In today’s briefing:
- Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- KLINE (9107) – More Profit, More Shareholder Return 3mo Buyback Inbound
- Chilled & Frozen’s Target Opinion Statement; Chotto Matte (Four Counterbidders)
- Namoi Cotton (NAM AU): Bloom Times As Louis Dreyfus & Olam Agri Tangle
- Wuxi XDC Lock-Up – US$300m Lockup Expiry Could See Some Selling Owing to the Regulatory Overhang
- Quiddity Leaderboard STAR 50 Jun 24: SHORTs Down 12% Vs Peers in 1 Month; Final Ranks & New Trade
- Quiddity Leaderboard KOSPI 200 Jun 24: One Last-Minute Change to Rankings
- ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Continues
- Hostile or Not?
Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
- Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.
- Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.
KLINE (9107) – More Profit, More Shareholder Return 3mo Buyback Inbound
- Kawasaki Kisen Kaisha (9107 JP) today announced earnings. Ocean Network Express earnings were out earlier and beyond that, Consolidated Revs beat, OP faltered, but NP was spot on guidance.
- Guidance for the year to March 2025 is well ahead of consensus on revenue, slightly ahead on OP, and just a wee bit ahead on NP.
- But the company raised its 5yr MTMP Shareholder Return from ¥500bn to ¥700bn and set a new ¥100bn (5.5%) buyback to be executed in the next 3 months.
Chilled & Frozen’s Target Opinion Statement; Chotto Matte (Four Counterbidders)
- Today, after the close, Chilled & Frozen Logistics Holdings (9099 JP) released a required (by the FIEA) Target Opinion Statement saying “Opinion Withheld.”
- C&F notes that it had received 9 possible counter-proposals, offered due dili to a certain extent, and by May 1, had 4 binding offers.
- There are interesting competitive dynamics at play here, but cross-holding concentration matters. The question is… How much is enough?
Namoi Cotton (NAM AU): Bloom Times As Louis Dreyfus & Olam Agri Tangle
- Singapore’s Olam Agri and global commodity merchant Louis Dreyfus Company (LDC) are duking it out for Namoi Cotton Co Operative (NAM AU), Australia’s largest cotton producer.
- After both initially lobbed competing Schemes, both have now tabled off-market Offers – A$0.67/share from LDC, A$0.66/share from Olam – each contingent on a 50.1% acceptance hurdle, FIRB, and ACCC.
- LDC, currently holding 17%, announced it will reject Olam Agri’s Offer. Top shareholder Samuel Terry Asset Management, with 24.5%, is expected to support the winning (or superior) bid.
Wuxi XDC Lock-Up – US$300m Lockup Expiry Could See Some Selling Owing to the Regulatory Overhang
- WuXi XDC Cayman (2268 HK) was listed in Hong Kong on 17th Nov 2023 after raising US$470m. Its six-month lockup will expire on 16th May 2024.
- WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Quiddity Leaderboard STAR 50 Jun 24: SHORTs Down 12% Vs Peers in 1 Month; Final Ranks & New Trade
- STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
- In my last insight (link), I discussed how the rankings had to be monitored closely before finalizing the index change expectations for the June 2024 index rebal event.
- Now that the reference period is complete, I have discussed my final expectations for the June 2024 review. The official index changes will be announced later this month.
Quiddity Leaderboard KOSPI 200 Jun 24: One Last-Minute Change to Rankings
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- The reference period for the June 2024 index rebal event ended recently. In this insight, we take a look at our final expected ADDs/DELs.
- There has been one change to our list of expected ADDs presented in my last insight (link).
ChiNext/ChiNext50 Index Rebalance Preview: Outperformance Continues
- With the review period now complete, we forecast 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
- There are 4 stocks that could be added to both indices while some stocks will also have same way flows from CSI Smallcap 500 Index (SH000905 INDEX) trackers.
- The potential adds have outperformed the potential deletes over the last 6 months. There has been a big move higher in the potential adds over the last few weeks.
Hostile or Not?
- On 6 May, the Board of Sabadell rejected the merger proposal as “it significantly undervalues its growth prospects and is not aligned with the interests of its customers and shareholders”.
- BBVA could take the offer directly to Sabadell shareholders, but a hostile offer seems extremely unlikely and there are no precedents in the Spanish banking sector.
- I find it unlikely that both parties reach an agreement because the terms would likely be unfavourable for BBVA (premium 40%-50%). Market sentiment also suggests a low probability.
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