In today’s briefing:
- HDFC AMC: Abrdn’s Potential Placement & Index Implications
- Xingda Int’l (1899 HK): Kicking The Tyres
- HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
- TOPIX Inclusions: Who Is Ready (Dec 2022)
- Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate
- Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control
- Xingda International (1899 HK)’s to Draw a Privatisation Bid from Management?
- Xingda Int’l (1899 HK): Partial MBO
HDFC AMC: Abrdn’s Potential Placement & Index Implications
- Abrdn PLC (ABDN LN) is looking to sell its entire 10.21% stake in HDFC Asset Management (HDFCAMC IN) following which it will no longer be a sponsor of HDFC MF.
- Depending on who the stake is sold to, there could be an immediate increase in the investability weight in the FTSE All-World Index.
- More importantly, the increased free float will result in an increase in the FIF for the MSCI Standard Index and index inclusion could take place in February.
Xingda Int’l (1899 HK): Kicking The Tyres
- Xingda International (1899 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
- The controlling shareholders – more commonly known as the Five Parties – hold 45.6% of shares out.
- Two years ago, Xingda sought to spin-off its key operating vehicle. Perhaps the Five Parties are privatising Xingda, then IPOing Xingda Steel Tyre Cord. Or, cashing out their positions.
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
- Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
- One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
- After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).
TOPIX Inclusions: Who Is Ready (Dec 2022)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Oct 2022)
- At present, there are 60 names that satisfy all of these conditions and there are more names that are close to being in that group.
Yearend Dividend Play on Korean Stocks with High Yield/Borrow Rate
- We’d better pay attention to trading for price gain by building a position 2-3 weeks towards ex-dividend and getting out of it before ex-dividend, which often provides higher returns.
- For this, we should focus on high dividend yield stocks, which also feature a high borrow rate, but on a decreasing trend.
- They are Hyosung TNC (298020), HD Hyundai (267250), BNK Financial (138930), Woori Financial (316140), DL E&C (375500), LX Semicon (108320), KB Financial (105560 KS), and HDC Hyundai Development (294870).
Xingda (1899 HK)’s Partial Offer from Management to Seize Statutory Control
- Xingda International (1899 HK) disclosed a partial offer from management to acquire a maximum of 80.0 million shares at HK$1.88 per share, a 24.50% premium to the undisturbed price.
- The pre-condition is Executive approval. The partial offer is conditional on the offeror hitting 50.01% voting rights and approval by the requisite majority of shareholders on the acceptance form.
- The partial offer is an opportunistic foray to seize statutory control as it would not be sufficiently enticing to overcome FIL’s 9.99% blocking stake in a privatisation scheme.
Xingda International (1899 HK)’s to Draw a Privatisation Bid from Management?
- Xingda International (1899 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
- It is likely that the management, representing 45.60% of ordinary shares (through a five parties agreement), is seeking to privatise Xingda.
- The bid is likely privatisation through a scheme. Due to FIL’s blocking stake, a decent premium is required, such as an offer approaching HK$2.00 (33% premium to the last close).
Xingda Int’l (1899 HK): Partial MBO
- Late night Xingda (1899 HK) announced a partial Offer from a consortium comprising management – known as the Five parties – at HK$1.88/share – a 24.5% premium to last close.
- The consortium – widely known as the Five Parties – currently holds 45.6%, and the intention of the Offer is to hold 50.01%, or a controlling stake.
- There is a minimum/maximum number shares to be acquired under the Offer. I’d expect the minimum acceptance condition to be met.
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