In today’s briefing:
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: HUGE Turnover as Review Period Ends
- 10 Tradable Names for KOSPI Size Index Migration & Hyundai Mipo in Conjunction with MSCI Nov IR
- FTSE TWSE Taiwan 50 Index Rebalance Preview: PSMC (6770) Deletion Could Offset Some All-World Flow
- FTSE China A50 Index Rebalance Preview: PetroChina & EVE Energy Are Potential Adds
- Samsung Electronics: Local Market’s Bet on a Buyback
- Link’s Scheme Approved but Time Running Out for Satisfying Conditions Precedent
- PTB Group Enters Scheme With PAG
- Nearmap Enters a SID with Thoma Bravo at A$2.10
- FTSE China 50 Index Rebalance Preview: Yankuang Energy (1171) Could Replace Shenzhou Intl (2313)
- KB Kookmin Bank Invests 200 Billion Won in SK Square’s TMap Mobility
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: HUGE Turnover as Review Period Ends
- We do not forecast any deletions from the FTSE TWSE Taiwan Dividend+ Index in September. There will be a lot of flow from dividend yield changes and capping changes.
- Based on the closing prices from 22 August, we estimate one-way turnover of 13.6% at the September rebalance resulting in a one-way trade of TWD 19,664m (US$653m).
- Passive inflows will be focused (for the most part) on stocks that have underperformed and outflows will mainly be on recent outperformers.
10 Tradable Names for KOSPI Size Index Migration & Hyundai Mipo in Conjunction with MSCI Nov IR
- Ten names, five each for each direction, are almost guaranteed to migrate between MID and LARGE. From the last time we checked, Hyundai Marine and Hanmi Science are newly added.
- The rebalancing trading day is September 8, and both directions of MID⇔LARGE cause significant passive impact. So, Long/Short basket trading is a practical approach, starting about 20 days before effective.
- We should consider approaching this event in conjunction with the MSCI IR. This is because of Hyundai Mipo Dockyard, the only candidate likely to join the MSCI Standard this November.
FTSE TWSE Taiwan 50 Index Rebalance Preview: PSMC (6770) Deletion Could Offset Some All-World Flow
- Today is the review cutoff and we expect SinoPac Holdings (2890 TT) to replace Powerchip Semiconductor Manufacturing Corp (6770 TT) in the FTSE TWSE Taiwan 50 Index in September.
- Passive Taiwan50 trackers will need to buy over 5 days ADV on SinoPac Holdings (2890 TT) and sell less than a days ADV on Powerchip Semiconductor Manufacturing Corp (6770 TT).
- Powerchip Semiconductor Manufacturing Corp (6770 TT) has been added to the FTSE All-World Index and those trackers need to buy around 96.5m shares.
FTSE China A50 Index Rebalance Preview: PetroChina & EVE Energy Are Potential Adds
- PetroChina (601857 CH) and EVE Energy (300014 CH) could replace China Pacific Insurance (Group) (601601 CH) and Zhangzhou Pientzehuang Pharmaceutical Co. (600436 CH) in the index at the September rebalance.
- Assuming both changes are implemented, estimated one-way turnover is 2.24% and will result in a one-way trade of CNY 1,180m.
- There has been no announcement from FTSE yet on the potential increase in the number of index constituents from 50 to 100.
Samsung Electronics: Local Market’s Bet on a Buyback
- The local market is betting that Samsung Electronics will announce an additional shareholder return measure. Special dividends or buyback? They lean towards a buyback.
- It is unlikely that it will be another pref-skewed buyback. The Lee family needs cash now, so preventing the dilution of voting shares becomes the top priority.
- Hence, we should not have high expectations for a further decline in the pref discount. Instead, we should consider designing a short position aimed at block sales.
Link’s Scheme Approved but Time Running Out for Satisfying Conditions Precedent
- Shareholders approved the scheme at the scheme meeting. However, Link Administration (LNK AU) shares declined due to the slow progress in satisfaction of conditions precedent.
- Key conditions precedent is ACCC, FIRB, UK’s FCA and Central Bank of Ireland approvals. The wording in the Chairman’s address on the conditions precedent is incrementally negative.
- The downside to a deal break remains low. At the last close, the potential upside to the offer (10.1%) outweighs the downside (-3.8% to our A$4.21 price target).
PTB Group Enters Scheme With PAG
- Late last week aviation engine repair play PTB Group Ltd (PTB AU) entered into a Scheme Implementation Deed (SID) with PAG Holding Corp.
- PAG is offering $1.595/share, a 40.5% premium to last close.
- Apart from PTB shareholder approval, PAG’s Offer requires FIRB. This looks done. PTB’s board unanimously recommends the Scheme.
Nearmap Enters a SID with Thoma Bravo at A$2.10
- Nearmap Ltd (NEA AU) entered a scheme implementation deed (SID) with Thoma Bravo at A$2.10 per share, a 39.1% premium to the undisturbed price.
- The offer price is attractive. The key conditions are shareholders and regulatory (FIRB & US antitrust) approvals. The scheme meeting is in November.
- At last close and for the end of November payment, the gross and annualised spread to the offer is 1.4% and 5.2%, respectively.
FTSE China 50 Index Rebalance Preview: Yankuang Energy (1171) Could Replace Shenzhou Intl (2313)
- Yankuang Energy Group (1171 HK) is the highest ranked eligible non-constituent and could replace Shenzhou Intl Group Holdings (2313 HK) in the index at the September rebalance.
- Passive trackers will need to buy over 1 day of ADV on Yankuang Energy Group (1171 HK) while selling over 1 days ADV on Shenzhou Intl Group Holdings (2313 HK).
- Short interest is over 10% of float on Yankuang Energy Group (1171 HK) and there could be short covering as the stock breaks out.
KB Kookmin Bank Invests 200 Billion Won in SK Square’s TMap Mobility
- On 22 August, it was announced that KB Kookmin Bank invested 200 billion won worth of TMap Mobility, valuing the company at 2.2 trillion won ($1.7 billion).
- At the end of 2021, SK Square owned a 66.3% stake in TMap Mobility. After this investment, KB Kookmin Bank will own an 8.2% stake in TMap Mobility.
- TMap Mobility generated sales of 74.5 billion won, operating loss of 67.8 billion won, and net loss of 5.3 billion won in 2021.
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