In today’s briefing:
- Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- Quiddity Leaderboard S&P 500 Dec 24 Rebal – Final Predictions
- HKBN (1310 HK): Just How Likely Is An I Squared Offer?
- Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
- GAPack (468 HK): No Further Progress On Co-Founder’s Offer. That’s Good For XJF
- UK100 and UK250 Index Rebals: Some Interesting Trades
- S&P500 December 2024 Forecast (Final): Flipping the COIN
- Hotel Properties (HPI AU): Charter Hall Declares Offer Unconditional
- Kronos Bio Strategic Review: Workforce Reduction, Leadership Changes, and Potential Sale Amid Genentech Partnership Uncertainty
Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion.
- The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
- The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer.
Quiddity Leaderboard S&P 500 Dec 24 Rebal – Final Predictions
- The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
- The rankings used for the December 2024 index rebal event will be based on yesterday’s (4th December 2024) opening prices. Announcement date will be
- Inside we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.
HKBN (1310 HK): Just How Likely Is An I Squared Offer?
- Two hours before China Mobile’s pre-conditional voluntary Offer announcement on the 2 December, HKBN Ltd (1310 HK) flagged a possible separate Offer from I Squared Asia-backed HGC Global Communication (HGC).
- No price was mentioned, although HKBN and I Squared “are in discussions on the terms of the proposal (including the price).” The media is reporting a HK$5-HK$6/share price range.
- Apart from anti-competition concerns via a HKBN/HGC tie-in; would HGC even get approval from the powers that be to proceed with a merger?
Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
- Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
- We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
- There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.
GAPack (468 HK): No Further Progress On Co-Founder’s Offer. That’s Good For XJF
- In Greatview Aseptic Packaging (468 HK) (GAPack)’s monthly update, there is no update.
- No further progress on the management Offer. Four months and counting. In the meantime, Shandong Xinjufeng Technology (301296 CH) (XJF) secured SAMR approval; and the appointment of two friendly directors.
- IF (and when) XJF’s Offer becomes open to acceptance and the IFA is supportive, management should back the Offer if their own Offer is unlikely to materialise.
UK100 and UK250 Index Rebals: Some Interesting Trades
- Janaghan Jeyakumar, CFA had predicted a series of changes in UK100 (a.k.a. F100) and UK250 (aka F250) and all predicted changes came to pass. F250 saw one extra change.
- There will be one more ad hoc announcement today. We think the replacement for Tritax Eurobox (EBOX LN) will be Mobico Group (MCG LN).
- There were two ADDs in F250 which are VERY much worth looking at. Janaghan had addressed these in prior weeks as well. Those two names really stand out.
S&P500 December 2024 Forecast (Final): Flipping the COIN
- Coinbase Global (COIN US) can be the unexpected addition by transition because of a high liquidity score and a close distance below the estimated transition threshold.
- Lennox International (LII US) is the main candidate for addition by migration due to having the highest average mcap score and passing eligibility metrics.
- Illumina Inc (ILMN US) has a muted conviction for addition because of ineligible earnings and a recent deletion from the index.
Hotel Properties (HPI AU): Charter Hall Declares Offer Unconditional
- Declaring its Offer unconditional was always a possibility as Hotel Property Investments (HPI AU) board continues to reject terms. The alternative was a likely deal fail.
- Charter Halls currently has 31.37%, including 6.66% via the acceptance facility. That facility has now closed following this unconditional statement.
- It will be challenging for Charter Hall to clear 50% without board support. But IF they get 50%+, expect the board to change their mind and recommend shareholders accept terms.
Kronos Bio Strategic Review: Workforce Reduction, Leadership Changes, and Potential Sale Amid Genentech Partnership Uncertainty
- Kronos Bio’s NAV is estimated at $1.39/share, 48% above current price, with strategic review ongoing for sale/reverse merger.
- Significant insider ownership includes 14.7% by ex-CEO Norbert Bischofberger and 5.8% by chairman Arie Belldegrun.
- Kronos Bio’s partnership with Genentech offers potential milestone payments, but no compounds identified for further development.
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