In today’s briefing:
- FTSE Japan: Potential Inclusions Following TSE Restructure
- SRE Holdings (2980 JP) Offering – New Higher Growth at New Lower Multiple
- Potential Additions & Deletions in MSCI Korea Rebalance in May 2022
- Second Brookfield-MCB Bid for AGL Energy Rejected
- KOSPI Size Index Series Rebalancing: Official Results & Passive Impacts
- Merger Arb Mondays – Razer, Sezzle, Irongate, 51job, Link, Guodian, Crown Resorts
- BBL/KBANK: Time for a Bounce
FTSE Japan: Potential Inclusions Following TSE Restructure
- Following the TSE restructure on 4 April, FTSE will include stocks that trade on the Prime Market and Standard Market as part of the eligible universe for index inclusion.
- We see 4 stocks meeting the requirements for inclusion in the FTSE All-World Index, and another 13 stocks meeting the requirements for inclusion in the FTSE All-Cap Index.
- There are stocks that have over 4 days of ADV to buy from passive trackers. Given the inclusions will take place in March 2023, its wait and watch for now.
SRE Holdings (2980 JP) Offering – New Higher Growth at New Lower Multiple
- SRE Holdings Corp (2980 JP) last week announced an offering of new shares and a secondary share sale by Z Holdings (4689 JP) of the bulk of its holdings.
- The Z Holdings sale coincides with a “new business alliance” between SRE and Yahoo. At first glance, it appears as if both sides have decided to rejig what they do.
- SRE has an interesting business model which is quite growthy. It is growthier than it planned and others expected, but the stock has fallen 70% in 3mos. It’s a buy.
Potential Additions & Deletions in MSCI Korea Rebalance in May 2022
- In this insight, we discuss the potential inclusions and deletions in the upcoming MSCI rebalance in May 2022. The next MSCI Korea rebalance will be announced on 12 May 2022.
- We believe that Hyundai Mipo, Hanwha Aerospace, and Daewoo Shipbuilding could increasingly be viewed as potential additions to MSCI Korea rebalance in May.
- Green Cross Corp, Sk Chemicals Co, and Alteogen could increasingly be viewed as potential deletion candidates in the next MSCI Korea rebalance.
Second Brookfield-MCB Bid for AGL Energy Rejected
- The duo of Brookfield and Atlassian/Australian billionaire Mike Cannon-Brookes has apparently lobbed a higher offer for AGL Energy Ltd (AGL AU) and AGL has apparently rejected it.
- Confirmation from AGL is due tomorrow but given the previous bid was “ridiculously low”, “extremely undervalued” the company, and had “unserious” elements, expect the language to be similar.
- Next steps probably mean waiting for the De-Merger Circular due April but possibly May. In the meantime, this probably trades in a range.
KOSPI Size Index Series Rebalancing: Official Results & Passive Impacts
- KRX officially announced the rebalancing results of the KOSPI Size Index Series. The effective date is March 11.
- Of these, new MidCap entrants are what matter the most. This rebalancing delivers a total of 26 new MidCap entrants.
- The three stocks shown below have ADTV of over ₩5B and passive flow x ADTV of 1.0x or higher: CJ Logistics, GS Retail, and Lotte Rental.
Merger Arb Mondays – Razer, Sezzle, Irongate, 51job, Link, Guodian, Crown Resorts
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
- This week, the highest gross spreads are Razer Inc (1337 HK), Sezzle Inc (SZL AU), Irongate Group (IAP AU), 51 Job Inc Adr (JOBS US), Link Administration Holdings (LNK AU)
- The lowest gross spreads are China Logistics Property Holdings (1589 HK), Virtus Health (VRT AU), CIMIC Group Ltd (CIM AU), Singapore Press Holdings (SPH SP), Australian Pharmaceutical Industries (API AU)
BBL/KBANK: Time for a Bounce
- Bangkok Bank Public has underperformed Kasikornbank PCL over the short-term and over the last year as well. The price ratio is now trading at the low end of the recent range.
- The number of NVDRs issued on Bangkok Bank Public (BBL TB) have continued to decrease while increasing on Kasikornbank PCL (KBANK TB).
- Bangkok Bank Public (BBL TB) trades cheaper than Kasikornbank PCL (KBANK TB) and there could outperform in the short-term.
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