In today’s briefing:
- Preemptive Flow Trading Opportunities with the Fastest-Growing Sector ETFs in Korea
- Take-Private Interest
Preemptive Flow Trading Opportunities with the Fastest-Growing Sector ETFs in Korea
- Two SOL sector ETFs are unique in that they only include companies positioned upstream. This results in a group of smaller-sized constituents, which can have a greater flow impact.
- Once the universe is established, constituent selection and weight adjustment are determined exclusively using full/float market capitalization. As a result, flow trading can be highly predictable.
- Although they have lower AUM, the five Semiconductor constituents could still face a significant flow impact during this one-day flow event due to their much lower DTV.
Take-Private Interest
- Applus has long been considered an LBO candidate: arguably cheap (10.8x EV/Fwd EBIT vs. peers >13x) with no dominant shareholders on the register. Apollo, Apax and I Squared/TDR are circling.
- My fair-value estimate ranges from €10.51/share (DCF) to €11.33/share (multiples, applying a discount to more profitable peers). There’re two issues regarding a possible LBO: IDIADA contract and debt covenants.
- Cost of debt would increase to >4% and the buyer would have to negotiate a temporary increase of covenants to 5x EBITDA (probably in exchange of disposal of O&G business).
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