In today’s briefing:
- Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value
- SET50 Index Rebalance Preview: Changes from Now to June
- Merger Arb Mondays (20 Feb) – AAG Energy, Yashili, Toyo, Nitro, Origin Energy, Newcrest, O2Micro
- NIFTY Mar 23 Rebal: Quiddity Flow Expectations
- Weekly Deals Digest (19 Feb) – Fujitec, Toyo, AAG Energy, Yashili, Newcrest, Keppel, Pertamina
Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value
- The transaction completes on 28 February and the distribution in-specie of 49% new Sembcorp Marine (SMM SP) shares will be credited to Keppel Corp (KEP SP)‘s shareholders on 1 March.
- While the potential index inclusions are likely to support new SMM shares, there is likely to be greater short-term downward pressure from the overhang created by the distribution in-specie.
- New SMM trades at a premium P/NAV multiple of 1.81x vs peers. However, New SMM’s order book of S$18.1 billion implies an undemanding EV/order book of 0.60x vs historical ranges.
SET50 Index Rebalance Preview: Changes from Now to June
- Srisawad Power 1979 (SAWAD TB) is likely to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in early March following the DTAC/TRUE merger.
- Then there should be one change in June with Thai Life Insurance (TLI TB) replacing Jaymart PCL (JMART TB) in the index.
- There is one stock close to failing the liquidity test and that could lead to another change with a few stocks vying for index inclusion.
Merger Arb Mondays (20 Feb) – AAG Energy, Yashili, Toyo, Nitro, Origin Energy, Newcrest, O2Micro
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Origin Energy (ORG AU), 111 Inc (YI US), Golden Energy & Resources (GER SP), Genesis Minerals (GMD AU).
- Lowest spreads – Boustead Projects (BOCJ SP), Ihara Science (5999 JP), Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), Essential Metals (ESS AU), Warrego Energy (WGO AU).
NIFTY Mar 23 Rebal: Quiddity Flow Expectations
- The March 2023 Rebalance results for the NIFTY broad market Indices were announced after the close on Friday 17th February 2023.
- In my previous insights, I highlighted Pidilite Industries (PIDI IN) as a potential ADD for NIFTY 50 but it will not be added in March 2023. There are no changes.
- However, for NIFTY 100 (& NIFTY Next 50), 4/5 Expected ADDs and 5/5 Expected DELs were predicted correctly.
Weekly Deals Digest (19 Feb) – Fujitec, Toyo, AAG Energy, Yashili, Newcrest, Keppel, Pertamina
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Pertamina Geothermal (0125738D IJ) raised US$597 million by pricing the IPO at the low end of the price range of IDR875-880 per share.
- Event-Driven developments – Fujitec Co Ltd (6406 JP), Toyo Construction (1890 JP), Keppel Corp (KEP SP), Aag Energy Holdings (2686 HK), Newcrest Mining (NCM AU), Origin Energy (ORG AU).
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