In today’s briefing:
- StubWorld: Swire’s NAV Discount Further Narrows As Buyback Kicks Off
- FTSE TWSE Dividend+ Sep 22 Capping: Massive Negative Flows for Farglory, Greatek, & Elan
- Intouch’s NAV Discount Not Supported By Higher Look-Through Payout
- Intel’s $30 Billion JV with Brookfield Asset Mgmt: To Take Away Market Share from TSMC & Samsung?
- KLCI Index Rebalance Preview: The Gloves Could Come Off
- ESOP Lockup Releases: Iljin HySolus & Hyundai Heavy Industries
- Hong Kong CEO & Director Dealings – 25th August 2022
- APM Human Services IPO Lock-Up – PE with a US$620m Stake Comes Free
StubWorld: Swire’s NAV Discount Further Narrows As Buyback Kicks Off
- Swire Pacific (19 HK) has bought back B/A shares in ratios of 63/37 and 72/28 over two days. Listing Rules suggest the ratio has to be higher than 76.71/23.29.
- Preceding my comments on Swire 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%.
FTSE TWSE Dividend+ Sep 22 Capping: Massive Negative Flows for Farglory, Greatek, & Elan
- The index constituent weights of the FTSE TWSE Dividend+ Index will be capped during the upcoming September 2022 Index quarterly index review.
- In addition, Elan Microelectronics (2458 TT) could also get deleted as discussed in FTSE TWSE Quiddity Leaderboard Sep 2022: Elan Micro (2458 TT) Could Be a Big Negative Surprise
- In this insight, we take a look at Quiddity’s expectations for index flows resulting from these events.
Intouch’s NAV Discount Not Supported By Higher Look-Through Payout
- Intouch Holdings (INTUCH TB)‘s discount to NAV is back to levels last seen in November 2021, where euphoric trading was rolling over subsequent to Gulf Energy Development (GULF TB)‘s VTO.
- Intouch’s net cash increased in the 2Q22 and its look-through interim dividend payout is the highest in at least five years.
- I’d be shorting Intouch here and buying Advanced Info Service (ADVANC TB), with a view to mean reversion of ~25% NAV discount.
Intel’s $30 Billion JV with Brookfield Asset Mgmt: To Take Away Market Share from TSMC & Samsung?
- On 23 August, Intel announced that it will partner with Canada’s Brookfield Asset Management to jointly fund up to $30 billion to make advanced semiconductor chips in Arizona.
- Despite Intel’s aggressive plans to expand the semiconductor chip production, we are more concerned about the overall downturn in the semiconductor sector which lead to further decline in sales.
- Despite our negative view of Intel’s shares in the near term, Intel could gain market share versus Samsung and TSMC in the semiconductor sector in the next three years.
KLCI Index Rebalance Preview: The Gloves Could Come Off
- AMMB Holdings (AMM MK) and Ql Resources (QLG MK) could replace Hartalega Holdings (HART MK) and Top Glove Corp (TOPG MK) at the December rebalance.
- One way turnover is estimated at 2.87% and the impact of passive flows is larger on the potential adds as compared to the potential deletes.
- Westports Holdings (WPRTS MK) is a close add and there could be changes over the next few months as we approach the end of the review period.
ESOP Lockup Releases: Iljin HySolus & Hyundai Heavy Industries
- Iljin HySolus and Hyundai Heavy Industries will release the ESOP volumes, 0.82% and 3.93% of SO, on September 1st and 17th. They have risen 2.3% and 145.8% from the listings.
- Despite the small profit, it seems more probable that the Iljin HySolus ESOP will attempt to dispose of its shares immediately after the release, potentially leading to another price correction.
- On the other hand, I would seek a hedge for the HHI ESOP lockup release. I would look at KSOE as a hedge for my short position on HHI.
Hong Kong CEO & Director Dealings – 25th August 2022
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights also flag those companies where shares have been pledged, both recently and ongoing.
APM Human Services IPO Lock-Up – PE with a US$620m Stake Comes Free
- APM Human Services (APM) raised about US$730m by selling a mix of primary and secondary shares in Nov 21. Its IPO linked lockup is set to expire later this month.
- APM is an international human services provider, it runs 800 sites spanning 10 countries with its largest market being Australia.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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