Darby/UMW: It’s All About Scale
  • Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
  • Grab Holdings (GRAB US) – Growth with Scale from a Stable Platform
  • Jackson Hole Nugget: Who cares about shelter? Powell does
  • Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives
  • Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity

Hang Seng Index Rebalance: Sinopharm (1099 HK) Added, Country Garden (2007 HK) Deleted

By Brian Freitas

HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks

By Brian Freitas

HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect

By Brian Freitas

  • There are 22 adds and 27 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents down to 518.
  • We expect all 22 inclusions to the HSCI will be added to Stock Connect, while 24 of the 27 HSCI deletions will be removed from Southbound Stock Connect.
  • Since the end of June, shares held though Southbound Connect have increased on 20 of the 27 HSCI deletions and there could be some unwinding in the next two weeks.

HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)

By Brian Freitas

Sime Darby/UMW: It’s All About Scale

By David Blennerhassett

  • In one of the largest M&A transactions in Malaysia, Sime Darby (SIME MK) intends to acquire a 61.2% stake in UMW Holdings (UMWH MK) from Permodalan Nasional Bhd for RM3.57bn. 
  • Sime Darby is paying RM5/share, a token 9.9% premium to last close, but more like 25% when factoring in apparent news leakage.
  • Once the stake sale is completed, Sime Darby will launch an unconditional MGO for all remaining shares not held. This transaction is expected to be wrapped up in early 2024.

Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea

By Sanghyun Park

  • In the inaugural constituent selection, FnGuide revealed a noteworthy pattern. Given the smaller market capitalization of the electrolyte suppliers, FnGuide has included only the largest among them in this ETF.
  • SoulBrain, categorized by FnGuide as an electrolyte supplier like Chunbo, has significantly outperformed Chunbo. As a result, there is a considerable likelihood that SoulBrain will replace Chunbo in December.
  • The price impact from ETF rebalancing trading has disappeared substantially in Korea. We should focus on the first rebalancing of newly listed ETFs that haven’t yet established a learning effect.

Grab Holdings (GRAB US) – Growth with Scale from a Stable Platform

By Angus Mackintosh

  • Grab Holdings (GRAB US) released another set of positive results but this time the balance between profitability and growth was well-struck, as it reduced incentives yet increased its market share. 
  • Grab saw GMV growth in both deliveries more notably in mobility, with revenues growing at a faster pace and adjusted EBITDA surprising on the upside, bringing forward breakeven to 3Q2023. 
  • Prospects for 2H2023 look even better with Grab’s affordability initiatives gaining traction and improving retention and profitability.

Jackson Hole Nugget: Who cares about shelter? Powell does

By Andreas Steno

  • Our short and sweet observations from the Jackson Hole opening remarks from Jay Powell.
  • To us, hopes of an explicit pause have been postponed further down the road after this speech.
  • A few highlights:1) Data dependency is still the name of the game – NO promises for further meetings, meaning that consensus does not exist 2) Shelter costs are highlighted, which to me can be seen as a sign that Powell needs an excuse to hike further 3) The Fed is attentive to the risk of the economy running above trend still and monitors the housing rebound closely 4) The lack of spill-overs from the slide in job openings to the unemployment rate puzzles the Fed and they want more data.

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

By Joe Jasper

  • Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).
  • As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).
  • Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.

Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity

By Travis Lundy

  • On Friday after the close, SBI Holdings (8473 JP) – which currently owns 24.63% of Medical Data Vision (3902 JP) – announced it would buy another 2,043,200 shares.
  • This market purchase would lift them to just under 30% by year-end.
  • There have been similar trades done by others in the past and they were worth looking at.

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Aug 26
0

Most Read: JSR Corp, Piotech , UMW Holdings, Soulbrain, Samsung Electronics, NVIDIA Corp, Hanwha Ocean, Boustead Plantations and more

By | Daily Briefs, Most Read

In today’s briefing:

  • JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
  • STAR50 Index Rebalance Preview: Potential Changes Playing Catchup
  • Sime Darby/UMW: It’s All About Scale
  • Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
  • Is Samsung M&A About to Happen?
  • Nvidia: Better than Dreamed
  • Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won
  • China Property Developers In Distress – Weekly News & Announcements Tracker | 18-24 August 2023
  • Boustead Plantations’ Lifetime High Offer Price
  • China Property: Policy Announcement Alert

JSR (4185 JP) Takeover – Why So Wide? FUD and Flows

By Travis Lundy

  • In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally. 
  • It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too. 
  • FUD and Flows mean that it is likely to continue to trade wide for the near future.

STAR50 Index Rebalance Preview: Potential Changes Playing Catchup

By Brian Freitas

  • The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.
  • The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.
  • One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.

Sime Darby/UMW: It’s All About Scale

By David Blennerhassett

  • In one of the largest M&A transactions in Malaysia, Sime Darby (SIME MK) intends to acquire a 61.2% stake in UMW Holdings (UMWH MK) from Permodalan Nasional Bhd for RM3.57bn. 
  • Sime Darby is paying RM5/share, a token 9.9% premium to last close, but more like 25% when factoring in apparent news leakage.
  • Once the stake sale is completed, Sime Darby will launch an unconditional MGO for all remaining shares not held. This transaction is expected to be wrapped up in early 2024.

Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea

By Sanghyun Park

  • In the inaugural constituent selection, FnGuide revealed a noteworthy pattern. Given the smaller market capitalization of the electrolyte suppliers, FnGuide has included only the largest among them in this ETF.
  • SoulBrain, categorized by FnGuide as an electrolyte supplier like Chunbo, has significantly outperformed Chunbo. As a result, there is a considerable likelihood that SoulBrain will replace Chunbo in December.
  • The price impact from ETF rebalancing trading has disappeared substantially in Korea. We should focus on the first rebalancing of newly listed ETFs that haven’t yet established a learning effect.

Is Samsung M&A About to Happen?

By Ken S. Kim

  • Local press states that Samsung Electronics Pref Shares (005935 KS)sold shares as they look to invest in their future capex
  • The capex amount for 2023 will be around 40-50 trillion KRW and it doesn’t seem like W3 trillion is a needle mover
  • With a new 3 year shareholder return plan, I would think maybe cash is needed to secure ammunition for M&A

Nvidia: Better than Dreamed

By Douglas O’Laughlin

  • Nvidia, in characteristic fashion, murdered EPS estimates.
  • Revenue was $2 billion ahead of the guide, and the guide was another $4 billion ahead of consensus for the next quarter.
  • Going into the print, many people were concerned that positioning was bad, i.e., everyone was bullish and expectations were too high. Well, they did not disappoint.

Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won

By Douglas Kim

  • After the market close on 23 August, Hanwha Ocean (042660 KS) confirmed that it will conduct a massive rights offering of 2 trillion won.
  • The expected rights offering price is 22,350 won, which is 36% discount to current price. 
  • We believe this rights offering is likely to dilute the existing shareholders and negatively impact Hanwha Ocean’s share price.

China Property Developers In Distress – Weekly News & Announcements Tracker | 18-24 August 2023

By Robert Ciemniak

  • A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
  • We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
  • We do not verify the underlying data or provide any opinion, we only select and summarize the information; see direct links to sources

Boustead Plantations’ Lifetime High Offer Price

By David Blennerhassett

  • Palm oil play Kuala Lumpur Kepong (KLK MK) has entered an agreement with Boustead Holdings, Boustead Plantations (BPLANT MK)‘s largest shareholder, to acquire a 33% plus 1 share stake.
  • Upon the completion of the agreement, KLK will make a Mandatory Offer for all shares not owned in BPlant. The Offer Price is RM1.55/share, a lifetime high. 
  • The agreement conditions are rudimentary. The MGO has no minimum acceptance condition. This is done.

China Property: Policy Announcement Alert

By Robert Ciemniak

  • A new policy easing focused on homebuyers was released, building on July announcements, and now an option for all cities
  • More homebuyers will be able to get preferential terms for mortgages as first-time buyers
  • A joint notice from the Ministry of Housing and Urban-Rural Development, the People’s Bank of China, and the State Administration of Financial Supervision

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Aug 25
0

Most Read: Taiwan Semiconductor (TSMC) – ADR, Alibaba (ADR), Hanwha Ocean, M&A Research Institute, Shibaura Mechatronics, Doosan Robotics, Eoflow , Samsung Electronics, Intouch Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today
  • Alibaba: Navigating in Reverse
  • Korea – Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart
  • M&A Research Institute Holdings (9552) TOPIX Inclusion
  • Shibaura Mechatronics (6590) Secondary Offering & Buyback
  • Doosan Robotics IPO Preview
  • EOFLOW/Medtronic Tender: Irrational Exuberance
  • Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won
  • Is Samsung M&A About to Happen?
  • StubWorld: Intouch “Cheap” As Thaksin Returns

Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today

By Vincent Fernando, CFA

  • Nvidia will report its earnings today U.S.-time, we outline the key Taiwan AI supply chain names to watch around the earnings.
  • TSMC has maintained its full-year revenue guidance despite media reports questioning whether a further downgrade was coming.
  • Hon Hai produces over 50% of Nvidia’s AI hardware according to media reports.

Alibaba: Navigating in Reverse

By Oshadhi Kumarasiri

  • Alibaba (ADR) (BABA US)‘s New Retail strategy stumbled, prompting the company to revert to its e-commerce origins with a renewed emphasis on social commerce.
  • Creating a social media platform could be relatively simple, yet turning it into a prosperous venture amid established social media giants could be challenging.
  • Branching out from social media to e-commerce might be straightforward, but Alibaba Group Holding (9988 HK)‘s unprecedented reverse path could present unique challenges.

Korea – Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart

By Brian Freitas

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. 

Shibaura Mechatronics (6590) Secondary Offering & Buyback

By Travis Lundy

Doosan Robotics IPO Preview

By Douglas Kim

  • Doosan Robotics is getting ready to complete its IPO in Korea in September. The expected IPO price range is 21,000 won to 26,000 won.
  • The company estimates its sales to surge from 67 billion won in 2023 to 766.3 billion won in 2027, representing 83.9% CAGR from 2023 to 2027.
  • One of the major reasons why local investors will have a positive view of Doosan Robotics is due to Samsung’s investment in Rainbow Robotics whose share price increased 232% YTD. 

EOFLOW/Medtronic Tender: Irrational Exuberance

By Arun George

  • Eoflow (294090 KS) shares were up 4.4% on the back of Medtronic Plc (MDT US)’s earnings call comment that it expects the acquisition to close at the end of 2023.
  • The bear view is that Medtronic’s messaging remained unchanged as it is still assessing Insulet Corp (PODD US) lawsuit and the potential impact on the timing and/or pricing.
  • The bull view is that Medtronic’s comment underscores its commitment to close the transaction. It’s tough to take a call on risk/reward profile – at best it’s a brave buy. 

Hanwha Ocean: Big Shares Dilution from Rights Offering of 2 Trillion Won

By Douglas Kim

  • After the market close on 23 August, Hanwha Ocean (042660 KS) confirmed that it will conduct a massive rights offering of 2 trillion won.
  • The expected rights offering price is 22,350 won, which is 36% discount to current price. 
  • We believe this rights offering is likely to dilute the existing shareholders and negatively impact Hanwha Ocean’s share price.

Is Samsung M&A About to Happen?

By Ken S. Kim

  • Local press states that Samsung Electronics Pref Shares (005935 KS)sold shares as they look to invest in their future capex
  • The capex amount for 2023 will be around 40-50 trillion KRW and it doesn’t seem like W3 trillion is a needle mover
  • With a new 3 year shareholder return plan, I would think maybe cash is needed to secure ammunition for M&A

StubWorld: Intouch “Cheap” As Thaksin Returns

By David Blennerhassett

  • Intouch Holdings (INTUCH TB) plumbs new 12-month lows for its implied stub, and NAV discount as the former PM returns from exile. 
  • Preceding my comments on Intouch 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%.

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Aug 24
0

Most Read: Golden Eagle Retail, Isupetasys, Dali Foods Group, Lake Resources Nl, Eoflow , TVS Supply Chain Solutions, Taiwan Semiconductor (TSMC) – ADR, Coforge, APA Group, Hanwha Ocean and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Golden Eagle (3308 HK): 15th September Scheme Meeting
  • KOSPI Size Indices – Plenty of Migrations to Attract Active Flows
  • Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote
  • MVIS Global Rare Earth/​​​​​​​​Strategic Metals Index Rebalance Preview: A Week to Go
  • EOFlow/Medtronic: What Lawsuit?
  • TVS Supply Chain Solutions IPO Trading – Offered at a Premium with Underwhelming Subscription Rates
  • Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today
  • Coforge Placement – US$900m Cleanup, Well Flagged but the Stock Is Toppish
  • APA Group Placement – Well Flagged Deal, but Lacks in Accretion
  • Korea – Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart

Golden Eagle (3308 HK): 15th September Scheme Meeting

By David Blennerhassett

  • On the 28th May, PRC department store play Golden Eagle Retail (3308 HK) announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close.
  • The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable. 
  • The Scheme Doc was despatched this morning (23 August). The Scheme Meeting is September 15th with expected payment on (or before) the 17th of October. The Offer price is final.

KOSPI Size Indices – Plenty of Migrations to Attract Active Flows

By Brian Freitas

  • The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
  • We see 7 migrations from MidCap to LargeCap, 6 migrations from LargeCap to MidCap, 7 new adds to MidCap, and 17 migrations from SmallCap to MidCap.
  • Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote

By Arun George

  • Dali Foods Group (3799 HK)‘s gross spread on the Founder’s (Mr Xu Shihui) HK$3.75 per share offer has sharply increased and stood at 5.3% at the last close.
  • The rising gross spread is due to the recent market selloff (the gross spread of all HKEx merger arbs we track increased this week) and vote risk. 
  • The vote risk is due to no interim results, the high AGM minority participation rate and a modest offer. There is little evidence that these risks will derail the vote. 

MVIS Global Rare Earth/​​​​​​​​Strategic Metals Index Rebalance Preview: A Week to Go

By Brian Freitas

  • The changes for the next rebalance will use closing prices from 31 August, will be announced after the close on 8 September with implementation at the close on 15 September.
  • One stock is very close to the 85% cumulative market cap inclusion threshold, while there are two stocks that are near the 98% cumulative market cap deletion threshold.
  • With one inclusion and capping changes, estimated one-way turnover at the rebalance will be 3.5% resulting in a one-way trade of US$20m. That could change over the next week.

EOFlow/Medtronic: What Lawsuit?

By David Blennerhassett

  • On the 8th of August, Insulet Corp (PODD US) filed a lawsuit accusing Eoflow (294090 KS) of the misappropriation of trade secrets, patent infringement, and trademark dilution.
  • The filing was pretty heavy on accusations. EOFlow declined ~11% on the news.
  • Undeterred, Medtronic (MDT US) continues to preach all is peachy, suggesting the EOFlow merger is a go, and Medtronic will deal with the lawsuit, as and when.

TVS Supply Chain Solutions IPO Trading – Offered at a Premium with Underwhelming Subscription Rates

By Ethan Aw

  • TVS Supply Chain Solutions (TVSSCS IN) raised around US$108m in its India IPO, after downsizing from an earlier reported float of up to US$500m.
  • TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer. 
  • We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand and trading dynamics.

Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today

By Vincent Fernando, CFA

  • Nvidia will report its earnings today U.S.-time, we outline the key Taiwan AI supply chain names to watch around the earnings.
  • TSMC has maintained its full-year revenue guidance despite media reports questioning whether a further downgrade was coming.
  • Hon Hai produces over 50% of Nvidia’s AI hardware according to media reports.

Coforge Placement – US$900m Cleanup, Well Flagged but the Stock Is Toppish

By Sumeet Singh

  • Baring aims to raise around US$900m by selling its remaining 26.6% stake in Coforge (COFORGE IN) .
  • Baring has been paring down its stake since 2020 and hence, the selldown is somewhat well flagged.
  • In this note, we run the deal through our ECM framework and talk about the deal dynamics.

APA Group Placement – Well Flagged Deal, but Lacks in Accretion

By Clarence Chu

  • APA Group (APA AU) is looking to raise A$675m (US$430m) in its primary follow-on to partially fund its acquisition of the Alinta Energy assets in the Pilbara region.
  • The deal is a well flagged one with APA having been one of the last remaining bidders on the asset. Short interest has been on the rise as well.
  • However, the deal doesn’t seem accretive at our end, and the results reported today seemed to have missed analyst expectations.

Korea – Positioning in Ecopro, JYP Entertainment, Hanwha Ocean, Hanmi Semi, CJ Corp, E-Mart

By Brian Freitas

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Aug 23
0

Most Read: Zydus Lifesciences Ltd, Ping An Insurance (H), Accton Technology, S&P 500 INDEX, Hanwha Ocean, ARM Holdings, Integral Corporation, Kuaishou Technology and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Zydus Lifesciences (ZYDUSLIF IN): Strong Start of FY24 Riding on US Formulation Business
  • Ping An A/​H Premium: Sell the A’s, Buy the H’s; National Team at Work?
  • Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
  • Pause Continues But Oversold Bounce Likely; Buys in Energy, Construction/Engineering, Enrgy Shippers
  • Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It
  • Inflation Watch: Why EUR inflation will print below 2% before New Years
  • ARM Holdings Limited – The Positives – Pervasive Global Presence
  • Integral Corporation IPO: The Bear Case
  • KS (Kuaishou 1024 HK): 2Q23, First Net Profit Since IPO, Growth Accelerated, Buy
  • FX Nugget: What Policy Normalization? The BoJ Is as Interventionist as Ever….

Zydus Lifesciences (ZYDUSLIF IN): Strong Start of FY24 Riding on US Formulation Business

By Tina Banerjee

  • Zydus Lifesciences Ltd (ZYDUSLIF IN) recorded 30% YoY growth in revenue to INR51B in Q1FY24, driven by 57% YoY growth in US formulation business. India business revenue grew 6% YoY.
  • US business growth was driven by new product launches and improvement in base business. The company has launched four new products in the US during the quarter.
  • Zydus Lifesciences expects double-digit growth in India branded formulation business to continue and the U.S. business to grow on a formidable base of FY23 going forward.

Ping An A/​H Premium: Sell the A’s, Buy the H’s; National Team at Work?

By Brian Freitas

  • The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
  • There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
  • A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.

Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover

By Brian Freitas

  • There should be 4 changes to the Yuanta/​P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in September.
  • The potential adds are driven by the AI-frenzy that has swept the market for the last few months. Most potential deletions are shipping stocks that are way off their highs.
  • Short interest on the potential deletions is high in terms of days of ADV and free float. The rise in shorts on the potential adds is being rapidly covered.

Pause Continues But Oversold Bounce Likely; Buys in Energy, Construction/Engineering, Enrgy Shippers

By Joe Jasper

  • Support levels discussed in our 8/8/23 Compass broke, leading to a change in character (from buy the dup to sell the rip) and a deeper pullback.
  • Supports we were watching included the 50-day MA and 4460-4475 on the S&P 500, $371.50 on $QQQ, and $190-193 on the $IWM; these are now resistance moving forward
  • Longer-Term support on the S&P 500 is at 4300-4325 (nearly hit on Friday) and 4200, and we will remain constructive as long as these supports hold.

Hanwha Ocean’s Massive Issuance: Clearly, This Is Test-The-Water and How to Approach It

By Sanghyun Park

  • Multiple local news outlets reported Hanwha Ocean is undergoing a 2.5 trillion won equity increase. The official disclosure regarding this matter is expected to be released within this month.
  • We have repeatedly observed a pattern of testing the waters through leaks to the local media. The case of Hanwha Ocean can also be seen in this light.
  • It’s challenging to envision this magnitude being absorbed seamlessly by the market. There is a considerable likelihood that both issuers and bankers will aggressively attract inflows of arbitrage-seeking hot money.

Inflation Watch: Why EUR inflation will print below 2% before New Years

By Andreas Steno

  • It’s Jackson Hole week and even if Wyoming is typically only full of cowboys (also when CBs gather), they are joined by a cowgirl from France this week for the conference.
  • The Fed and the ECB will enter the yearly conference with different macroeconomic backdrops as the US growth and inflation momentum seems stickier than Euro peers on our models.
  • And using leads/lags from the European PPI basket and the US HICP index, we intend on showing you that sub 2% inflation in Europe is a clear possibility in just 3 months from now.

ARM Holdings Limited – The Positives – Pervasive Global Presence

By Sumeet Singh

  • Softbank Group (9984 JP) aims to raise around US$8-10bn via selling some of its stake in ARM Holdings ’ US IPO.
  • ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
  • In this note, we talk about the positive aspects of the deal.

Integral Corporation IPO: The Bear Case

By Arun George

  • Integral Corporation (5842 JP) is an independent Japanese private equity firm seeking to raise about US$175 million. The pricing is on 4 September, and the listing is on 20 September. 
  • In Integral Corporation IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rest on the declining mix of fee-earning AUM, growth driven by volatile investment income and uninspiring 1HFY22 performance in fee-related revenue growth and margin.

KS (Kuaishou 1024 HK): 2Q23, First Net Profit Since IPO, Growth Accelerated, Buy

By Ming Lu

  • The total revenue growth rate accelerated significantly to 28% YoY in 2Q23.
  • The high-margin businesses grew more rapidly than the low margin business.
  • Gross Merchandise Value and Active user base still increased strongly.

FX Nugget: What Policy Normalization? The BoJ Is as Interventionist as Ever….

By Andreas Steno

  • Markets are stuck in a discussion on the JPY this morning as BoJ governor Ueda and PM Kishida held a meeting allegedly discussing FX developments.
  • Our models continue to signal weakness ahead for the JPY.
  • Even a move to 1% in the YCC-curve control has NOT allowed the BoJ to become less interventionist.

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Aug 22
0

Most Read: Tokyo Stock Exchange Tokyo Price Index Topix, East Buy Holding , E Guardian Inc, AAC Technologies Holdings, Accton Technology, Samsung Electronics Pref Shares, Trip.com Group , Ping An Insurance (H), SK Rent A Car, Ventia Services Group Pty and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Share Buybacks In Japan – A 2023 Primer
  • HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks
  • E-Guardian (6050) Partial Offer Update
  • Hang Seng TECH Sep23 Index Review – A Few BIGLY Events and One-Way Flow of 3.4%
  • Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
  • Market Information About Samsung Electronics’ Shareholder Return
  • HSCEI Sep23 Index Review/​Flows – Trip.Com (9961) Added, CG Svcs (6098) Deleted; ~2.5% One Way
  • Ping An A/​H Premium: Sell the A’s, Buy the H’s; National Team at Work?
  • SK Rent A Car: SK Networks’ Tender Offer
  • Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well

Share Buybacks In Japan – A 2023 Primer

By Travis Lundy

  • The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
  • Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
  • So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.

HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks

By Brian Freitas

E-Guardian (6050) Partial Offer Update

By Travis Lundy

  • When this was launched, it traded more volume than expected on the first day, then again on the second day. Since then it has traded cheap vs initial estimates.
  • A week after the launch, two separate Large Shareholder Filings came out. Those bear scrutiny.
  • The back end trade is still an interesting one in my opinion.

Hang Seng TECH Sep23 Index Review – A Few BIGLY Events and One-Way Flow of 3.4%

By Travis Lundy

  • The Sep 23 review results for the Hang Seng Tech Index were announced on Friday 18 August after the close.
  • East Buy Holding (1797 HK) (formerly Koolearn) was an ADD. AAC Technologies Holdings (2018 HK) is a DELETE. 
  • AAC is a significant flow event, and worth looking at. There are a few odds and ends too.

Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover

By Brian Freitas

  • There should be 4 changes to the Yuanta/​P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/​P-Shares Taiwan Dividend Plus ETF in September.
  • The potential adds are driven by the AI-frenzy that has swept the market for the last few months. Most potential deletions are shipping stocks that are way off their highs.
  • Short interest on the potential deletions is high in terms of days of ADV and free float. The rise in shorts on the potential adds is being rapidly covered.

Market Information About Samsung Electronics’ Shareholder Return

By Sanghyun Park

  • The local market is increasingly convinced that Samsung Electronics’ quarterly dividends for the latter half of this year will experience a reduction.
  • Samsung Electronics plans to apply the updated regulations from the 2024 1st quarter dividends, following the conclusion of the capital market law revision at the end of this year.
  • It might be prudent to refrain from trading that bets on a reduction in the 1P discount in the first half of this year.

HSCEI Sep23 Index Review/​Flows – Trip.Com (9961) Added, CG Svcs (6098) Deleted; ~2.5% One Way

By Travis Lundy

  • The HSCEI Review for Sep 2023 was announced on Friday 18 August. There is one ADD Trip.com Group (9961 HK) and one DELETE Country Garden Services (6098 HK). 
  • Neither of these two are a surprise. Neither are hugely impactful. 
  • There is about 2.5% one-way to trade. Alibaba (ADR) (BABA US) is a sell across all three major indices.

Ping An A/​H Premium: Sell the A’s, Buy the H’s; National Team at Work?

By Brian Freitas

  • The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
  • There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
  • A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.

SK Rent A Car: SK Networks’ Tender Offer

By David Blennerhassett

  • Korean car rental play SK Rent A Car (068400 KS) has announced a Tender Offer from SK Networks (001740 KS), its largest shareholder with ~76%. 
  • SK Rent shareholders have the option of receiving cash or SK Networks scrip. Appraisal rights are also afforded. 
  • The shareholder vote is a lock. The current trade is the cash offer, which is trading tight to terms. 

Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well

By Sumeet Singh

  • Ventia Services Group Pty (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, will come off their placement linked lockup soon.
  • The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
  • In this note, we will talk about the likely placement and past deal performance.

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Aug 21
0

Most Read: Tokyo Stock Exchange Tokyo Price Index Topix, Sinopharm Group Co Ltd H, Joyful Honda, Trip.com Group , Eoflow , East Buy Holding , Brilliance China Automotive, Dali Foods Group, AAC Technologies Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Share Buybacks In Japan – A 2023 Primer
  • Hang Seng Index Rebalance: Sinopharm (1099 HK) Added, Country Garden (2007 HK) Deleted
  • Joyful Honda (3191) – Repeats Its ASR In Double the Size
  • HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)
  • Eoflow’s US Subsidiary (Nephria Bio)’s Technology in MXene Advanced Material
  • HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks
  • Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI
  • Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote
  • HSI Sep23 Index Review/​Flows – Sinopharm (1099) IN, CoGard (2007) OUT; 100 Names a Loooong Way Off
  • Hang Seng TECH Sep23 Index Review – A Few BIGLY Events and One-Way Flow of 3.4%

Share Buybacks In Japan – A 2023 Primer

By Travis Lundy

  • The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
  • Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
  • So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.

Hang Seng Index Rebalance: Sinopharm (1099 HK) Added, Country Garden (2007 HK) Deleted

By Brian Freitas

Joyful Honda (3191) – Repeats Its ASR In Double the Size

By Travis Lundy

  • Last year, I wrote about Joyful Honda (3191 JP)‘s implementation of a ¥2.5bn ToSTNeT-3 into Accelerated Share Repurchase. It was the first such transaction I knew of in Japan.
  • This year, they have just announced another for nearly twice the size. It is worth looking at the details and comparing the stock vs Peers.
  • It is also worth understanding exactly what the incentives are for whom and how that impacts the path. And who might respond to it.

HSCEI Index Rebalance: Trip.com (9961 HK) Replaces CG Services (6098 HK)

By Brian Freitas

Eoflow’s US Subsidiary (Nephria Bio)’s Technology in MXene Advanced Material

By Douglas Kim

  • Eoflow (294090 KS)’s shares rose 2.7% to 27,000 won on 18 August with 1.4 million shares traded, which was 5.7x higher than the previous three days of trading.
  • The main reason for this was due to the local news flow on Eoflow’s US subsidiary’s (Nephria Bio) technology on the advanced material MXene.
  • This news flow on MXene is likely to put further positive boost to Eoflow’s share price closer to the tender offer price (or at least limit further downside risk). 

HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks

By Brian Freitas

Index Rebalance & ETF Flow Recap: ASX, NEXT50, MVMVA, MVMVW, Celltrion, Brilliance, KQ150, HSCI

By Brian Freitas

  • Friday was the review cutoff for the September rebalance of the ASX family of indices. The September changes for the Hang Seng family of indices were also announced.
  • The September changes for the SSE STAR50 (STAR50 INDEX) will be announced after the close of trading on 25 August.
  • For a second week running, there were big inflows to mainland China ETFs and were spread across multiple index trackers. There were outflows from iShares Emerging Markets (EEM US). 

Dali Foods (3799 HK): Widening Spread Ahead of the 23 August Vote

By Arun George

  • Dali Foods Group (3799 HK)‘s gross spread on the Founder’s (Mr Xu Shihui) HK$3.75 per share offer has sharply increased and stood at 5.3% at the last close.
  • The rising gross spread is due to the recent market selloff (the gross spread of all HKEx merger arbs we track increased this week) and vote risk. 
  • The vote risk is due to no interim results, the high AGM minority participation rate and a modest offer. There is little evidence that these risks will derail the vote. 

HSI Sep23 Index Review/​Flows – Sinopharm (1099) IN, CoGard (2007) OUT; 100 Names a Loooong Way Off

By Travis Lundy

  • On Friday, Hang Seng Indices announced the changes to the benchmark Hang Seng Index, the index in the family with the largest AUM.
  • Sinopharm Group Co Ltd H (1099 HK) is ADDED, Country Garden Holdings Co (2007 HK) – in no surprise, is deleted. 
  • I see HK$4bn a side to trade, and the only “compelling” trade by ADV here is Sinopharm, but correlations with a Peer Basket are low.

Hang Seng TECH Sep23 Index Review – A Few BIGLY Events and One-Way Flow of 3.4%

By Travis Lundy

  • The Sep 23 review results for the Hang Seng Tech Index were announced on Friday 18 August after the close.
  • East Buy Holding (1797 HK) (formerly Koolearn) was an ADD. AAC Technologies Holdings (2018 HK) is a DELETE. 
  • AAC is a significant flow event, and worth looking at. There are a few odds and ends too.

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