In today’s briefing:
- KOSPI 200 Rebalancing D-60: Names for Position Buildups
- TOPIX Inclusion: Bewith (9216 JP)
- Woodside / BHP Petroleum Merger On Tap; Index Impact Minimal but Flowback May Not Be
- Ecopro BM Offering: Deal Summary & Trading Dynamics
- MSCI Korea: Potential Inclusions & Exclusions in May 2022 Highlighted by Locals
- Banco BPM: Credit Agricole Makes Its Move
- Atlantia in Play?
KOSPI 200 Rebalancing D-60: Names for Position Buildups
- Since we are currently at a point of two months toward the KOSPI 200 rebalancing, we should start building up positions on stocks with a higher probability among the candidates.
- Six additions for position buildups: F&F (383220 KS), Meritz Fire (000060 KS), SD Biosensor (137310 KS), Iljin Hysolus (271940 KS), Hanil Cement (300720 KS), & K Car (381970 KS)
- Six deletions for position buildups: Nexen Tire (002350 KS), Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Sk Discovery (006120 KS), Bukwang Pharmaceutical (003000 KS), & Poongsan Corp (103140 KS)
TOPIX Inclusion: Bewith (9216 JP)
- Japan-Based BPO company Bewith (9216 JP) was listed in the First Section (now known as the “Prime” Market) of the Tokyo Stock Exchange (TSE) on 2nd March 2022.
- When a company gets listed in the TSE First Section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.
- Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for Bewith’s Inclusion Event.
Woodside / BHP Petroleum Merger On Tap; Index Impact Minimal but Flowback May Not Be
- Woodside Petroleum (WPL AU) and BHP Group Ltd (BHP AU) proposed a merger between Woodside and BHP Petroleum in August 2021, and signed the deal in November 2021.
- It required regulatory approvals (of which it already has some) and Woodside shareholder approval, and the Woodside shares to be received by BHP would be distributed to BHP Shareholders.
- Today, Woodside presented the Explanatory Memorandum, the Independent Expert Report (“fair and reasonable”), and information about the 19 May AGM vote. This deal could be done 1 June.
Ecopro BM Offering: Deal Summary & Trading Dynamics
- Ecopro BM announced a ₩0.5T rights offer: 1.6M new ordinary shares at a preliminary offering price of ₩310,300. In addition, there will also be a 1-to-3 bonus share issuance.
- In outright Long trading aiming for a 20% discount, one thing to keep in mind is bonus issues. Post-bonus issue price correction will likely be more substantial this time.
- We should aim at outright shorting as moving into the bonus issue ex-rights date while watching Ecopro’s share price upward trend and volatility during this event.
MSCI Korea: Potential Inclusions & Exclusions in May 2022 Highlighted by Locals
- Hyundai Heavy Industries and KT Corp are two stocks in Korea that are most heavily emphasized as potential inclusion candidates in the MSCI rebalance in May by the local media.
- Greater volatility on these names is likely as we get closer to the MSCI rebalance and there could be reduced outperformance on these names as we approach 13 May.
- Stocks that are expected to be excluded in the MSCI Korea index including Green Cross Corp, Alteogen, and SK Chemicals have experienced sharp decline in their prices in recent months.
Banco BPM: Credit Agricole Makes Its Move
- Credit Agricole has acquired a 9.18% stake in Banco BPM, sparking takeover bid speculation; Italy is Credit Agricole’s biggest banking market ex-France, where it has been very active on M&A
- For Credit Agricole, in our view, Banco BPM’s strong Northern Italian footprint, its cleaner and stronger balance sheet and its asset management arm are all big attractions for this asset
- We remain positive on Banco BPM, one of our 2022 High Conviction Ideas; not only a modestly valued potential M&A target, but its valuations are also underpinned by improving fundamentals
Atlantia in Play?
- GIP/Brookfield/ACS weigh launching a €15 billion unsolicited offer for Atlantia. Blackstone may partner with the Benettons to acquire Atlantia at €24/share (26% premium ). Italian Government’s role will be key.
- Atlantia trades at higher multiples than ACS (EV/22e EBITDA: 12.8x vs 3.2x, Capital IQ consensus). A hypothetical ACS/Abertis would become a world leader in infrastructure, but leverage is key.
- The opposition of Edizione makes the operation difficult/more expensive. A joint-bid Edizione/Blackstone, would force the GIP-led group to present an improved offer. Nearly 50% of Atlantia’s NAV is cash.
Before it’s here, it’s on Smartkarma
