In today’s briefing:
- Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
- S&P/ASX Index Rebalance Preview: High Impact Changes in March
- Adani Ent FPO – Early Demand Muted, Adani & Hindenburg Trade Barbs Again, But Not a Good Look
- STAR50 Index Rebalance Preview: 5 Changes Forecast as Review Period Ends
- StubWorld: Mickey Upstages Keisei Electric
- Osstem Implant: Details of Tender Offer & Chairman Choi’s Children Exchange CB Call Options for BWs
- MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
- Toshiba (6502) – Funding Mostly Secured, Still, Again, Maybe. Or Maybe Not. Or Not.
- Sembcorp Marine-Keppel O&M Merger Circular Squeaks In Under The Wire – Next Steps
- Flight Centre Travel Group Placement – Still a Good Deal Despite Its Track Record
Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
- The Adani Group stocks have taken a dive following the Hindenburg Research report. Group market cap is down more than US$47bn with company promoters taking the biggest hit.
- The Adani Enterprises FPO is almost certain to be undersubscribed. MSCI, in an unprecedented step, is monitoring publicly available information and is seeking feedback from the investment community.
- We find that the real float of some Adani Group stocks is much lower than the headline numbers and there could be selling if MSCI lowers the FIF.
S&P/ASX Index Rebalance Preview: High Impact Changes in March
- We currently see 1 change for the ASX20, 2 for the ASX100, 4 changes for the ASX 200 and 9 adds/ 6 deletes for the ASX300 Index in March.
- Passive trackers will need to trade over 3 days of ADV on 13 stocks, over 5 days of ADV on 9 stocks and over 10x ADV on 4 stocks.
- Shorts have been covering positions on stocks where there are expected to be passive inflows and increasing positions on stocks that are expected to have passive outflows.
Adani Ent FPO – Early Demand Muted, Adani & Hindenburg Trade Barbs Again, But Not a Good Look
- The Adani Enterprises (ADE IN) FPO saw VERY muted demand (realtime available on NSE+BSE websites) on Day 1 Friday as the share price plummeted through the bottom of the range.
- The Adani Group responded to Hindenburg late Sunday with a 400-page rebuttal, cloaked in nationalistic terms. Hindenburg responded saying the company failed to answer 62 of 88 questions.
- This is not going away. They could lower the FPO price, or just pull the FPO. That won’t materially change the significant over-valuation of many Adani Group listco share prices.
STAR50 Index Rebalance Preview: 5 Changes Forecast as Review Period Ends
- The review period for the March rebalance ends today. We forecast 2 changes using a 12-month minimum listing history, and 5 changes using a 6-month minimum listing history.
- We expect the index committee to continue using a 6-month minimum listing history. The impact on the potential deletes is a lot higher than the impact on the potential adds.
- With 5 changes to the index, estimated one-way turnover is 5.1% resulting in a one-way trade of CNY 4,549m. There is a reasonably large reverse funding trade.
StubWorld: Mickey Upstages Keisei Electric
- Keisei Electric Railway Co (9009 JP) is trading “cheap” as Oriental Land (4661 JP) enjoys a zero-Covid revival.
- Preceding my comments on Keisei/Oriental Land, 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%.
Osstem Implant: Details of Tender Offer & Chairman Choi’s Children Exchange CB Call Options for BWs
- We provide details of the Osstem Implant tender offer as well as Chairman Choi’s children exchange of CB call options for BWs.
- We believe that the majority of the minority shareholders in Osstem Implant are not likely to sell their shares at 190,000 won per share but hold on to it.
- Over a longer time frame, Osstem’s share price could reach higher levels driven by its improving sales and profit growth, deep valuation discount to global peers, and further M&A fight.
MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
- The review period for the February Quarterly Comprehensive Index Review (QCIR) of the MSCI indices ended yesterday. There will be a number of changes in the Asia Pacific region.
- Most of the inclusions are in China and the country weight in the MSCI Emerging Markets Index should increase leading to outflows from other markets.
- On average, the potential adds have outperformed the potential deletes over the last few weeks. At a glance, pre-positioning appears to be lighter than in the past.
Toshiba (6502) – Funding Mostly Secured, Still, Again, Maybe. Or Maybe Not. Or Not.
- The original bid was supposed to be presented fully-funded by 30 September 2022. Then it was early November, then late November, then early December, late Dec, early Jan, end Jan.
- Today we find out that The Banks and The Preferred JIP Bidding Consortium will aim to reach agreement by 3 Feb. The Bloomberg article details are newish, and odd.
- Shares have deteriorated and vs Peers, they are at their lowest point in many months. And the details do not make me confident this deal is clean yet.
Sembcorp Marine-Keppel O&M Merger Circular Squeaks In Under The Wire – Next Steps
- Last Friday, Sembcorp Marine (SMM SP) announced it had Approval-In-Principle for its Proposed Combination with Keppel Corp (KEP SP), contingent on the Circular being despatched by 31 January 2023.
- At 6:50pm local time on 31 January, Sembcorp Marine released its 679-page Circular (and EGM Announcement (16 Feb EGM)). Phew!
- Now we have a deal in sight, we have to think about next steps. SMM NEWCO needs a story vs flow. Orderbook is nice but may not cut it near-term.
Flight Centre Travel Group Placement – Still a Good Deal Despite Its Track Record
- Flight Centre Travel (FLT AU) is looking to raise US$127m from a fully underwritten institutional placement.
- The proceeds will be used to acquire Luxury Travel Holdings (Scott Dunn), a UK-based luxury travel business.
- In this note, we will discuss deal dynamics, past deal performance, and share the scores on our ECM framework.
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