In today’s briefing:
- Nikkei 225 Index Rebalance: Passives Trade on Friday
- Toyo Construction (1890) Plays Offence – A New Mid-Term Mgmt Plan with High Shareholder Payout
- Weekly Deals Digest (26 Mar) – Toshiba, Toyo, Healius, Mincor, Rakuten Bank, SBI Sumishin, Harita
- CIMC Enric (3899 HK): Growth Outlook Secured by Encouraging Orderbook
Nikkei 225 Index Rebalance: Passives Trade on Friday
- Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) will replace Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) in the Nikkei 225.
- Estimated one-way turnover at the rebalance is 1.08% and will result in a round-trip trade of JPY 412.8bn (US$3.16bn) at the close on 31 March.
- There has been recent pre-positioning on the stocks as well as movement in short interest over the last couple of months.
Toyo Construction (1890) Plays Offence – A New Mid-Term Mgmt Plan with High Shareholder Payout
- YFO continues its fight on Board governance. Toyo Construction has shifted so the Board and a Special Committee will now examine the input Toyo says YFO has not provided.
- Toyo also objected because it said YFO’s bid could not be sustained based on Toyo’s economics. Toyo’s fight should have been offence. With a new Medium-Term Management Plan, it is.
- Toyo now promises strong revenue and double digit OP growth, and a ¥50/share (5.3%) dividend. Toyo is trying to pay off shareholders to support it against YFO. That’s fair/good.
Weekly Deals Digest (26 Mar) – Toshiba, Toyo, Healius, Mincor, Rakuten Bank, SBI Sumishin, Harita
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Rakuten Bank (5838 JP), SBI Sumishin Net Bank (7163 JP), Trial Holdings (5882 JP) and PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) IPOs.
- Event-Driven developments – Toshiba Corp (6502 JP), Toyo Construction (1890 JP), Golden Energy & Resources (GER SP), Estia Health (EHE AU), Healius (HLS AU), Mincor Resources NL (MCR AU).
CIMC Enric (3899 HK): Growth Outlook Secured by Encouraging Orderbook
- After posting a decent FY22 result, earnings momentum for CIMC Enric Holdings (3899 HK) should sustain, underpinned by clean energy recovery and chemical and environmental equipment demand.
- 2M23 new orders growth stayed healthy at 10.7%, evidencing positive demand outlook. Hydrogen Energy is a growing driver as revenue will reach Rmb700m in FY23 and Rmb3bn in FY25.
- The stock’s PERs of 11.7x and 9.5x for FY23 and FY24, respectively, appear inexpensive in view of 19% earnings CAGR. Net cash position also adds an appeal to us.
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