In today’s briefing:
- Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped
- Fuji Soft (9749 JP): KKR’s Cop-Out as It Launches at Unchanged Terms, Next Move Bain
- Australia/NZ Real Estate: Stocks With (Large) Passive Flows
- PC Partner: Relocating HQ and Listing to Singapore, 81% of Market Cap Is Cash
- FXI Rebalance: China Tower (788 HK) Will Replace CICC (3908 HK)
- Intel. Could Things Get Any Worse? You Bet. Here’s How.
- Apple Restructures App Store Amid EU Regulations, Developer Dissatisfaction, and Market Pressures
- Quiddity Leaderboard F100/250 Sep 24: Announcement Day; Final Expectations
- Tech Supply Chain Tracker (05-Sep-2024): UK car market rebounds, EV growth shines at LCV Show.
- salesforce.com Inc: Enhanced Product Offerings and Vertical Integration Driving Our Optimism!
Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped
- Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX).
- Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!)
- Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.
Fuji Soft (9749 JP): KKR’s Cop-Out as It Launches at Unchanged Terms, Next Move Bain
- In response to the potential Bain competing offer for Fuji Soft Inc (9749 JP), KKR has waived the precondition and launched its offer at unchanged JPY8,800 per share.
- Bain’s due diligence ends on 20 September, and it aims to submit a binding proposal in October. This timeline will thwart KKR’s offer, which closes on 21 October.
- KKR’s offer launch at unchanged terms is delaying the inevitable and will have to bump to succeed. A potential bidding war is likely to push the offer price to JPY10,500.
Australia/NZ Real Estate: Stocks With (Large) Passive Flows
- There will be passive buying in Nextdc Ltd (NXT AU) and Charter Hall (CHC AU) and selling in Vital Healthcare Property Trust (VHP NZ) at the close on 20 September.
- Charter Hall (CHC AU)‘s stock price jumped following announcement of results and that was accompanied by big short covering. There should still be more positioning here.
- Nextdc Ltd (NXT AU)‘s increase in cumulative excess volume came on a drop in the stock price. There could be some covering here as positioning builds up.
PC Partner: Relocating HQ and Listing to Singapore, 81% of Market Cap Is Cash
- PC Partner showed a significant improvement in its 1H24 results YoY.
- The company will be relocating HQ to Singapore and move its primary listing from HK to Singapore. If this move is successful, it will improve AI chips allocation from Nvidia.
- Why Singapore? PC Partner is preparing itself for a future where China/USA political relationship does not improve.
FXI Rebalance: China Tower (788 HK) Will Replace CICC (3908 HK)
- China Tower (788 HK) will replace China International Capital Corporation (3908 HK) in the iShares China Large-Cap (FXI) (FXI US) at the close on 20 September.
- The appears to be a lot more positioning and short interest in China International Capital Corporation (3908 HK) compared to China Tower (788 HK).
- The listing of Midea Group Co Ltd A (000333 CH) H-shares could result in another change for the ETF prior to the next scheduled rebalance in December.
Intel. Could Things Get Any Worse? You Bet. Here’s How.
- Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
- The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
- Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock
Apple Restructures App Store Amid EU Regulations, Developer Dissatisfaction, and Market Pressures
- Apple’s App Store contributed to the $85.2 billion service segment revenue in 2023, with an impressive gross margin of 70.2%, making it a crucial profit driver within Apple’s Services segment.
- The restructuring splits the App Store division into two teams: one to oversee the traditional App Store, and another to manage new, legally mandated alternative app distribution channels.
- Developers who choose to bypass the App Store may incur a substantial Core Technology Fee, potentially amounting to hundreds of thousands of dollars, reflecting the cost of maintaining Apple’s ecosystem.
Quiddity Leaderboard F100/250 Sep 24: Announcement Day; Final Expectations
- In this insight, we take a look at our final expectations for ADDs/DELs for the F100 and F250 indices during the September 2024 index rebal event.
- Yesterday (3rd September) was the base date for this rebalance event and the index changes will be confirmed after market close today.
- We see one change for F100 and one change for F250 during the regular rebalance but there could be another change triggered by the Network International (NETW LN) deal completion.
Tech Supply Chain Tracker (05-Sep-2024): UK car market rebounds, EV growth shines at LCV Show.
- UK car market sees resurgence as electric vehicles gain popularity at LCV Show, driving up sales and interest in sustainable options.
- SAIC Motor struggles with falling profits and tariffs on electric vehicles, putting financial strain on the company’s operations.
- IEDC fosters stronger economic ties between Taiwan and the region through a new office opening, promoting business opportunities and enhancing cooperation.
salesforce.com Inc: Enhanced Product Offerings and Vertical Integration Driving Our Optimism!
- Salesforce, a prominent leader in customer relationship management (CRM) solutions, disclosed its fiscal 2025 second-quarter financial results, articulating significant developments and prospects, particularly in AI (artificial intelligence).
- The earnings call, spearheaded by Salesforce executives including Chair and CEO Marc Benioff, illustrated both promising highlights and some challenges that investors need to consider.
- Positively, Salesforce reported a robust quarter with revenue marking $9.33 billion, representing an 8% increase year-over-year and adjusting for currency fluctuations, a growth of 9%.
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