In today’s briefing:
- MSCI May Index Rebalance Preview: Potential FIF Changes & Impact
- ASX200 Index Rebalance: HomeCo Daily Needs REIT (HDN) Replaces CIMIC; More Changes in May & June
- Yangzijiang: Proposed Spin-Off of YZJFH to Unlock Value
- BIG Nikon (7731) Buyback – OK But Should Do Better
- Virtus: BGH’s Less Than Friendly Offer
- WISE Tour Leisure Rebalancing (TIGER ETF): Long/Short Tradable Names
- WISE Secondary Cell Rebalancing (TIGER ETF): Long/Short Tradable Names
- WISE Media Contents Rebalancing (TIGER ETF): Long/Short Tradable Names
- HomeCo Daily Needs Moves to ASX200 (CIMIC Out)
- Merger of Dongwon Industries & Dongwon Enterprise
MSCI May Index Rebalance Preview: Potential FIF Changes & Impact
- MSCI comprehensively evaluates the free float for stocks at the May SAIR. The changes will be announced on 12 May and implemented at the close on 31 May.
- We expect an increase in the FIF for some stocks. Largest inflows are expected on Tencent (700 HK), Kuaishou Technology (1024 HK), JD Health (6618 HK) and KakaoBank (323410 KS).
- There is reasonably large short interest on some of the stocks and there could be some short covering on stocks where there could be large passive inflows.
ASX200 Index Rebalance: HomeCo Daily Needs REIT (HDN) Replaces CIMIC; More Changes in May & June
- HomeCo Daily Needs REIT (HDN AU) will replace CIMIC Group Ltd (CIM AU) in the S&P/ASX 200 (AS51 INDEX) at the close of trading on 11 April.
- The change has come earlier than expected as Hochtief hold nearly 90% of CIMIC. Positioning on HDN could be light- the stock could rally over the next couple of days.
- There could be another ad hoc change prior to the June rebalance and then there will be more changes at the regular rebalance in June.
Yangzijiang: Proposed Spin-Off of YZJFH to Unlock Value
- Yangzijiang Shipbuilding (YZJSGD SP) aims to spin off Yangzijiang Financial Holdings (YZJFH) through a dividend-in-specie of all the issued YZJFH shares to shareholders on a one-on-one basis.
- YZJFH shares will be listed on the SGX-ST by way of an introduction. The EGM to approve the spin-off will be held on 18 April at 4 pm.
- This transaction will unlock value. Our SoTP valuation is S$1.94 per share, which is a 22% upside to the last close price of S$1.59 per share.
BIG Nikon (7731) Buyback – OK But Should Do Better
- Nikon Corp (7731 JP) today announced a Very Large Buyback. This is the third buyback it has announced since spring 2019. The first was short. The next two big.
- The company also announced a new Medium-Term Management Plan for FY2022-2025 today in which they reiterated their existing Shareholder Return Policy of 40+% payout of stable dividends and opportunistic buybacks.
- It’s a decent div, and the buyback is for 6-7% of shares out, but it could do better. The company is hugely cash- and securities holdings-rich. It should do better.
Virtus: BGH’s Less Than Friendly Offer
- Fertility specialist Virtus Health (VRT AU) has received a revised unconditional Offer from local Aussie PE outfit BGH which just eclipses CapVest’s Offer.
- BGH’s $8.00/share Offer is A$0.02/share above CapVest’s takeover A$7.98/share offer – the one with a minimum acceptance condition of 50% – now the A$0.12/share dividend has gone ex.
- CapVest still has the superior A$8.13/share Scheme Offer on the table, yet BGH’s 20% stake suggests the outcome for such an Offer is no certainty. CapVest does have matching rights.
WISE Tour Leisure Rebalancing (TIGER ETF): Long/Short Tradable Names
- Next Thursday, the rebalancing trading of the WISE Secondary Cell Index will occur. The current AUM is ₩0.24T, and the AUM has slightly increased in the last two weeks.
- Five names (2 Longs & 3 Shorts) are screened: Hana Tour Service, Lotte Tour Development, Asiana Airlines, Paradise Co Ltd, & Hanjin KAL Corp.
- All the short targets are available for short-selling. The Long targets have also not seen much volatility recently, so it looks fine to put them all in a Long/Short basket.
WISE Secondary Cell Rebalancing (TIGER ETF): Long/Short Tradable Names
- Next Thursday, the rebalancing trading of the WISE Secondary Cell Index will occur. The current AUM is ₩1.26T, and the AUM has slightly increased in the last two weeks.
- Six names (2 Longs & 4 Shorts) are screened: SK Innovation, LG Energy Solution, Posco Chemical, SKC Co Ltd, Iljin Materials, & Solus Advanced Materials.
- Considering the 20-day price returns, long/short basket trading seems valid as the long targets have relatively outperformed. However, since Solus Advanced Materials is short-restricted, we need to exclude it.
WISE Media Contents Rebalancing (TIGER ETF): Long/Short Tradable Names
- Next Thursday, the rebalancing trading of the WISE Secondary Cell Index will occur. The current AUM is ₩0.15T, and the AUM has increased a bit in the last two weeks.
- Four names (2 Longs & 2 Shorts) are screened as follows: CJ ENM, Dear U, JYP Entertainment, & Jcontentree Corp.
- We should consider putting only JYP Ent in the Short basket. On the other hand, it seems okay to put CJ ENM and Dear U together in the Long basket.
HomeCo Daily Needs Moves to ASX200 (CIMIC Out)
- This morning pre-open, Hochtief AG (HOT GR) announced that it now owned 89.77% of CIMIC Group Ltd (CIM AU). That gets awfully close to the level for squeezeout.
- Today post-close, the S&P ASX Indices announced that CIMIC Group Ltd (CIM AU) would be deleted from, and HomeCo Daily Needs REIT (HDN AU) added to ASX200 on 11 April.
- This is a non-negligible event for HomeCo Daily Needs, but was relatively well-flagged.
Merger of Dongwon Industries & Dongwon Enterprise
- Dongwon Industries (006040 KS) plans to merge with Dongwon Enterprise, paving the way for the latter company to complete a back door public listing.
- We believe this merger between Dongwon Industries and Dongwon Enterprise will have a positive impact on Dongwon Industries.
- Once the merger is completed, there could be less pressure “to keep the share price of Dongwon Industries intentionally low” in order have more beneficial merger ratio with Dongwon Enteprise.
Before it’s here, it’s on Smartkarma
