In today’s briefing:
- Solactive Global Lithium Index Rebalance: 45% Turnover & US$980m Trade
- KOSPI200/KOSDAQ150 Index Rebalances: KRX Increases Opacity on Stock Selection
- StubWorld: YTL Is Coming Up Cheap; Li Buys More PCCW
- Frasers Hospitality – Will TCC Renew Its Takeover Offer? Market Prices Bet Yes Ahead of Earnings
- Quiddity Leaderboard TDIV Dec 23: Sector-Neutral Trade Ideas for CDFHC and Far Eastern New Century
- Quiddity Leaderboard T50/100 Dec 23: U-Ming Potential TDIV Deletion Is the Main Talking Point
- In Play and Likely Worth More
- EQD | The NIFTY Could Find WEEKLY Support Soon and Bounce
Solactive Global Lithium Index Rebalance: 45% Turnover & US$980m Trade
- Solactive has announced the constituent changes for the Global Lithium Index. There are 8 adds and 9 deletes with implementation at the close on 31 October.
- Estimated one-way turnover is in excess of 22% and will result in a one-way trade of US$490m. There are 11 stocks with estimated passive flows greater than 1x ADV.
- The index is not very widely tracked and there could be big moves in stocks today and over the next few days – especially where there is multiple days ADV.
KOSPI200/KOSDAQ150 Index Rebalances: KRX Increases Opacity on Stock Selection
- KRX has amended the stock selection methodology for the KOSPI2 INDEX and KOSDQ150 INDEX and added ‘Expert Judgement’ as a criteria.
- The qualitative and quantitative criteria and the detailed filtering standards will be described in the manual but will NOT be publicly disclosed.
- There is no change from using full market cap to free float market cap in stock selection, so the stocks that could be added/deleted will be broadly same as forecasts.
StubWorld: YTL Is Coming Up Cheap; Li Buys More PCCW
- Malaysian conglomerate YTL Corp Bhd (YTL MK) is coming up “cheap” versus YTL Power International (YTLP MK). And Richard Li chips away at PCCW Ltd (8 HK).
- Preceding my comments on YTL and PCCW are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Frasers Hospitality – Will TCC Renew Its Takeover Offer? Market Prices Bet Yes Ahead of Earnings
- 400+ days ago, the TCC Group bid for Frasers Hospitality Trust (FHT SP) at just over 1.05x NAV failed on a combination of vocal minority opposition and minority apathy.
- FHT has dramatically outperformed plummeting peers over the last few months on hope TCC might re-up that bid, but weaker peers and CRE markets suggest financing could be tougher.
- Nothing is impossible, but it might make more sense for TCC to up its stake by stealth here rather than brute force. Earnings are 7 November.
Quiddity Leaderboard TDIV Dec 23: Sector-Neutral Trade Ideas for CDFHC and Far Eastern New Century
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2023 review.
- I currently see 6 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
- The estimate for one-way flow in December 2023 is US$1.37bn.
Quiddity Leaderboard T50/100 Dec 23: U-Ming Potential TDIV Deletion Is the Main Talking Point
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the December 2023 Rebalance.
- While there are no changes expected for the T50 index there could be one change for the T100 index.
- U Ming Marine Transport Corp (2606 TT) has moved closer to a potential T100 deletion which could also result in a TDIV deletion which has very significant flow implications.
In Play and Likely Worth More
- The current offer from Apollo of 65p/share undervalues the company. RTN ex-Leisure can achieve huge upside merely by executing the business plan. The shares have consistently traded above 65p.
- Activist investors are piling on the register and there is a strong possibility that shareholders push for an offer sweetening (c.75p). RTN is in play, another PE bidder could interlope.
- The bid is below mid-2021 highs of around 140p. Although a 34% premium is optically good, a conservative SOTP valuation provides a fair value estimate of 78.7p/share (8.7x EV/24eEBITDA).
EQD | The NIFTY Could Find WEEKLY Support Soon and Bounce
- The NIFTY Index last week closed down (CC=-1) and it’s moving towards the Q2/median support at 19154.
- The Index is not as oversold WEEKLY and MONTHLY as some of its other peers in the APAC group and is expected to rebound this week or the next.
- Suggested support prices to go LONG are found in the 19154 to 18682 price area, the rebound should unfold in November and could last the entire month.
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