In today’s briefing:
- Two Days Left Til Nikkei 225 Juggled Review Starts
- S&P/ASX Index Rebalance Preview: A Few High Impact Adds
- A Detailed Summary of Hanwha’s DSME Acquisition Deal
- Tetra Tech Outbids WSP
- JEIO IPO Preview
- FuelCell Energy: Carbon Savings Calculator & Other Drivers
Two Days Left Til Nikkei 225 Juggled Review Starts
- The Nikkei announced its Annual Nikkei 225 Average Review on 5 September. It was 3 OUT 3 IN as expected. Then they added Shizuoka Bank (8355 JP) to the mix.
- ShizuGin will form a holding company, so out it goes on Wednesday. NIDEC (6594) goes in. Then SMC (6273) and (7741) replace Unitika (3103) and Oki Electric (6703) Friday.
- Then ShizuGin goes back in Monday, and Maruha Nichiro (1333) is deleted. The “big trade” here? The ¥550bn+ funding trade. But the change in ADDs’ Real World Float is Real.
S&P/ASX Index Rebalance Preview: A Few High Impact Adds
- At the December rebalance, we expect changes to the S&P/ASX 50 Index and S&P/ASX 200 (AS51 INDEX). Announcement is on 2 December with implementation on 16 December.
- If added to the S&P/ASX 200 (AS51 INDEX), passive trackers will need to buy over 9 days of ADV on Monadelphous (MND AU) and ioneer Ltd (INR AU).
- Shorts have dropped on nearly all potential adds and deletes over the last couple of months. With shorts at low levels, short covering will have limited impact at the rebalance.
A Detailed Summary of Hanwha’s DSME Acquisition Deal
- The acquisition will be carried out through a third-party allocation rights offering. DSME will issue 104M new shares, solely allocated to Hanwha’s six affiliates, which will own a combined 49.3%
- This DSME acquisition will likely raise Hanwha’s holding ratio, potentially to more than 50%. What preemptive measures Hanwha will take will likely become a noteworthy subject from an investment perspective.
- Hanwha Aerospace and Hanwha Systems will likely proceed with a capital increase. As their current cash capacity is quite limited, liquidity concerns will likely be raised in the market.
Tetra Tech Outbids WSP
- On 24 September, Tetra Tech outbid WSP with a recommended 222p/share cash offer, a 7.8% increase vs. WSP’s and 110% premium to the start of the offer period.
- The new offer represents 19.1x EV/Fwd EBIT and 25.7x Fwd P/E, and seems dilutive for Tetra Tech. Irrevocables and letters of intent amount to 27.53%.
- Expect the shares to quickly close the spread at the beginning of the 26 September trading session and the market to possibly await a counterbid.
JEIO IPO Preview
- JEIO is getting ready to complete its IPO in Korea in early November. The IPO price range is from 15,000 won to 18,000 won.
- Based on the bankers’ valuation, the expected market cap of the company is from 500 billion won to 600 billion won.
- JEIO had a production capacity of 300 tons in 2021 for carbon nanotubes which is expected to increase to 1,000 tons in 2022 and to 3,000 tons by 2025.
FuelCell Energy: Carbon Savings Calculator & Other Drivers
- FuelCell Energy saw continued progress in product sales and delivered a solid revenue surpassing Wall Street expectations.
- The increase in product revenues resulted from the module sales to KFC (Korea Fuel Cell Company).
- We provide the stock of FuelCell energy with a ‘Hold’ rating and a revision in the target price.
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