In today’s briefing:
- MSCI May 2022 Index Rebalance Preview: Changes in a Volatile Market
- Hyundai Heavy Industries: Multi-Phase Trading on Lockup Release & FTSE GEIS Inclusion
- China Everbright Environment (257 HK): Sell-Down Unwarranted Given Positive Prospects
- Most Shorted Stocks on KOSDAQ 150 in Last 5 Days
- Mipox (5381 JP): Participation in Power Semiconductor Consortium a Growth Driver
MSCI May 2022 Index Rebalance Preview: Changes in a Volatile Market
- The review period runs from 18-29 April for the May SAIR, the results will be announced on 13 May (Asia-time) with the changes implemented after the close on 31 May.
- Most of the potential changes are in China with few changes spread across the other Asian markets. China loses the most number of index members, followed by Japan.
- There are over 4 weeks to the start of the review period and there will be changes over that time as stock prices move around.
Hyundai Heavy Industries: Multi-Phase Trading on Lockup Release & FTSE GEIS Inclusion
- Hyundai Heavy Industries will face significant volatility this week. First, on March 17, IPO 6-month lockup will be released. The next day, March 18, rebalancing trading of FTSE GEIS occurs.
- If half of the lockup release hits the market, it will be about 3.0x ADTV. At 30%, it is 1.8x ADTV. Then, we should see an inflow of 1.04x ADTV.
- The short position exit timing is crucial. Some of the volumes scheduled for release are likely to sell on the 18th or early next week, targeting Friday’s FTSE GEIS event.
China Everbright Environment (257 HK): Sell-Down Unwarranted Given Positive Prospects
- Share price was off 23% in the last two days, yet we think China Everbright Environment (257 HK) has posted a set of healthy result, though somewhat behind expectations.
- Good new project momentum, further increase in operation revenue and collection of national subsidies are key factors backing earnings growth and improvement in cash flow over the next 2 years.
- Longer term, management stays bullish on the industry growth opportunities. Its 14.5% ROE and mid-teens earnings growth both suggest the stock’s 3.3x PER, 0.45x P/B and 9.4% yield inexpensive.
Most Shorted Stocks on KOSDAQ 150 in Last 5 Days
- Here are the top 30 most shorted stocks on KOSPI 200 over the last five trading days, by short-selling volume as a % of the accumulated trade volume.
- I then sorted out those with a short-selling volume exceeding 10% of the accumulated trade volume during these five trading days and a 30-day ADTV of +₩3B.
- And another additional condition was an increase in the loan balance during the same period. As a result, six names came up as having a high potential of price decline.
Mipox (5381 JP): Participation in Power Semiconductor Consortium a Growth Driver
- Geared to rising demand for semiconductor and other industrial polishing services in general and rapid growth in the production of advanced power semiconductors in particular.
- Sales and operating profit could double over the next 5 years, but dilution from capital raising might hold EPS growth to 50%.
- Selling at 9.2x EPS guidance for FY Mar-22. 10x potential EPS implies 65% upside. Risks include small market cap and potentially volatile quarterly earnings.
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