In today’s briefing:
- Jardine Matheson (JM SP): Trading “Cheap”
- Hyundai Motor’s Value-Up Disclosure: Trading Implications from Release Timing & Pref-Skewed Buyback
- Huafa Props (982 HK): A Quick Word On Voting
- Alpha Generation from the New Entries in the ‘KOSDAQ Rising Stars’
- MV Australia Equal Weight Index Rebalance Preview: One Add & A Few Deletes
- HM Sampoerna (HMSP IJ): Global Index Deletion Following IDX Segment Shift
- Quiddity Leaderboard ES50 Sep 24: DSM Addition Unlikely; Engie Could Replace Kering (US$1bn+ Flows)
- Impact of Woori Financial’s Tongyang Life Acquisition Below ₩1.5T on Value-Up Flows
- Misunderstood Takeover Target
- Silverlake Axis (SILV SP): Goh’s Hybrid Offer
Jardine Matheson (JM SP): Trading “Cheap”
- I see Jardine Matheson Holdings (JM SP)‘s discount to NAV and implied stub at 12-month lows.
- Recent interim results were okay. Stripping out DFI Retail Group Holdings (DFI SP)‘s outperformance, the remainder of the Jardine stable delivered weaker numbers.
- Further afield, the implied stub is marginally below the long-term average since the Jardine Strategic Holdings (JS SP) circularity was collapsed in April 2021.
Hyundai Motor’s Value-Up Disclosure: Trading Implications from Release Timing & Pref-Skewed Buyback
- Hyundai’s TSR target is 35%+ (dividends plus buybacks), up 10 percentage points from previous years. They’ve also set a new annual dividend of ₩10,000, paid evenly quarterly.
- Hyundai’s Value-Up targets may not fully meet market expectations, but the key is the timing. By aligning early with government policies, Hyundai has reduced risks and secured investment flow.
- Hyundai plans a pref-skewed buyback, likely continuing this approach as retiring preferred shares first may boost ROE.
Huafa Props (982 HK): A Quick Word On Voting
- Huafa Property (982 HK) shareholders overwhelmingly approved (99.52% [of shares present and/or via proxy] FOR; 0.48% AGAINST) the Scheme yesterday. This part was expected. The headcount test was less certain.
- The final headcount tally, on a look-through basis into HKSCC Nominees by CCASS Participants, was 111 FOR, 14 AGAINST. Again, a pretty clear pass.
- Normally a Scheme Vote, if approved, wouldn’t warrant a full note. But when the headcount test is involved, it is worthwhile understanding the mechanics.
Alpha Generation from the New Entries in the ‘KOSDAQ Rising Stars’
- In this insight, we discuss the potential alpha generation from new entries in the “KOSDAQ Rising Stars.”
- For the KOSDAQ Rising Stars New Entries in 2023, there was a massive outperformance. Of course, we want to reiterate that past performance is NOT indicative of future performance.
- On 28 August 2024, KRX provided a list of 39 KOSDAQ Rising Stars companies (including 29 existing ones and 10 new companies).
MV Australia Equal Weight Index Rebalance Preview: One Add & A Few Deletes
- With 2 days left to review cutoff, there could be 1 inclusion and 3 deletions for the index at the September rebalance.
- Even if there are no constituent changes, capping changes will lead to one-way turnover of 4.4% and a round-trip trade of A$212m.
- The final list of inclusions/exclusions will depend on price movements till Friday and whether the index provider makes any significant changes to the free float of stocks in the universe.
HM Sampoerna (HMSP IJ): Global Index Deletion Following IDX Segment Shift
- HM Sampoerna (HMSP IJ) has been announced as a deletion from the Large cap of the Global Index at the September 2024 review.
- The reason for the security’s removal is due to a change of listing from an eligible to an ineligible exchange segment of the Indonesian Stock Exchange (IDX).
- Forecasted passive fund supply is ~$24.6m and ~11.9 ADV at the close of 20 September 2024. The significant ADV is because of the security’s low free float.
Quiddity Leaderboard ES50 Sep 24: DSM Addition Unlikely; Engie Could Replace Kering (US$1bn+ Flows)
- The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
- In this insight, we take a look at Quiddity’s estimation of the latest ranks of potential ADDs and DELs for the upcoming index rebal event in September 2024.
- The rankings will be finalized at the end of this week. Currently, we see one expected ADD/DEL but the expectations can change since there are three more trading days left.
Impact of Woori Financial’s Tongyang Life Acquisition Below ₩1.5T on Value-Up Flows
- Woori Financial’s value-up plan centers on improving the CET1 ratio to boost shareholder returns, with the total return ratio directly tied to the CET1 ratio.
- The market believed that if the acquisition cost stayed under ₩1.9 trillion, the CET1 ratio impact would be minimal, potentially leading to mid-term gains from non-banking profits.
- Though this may hurt Tongyang Life’s short-term stock, it opened the door for local institutional investors, especially NPS, to consider Woori Financial for value-up investments.
Misunderstood Takeover Target
- Allfunds Group, a global WealthTech firm born in Spain, attracts market interest, but no firm offers yet. Its top two shareholders (48.1%) are open to selling at the right price.
- Since listing, Allfunds’ total return has been -59%, driven by interest rate hikes, major distributors shifting to low-risk assets, stock overhang from top shareholders, and low share liquidity.
- ChatGPTAllfunds’ forward P/E of 12.9x (vs. peers at 18.6x) and 9.5% FCF yield undervalue its strong business model, momentum, market share gains, robust cash conversion, and solid balance sheet.
Silverlake Axis (SILV SP): Goh’s Hybrid Offer
- Goh Peng Ooi, the Executive Chairman and founder, has made a voluntary unconditional general Offer for the 25.9% in Silverlake Axis (SILV SP) not held.
- The S$0.36/share cash Offer for the software solutions play is a 20% premium to last close. Or a 31.9% premium to the 12-month VWAP.
- The quirk in the terms is the option to receive A$0.30/share (in cash), plus one new redeemable preference share in the Offeror, to be redeemed at A$0.18/share after five years.
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