In today’s briefing:
- STAR50 Index Rebalance: Five Changes as Adds Bigly Outperform Deletes
- Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?
- HSTECH Mar23 Index Review/Flows – Weibo IN, Ming Yuan Cloud OUT, BIGLY Flows on Li Auto & Xpeng
- Halcyon Agri (HACL SP): Offer Document Out, Offer Closes 24 March
- HSCEI Mar23 Index Review/Flows – Xpeng Added, China Feihe Deleted, Li Auto Sees A Bump Up
- HSI Mar23 Index Review/Flows – No Changes But Flows; 100 Names a Loooong Way Off
- Merger Arb Mondays (27 Feb) – Jiangnan, Origin Energy, Pushpay, Nitro, Norwest, Halcyon, Boustead
- Weekly Deals Digest (26 Feb) – Sembcorp Marine, Jiangnan, Origin Energy, Nitro, Boustead, Fujitec
- Halcyon Agri: Offer Doc Out. No New News Otherwise
STAR50 Index Rebalance: Five Changes as Adds Bigly Outperform Deletes
- The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in March.
- One way turnover is estimated at 4.95% and will result in a one-way trade of CNY 4,413m. The estimated impact on the deletes is higher than that on the adds.
- The inclusions have outperformed the deletions over multiple time periods. There will be pre-positions on the stocks and those could be unwound over the next week or two.
Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?
- The Fujitec Co Ltd (6406 JP) EGM where activist Oasis Management wanted to spill the independent board members took place Friday.
- Results were mixed, but generally a success for Oasis, with 9 of the 13 votes won. Preliminary analysis of “uncertain voter” split interesting, and “Glass Lewis Effect” stronger than expected.
- The real shocker, however, was a footnote at the end of the announcement. This could (and should) have further repercussions.
HSTECH Mar23 Index Review/Flows – Weibo IN, Ming Yuan Cloud OUT, BIGLY Flows on Li Auto & Xpeng
- On Friday 24 February 2023, the Hang Seng Index Committee announced changes for the HSTECH Index – Weibo Corp (9898 HK) IN, Ming Yuan Cloud Group (909 HK) OUT.
- Notably, the changes in FAF due to the new treatment for Dual Primary Companies means decent boosts in weight for XPeng (9868 HK) and Li Auto (2015 HK).
- Of the three “major” indices, this one produces the most fun – US$900mm+ and 8.7% flow one-way. And the big flows are additive to the other indices.
Halcyon Agri (HACL SP): Offer Document Out, Offer Closes 24 March
- China Hainan Rubber Industry (601118 CH) has despatched the offer document relating to its Halcyon Agri (HACL SP) MGO at US$0.315 or S$0.413 per share. The offer closes on 24 March.
- The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate (47% excluding the Gondobintoro Family).
- We think that this is achievable as the offer is attractive. At the last close and for an early-April payment, the gross and annualised spread is 0.7% and 7.3%, respectively.
HSCEI Mar23 Index Review/Flows – Xpeng Added, China Feihe Deleted, Li Auto Sees A Bump Up
- HSCEI keeps its constituent count at 80 names, adds XPeng (9868 HK) and deletes China Feihe (6186 HK).
- There are decent flows in this rebal, with Tencent (700 HK) and Alibaba Group (9988 HK) seeing selling, Meituan (3690 HK) seeing buying. Li Auto (2015 HK) sees FAF upweight.
- Janaghan Jeyakumar, CFA had called the deletion of China Feihe, but had another name higher on the ADD list. 3.2% and HK$2.6bn one-way flow.
HSI Mar23 Index Review/Flows – No Changes But Flows; 100 Names a Loooong Way Off
- There are no index changes, in what comes as a surprise given the index is now 9 months late getting to 80 names, with a target to get to 100.
- There are, however, several capping changes, leading to nearly 3 days to sell on HSBC Holdings (5 HK) and 2.6% one-way turnover.
- The lack of name changes is disappointing. They don’t need to find names to delete, just names to add to improve tracking and coverage. This portends further slowness to change.
Merger Arb Mondays (27 Feb) – Jiangnan, Origin Energy, Pushpay, Nitro, Norwest, Halcyon, Boustead
- 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), 111 Inc (YI US), Golden Energy & Resources (GER SP), Origin Energy (ORG AU), Toyo Construction (1890 JP).
- Lowest spreads – Ihara Science (5999 JP), Tyro Payments (TYR AU), Nitro Software Ltd (NTO AU), Boustead Projects (BOCJ SP), Nissin Electric (6641 JP), Techno Associe (8249 JP).
Weekly Deals Digest (26 Feb) – Sembcorp Marine, Jiangnan, Origin Energy, Nitro, Boustead, Fujitec
- 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 Energy (PGEO IJ) has a flat debut and Star Entertainment Group (SGR AU) aims to raise A$800 million to fix its balance sheet.
- Event-Driven developments – Sembcorp Marine (SMM SP), Halcyon Agri (HACL SP), Fujitec Co Ltd (6406 JP), Jiangnan (1366 HK), Techtronic Industries (669 HK), Origin Energy (ORG AU), Nitro, Pushpay.
Halcyon Agri: Offer Doc Out. No New News Otherwise
- The Offer Document for China Hainan Rubber Industry (601118 CH)‘s mandatory Offer for Halcyon Agri (HACL SP) has been dispatched.
- Hainan Rubber holds 36% and needs 14% out of 34.8% available – or ~40% to tender. The first close is the 24 March.
- There is no IFA opinion in the Offer Doc. This will be present in the Circular which is expected to be sent out by the 10th March, at the latest.
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