In today’s briefing:
- Asahi Group Placement – Follow Up – Shaping up for a Christmas Cheer
- CSI300 Index Rebalance: 14 Changes & A Few Surprises
- KWEB Index Rebalance: Fenbi (2469 HK) & YSB (9885 HK) Added
- Quiddity Aggregation of CSI300/500 and SSE50/180 Index Flows for Dec 2023: US$4.2bn One-Way!
- Merger Arb Mondays (27 Nov) – Origin, OreCorp, Healius, Taisho, JSR, Eoflow, Hollysys, Haitong Intl
- CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes
- CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks
- Porsche Automobile Holding: Q3 and Discount
Asahi Group Placement – Follow Up – Shaping up for a Christmas Cheer
- A group of shareholders aims to raise US$1.3bn (JPY197.8bn) by selling their respective stakes in Asahi Group Holdings (2502 JP) via an extended secondary follow-on.
- We have covered the background of the deal in our earlier note, Asahi Group Placement – Relatively Small One when Compared to Previous Large JP Secondary Selldowns.
- In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.
CSI300 Index Rebalance: 14 Changes & A Few Surprises
- There are 14 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 8 December.
- While most changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used their discretion.
- The adds outperformed the deletes in the first half of the year with performance staying stable over the second half of the year. Position for outperformance ahead of implementation.
KWEB Index Rebalance: Fenbi (2469 HK) & YSB (9885 HK) Added
- The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 8 December.
- Fenbi Ltd (2469 HK) and YSB (9885 HK) will be added to the index and there are no deletions.
- There is a big lock-up expiry in YSB (9885 HK) soon after the index inclusion and this could be an opportunity to access liquidity in the stock.
Quiddity Aggregation of CSI300/500 and SSE50/180 Index Flows for Dec 2023: US$4.2bn One-Way!
- After market close on Friday 24th November 2023, the December 2023 index review results for CSI 300/500 and SSE 50/180 were announced.
- CSI 300 and CSI will have 14 and 50 changes while SSE 50 and SSE 180 will have 5 and 18 changes respectively. There are many overlapping flows.
- In this insight, I have presented the details of the index changes and aggregated the expected flows attributable to the four indices mentioned above.
Merger Arb Mondays (27 Nov) – Origin, OreCorp, Healius, Taisho, JSR, Eoflow, Hollysys, Haitong Intl
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads Eoflow (294090 KS), 111 Inc (YI US), Taisho Pharmaceutical Holdin (4581 JP), Healius (HLS AU), Irc Ltd (1029 HK), Hollysys Automation Technologies (HOLI US), Origin Energy (ORG AU).
- Lowest spreads – Azure Minerals (AZS AU), Toyo Construction (1890 JP), Tietto Minerals Ltd (TIE AU), Pact Group Holdings (PGH AU), IJTT Co., Ltd. (7315 JP).
CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes
- There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 8 December.
- There are 15 stocks that overlap between the CSI 300 Index and the CSI Smallcap 500 Index and there will be opposing flows from passive trackers.
- One way turnover at the rebalance is estimated at 9.56% leading to a one-way trade of CNY 6.04bn. Industrials and Information Technology gain index spots while Materials and Financial lose.
CSI Medical Service Index Rebalance: Chunky Flows for Some Stocks
- There are 4 changes for the CSI Medical Service Index that will be implemented at the close on 8 December.
- The constituent changes plus capping result in one-way turnover of 5.9% and in a one-way trade of CNY 1.86bn (US$261m).
- Some stocks will have passive flows from global trackers at the end of November while there will be flows from other local passive trackers at the close on 8 December.
Porsche Automobile Holding: Q3 and Discount
- My updated SOTP shows that Porsche Automobil Holding (PAH3 GR) is trading at a still massive 41.2% discount/NAV, implying that Porsche SE is liable for c. €6.5 billion legal claims, maybe too harsh.
- Recent rulings have been favourable. The discount is partly due to capital allocation leaning towards debt servicing. Porsche SE is trading at 2024e 2.6x Fwd P/E and 7.3% dividend yield.
- Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG through a discounted and levered investment. Discount to NAV should systematically decrease.
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