In today’s briefing:
- NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie …
- Origin/Brookfield: ACCC Rubber Stamped. Now Shareholders Will Have Their Say
- TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights
- HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
- Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
- Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump
- Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
- CMB/Euronav: Mandatory Offer
- Quiddity Leaderboard BSE/SENSEX Dec 23: Bandhan Bank Could Underperform State Bank
NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie …
- Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for New World (17 HK)‘s 60.88%-held NWS (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed.
- The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
- The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS’ final dividend ex-date. That’s worth exploring further.
Origin/Brookfield: ACCC Rubber Stamped. Now Shareholders Will Have Their Say
- Brookfield Asset Management/MidOcean Energy’s tilt for Origin Energy (ORG AU), faced two major hurdles.
- The first was ACCC approval. Not just over competition issues, but also the perceived/apparent public benefit from Brookfield’s future commitment to renewable generation. ACCC has now cleared the transaction.
- The second is currying favour with shareholders, several of whom, including AustralianSuper (13.68% stake), reckon the Offer is substantially below long-term value. This needs a bump.
TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights
- At the October rebalance, Free Float Weight (FFW) will be reduced on 284 stocks and increased on 458 stocks. 43 stocks will be removed from Phased Weight Reduction.
- Estimated one-way turnover is 1.77% resulting in a one-way trade of ¥1.45tn. 364 stocks have over 4 days ADV to trade, 97 stocks have over 8 days ADV to trade.
- Over the last 6 months, the stocks with inflows (>US$25m) have outperformed the stocks with outflows (>US$25m) with most of the outperformance coming in the last three months.
HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
- With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
- Capping changes will result in a one-way turnover of 2.16% and that will result in a round-trip trade of US$556m.
- The impact of capping changes has doubled over the last month and there will be more changes from now till the official capping is done on 28 November.
Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
- The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
- With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
- All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.
Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump
- The ACCC has approved Brookfield/EIG’s proposed acquisition of Origin Energy (ORG AU). The Brookfield/EIG offer is A$5.78 and US$2.19 per share, worth A$8.83 at the last close.
- The bidders now face the challenge of convincing shareholders to accept the offer and avoid incurring ticking fees. The scheme booklet will be despatched in the coming weeks.
- Several shareholders have justifiably argued that the offer is light. Our SoTP valuation is A$9.46 per share, 7.1% above the implied offer price of A$8.83.
Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
- Rakuten Bank (5838 JP) (RB), the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
- RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
CMB/Euronav: Mandatory Offer
- CMB and Frontline Ltd (FRO US) smoke the peace pipe: CMB will buy Frontline out of Euronav NV (EURN US) at $18.43/share (25% premium) and agree to Euronav selling 24 VLCCs to FRO.
- After an EGM gives the green light, CMB will launch a mandatory $18.43/share cash offer for Euronav. The three-way transaction is fairly priced (1.0x P/NAV) for all players, including the Euronav minorities.
- There shouldn’t be any antitrust issues. Spread is 4.02%/7.66% (gross/annualised assuming settlement by 30 April 2024). Recommendation is long and tender (there won’t be any squeeze-out).
Quiddity Leaderboard BSE/SENSEX Dec 23: Bandhan Bank Could Underperform State Bank
- In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
- At present, I do not see any changes for the SENSEX index. For the BSE 100 and BSE 200 indices I see six and five changes respectively.
- Some of these changes are different from those expected in my last insight. However, the changes expected in this insight will be my final expectations for the December 2023 Rebalance.
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