In today’s briefing:
- Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
- Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
- Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
- Energy One: Busby Baulks At STG’s Offer
- Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
- Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
- Zeus Co: Listing of JET Co Japanese Subsidiary and NAV Valuation
- Zeus Co (079370 KS): Is J.E.T.’s Spin-Off Priced In?
- AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows
Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
- Shareholders of Prosus NV (PRX NA) and Naspers (NPN SJ) approved AGM agenda items late last week to enable the two Capitalisation Issues and Naspers’ Share Consolidation to move forward.
- What Will Happen: Prosus will issue new N shares to its shareholders and Naspers will reject them. Naspers will issue new shares to its shareholders, and Prosus will reject them.
- Naspers will own ~42.9% of Prosus, Prosus will own 0.02% of Naspers. Sales of Tencent shares will continue. Share Buybacks too. But the ouroboros will have spit out its tail.
Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
- The Hang Seng announces changes along with prospective flows 2wks before the actual change. Capping flows are calculated off the close three days before implementation. That was today.
- There have been some minor movements in the rankings. Nothing major. There is still just over US$1bn to trade, one-way.
- Enclosed are totals for each of the three major indices (Hang Seng, HSCEI, and HS Tech) and then netted flows. The biggest is US$470mm of BABA to sell. Spreadsheet attached.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
- The September rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- The largest passive inflows will be on East Buy (1797 HK), JD.com (9618 HK), Ping An (2318 HK), Sinopharm (1099 HK), BYD (1211 HK), Lenovo (992 HK) and Trip.com (9961).
- The largest passive outflows will be on Alibaba (9988 HK), Li Auto (2015 HK), Meituan (3690 HK), AAC Technologies (2018 HK), Kuaishou (1024 HK), COGARD (2007) and CG Services (6098).
Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
- KB Asset Management has announced the release of an inverse ETF, containing the top 10 core stocks in the secondary battery sector.
- Given the substantial fluctuations in SSF trading volume in Korea, the flow increase of this ETF might temporarily lead to an unusually high level of backwardation.
- Also, we may observe a phenomenon known as ‘wag-the-dog’ as the flow of this inverse ETF could act as a triggering factor for a temporary spark.
Energy One: Busby Baulks At STG’s Offer
- Yesterday (28 August) software provider Energy One Ltd (EOL AU) announced an indicative Offer, by way of a Scheme, from STG at A$5.85/share, a solid 44% premium to last close.
- Energy One has granted STG due diligence on an exclusive basis and the board is supportive if terms are firmed. All looks good. However …
- … Vaughan Busby, a NED and founding CEO of Energy One, is not aligned with the board. And he holds ~14%.
Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
- Shougang Fushan Resources (639 HK) shareholders approved the partial offer to acquire a maximum of 125.0 million shares (2.47% of outstanding shares) at HK$2.40 per share and the whitewash waiver.
- The partial offer is now unconditional and will close on 12 September. Considering the irrevocables not to tender, a 100% minority participation rate implies a minimum proration of 2.98%.
- If the partial offer’s acceptance rate mirrors today’s general meeting minorities participation rate of 63.6%, it would imply a minimum proration of 4.69%.
Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
- Last week I wrote about another situation, noting Equity Offering Into TOPIX Inclusion is a standard construct. Here we have another.
- DX and HR Support company Core Concept Technologies Inc (4371 JP) today announced a large (it ups Real World Float by 64%, and is 33 days of ADV) secondary offering.
- The “reason” for the offering mentions a desire to move to TSE Prime in future.
Zeus Co: Listing of JET Co Japanese Subsidiary and NAV Valuation
- Our NAV valuation of Zeus Co suggests an implied price target of 32,991 won, which is 13% lower than current share price.
- Given the lack of upside, we would avoid Zeus shares at current prices.
- Currently, JET Co is listed on Tokyo PRO Market Exchange. JET Co is expected to switch its listing to the Tokyo Standard Market Exchange.
Zeus Co (079370 KS): Is J.E.T.’s Spin-Off Priced In?
- Zeus Co Ltd (079370 KS), a maker of semiconductor equipment, flat panel display equipment, and facility automation solutions, intends to spin off 95%-held J.E.T. Co (6228 JP) next month.
- J.E.T., a semiconductor etching equipment play, will list on the 25 September. Pricing is expected around the 5 September.
- Zeus’ share price has fallen 33% in the past month. That may be justified.
AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows
- We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
- The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
- Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.
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