In today’s briefing:
- Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?
- Hollysys: Court Injunction Hearing Is Key
- Alchip Technologies GDRs Early Look – Another Well Flagged GDR Issuance in the Pipeline
- CMIC (2309 JP) – Huge Business Model Plan Appears to Hide Assets, Then an MBO. Ugh…
- StubWorld: Digital Garage Looking “Cheap”. Melco’s Consensus-Missing Results
- Southern Cross/ARN Media: Getting Cosy?
- Momentum Trading Opportunities Among Top 50 Stocks in KOSDAQ With Highest Short Interest Ratios
- ChiNext/ChiNext50 Index Rebalance Preview: Time for a Turnaround
Korea Short Sell Ban: Not a Lot Covered on Monday; Shorts Holding On?
- Following the short sell ban announced on the weekend, the KOSPI 200 and KOSDAQ 150 opened higher on Monday and rallied through the day.
- A lot of the intraday gains on Monday have been given up over the next two trading days. Surprisingly, KRX data indicates that not a lot of shorts have covered.
- Foreigners have been net cash buyers since Monday (could indicate covering of offshore borrow) while retail were big sellers on Monday.
Hollysys: Court Injunction Hearing Is Key
- Talk about your never-ending story. I count at least seven non-binding Offers for Hollysys Automation Technologies (HOLI US) since December 2020, three of which are still on the table.
- The latest, at US$26/share, was pitched earlier this week from Ascendent Capital Partners; who along with Changli Wang, Hollysys’ founder, previously made an US$23/share Offer in August 2021.
- However, all these Offers are largely moot until we get closure at the court injunction hearing. If that occurs. Separately, I had a solid discussion with Hollysys’ IR.
Alchip Technologies GDRs Early Look – Another Well Flagged GDR Issuance in the Pipeline
- Alchip Technologies (3661 TT) is looking to raise around US$375m in its upcoming global deposit receipts (GDRs) offering.
- Similar to previous GDR listings, the deal is a very well flagged one, with a drawn out process of regulatory/approval loops the firm has to jump through up till issuance.
- Based on its board’s approval to issue up to 4m new shares in its GDR offering, the deal is a relatively small one at just 5.4% of Alchip’s current mcap.
CMIC (2309 JP) – Huge Business Model Plan Appears to Hide Assets, Then an MBO. Ugh…
- CMIC Holdings (2309 JP) decided to “change its business model” this past spring, transferring control of a consolidated JV and other subs to DNP.
- The result changed the accounting, and the business model, capitalising future cashflow and net income in a “hidden” asset which may or may not be in the Financial Advisor’s valuation.
- My read is this is being done too cheaply, and the price should be 30-60% higher. But, it would be tough to block this.
StubWorld: Digital Garage Looking “Cheap”. Melco’s Consensus-Missing Results
- Digital Garage (4819 JP) is coming up “cheap” versus Kakaku.com Inc (2371 JP); and Melco International Development (200 HK) is trading “rich” to Melco Resorts & Entertainment (MLCO US).
- Preceding my comments on DG and Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Southern Cross/ARN Media: Getting Cosy?
- Back on the 18 October, media play Southern Cross Media (SXL AU) announced a non-binding indicative proposal from ARN Media (A1N AU) and Anchorage.
- SXL shareholders are being offered, by way of a Scheme, 0.83 ARN shares and A$0.296/share in cash. SXL considers the terms to be “complex, and highly conditional”.
- Reportedly SXL has now signed a confidentiality agreement to gather more info on ARN, possibly leading to a firm deal.
Momentum Trading Opportunities Among Top 50 Stocks in KOSDAQ With Highest Short Interest Ratios
- In this insight, we discuss near-term momentum trading opportunities among the top 50 stocks in KOSDAQ with highest short interest ratios.
- We have identified 10 companies in KOSDAQ that have high short interest ratios, among the worst performing stocks YTD, but with strongest share price performance in the past three days.
- These 10 stocks are up on average 10% in the past three trading days, outperforming KOSDAQ which is up 3.7% in the same period.
ChiNext/ChiNext50 Index Rebalance Preview: Time for a Turnaround
- With the review period complete, we forecast 9 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
- Some of the potential adds will also have passive flows from the CSI Smallcap 500 Index trackers at the same time as the ChiNext Index rebalance.
- The potential adds have slipped a lot versus the potential deletes over the last few months as the National Team has tried to stabilise the market via ETF creations.
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