In today’s briefing:
- Update on the S-REIT Re-Allocation Trade
- Appier Group (4180 JP): Now TOPIX-Ready!
- KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
- MSCI Korea Flow Trading for August 31st
- Net Marketing Japan (6175) “MBO” Tender Offer – Done Deal
- SSE50 Index Rebalance Preview: Sector Rotation To Continue
- Genex Gets an Improved A$0.25 Offer, Headcount Test a Risk, Board Hoping for an Auction
- LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
- A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
- Judo Capital IPO Lock-Up – Gearing up for a A$650m Lock-Up Release
Update on the S-REIT Re-Allocation Trade
- In June-July I warned of a reinvestment trade into S-REITs due to the S$2.0-3.0bn cash-out by investors in Mapletree North Asia Commercial Trust and sellers into the SPHREIT Chain Offer.
- Many investors who would need to re-allocate. The trade was to buy major S-REITs. From my last insight, a basket is up 5.3%. MCT has already topped out vs peers.
- The question is…. is there still a trade left to run?
Appier Group (4180 JP): Now TOPIX-Ready!
- In February 2022, I discussed why Appier Group (4180 JP) could be an interesting TOPIX Inclusion Candidate in TOPIX Inclusion Pre-Event: Appier Group (4180 JP)
- Earlier this month, I reiterated my view in TOPIX Inclusions: Who Is Ready (Aug 2022) identifying Appier Group as the best pick among all current TOPIX Inclusion candidates.
- Since my last insight, the share price has risen sharply and that has important implications for the company’s Prime market ambitions.
KOSDAQ150 Ad Hoc Index Rebalance: Hancom (030520) To Replace Vidente (121800)
- Vidente (121800 KS) has not submitted its semiannual reports and has been labeled as an ‘Administrative Issue’. This means deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) on 19 August.
- Hancom Inc (030520 KS) was the highest ranked stock to not be included in the index at the June rebalance. It will now be included in the index.
- Passive funds will need to buy KRW 8.8bn of Hancom Inc (030520 KS) while selling KRW 11.2bn of Vidente (121800 KS).
MSCI Korea Flow Trading for August 31st
- MSCI Korea’s August QIR features one deletion: SK Telecom. But Woori Financial, HYBE, and LG Energy will also present a notable impact as they face float rate changes.
- We should consider executing flow trading on these names, even SKT, towards the effective date as much as possible, as the flow magnitude wouldn’t be enough to act proactively.
- It’s been witnessed that SK Telecom’s recall and liquidation of short positions have been made preemptively this time, minimizing the risk of price distortion on the effective date.
Net Marketing Japan (6175) “MBO” Tender Offer – Done Deal
- Bain Capital Private Equity launched a deal for Net Marketing (6175 JP) at a 63% premium.
- That should be enough to get it done on its own, despite coming below the IPO price of 5yrs ago.
- In any case, Shareholder Structure makes this a completely done deal.
SSE50 Index Rebalance Preview: Sector Rotation To Continue
- Over 80% of the way through the review period for the December rebalance, we see 7 stocks in inclusion/exclusion zone. However, there can be a maximum of 5 changes.
- We estimate a one-way turnover of 3.9% at the December rebalance leading to a one-way trade of CNY 2.85bn.
- The potential adds have outperformed the potential deletes and the SSE50 Index (SSE50 INDEX) by a wide margin over the last few months.
Genex Gets an Improved A$0.25 Offer, Headcount Test a Risk, Board Hoping for an Auction
- Genex Power Ltd (GNX AU) received an improved non-binding offer from Skip Capital/Stonepeak at A$0.25 per share, an 8.7% bump from the previously rejected A$0.23 offer.
- The headcount test is emerging as a key risk as retail shareholders are voicing their displeasure. The offer is underwhelming based on precedent transactions and average sell-side price targets.
- The Board hopes that granting non-exclusive due diligence and stating an intention to recommend a binding A$0.25 offer will force rival bidders to kickstart an auction.
LX Semicon KOSDAQ→KOSPI Migration Event: Index Rebalance Trading
- LX Semicon announced that its board approved KOSPI migration on August 17. This migration requires shareholder approval, and a shareholder meeting will be scheduled for September 23.
- The outflow of KOSDAQ 150 is estimated to be -1.37x ADTV. A passive impact of this magnitude should cause a price movement of at least 3%p.
- But LX Semicon’s GICS sector won’t change after the KOSPI migration. We should refrain from trading with expectations for the possibility of KOSPI 200 inclusion at this point.
A Full Walkthrough of What Happens to Vidente & Hancom: KOSDAQ 150 Special Change
- Vidente is a KOSDAQ 150 constituent. If designated as an administrative issue, it will be removed on the third trading day after the effective date of designation.
- Hancom gets to replace Vidente, and rebalancing trading occurs at the close of August 19th. Hancom’s passive inflow should be 4.70x ADTV.
- It seems that proactive long positions have already been built up significantly from today. So, we should consider getting out of the position earlier than usual towards Friday’s close.
Judo Capital IPO Lock-Up – Gearing up for a A$650m Lock-Up Release
- Judo Capital raised about US$483m by selling a mix of primary and secondary shares in Nov 21. Its IPO linked lockup is set to expire later this month.
- Judo Capital (JC) focuses on lending to small and medium-sized enterprises (SMEs) in Australia. It also offers a range of personal term deposit products to consumers.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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