In today’s briefing:
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Updated Dividends & Flow Shift
- Yashili’s Widening Spread Is an Opportunity
- Readytech (RDY AU): Microequities Baulks At PEP’s A$4.50/Share Indicative Offer
- AMFI Stock Reclassification Preview (Dec 2022): Long/Short Trade Flattening Out
- SK On Valuation at 22 Trillion Won – Impact on SK Innovation
- S&P BSE/Sensex Quiddity Leaderboard Dec 22: Potential ADDs Could Outperform the Index
- EQD | ARK Innovation (ARKK US): Is It Time to Get Back into Growth?
- ReadyTech’s Indicative Offer of A$4.50 from Pacific Equity Partners Good Enough?
- China VAST (6166 HK): 23 Nov Court Meeting. IFA Says Fair
- Singapore Medical’s VGO: Acceptances at 77.37%, Closing Date Now 15 Nov
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Updated Dividends & Flow Shift
- Updated forward dividend estimates and price moves lead to changes in adds/deletes and to estimated flows at the December rebalance. We now see 26 adds and 5 deletes in December.
- The estimated one-way turnover due to adds, deletes, funding and capping is 46.6% and will result in a one-way trade of TWD 72.7bn (US$2.26bn).
- Passive trackers will need to buy over 5 days of ADV on 15 stocks and sell over 5 days of ADV on 14 stocks. There will be trading opportunities galore.
Yashili’s Widening Spread Is an Opportunity
- Yashili International Holdings (1230 HK)‘s spread to China Mengniu Dairy Co (2319 HK)’s offer (HK$1.20) has widened to 10.1% due to doubts about the satisfaction of the remaining pre-condition.
- We think the delay in satisfying Dumex Key Condition is due to the glacial bureaucratic process. The pre-conditions long stop date is 31 July 2023, which provides sufficient time.
- Both Danone SA (BN FP) and Mengniu can waive conditions to satisfy the pre-condition. Both have the motivation to complete the transaction as it facilitates the unwinding of their partnership.
Readytech (RDY AU): Microequities Baulks At PEP’s A$4.50/Share Indicative Offer
- Software outfit ReadyTech (RDY AU) has announced an indicative proposal from Pacific Equity Partners and affiliates, to acquire ReadyTech by way of a Scheme of Arrangement at $4.50/share.
- Pemba Capital, with 32.01% of shares out, are in discussion with PEP as to what appears to be the PE firm rolling over shares.
- ReadyTech’s independent board has granted PEP non-exclusive due diligence to flesh out a firm Offer. According to media reports, Microequities, with ~13%, is not on board whatsoever.
AMFI Stock Reclassification Preview (Dec 2022): Long/Short Trade Flattening Out
- Two-Thirds through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, 7 stocks moving from SmallCap to MidCap, 8 moving from MidCap to SmallCap.
- There have been changes to the list of stocks over the last couple of months and there could be more, especially on stocks that are close to the cutoff ranks.
- There is a big gap in the performance of the stocks moving upward versus migrating downward and there could be some mean reversion over the next couple of months.
SK On Valuation at 22 Trillion Won – Impact on SK Innovation
- SK On announced that it recently received 1 trillion won in investment, valuing the company at 22 trillion won, 29% higher than SK Innovation’s market cap of 17 trillion won.
- The recent investment of nearly 1 trillion won in SK On was in the form of convertible preferred stock (CPS), which guarantees a minimum return of 7.5%.
- Our SoTP valuation of SK Innovation suggests a target price of 254,396 won per share, which represents a 39% higher levels than current price.
S&P BSE/Sensex Quiddity Leaderboard Dec 22: Potential ADDs Could Outperform the Index
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
- The reference period for the trading data used for the index selection ended on 31st October 2022.
- There have been a couple of key revisions to the index selection methodologies for SENSEX and SENSEX Next 50 which could have important consequences.
EQD | ARK Innovation (ARKK US): Is It Time to Get Back into Growth?
- Growth Stocks have been hammered in the rising rate environment
- Inflation may have peaked and central banks could be reaching the end of the hiking cycle
- We look at derivative strategies on ARKK US to gain a broad exposure to the growth and tech
ReadyTech’s Indicative Offer of A$4.50 from Pacific Equity Partners Good Enough?
- ReadyTech Holdings Ltd (RDY AU) confirmed that it received a conditional, non-binding indicative proposal from Pacific Equity Partners (PEP) at A$4.50 per share, a 38.9% premium to the undisturbed price.
- PEP aims to jointly work with Pemba, the largest shareholder with a 32.01% stake, on the proposal. Microequities, the second-largest shareholder, is said to oppose the offer.
- The offer represents an all-time price high but struck at a discount to peer multiples, suggesting room for a bump. At last close, the spread to the offer is 8.4%.
China VAST (6166 HK): 23 Nov Court Meeting. IFA Says Fair
- On the 9 June, Urban planner China VAST Industrial Urban Development (6166 HK) received a pre-conditional Offer, by way of a Scheme, from China Jinmao Holdings (817 HK).
- On the 17 October, China Jinmao and China VAST announced that all pre-cons for the HK$2.40/share Offer had been fulfilled.
- The Scheme Doc is now out. The Court Meeting will be held on the 23 November. The IFA says fair and reasonable. This is done and trading tight to terms
Singapore Medical’s VGO: Acceptances at 77.37%, Closing Date Now 15 Nov
- Singapore Medical (SMG SP)‘s voluntary conditional offer from management (chairman, CEO, exec director) has received acceptances of 77.37% of outstanding shares, below the 90% minimum acceptance condition.
- The closing date has been extended to 15 November. To hit the 90% minimum acceptance condition, the offeror requires a 55.8% acceptance rate from the remaining holdout minorities.
- The IFA previously declared the offer “not fair but reasonable.” The gross spread of 1.4% is not an attractive risk/reward profile. We continue to recommend taking profits.
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