In today’s briefing:
- Silverlake Axis (SILV SP): Voluntary Unconditional Offer
- Shinko Electric (6967) Deal Approval Delayed; From Here, Big Gap-, Small Break-, Some Delay-Risk
- KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- Huafa Property (982 HK): Buy With Both Hands
- Shinko Electric (6967 JP): Tender Start Timelines Delayed
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Could Drop Some More
- HK Connect SOUTHBOUND Flows (To 23 Aug 2024); Net Breaks the 28-Week Buying Streak on ETF Selling
- Quiddity Leaderboard T50/100 Sep 24: Nuvoton Tech TDIV DEL Likely; Shin Kong M&A Consequences
- Quiddity TDIV Sep 24 Flow Expectations: Final Expectations; One Deletion; US$253mn One-Way
- KOSPI Size Indices: Momentum Stalls; (Some) Upward Migrations Sell-Off
Silverlake Axis (SILV SP): Voluntary Unconditional Offer
- Silverlake Axis (SILV SP) has disclosed a voluntary unconditional offer from the Goh family and Ikhlas Capital. The default cash consideration is S$0.36, a 20.0% premium to the undisturbed price.
- The combi consideration is S$0.30 in cash and one new redeemable preference share (RPS) in the offeror, which will be mandatorily redeemed after five calendar years at S$0.18 per RPS.
- While not declared final, the offer is reasonable but not a knockout bid. The offeror is likely to use the voluntary delisting method to privatise Silverlake.
Shinko Electric (6967) Deal Approval Delayed; From Here, Big Gap-, Small Break-, Some Delay-Risk
- Today after the close, Shinko Electric Industries (6967 JP) offered a progress report on the approvals for the JIC Consortium Tender Offer originally “scheduled” to start in late August 2024.
- “Procedures and Steps Necessary under the competition laws of Vietnam and China have not been completed” so the Tender Offeror expects to commence the Tender Offer in/after late January 2025.
- The announcement appears to suggest no update is likely for another five months or until the Tender Offer starts. That will introduce questions of further delay.
KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
- KRX plans to launch the Value-Up Index as two separate indices: the “Excellent Value-Up Index” and the “Promising Value-Up Index.”
- The universe will include 150 constituents from KOSPI 200 and KOSDAQ 150. Allocation between indices is undecided, with sector limits on number and weight confirmed.
- The key indicators (ROE, PBR, shareholder return rate) remain unchanged. The Promising Index’s weights are undisclosed, but the Excellent Index favors financial and automotive stocks.
Huafa Property (982 HK): Buy With Both Hands
- A state-owned Offeror pitching a lifetime high Offer Price – with a solid premium – for an illiquid company? Sounds like a slam dunk.
- Yet property manager Huafa Property Services Group (982 HK) has perennially traded wide to Huafa Industrial Co., Ltd. Zhuhai (600325 CH)‘s terms. This is not justified.
- The Scheme Meeting/SGM is tomorrow (28 August), with payment on (or before) the 30 September. Or a gross/annualised return of 4%/46%. Buy here. Then buy some more.
Shinko Electric (6967 JP): Tender Start Timelines Delayed
- Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The tender start has been delayed from late August to around late January 2025.
- The delay was due to outstanding China SAMR and Vietnam regulatory approvals. The stretched timeline suggests that SAMR will likely conditionally approve the deal.
- While Ibiden Co Ltd (4062 JP)’s underperformance lowers the deal’s break price, timing, not break risk, remains the key concern. At the last close, the gross/annualised spread was 3.7%/7.5%.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Could Drop Some More
- With the review period complete, Nuvoton Technology (4919 TT) is a near certain deletion from the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
- Passive trackers will need to sell 20m shares in Nuvoton Technology (4919 TT). That is over 10% of float and the stock could continue to remain under pressure.
- The potential deletion still appears to be under positioned. There could be renewed selling in the stock over the next few weeks.
HK Connect SOUTHBOUND Flows (To 23 Aug 2024); Net Breaks the 28-Week Buying Streak on ETF Selling
- SOUTHBOUND was a net seller this past week for HK$1.5bn, the first week in 29 where SB was a net seller. It was all ETFs. Stocks were a net buy.
- Gross volumes remain very low. Net volumes de minimis. Very August-ish. No sectors stood out.
- The largest net buy was CSPC Pharmaceutical Group (1093 HK) where the net buying was the same size as the fifth largest net sell (Tencent (700 HK))
Quiddity Leaderboard T50/100 Sep 24: Nuvoton Tech TDIV DEL Likely; Shin Kong M&A Consequences
- The T50 index represents the top 50 largest stocks by market capitalization in the Taiwan Stock Exchange (TWSE). The T100 index represents the next 100 largest names (51-150 ranks).
- Today is the base date for the September 2024 index rebal event and the expected ADDs/DELs discussed in this insight are our final index change expectations.
- Separately, we also have a look at the T50/100 index implications of the Shin Kong Financial Holding (2888 TT) – Taishin Financial Holding (2887 TT) merger situation.
Quiddity TDIV Sep 24 Flow Expectations: Final Expectations; One Deletion; US$253mn One-Way
- The TDIV index tracks the top 50 names in the Taiwan Stock Exchange with the highest dividend yields. It is a yield-weighted index with unique capping rules.
- Today is the base date for determining constituent weights/capping for the TDIV index September 2024 index rebal event.
- We expect one deletion in September 2024 and we estimate the one-way capping flow to be around US$253mn.
KOSPI Size Indices: Momentum Stalls; (Some) Upward Migrations Sell-Off
- The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August. Only 4 trading days to go.
- We see 7 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 12 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
- The upward migrations have underperformed the downward migrations over the last month as a few stocks have sold off hard. Some despite being included in global indices.
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