In today’s briefing:
- JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings
- AAG Energy (2686 HK): New Scheme Vote Date, Different Result?
- Kum Yang: Shorting Entry Timing on the Inevitable Block Deals
- AAG Energy (2686) Favors Buying Weakness
JAPAN GOVERNANCE CHANGES II – Who Could Surprise on Buybacks? Quant Rankings
- Japanese companies are buying back more stock than ever before, and recent moves by the TSE and METI are effectively pushing for more.
- The new goal is to lift PBR and ROE. The easiest way to lift ROE is reduce E. Low-PBR Cos with excess assets and cross-holdings (outbound and inbound) are targets.
- In this insight I look at several possible rankings for potential large buyback targets.
AAG Energy (2686 HK): New Scheme Vote Date, Different Result?
- Aag Energy Holdings (2686 HK)’s disclosed a revised timetable to vote on Xinjiang Xintai Natural Gas (603393 CH)’s HK$1.85 offer. The new scheme meeting is set for 2 June.
- Our analysis suggests that in the best case, Xinjiang Xintai would need to further swing NO votes representing 6.52%-8.34% of outstanding shares to YES to get the scheme approved.
- AAG’s case is unprecedented. The risk-reward remains unattractive as the upside to a scheme pass (13.5% upside) is equal to the downside to a scheme fail (average 13.5% downside).
Kum Yang: Shorting Entry Timing on the Inevitable Block Deals
- Kum Yang IR director Park once mentioned that the block deals to sell the 2M treasury shares would likely occur in late May or early June.
- There has been speculation in the market that the timing of the block deal may be postponed until after its inclusion in the KOSPI 200, allowing for short selling.
- Considering the immediate funding needs faced by the company, setting an aggressive approach to shorting from shortly after its inclusion in the KOSPI 200 would be reasonable regarding entry timing.
AAG Energy (2686) Favors Buying Weakness
- AAG Energy (2686) exhibits a clear wedge range to trade with an intermediate positive outcome as long as lower wedge support stands up near outlined 1.50 support.
- The intermediate cycle favors a bullish outcome as long as lower pattern support holds true. Wedge still needs time to mature.
- 1.70 is the level to clear for bull traction. Risk to 1.40 region if we fail to hold lower wedge support at 1.48.
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