In today’s briefing:
- StubWorld: SK Square And LG Chem’s Unjustified NAV Discounts
- FTSE GEIS March 2022 SAIR: Share/Float Changes
- FTSE China A50 Index Rebalance Preview (March 2022): Big Impact of FOL Changes
- Buybacks in Progress at KOSPI/KOSDAQ: Stocks to Watch From a Trading Perspective
- FTSE TWSE Taiwan 50 Index Rebalance Preview: China Dev Fin (2883) Should Replace Pegatron (4938)
- FTSE China 50 Index Rebalance Preview (March): Nongfu, COLI, XPeng Potential Adds
- Siemens Energy/Siemens Gamesa: Takeover Conundrum
- KOSDAQ 150 Special Change: Momentum Trading on Caregen Right Before Inclusion
- STOXX Europe Indices: Quiddity Leaderboard for March 2022 Rebalance (Final)
- KOSPI/KOSDAQ Quarterly Dividend Stocks: DPS & Yield Estimations
StubWorld: SK Square And LG Chem’s Unjustified NAV Discounts
- SK Square (402340 KS) was inexpensive after its November listing. Now it’s even cheaper.
- Preceding my comments on SK Square – and LG Chem Ltd (051910 KS) – are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
FTSE GEIS March 2022 SAIR: Share/Float Changes
- FTSE announced the changes to the All-World/All-Cap indices post market close on Friday. There were changes to the number of shares and free floats for quite a few stocks too.
- There are a few stocks where the passive flow and impact is large and quite a few of these stocks have moved today. They could move more till implementation.
- At the close on 4 March, HSI trackers will sell CK Infrastructure Holdings (1038 HK) due to a float reduction. Then the FTSE trackers will sell on 18 March.
FTSE China A50 Index Rebalance Preview (March 2022): Big Impact of FOL Changes
- Todays closing prices will be used to determine the inclusions and exclusions at the March rebalance. We see PSBC and Bank of Ningbo replacing EVE Energy and Aier Eye.
- There will also be changes to the investability weight of the stocks following the Ground Rule change that will cap stocks at their Foreign Ownership Limits.
- Change to the index constituents and FOL changes will result in a one-way turnover estimated at 16.64% and will result in a one-way trade of CNY 9,322m.
Buybacks in Progress at KOSPI/KOSDAQ: Stocks to Watch From a Trading Perspective
- I filtered 42 buybacks currently in progress at KOSPI/KOSDAQ, which have a market cap of over 200 billion won.
- Of these, 15 buybacks have their buyback volume exceeding 1% compared to SO, and buyback completion % is currently below 50% at present.
- Among these, we should pay attention to those whose buybacks are being completed relatively early. These names also show a good correlation with stock prices.
FTSE TWSE Taiwan 50 Index Rebalance Preview: China Dev Fin (2883) Should Replace Pegatron (4938)
- The March rebalance of the FTSE TWSE Taiwan50 Index will use data from today’s close to calculate the market cap cutoff to determine inclusions to and deletions from the index.
- China Development Financial (2883 TT) is a high probability inclusion to the index, while we expect Pegatron Corp (4938 TT) to be deleted at the March rebalance.
- Short interest on China Development Financial (2883 TT) is small and decreasing, while shorts on Pegatron Corp (4938 TT) are much larger but decreasing steadily as well.
FTSE China 50 Index Rebalance Preview (March): Nongfu, COLI, XPeng Potential Adds
- We expect Nongfu Spring (9633), China Overseas Land & Investment (688) and XPeng (9868) to replace Geely Auto (175), China Tower (788) and JD Health (6618) in the index.
- There will also be some big capping changes that will result in one-way turnover estimated at 9.2% and in a one-way trade of HK$4,910m.
- Nongfu Spring (9633 HK) is a triple inclusion – HSI at the close on 4 March, FTSE All-World at the close on 18 March and possibly the FTSE China50 too.
Siemens Energy/Siemens Gamesa: Takeover Conundrum
- Investors are pressing Siemens Energy (67% owner of Siemens Gamesa Renewable Energy, S.A. (SGRE SM)) to act in the wake of a downwards sliding share price.
- DFC valuation (WACC 7.5%, 5y EV/EBITDA exit multiple of 5.5x, which conservatively implies no growth rate, which I consider adequate in a low visibility environment) gives a fair value of €16.4/share.
- An exclusion bid could be on the cards, and the premium need not be high, 20% could be enough, but that would still amount to c. €3.7 billion.
KOSDAQ 150 Special Change: Momentum Trading on Caregen Right Before Inclusion
- KOSDAQ 150 will replace Osstem with Caregen at the close on March 16.
- Even if we conservatively assume KOSPI 150’s direct rebalancing trading funds at ₩1.5T, Caregen will likely face a passive inflow of 4.76x ADTV.
- So, it seems appropriate to approach this event as a short-term momentum trading with a small volume on Caregen right before the inclusion effective date.
STOXX Europe Indices: Quiddity Leaderboard for March 2022 Rebalance (Final)
- The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
- The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
- Below is a look at the Potential Adds and Deletes for the STOXX Europe 600 Index and the EURO STOXX Index in the upcoming index review in March 2022.
KOSPI/KOSDAQ Quarterly Dividend Stocks: DPS & Yield Estimations
- There are 71 interim dividend stocks on KOSPI and KOSDAQ. Of these, 9 stocks pay quarterly dividends: 7 KOSPI and 2 KOSDAQ.
- All except POSCO and Shinhan Financial employ an equal quarterly split. As expected, SKT offers the highest quarterly dividend yield. At the last closing price, it is 1.55%.
- Since the absolute yield level is tight, it may not be appropriate to consider a dividend arb play, except for SKT. Nevertheless, it may act as short-term price momentum.
Before it’s here, it’s on Smartkarma
