In today’s briefing:
- Frasers Hospitality Trust’s Scheme Votes Unexpectedly Falls Short
- India: AMFI Stock Reclassification Preview (Dec 2022)
- SHiDAX Board-Oisix-Shida Family Scrap
- STAR50 Index Rebalance Preview: Four or Five Changes in December
- Tencent : A Long but Use Options to Mitigate Any Broader Market Risks
- MVIS Vietnam Index Rebalance: One Add, Two Deletes
- KODEX Battery ETF Rebalancing: Target Weight & Qty in CU of Each Constituent
- Tullow/Capricorn: Unsuitable on Current Terms
- United Tractors (UNTR IJ) Buyback – One Month To Go
- PropertyGuru SPAC Lock-Up – Two PE’s with a US$450m Stake Are Stuck with a Liquidity Conundrum
Frasers Hospitality Trust’s Scheme Votes Unexpectedly Falls Short
- Frasers Hospitality Trust (FHT SP)’s scheme just fell shy of clearing the value test as 74.88% of the total votes cast approved the scheme resolution vs the 75% requirement.
- The shares were trading tight to terms as Frasers Property Ltd (FPL SP)’s offer of S$0.714 comprising of S$0.70 cash per share + permitted distributions (estimated 1.356 cents) was attractive.
- We estimate that the surprising deal break will likely lead to a 15-20% share price fall. The last close price is around 24% higher than the undisturbed price (S$0.57).
India: AMFI Stock Reclassification Preview (Dec 2022)
- Less than halfway through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, and 7 stocks moving from SmallCap to MidCap and vice versa.
- There are a bunch of stocks that are close to the cutoff ranks and there will be more change as we move deeper into the review period.
- Over the last 6months, stocks expected to migrate upward have outperformed stocks that are expected to migrate downward. Given the large divergence, there will be a pullback at some point.
SHiDAX Board-Oisix-Shida Family Scrap
- Shidax Corp (4837 JP) is under offer for a partial tender by Oisix ra daichi (3182 JP). Unison Capital is expected to tender their shares.
- Unison may not want to go against the board but a direct transfer (i.e. not tender offer) is still possible.
- Some Independent Board Members have suggested the company buy Unison’s shares back. This might work BUT the end game is still the same.
STAR50 Index Rebalance Preview: Four or Five Changes in December
- Nearly 90% of the way through the review period, we see 4 changes using a 12 month minimum listing history, and 5 changes using a 6 month minimum listing history.
- There are overlaps in the inclusions using 6/12 month minimum listing history, so there is less risk if the index committee switches from 6 to 12 months at the review.
- Using a 6 month minimum listing history, one-way turnover is estimated at 5.07% and will result in a one-way trade of CNY 2,795m.
Tencent : A Long but Use Options to Mitigate Any Broader Market Risks
- Derivative trade ideas to maintain upside/protect downside in Tencent. Stock is cheap but risks remain
- Take advantage of a retracement in implied vols and depressed skew levels to improve payoffs and protect against broader market risk
- We look at 3 alternative trades depending on your position and outlook
MVIS Vietnam Index Rebalance: One Add, Two Deletes
- Hagl Jsc (HAG VN) is an inclusion while An Phat Holdings (APH VN) and CEO Group (CEO VN) are deletes from the MVIS Vietnam Index at the September rebalance.
- There are a lot of float and capping changes that will result in one-way turnover of 12% and a one-way trade of US$45m.
- There are a lot of stocks that have over 1 day of ADV to trade and there could be opportunities to enter/exit positions on a move in the stocks.
KODEX Battery ETF Rebalancing: Target Weight & Qty in CU of Each Constituent
- KODEX Battery ETF rebalancing began on September 8 and runs until this Tuesday, the 14th. Its AUM is 1.3 trillion won, and the number of constituents is only 25.
- The quantity change in one CU for the 13th was confirmed. Tomorrow’s are estimates based on equal daily weights. With still two-thirds to go, the flow/price impact looks still juicy.
- SK Innovation, L&F, LG Energy, and Ecopro will show a significant size in weight change and passive flow, so they are safe names for a LONG SHORT basket trading.
Tullow/Capricorn: Unsuitable on Current Terms
- On 9 September, Capricorn’s closing share price was at a c. 29% premium vs. merger terms (186.46p); scheme approval seems tricky. Capricorn has signaled it is open to explore other transactions.
- To rebalance the exchange equation, Tullow should offer at least 4.904043 TLW LN x 1 CNE LN, which would change the balance of power (Capricorn 51.8%, Tullow 48.2%).
- Cash makes up to 72% of Capricorn’s shares, whose latest price movements could either anticipate some statement from Tullow or other “potential outcomes”. I’d be long Capricorn, rather than the spread.
United Tractors (UNTR IJ) Buyback – One Month To Go
- In mid-July, United Tractors (UNTR IJ) announced a buyback of up to 5 trillion rupiah, buying back “up to 20% of shares out.”
- In United Tractors (UNTR IJ) Buyback – Sure to Be Impactful I said the buyback would be smaller than the headlines, but still likely quite impactful.
- On Day 1, shares rose 5% to IDR 28,275. Since then the stock is up an additional 22%. Now we have a month left. There may be more juice still.
PropertyGuru SPAC Lock-Up – Two PE’s with a US$450m Stake Are Stuck with a Liquidity Conundrum
- PropertyGuru (PG) tried to raise around US$300m when it undertook a merger with Bridgetown 2 SPAC in Mar 2022.
- The transaction valued PropertyGuru at an EV of US$1.35bn and equity value of US$1.78bn. It is now trading at less than half that valuation and with very limited liquidity.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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