In today’s briefing:
- Rio Tinto Taps Arcadium As Lithium Prices Sag
- Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities
- Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light
- Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained
- Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
- TOPIX Inclusions: Who Is Ready (Oct 2024)
- Greatview Aseptic Packaging (468.HK) Update – Some New Information Worth the Attention
- WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: US$300m Round-Trip Trade
- Boqi Environmental (2377 HK): Privatisation by Management?
- EQD | The Nikkei Is At The Top But Could Rally A Bit More…
Rio Tinto Taps Arcadium As Lithium Prices Sag
- Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition.
- No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
- Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable.
Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities
- Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%.
- The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month.
- Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH). The question: how much more in the tank?
Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light
- In response to media reports, Arcadium Lithium (LTM AU) confirmed receiving a non-binding proposal from Rio Tinto Ltd (RIO AU). No terms were disclosed.
- According to press reports, Rio aims to acquire Arcadium at a valuation range of US$4-6 billion (A$5.9-8.8 billion). Blackwattle thinks a fair price is closer to US$8 billion.
- The rumoured valuation range is unattractive and arguably a bear case valuation assuming no significant recovery in lithium prices.
Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained
- This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
- The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
- The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.
Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
- Rigaku Holdings (268A JP) listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
- At the reported indicative IPO price of JPY 1230/share, Rigaku Holdings (268A JP) will be valued at JPY 277.1bn (US$1.87bn).
- The stock should be added to the TOPIX INDEX on 28 November while inclusion in global indices will take place in February and June next year.
TOPIX Inclusions: Who Is Ready (Oct 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
- PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.
Greatview Aseptic Packaging (468.HK) Update – Some New Information Worth the Attention
- The loss of control over Greatview’s international business will lead to significant loss of Newjf’s interests,which is the most direct trigger of Newjf’s decision to initiate an acquisition of Greatview.
- Newjf is actively fulfilling the Pre-Conditions and is now progressing smoothly. Newjf’s acquisition of Greatview is complied with the Anti-monopoly Law. Newjf will make every effort to complete the acquisition.
- Greatview urges shareholders to reject Newjf’s Offer is not for the benefit of the entire company. The “true motives” behind are questionable. We advise investors to take Newjf’s Offer seriously.
WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: US$300m Round-Trip Trade
- The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
- The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
- There are 154 adds and 80 deletes for the index with an estimated round-trip trade of US$300m.
Boqi Environmental (2377 HK): Privatisation by Management?
- China Boqi Environmental Hol (2377 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. The shares have been up 39% since 30 September.
- It is likely that management, representing 59.59% of outstanding shares, is seeking to privatise Boqi through a Cayman scheme.
- Sinopec, a pre-IPO investor potentially holding a blocking stake, is likely seeking to exit. At the last close, Boqi trades in line with the median peers’ P/B multiple.
EQD | The Nikkei Is At The Top But Could Rally A Bit More…
- In our last Nikkei 225 insight we predicted that the Nikkei 225 INDEX was overbought and about to pullback and that is exactly what happened the following week.
- We also reiterated our view about the index’s overall trend, not looking good, and the fact that our seasonal quantitative model point to a coin flip scenario (up/down) for October.
- This week the index gapped up and the current SHORT pattern model is showing a good chance to rally from here. Let’s check how high it can go.
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