In today’s briefing:
- Boral’s 45% Capital Return – Resetting Forward Expectations
- Allied Telesis (6835) – Small Cap Windfall
- ASX200 Index Rebalance: Arena REIT to Replace Ausnet
- S&P/ASX200 – Ausnet OUT, Arena REIT IN
- NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March
- Seven & I to Sell The Loss Making Department Store Business Amidst Pressure From Investors
- MSCI Feb 2022 Index Rebalance Preview: And That’s A Wrap
- Sawada/HS (8699) – A NON-Salutary Development
- KRX K-New Deal Index Screening Period Ended: Rebalancing Changes & Passive Impacts Update
- JALUX (2729 JP) Tender Offer Commences – Open & Shut Case With Weirdness
Boral’s 45% Capital Return – Resetting Forward Expectations
- Boral Ltd (BLD AU) today announced a special dividend and return of capital totalling $2.72/share. That is 46% of yesterday’s closing price.
- This was not unexpected. Management had promised, media articles had proposed as much. Now it is coming through.
- Despite an 11% jump in the forward ex-div price today, the stock is cheap on a FY23 basis.
Allied Telesis (6835) – Small Cap Windfall
- Allied Telesis is a Japan-listed business with a long US history making networking equipment and solutions for corporate customers.
- The company received a legal settlement today which is worth a fair bit to them.
- The company had already had the best 12 months earnings history in years, while the stock is trading at long-time lows. This could get exciting.
ASX200 Index Rebalance: Arena REIT to Replace Ausnet
- Ausnet Services (AST AU) will be deleted from the S&P/ASX 200 (AS51 INDEX) after the close of trading on 4 February and Arena Reit (ARF AU) will be included.
- With this change announced, Telix Pharmaceuticals (TLX AU) is a high probability inclusion to the S&P/ASX 200 (AS51 INDEX) next week when Sydney Airport (SYD AU) will be deleted.
- Arena Reit (ARF AU) has outperformed its peers over the last year and now trades at higher valuations. We would use price spikes on inclusion to rotate into its peers.
S&P/ASX200 – Ausnet OUT, Arena REIT IN
- The S&P DJI Index team announced the replacement for Ausnet Services (AST AU) when it is deleted from the S&P/ASX200 Friday at the close: Arena Reit (ARF AU)
- There are other changes to sub-indices which are not publicly announced but which should align with previous analysis
- This insight provides estimates for the index events Friday and ways to play them.
NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March
- The review period for the NIFTY 100 Index ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.
- Potential inclusions are Zomato (ZOMATO IN), Mindtree Ltd (MTCL IN), SRF Ltd (SRF IN), Indian Railway Catering and Tourism (IRCTC IN) and Tata Power (TPWR IN).
- Potential deletions are Yes Bank (YES IN), Indraprastha Gas (IGL IN), Jindal Steel & Power (JSP IN), Aurobindo Pharma (ARBP IN) and Hindustan Petroleum (HPCL IN).
Seven & I to Sell The Loss Making Department Store Business Amidst Pressure From Investors
- Nikkei reported yesterday that Seven & I Holdings (3382 JP) is in final negotiations to sell its underperforming department store business Sogo Seibu, amidst pressure from several of its investors.
- The company has indirectly confirmed the news by saying that they are considering changes to Seven & I’s business portfolio including the sale of the Sogo & Seibu business.
- The disposal of underperforming department stores could increase the efficiency of capital usage and generate upside to shareholders returns and enable the company to focus on growth through geographic expansion.
MSCI Feb 2022 Index Rebalance Preview: And That’s A Wrap
- Post the end of the review period, there are 19 potential adds for Asia and 9 potential deletes. High probability names include 16 adds and 8 deletes.
- There are stocks that will have same way flow from the FTSE AW/AC trackers in March, while others could have same way flows from KOSPI200 or CSI300 trackers in June.
- Potential additions that got beaten down over the last few weeks have started to recover and could remain supported going into announcement date on 10 February (Asia time).
Sawada/HS (8699) – A NON-Salutary Development
- Sawada/HS Holdings (8699 JP) gets the bulk of its earnings from Khan Bank (even more so post-exit from gaitame).
- Khan Bank just had a fantastic year with earnings up 77%.
- But Sawada has just done a deal with should give one pause.
KRX K-New Deal Index Screening Period Ended: Rebalancing Changes & Passive Impacts Update
- For this March rebalancing, the screening base date is January 28, which is the last trading day of January. So, the 3-month rebalancing review period is now done.
- Other than LG Energy (+₩146,2B), we should pay the most attention to AfreecaTV (+1.70x), Chunbo (+0.36x), Douzone Bizon (-4.82x), and SoulBrain (-0.99x).
- In addition, large-cap stocks such as SKIET (+0.25x), Ecopro BM (+0.10x), LG Chem (-0.62x), and Posco Chemical (-0.30x) will likely draw much attention.
JALUX (2729 JP) Tender Offer Commences – Open & Shut Case With Weirdness
- Sojitz and JAL have announced the start of their tender offer for Jalux Inc (2729 JP). There was no surprise in November. And no change in the interim.
- While not outrageously generous, it is not particularly egregious to minority shareholders and the shareholder structure suggests it gets done easily.
- The lack of Japan FTC approval prior to launch is a little odd, but there should be minimal risk, and practically speaking, zero incremental risk vs waiting to start.
Before it’s here, it’s on Smartkarma
