In today’s briefing:
- TOPIX Inclusions: Who Is Ready (Jan 2023)
- Ping An A/H Premium: Buy the A’s, Sell the H’s
- Halcyon Agri: MGO One Step Closer As SASAC Approves SPA
- Korea M&A Outlook in 2023: What’s for Sale?
- Warrego: Gina Bumps As MinRes (Potentially) Circles
- EQD | Tencent (700 HK): Use Derivatives to Protect Recent Gains
- Warrego (WGO AU): Hancock Ups Its Offer to A$0.36 as MinRes Looms Large
- Backtracing Korea NPS Trades on Local Stocks Through KRX FAIR
TOPIX Inclusions: Who Is Ready (Jan 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Dec 2022).
- Our latest top pick for TOPIX Inclusion pre-events is Artspark Holdings (3663 JP).
Ping An A/H Premium: Buy the A’s, Sell the H’s
- Ping An Insurance (H) (2318 HK) has outperformed Ping An Insurance (601318 CH) by 38% since our last Insight. With the AH premium near parity, we take profit.
- We also reverse the position and go long Ping An Insurance (601318 CH) and short Ping An Insurance (H) (2318 HK) to play the premium expansion trade.
- Northbound holding of Ping An Insurance (601318 CH) has increased over the last couple of months while Southbound holding of Ping An Insurance (H) (2318 HK) has decreased.
Halcyon Agri: MGO One Step Closer As SASAC Approves SPA
- Back on the 16 November, Halcyon Agri (HACL SP) announced Sinochem, holding 65.2% of shares out, had entered into an SPA to sell 36% to China Hainan Rubber (601118 CH).
- Upon completion of the SPA, Hainan Rubber will make an MGO, conditional on a 50% tendering acceptance. Sinochem has provided an undertaking not to tender its remaining 29.2% stake.
- Halcyon has now announced SASAC has given the green light for the SPA. Outstanding conditions include MoC and NDRC. Those approvals should fall into place shortly.
Korea M&A Outlook in 2023: What’s for Sale?
- More than 20 trillion won (US$16 billion) worth of deals are up for M&As in 2023.
- However, due to high interest rates and differences on valuations among buyers and sellers, the M&A market in Korea is likely to continue to be weak in 2023.
- In this insight, we discuss 24 companies that are up for M&As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.
Warrego: Gina Bumps As MinRes (Potentially) Circles
- Talk about a crowded register. Gina Rinehart’s Hancock has 25.91%, Strike Energy (STX AU) has 19.9%, and now a new player, possibly MinRes (MIN AU), has taken a ~15% stake.
- 186mn shares in Warrego, or 15.2% were crossed in after market yesterday at HK$0.35/share. Regal Funds is understood to be one large seller. No shareholding disclosure has emerged.
- Not one to rest on its laurels, Hancock immediately bumped the Offer to A$0.36/share, up from A$0.28/share, provided it gets to 40%. We need more popcorn.
EQD | Tencent (700 HK): Use Derivatives to Protect Recent Gains
- Stock is up over 80% from October lows and almost 10% in 2023 already
- Sentiment over fundamentals appears to be driving the rally and stock is back in the worlds top 10 most valuable companies
- We consider some option strategies to roll profits and reduce exposure
Warrego (WGO AU): Hancock Ups Its Offer to A$0.36 as MinRes Looms Large
- Hancock increased its Warrego Energy (WGO AU) off-market takeover bid by 28.6% from A$0.28 to A$0.36 per share along with a 40% minimum acceptance condition.
- Hancock’s latest move is an attempt to ward off a potential offer from a third suitor who has built up a 15% stake (rumoured to be Mineral Resources (MIN AU)).
- Strike Energy (STX AU)’s all-scrip offer remains the highest as it is the next takeover target. However, Gina Rinehart’s ego suggests that she will persist no matter the cost.
Backtracing Korea NPS Trades on Local Stocks Through KRX FAIR
- Last year, NPS raised the weighting of defense, renewables, and reopening (entertainment and leisure) stocks. In contrast, NPS mainly reduced exposure to construction, banking, and semiconductors.
- In December, NPS is building a fairly aggressive long position in China Reopening. In addition, trading assumed to be portfolio rebalancing for the local chemical sector was detected.
- NPS’ stake in most major holdings exceeds 5%. This allows us to monitor NPS’ trading history almost in real time through KRX FAIR.
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