In today’s briefing:
- KDX (8972) – The Kenedix REIT Merger After a Disastrous Index Inclusion Trade
- Onewo (2602 HK) – Full Circulation & HSCI Inclusion
- EQD | If the Nikkei Begings to Rally, Where Will It Encounter Resistance?
- TPG/Intervest: Agreed Offer, Spread
- Quiddity HK Connect SOUTHBOUND (To 27-Oct-23); Meituan & Tech IN, High Div SOEs OUT, Financials MIA
- HDFCL Vs SBIL: The Low Down on the Best Life Insurance Stocks In India Right Now (+SBIL 2Q24 Review)
KDX (8972) – The Kenedix REIT Merger After a Disastrous Index Inclusion Trade
- The merger between Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) is done. Newco starts trading this week as KDX.
- The trade was fine until I wrote 9 days ago there was still room to run. It fell the next day, bounced 3%, then got CRUSHED into the index upweight.
- NEWREIT is now as cheap relative to its Pro-Forma Peer Group as it was at announcement.
Onewo (2602 HK) – Full Circulation & HSCI Inclusion
- Onewo (2602 HK) has announced the full conversion of 1.05bn Domestic Shares and Unlisted Foreign Shares to H-shares. The increased market cap will help in HSCI inclusion.
- Onewo (2602 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect soon after index inclusion.
- Onewo (2602 HK) has drastically underperformed its peers since listing and the HSCI inclusion could mark a turning point for the stock.
EQD | If the Nikkei Begings to Rally, Where Will It Encounter Resistance?
- Last week, the Nikkei closed down at 30991.69 (CC=-2). The index’s sell-off could end in November, marking a temporary bottom from which a rally could start.
- MRM models say that if the Nikkei bounces this week, it could rise for 3 weeks and reach a price area between 31624 (Q3/CC=+1) and 32892 (Q3/Gen.Pattern Boxplot).
- The upcoming rally comes as a reaction to quite OVERSOLD conditions, as previously discussed, but could be followed by another pullback. This insight points to where the rally may end.
TPG/Intervest: Agreed Offer, Spread
- TPG will launch an agreed offer for turnaround-play Intervest Offices & Warehouses (INTO BB) at €21/share, 52% premium, with minimum acceptance condition of 50%+1 share. It has already secured 10.09% acceptances.
- At 6.7% discount to last reported EPRA NTA, 5.5% discount to pro forma EPRA NTA, and 14.3x P/FFO 2023e, the offer price seems good exit value for shareholders.
- Listed logistics European compas trade at c.11% premium EPRA NTA 2023e and 17x-18x P/FFO 2023e. Spread is 4.52%/16.04% (gross/annualised assuming settlement on 21 February). Risk/return looks interesting. Long.
Quiddity HK Connect SOUTHBOUND (To 27-Oct-23); Meituan & Tech IN, High Div SOEs OUT, Financials MIA
- This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
- Last week, China Mobile (941), SMIC (981) and CNOOC (883) all saw total SOUTHBOUND turnover top 75% of value traded on a gross basis, indicating huge participation.
- Meituan was again the top SOUTHBOUND inflow, now net inflow every day for more than a month. Total Net Inflows at HK$6.9bn now 14 weeks straight in the positive column.
HDFCL Vs SBIL: The Low Down on the Best Life Insurance Stocks In India Right Now (+SBIL 2Q24 Review)
- We make two arguments in this note (A) Why you should invest in the Indian Life Insurance Sector right now; (B) Why you should start with SBILIFE over HDFCLIFE
- Answers (A) The train has left-the-station on the long runway of double-digit growth in the sector; (B) The sector valuations are very reasonable due to short-term pressures, SBIL especially so.
- We compare SBILIFE and HDFCL’s valuations, and narrow the focus on to One Crucial Factor showcasing the fundamental strength of these businesses.
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