In today’s briefing:
- My Take on the Three Scenarios that Sammy Buyback Stirred up in the Market Today
- WH Group (288 HK)’s US/Mexican Spin-Off
- TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week
- TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact
- KRX Value-Up Special Rebalance in December: Playbook & Screening Rundown
- SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide
- Quiddity Leaderboard ASX Dec 24: Few Index Changes But High Impact
- HKBN (1310 HK): China Mobile Resurfaces as a Rumoured Suitor
- Hong Kong Index Options Weekly – HSI and HSCEI
- FOOTSIE UK December 2024 Forecasts: ALW and STJ for Top 100; MTRO and DEC for Next 250
My Take on the Three Scenarios that Sammy Buyback Stirred up in the Market Today
- The market’s reaction to Samsung Fire’s stake sale seems overhyped. Given past share sales, Life may outperform Fire as this momentum unfolds.
- I don’t see SDS merging with Samsung Electronics. It lacks synergy and could stir up PR issues. If Sammy’s stock stalls, Lee Jae-yong might sell more of his SDS stake.
- I’m still bullish on Sammy prefs. If the tax reform passes, a special dividend, not a buyback, will be the cleanest way for Samsung to address inheritance tax.
WH Group (288 HK)’s US/Mexican Spin-Off
- Back on 14 July 2024, WH Group (288 HK) (WHG) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ
- WHG the world’s largest pork producer, has now confirmed it will sell up to 20% of Smithfield’s shares on a fully diluted basis, in an initial public offering.
- WHG has also proposed an assured entitlement for existing shareholders by way of a distribution in specie of existing shares of Smithfield, or a cash alternative.
TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week
- There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.
- Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.
- An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.
TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 284bn (US$8.7bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 15.8% and a round-trip trade of around US$2.75bn.
- An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since beginning September with a pick-up in pace over the last 2-3 weeks.
KRX Value-Up Special Rebalance in December: Playbook & Screening Rundown
- Since Sep 24, 32 companies made Value-Up disclosures. After filtering, 17 remain, but KRX will keep inclusions tight. They’ll likely use PBR and ROE rankings for final selection.
- We have 6 names—3 financials, 2 healthcare, 1 industrial. New Value-Up disclosures through Dec 6 could add more, but these 6 are the frontrunners for now.
- KRX is likely to announce results by Dec 10-11. Start eyeing entry points 10 days prior, and if price action heats up early, consider pulling the trigger sooner.
SF Holding (6936 HK): No Index Inclusion till Mid-2025; AH Premium Could Stay Wide
- The S.F. Holding (002352 CH) H-shares are being offered at a price range of HK$32.3-36.3/share, a discount of 20.2%-29% to the A-shares. The max raise (including oversubscription) is US$912m.
- Unlike Midea Group (300 HK), the S.F. Holding (002352 CH) H-shares will not get Fast Entry to any indices. Southbound Stock Connect inclusion will take place on 23 December.
- With no index inclusion in the short-term, the H-shares discount to the A-shares should remain wide. The H-shares could become short sell eligible in February.
Quiddity Leaderboard ASX Dec 24: Few Index Changes But High Impact
- In this insight, we take a look at our final expectations for index changes for ASX200, 100, 50, and 20 in the run-up to the December 2024 index rebal event.
- We do not see any index changes for ASX 20 and ASX 100.
- We expect one change for ASX 50 and one change for ASX 200.
HKBN (1310 HK): China Mobile Resurfaces as a Rumoured Suitor
- Bloomberg reports that China Mobile (941 HK) is exploring a buyout of HKBN Ltd (1310 HK) and is willing to pay at least HK$5.00, a 16.0% premium to last close.
- HKBN has been the subject of numerous bid rumours, which seemingly came to nothing due to the challenge of meeting the largest shareholders’ (TPG and MBK) price expectations.
- The rumoured offer price will struggle to gain TPG/MBK’s backing. The current valuation is unappealing, as HKBN trades at a premium multiple compared to peers at the last close.
Hong Kong Index Options Weekly – HSI and HSCEI
- Vols have stabilized as market has moved away from peak short gamma levels just above the recent market highs.
- HSI Put positions appear to have been rolled down to the 19,000 strike.
- HSCEI saw significant put volume at the 6300 strike with ~15,000 contracts per day trading at that level.
FOOTSIE UK December 2024 Forecasts: ALW and STJ for Top 100; MTRO and DEC for Next 250
- Alliance Witan (ALW LN) is the main candidate for addition in Top 100 (footsie 100) replacing Vistry Group (VTY LN) whose price recently plummeted more than 50%.
- St James’s Place (STJ LN) is the next candidate for addition in Top 100 replacing Frasers Group (FRAS LN) with both stocks being extremely close to the entry-exit rank.
- Metro Bank (MTRO LN) and Diversified Energy (DEC LN) are the top two addition candidates for Next 250 (footsie 250), replacing PZ Cussons (PZC LN) and Close Brothers (CBG LN).
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