In today’s briefing:
- IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
- May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
- L’Occitane (973 HK): Geiger’s $34/Share Offer
- Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
- Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged
- China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market
- Leading Candidates for the First Value-Up Disclosure
- Keisei Electric Rail (9009): For Relative Value Trade
IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
- There are 2 constituent changes for the LQ45 Index and 6 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 30 April.
- The largest passive inflows are expected in Amman Mineral Internasional (AMMN IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ) and Merdeka Copper Gold Tbk PT (MDKA IJ).
- With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.
May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
- May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
- Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
- We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.
L’Occitane (973 HK): Geiger’s $34/Share Offer
- After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
- The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final.
- This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.
Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
- Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
- This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
- The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.
Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
- The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
- Below I present a study using data from 2012-2023 and this year’s portfolio.
ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
- The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
- Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.
Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged
- Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
- Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market
- China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In this note, we talk about the positive aspects of the deal.
Leading Candidates for the First Value-Up Disclosure
- Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.
- Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).
- The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index
Keisei Electric Rail (9009): For Relative Value Trade
- The activist investor is back and has demanded further action to unlock value from Keisei Electric Railway Co (9009 JP) management.
- Operational numbers are still healthy, but growth is not as large due to the high base.
- Immediate pressure to divest Oriental Land thus short Oriental Land (4661 JP) and long Keisei.
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