In today’s briefing:
- PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
- Sunpower: 2023 China Re-Opening Stock, but CB Conversion Uncertainty Needs To Be Resolved
- Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering
- FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change
- Deere & Co: New Product Launches & Other Drivers
PCOMP Index Rebalance Preview Feb 23: Higher Free Float Means Fewer Changes
- From December 2022, the minimum free float requirement to be a part of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) increases from 15% to 20%.
- We see a high probability of DMCI Holdings (DMC PM) replacing Emperador (EMP PM) in the index at the upcoming rebalance.
- There are a few other potential changes to the index and the passive flow on the stocks will be material.
Sunpower: 2023 China Re-Opening Stock, but CB Conversion Uncertainty Needs To Be Resolved
- Sunpower has had a rough +/-18 months as input cost rises coincided with Force Majeure issues at some of its clients due to never-ending rolling Chinese lockdowns.
- Mr. Market has pushed Sunpower back below 0.27 SGD/share (-43% YTD) despite revenue- and EBITDA growth continuing at its GI division. Profits have been compressed due to rising input costs.
- As China re-opens in FY23 Sunpower should benefit from normalization and recovery in demand from its industrial base customers. However, CB conversion details are needed for re-rating to start.
Toshiba (6502 JP): JIP’s Privatisation Bid Is Floundering
- JIP, Toshiba Corp (6502 JP)‘s preferred bidder, is reported to be under pressure from co-investors to cut its offer price. Securing financing continues to be troublesome.
- An offer valuing Toshiba less than JPY2.2 trillion would face pushback from the special committee, let alone shareholders. There are no signs of a JIC/Bain coming to the rescue.
- While the Toshiba/peers price ratio remains undemanding compared to historical ratios, Toshiba looks expensive vs peers on multiples. With short-term newsflow likely to be incrementally negative, remain on the sidelines.
FTSE China A50 Index Rebalance: Stock Connect Deletion to Drive Change
- Beijing-Shanghai High Speed Railway-A (601816 CH) will be deleted from the Northbound Stock Connect Buy and Sell list from the close on 9 December.
- Beijing-Shanghai High Speed Railway will be deleted from the SSE180, MSCI and FTSE indices. Plus a deletion from the FTSE China A50 Index (XIN9I INDEX).
- The replacement for Beijing-Shanghai High Speed Railway-A (601816 CH) will be determined at the close of trading today and the announcement will be made post market close.
Deere & Co: New Product Launches & Other Drivers
- Deere had a challenging start to the new fiscal as a result of a work stoppage at some of its biggest U.S. plants, but managed to resolve the situation with the help of a new contract.
- The company delivered another all-around beat and the performance across its segments was fueled by persistently high demand and increased production rates.
- Furthermore, they launched several large wheel loaders, including 744 P-tier, 824 P-tier, 844 P-tier, and brand-new 904 P-tier.
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