In today’s briefing:
- Greatview (468 HK): A Packing Case Pick
- MSCI Korea Rebalancing: Cautions with KT & Hyundai Heavy Industries
- Topix FFW Transition – Insurance Sector a Big Net Sell
- CNOOC RMB Share Prices at Small Premium (But CNOOC Still Cheap To Peers)
- Strong Telecom Flows in TOPIX FFW Transition Months
- Yangzijiang (YZJSGD SP) Spin-Off: Index Treatment
- VNET’s Languishing Shares Draws an Opportunistic $8.00 Bid
- KOSDAQ 150 Rebalancing in June: Safely Tradable Names for Position Buildups at This Point
- The Panel Joins CapVest In Virtus’ Corner
- Kohnan Shoji (7516) Buyback – Shareholder Return? Activist Defense? Future MBO? All of the Above?
Greatview (468 HK): A Packing Case Pick
- Earlier this year, Jardine Matheson Holdings (JM SP) was understood to be exploring the sale of its 28% stake in Greatview Aseptic Packaging (468 HK).
- GA Pack announced its full-year results late last month and for the first time since 2012, opted not to pay a final dividend.
- Shares are down 20% since that non-dividend announcement. That’s convenient.
MSCI Korea Rebalancing: Cautions with KT & Hyundai Heavy Industries
- KT’s inclusion possibility is still high, but if the foreign ownership continues to increase at the current rate until April end, there is a possibility that the inclusion will fail.
- Suppose HHI faces a little over a 10% price correction. In that case, its market cap will fall below ₩10T, and it will stand on the screening borderline.
- We need to consider closing our LONG positions for these two earlier.
Topix FFW Transition – Insurance Sector a Big Net Sell
- The TOPIX Insurance Sector sees the worst net flows as a percentage of index weight among the 33 sectors in the April-June FFW Transition.
- On a net basis, rebalance flows favour Japan Post Insurance (7181 JP) vs T&D Holdings (8795 JP) (finishing a buyback) and Dai Ichi Life Insurance (8750 JP) (just finished).
- JPI has underperformed both over the last three years despite growing BVPS by more. And earnings should be a blowout.
CNOOC RMB Share Prices at Small Premium (But CNOOC Still Cheap To Peers)
- CNOOC’s RMB Issue of 2.6bn Shares (about US$5bn with over-allotment) was priced at a 14.2% premium to Friday’s close. Not Great Bob.
- But 31 March indications of Q1 results, and the promises of an H-share buyback noted in the Annual Results a day earlier are worthwhile noting.
- CNOOC continues to trail Global Peers in Price and Forward EBIT multiple since the Executive Order 13959 dampened share demand and booted it from global indices. It’s still cheap though.
Strong Telecom Flows in TOPIX FFW Transition Months
- The April-June TSE FFW Methodology Revision moves favour certain sectors over others. There is nearly ¥500bn of telecom stocks to buy with 60+% of that in four names.
- Other factors may support some of the names as well.
- There is enough excess buying to warrant trading tilts and keeping fundamental positions even as forward earnings multiples have expanded to multi-year highs.
Yangzijiang (YZJSGD SP) Spin-Off: Index Treatment
- Yangzijiang Shipbuilding (YZJSGD SP) is looking to spin-off its investment segment, Yangzijiang Financial Holding Ltd (YZJFH). The EGM is on 18 April and the book closure is 25 April.
- There will be no flows from the MSCI and FTSE trackers given that both stocks should continue to remain members of the MSCI Small Cap and FTSE All-World indices.
- There will be a deletion from the FTSE Straits Times Index (STI) (STI INDEX) though, where either YZJSGD, YZJFH or Comfortdelgro Corp (CD SP) will be deleted from the index.
VNET’s Languishing Shares Draws an Opportunistic $8.00 Bid
- VNET, formerly known as 21Vianet Group (VNET US), is a leading carrier and cloud-neutral data centre services provider in China.
- It has received a non-binding privatisation proposal from The Hina Group and Industrial Bank Co Ltd A (601166 CH) at $8.00 per ADS, a 48.1% premium to the undisturbed price.
- The Board has not made any decisions on the offer. Despite the juicy premium, the offer is unattractive in the context of historical multiples and share prices.
KOSDAQ 150 Rebalancing in June: Safely Tradable Names for Position Buildups at This Point
- Here are the tradable stocks for Long/Short position buildups for the KOSDAQ 150 rebalancing in June.
- LONG (Additions): Dear U (376300 KS), Vidente (121800 KS), GOLFZON (215000 KS), Hana Micron (067310 KS), Danal (064260 KS), & Intellian Technologies (189300 KS)
- SHORT (Deletions): Daea Ti (045390 KS), Advanced Process Systems (265520 KS), Unison (018000 KS), Danawa (119860 KS), OE Solutions (138080 KS), & Toptec (108230 KS)
The Panel Joins CapVest In Virtus’ Corner
- CapVest has bumped its Scheme Offer for Virtus Health (VRT AU) to A$8.15/share. More importantly, it has increased the Takeover Offer price to A$8.10/share.
- Separately, the Takeovers Panel has made interim orders prohibiting BGH from acquiring on market any Virtus shares above its Bid Price.
- Virtus’s Board has unanimously determined that CapVest’s revised Offer is superior to BGH’s Bid.
Kohnan Shoji (7516) Buyback – Shareholder Return? Activist Defense? Future MBO? All of the Above?
- Yesterday after the close, 500+ store home centre operator Kohnan Shoji (7516 JP) announced full-year earnings (revs -0.2%, OP -16.6%, NP -16.4%yoy) and a buyback.
- The buyback is for up to 1.2mm shares and up to ¥4bn to spend from here to end Sep 2022.
- The shareholder register is interesting, diverse, and makes one wonder whether the buyback is to soften the blow of lower income, defence against an activist, or something else.
Before it’s here, it’s on Smartkarma
