In today’s briefing:
- SET50 Index Rebalance Preview (June): Two Changes, Maybe Three
- TOPIX Inclusion Pre-Event: Appier Group (4180 JP)
- FnGuide & KRX K-New Deal Batteries: Combined Passive Flows Preview on March 10-15
- Tomson Group (258 HK): The Next Rivera
- Cobham/Ultra Electronics: Updated Valuation and Spread
SET50 Index Rebalance Preview (June): Two Changes, Maybe Three
- The market cap review period for the June rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) starts in a couple of weeks.
- Using the last close, we see JMT Network Services (JMT) and Bangkok Life Assurance (BLA) as potential inclusions, replacing Ratch Group PCL (RATCH TB) and KCE Electronics PCL (KCE TB).
- Ratch Group PCL is the lowest ranked index constituent and needs to move 15% higher to avoid deletion. Passive trackers will need to sell nearly 4 days of ADV.
TOPIX Inclusion Pre-Event: Appier Group (4180 JP)
- Japan-Based AI company Appier Group Inc (4180 JP) announced they had resolved to prepare to apply to change its listing on the Tokyo Stock Exchange to the Prime Market.
- Appier has confirmed that it meets the criteria for the TSE Growth Market but if they move to the Prime Market, that would trigger a TOPIX Inclusion Event.
- Below is a look at Appier’s potential to satisfy the Section Transfer Requirements and the upside potential of this event.
FnGuide & KRX K-New Deal Batteries: Combined Passive Flows Preview on March 10-15
- FnGuide Battery Index overlaps with the rebalancing of the KRX K-New Deal. K-New Deal is March 11. As for FnGuide Battery, it will be three trading days on March 14-16.
- Among the top-cap stocks, Samsung SDI will be the biggest beneficiary, and we need to consider a setup that utilizes Samsung SDI as a long/short partner for LG Chem.
- LG Chem’s staying significant distorts mid-caps’ index weight in KRX Battery. The extent of passive outflows would be pretty substantial. So, outright short these mid-caps should deserve our attention.
Tomson Group (258 HK): The Next Rivera
- At 0.3x price to book, PRC property play Tomson (258 HK) is cheap.
- It is even cheaper when factoring in its net cash worth 90% of the market cap.
- And it might continue to trade cheaply if not for the fact the controlling family recently privatised a connected company of Tomson’s.
Cobham/Ultra Electronics: Updated Valuation and Spread
- The deal is expected to be referred for thorough analysis given political sensitivities as Ultra Electronics Holdings (ULE LN) is a key supplier to the UK’s army. Shorts are increasing.
- The review should fall under the old rules though. My standalone fair value estimate (DCF based) is 3,184p. (vs. 2,950p comps-based implied valuation and 3,325p median Capital IQ consensus TP).
- Long ULE LN, TP 3,500p, plus 16p interim. Upside is 17.2%. I just don’t see the UK Government blocking a friendly defence deal from an investor coming from a key ally.
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