In today’s briefing:
- Tencent (700 HK) – This Is Not the Selldown You Are Looking For
- Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
- An Alternative Flow Trading Angle for K200 Rebalancing in June
- Enchem: Block Deal Sale of 14% of Outstanding Shares
- Quiddity Leaderboard for BSE/SENSEX Jun 23: Six BSE 100 Changes and Four BSE 200 Changes
- Cash Call at 38% Discount
Tencent (700 HK) – This Is Not the Selldown You Are Looking For
- On April 11, Prosus (PRX NA) made an Update on Repurchase Programme that it had repurchased shares in the market from the 3-7 April. They do so every week.
- This one said they would move 96 million shares of Tencent (700 HK) currently held in non-transferrable shares into CCASS so they could be sold.
- The ADRs dropped in New York time. Tencent shares fell hard today. If the share price fell because of a block offering, that would be unwarranted.
Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
- With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it’s been a year later than originally planned to reach 80 index constituents.
- We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
- There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.
An Alternative Flow Trading Angle for K200 Rebalancing in June
- In KOSPI 200 IT Sector Index rebalancing in June, we should consider using Samsung SDS as a hedge for short positions on KakaoPay from a day trading perspective.
- The expected performance of traditional flow trading based on passive impact has become uncertain due to flexible rebalancing trading by local pensions and short selling resumption on K200 new entrants.
- As such, flow events on these sector indices that are still pretty much under the radar in the market could be a meaningful alternative for us.
Enchem: Block Deal Sale of 14% of Outstanding Shares
- Chosun Business Daily reported today that Enchem is considering on conducting a block deal sale of nearly 14% of its outstanding shares, representing about 160 billion won.
- Brahman PS Investment is the likely seller in this block deal sale. If the block deal sale is successful, Brahman will have gained more than 6x on its original investment.
- We would not be buyers of the block deal sale mainly due to unattractive valuations, volatile profitability, and not enough block deal sale discount.
Quiddity Leaderboard for BSE/SENSEX Jun 23: Six BSE 100 Changes and Four BSE 200 Changes
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.
- There are only few more days left in the reference period used for the constituent selection process for the June 2023 Rebalance.
- Currently, I see 6 ADDs/DELs for the BSE 100 index and 4 ADDs/DELs for the BSE 200 index.
Cash Call at 38% Discount
- The timing was ripe for a rights issue after the share price had gained 64% since 24 October and addresses the capital structure, a need to win relevant contracts.
- The rights issue is priced at a 38.6% discount (with a negative impact on the share price). TERP is €8.8438, theoretical value of the right is €1.1762).
- Exclusively considering the cash injection and new number of shares, TP would be €9.07/share, with the caveat of the large dilution and uncertainty about the execution of the restructuring.
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