In today’s briefing:
- BHP Woodside Placement – Here Comes the Block, Will Be Tricky Trading over the Next Few Days
- Woodside Block – Medium Bigly, Well-Prepared, and More To Come
- FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Stocks Plunge as Cutoff Passes
- SET50 Index Rebalance Preview: Two High Probability Changes; One Low
- FTSE China A50 Index Rebalance: Three Changes, As We Expected
- FTSE China 50 Index Rebalance: Two Sets of Changes as Expected
- Virtus Health: How BGH’s Offer Plays Out From Here
- Hwa Hong’s Conditional Offer Open For Acceptances
- FCC/Metrovacesa: Acceptance Period
BHP Woodside Placement – Here Comes the Block, Will Be Tricky Trading over the Next Few Days
- BHP shareholders received US$18bn worth of Woodside petroleum shares on 1st Jun 2022, post the completion of the merger.
- As a part of the distribution, some shares belonging to ineligible and other small shareholders are being sold by the sales agent, JPM, in a US$823m block.
- In this note, we will look at the possible deal dynamics and run the deal through our ECM framework.
Woodside Block – Medium Bigly, Well-Prepared, and More To Come
- The Australian Financial Review’s “Street Talk” column says the Woodside Petroleum (WPL AU) (new ticker is WDS AU) block is out.
- Bookbuild is at $28.65 to $30.19 a share with is a 0% to 5.1% discount to the close (stock was up 1.44% today).
- The size of the trade is apparently 38 million shares. If you have been in the Woodside/Santos trade, I would take the deal, tactically.
FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact
- Samty Residential Investment and LOTTE Reit are inclusions while Hang Lung Properties, Henderson Land Development and New World Development are deletions for the FTSE EPRA Nareit Developed Asia Index.
- There is a large impact on all stocks, but the flow is much higher on the deletions and the stocks could drop and underperform their peers.
- Ichigo Inc (2337 JP) is a surprise non-inclusion and could trade lower today providing an opportunity to buy the stock while waiting for a late inclusion announcement.
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Stocks Plunge as Cutoff Passes
- Close to the 85% inclusion threshold, Core Lithium Ltd could be added to the MVIS Global Rare Earth/Strategic Metals Index in June. Lake Resources Nl (LKE AU) is also close.
- Australian Strategic Materials (ASM AU) is very close to the 98% deletion threshold. Even if it is not deleted, there will be passive selling due to capping changes.
- Yesterday was the cutoff date for the June review, so today’s steep fall in prices will not affect the ranking of the potential changes.
SET50 Index Rebalance Preview: Two High Probability Changes; One Low
- The market cap and liquidity review period for the June rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ended yesterday.
- JMT Network Services (JMT TB), Jaymart PCL (JMART TB) and Berli Jucker (BJC TB) could replace Sri Trang Gloves (STGT TB), Ratch Group PCL (RATCH TB) and IRPC PCL (IRPC).
- Asset World Corporation (AWC TB) could be deleted depending on which levers the index committee tweaks, and that could save IRPC PCL (IRPC TB) from index deletion.
FTSE China A50 Index Rebalance: Three Changes, As We Expected
- Anhui Conch Cement, China Citic Bank and Tongwei will replace Chongqing Zhifei Biological, Gree Electric Appliances and PetroChina in the FTSE China A50 Index at the close on 17 June.
- All changes are as we expected, but there are still trades to do off the back of the announced changes.
- Estimated one-way index turnover at the rebalance is 2.83% and will result in a one-way trade of CNY1,436m. There is negligible impact of the funding trade on the other stocks.
FTSE China 50 Index Rebalance: Two Sets of Changes as Expected
- China Longyuan Power (916 HK) and China Railway Group Ltd H (390 HK) will replace Smoore International (6969 HK) and Sunny Optical (2382 HK) in the FTSE China 50 Index.
- The adds, deletes, float changes and capping changes will result in one-way turnover estimated at 4.23% and in a one-way trade of HK$2,091m at the close on 17 June.
- Short interest has been increasing gradually on China Railway Group Ltd H (390 HK) while it has spiked on Smoore International (6969 HK).
Virtus Health: How BGH’s Offer Plays Out From Here
- BGH played a shrewd game. It bumped its Offer to A$8.15, matching CapVest’s Scheme price. With BGH (then) holding 22.38% of shares out, CapVest folded its tent.
- As CapVest was not returning calls, Virtus Health (VRT AU) commenced discussions with BGH and ultimately reversed course and recommended BGH’s Offer.
- BGH now has 71.63% of the voting power, edging towards the 90% threshold, following which a special fully franked dividend will be paid.
Hwa Hong’s Conditional Offer Open For Acceptances
- On the 17 May, Ong Choo Eng, his son Ong Eng Yaw, along with Roswell Assets, Dymon Asia, and Crytalic Star launched an Offer for Hwa Hong Corp (HWAH SP).
- The Offer Doc is now out and is open for acceptances. The first close is the 28th June.
- This Doc does not include an IFA opinion. That will be included in the Circular which is expected to be despatched on or before the 14 June.
FCC/Metrovacesa: Acceptance Period
- On 31 May the acceptance period started, it will run until 14 June (inclusive). The adjusted offer price is €7.2 (around 50% of NAV, not too generous in my view).
- Slim seeks to build a large real estate landlord and developer. Top shareholders are Santander and BBVA (49.5% and 20.9% respectively), but cannot tender without booking losses on their stakes.
- In the long term, this stock should be worth more, albeit it won’t be very liquid. For now, gross spread is 1.8% (est. 33% annual return). Long.
Before it’s here, it’s on Smartkarma
