In today’s briefing:
- HSCEI/HSTECH/HSIII Index Rebalance Preview: Potential Changes, Flow & Positioning
- To Tender Or Not – Gauging The Future of Sun Corp (6736)
- Greatview Aseptic Packaging (468.HK) – The Story Behind The “Hostile Offer”
- Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges, Time To Unwind
- J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.
- JTOWER (4485 JP): DigitalBridge’s 162% Takeover Premium Offer Is Opportunistic
- China Resources Beverage Pre-IPO – Thoughts on Valuation
- SET50 Index Rebalance Preview: Four Changes & A Few Close Names
- Quiddity Leaderboard MV Jr Gold Miners Sep 24: Mergers Mean Possible Up-And-Out DELETEs
- Piolax (5988 JP): Murakami Becomes a Substantial Shareholder
HSCEI/HSTECH/HSIII Index Rebalance Preview: Potential Changes, Flow & Positioning
- The constituent changes for the Hang Seng China Enterprises Index (HSCEI INDEX), Hang Seng TECH Index (HSTECH INDEX) and HSIII Index will be announced after market close on Friday.
- We forecast 2 changes for the Hang Seng China Enterprises Index (HSCEI INDEX), 1 change for the Hang Seng TECH Index (HSTECH INDEX) and 3 changes for the HSIII Index.
- With same-way and opposing flow on stocks from different passive trackers, the one-way trade is currently estimated at HK$5.2bn (US$672m). That will change with final capping done on 3 September.
To Tender Or Not – Gauging The Future of Sun Corp (6736)
- The revised/final True Wind Tender Offer for up to 19% of Sun Corp (6736 JP) ends this week. With the “excitement” the last two weeks, the SunCorp/CLBT ratio is higher.
- The minimum threshold is relatively low. The Tender will most likely succeed with very high pro-ration.
- For those on the edge, I discuss possibilities on the back end. It will be less liquid, but that may not be bad.
Greatview Aseptic Packaging (468.HK) – The Story Behind The “Hostile Offer”
- The connection between Newjf and Greatview is deep. Newjf expressed an interest in acquiring Greatview early on, but the two parties didn’t reach an agreement. Greatview is not entirely “innocent”.
- Newjf’s decision to forcibly acquire Greatview at this moment should be made after careful consideration. Mengniu may not necessarily oppose this merger. Mengniu is likely to take a neutral stance.
- Newjf’s Offer is attractive. In the absence of a more realistic action by Greatview to make a higher Offer, we advise investors not to walk away from Newjf’s Offer easily.
Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges, Time To Unwind
- The theory is that stocks which are down hard FY-to-date by end-April end up being good sells because Australians will harvest their losses into end-June.
- The idea is then to buy those oversold names and hold them for 30-40 trading days. That has worked 10 out of the last 12 years hedged vs ASX200.
- This year, the “sold-down” list is very heavily weighted to miners. They have continued to fall since end-June so it’s down. But hedged vs a basket of miners? It’s up.
J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.
- JTower (4485 JP) IPOed itself Dec-2019 at ¥1,600/share. An 8-bagger in a year, fell by half, doubled, fell 70%, then doubled, fell 35%, up 50%. That’s the first 3yrs.
- Since then, the trend has been lower. The stock is down 80+% in 2 years, especially painful after an equity raise at just under ¥5,000 6 months ago.
- But the stock today closed at ¥1,430, and the Tender Offer is at ¥3,600. A 150% premium. That’s big, but it may be “too low.” An interesting case.
JTOWER (4485 JP): DigitalBridge’s 162% Takeover Premium Offer Is Opportunistic
- JTower (4485 JP) has recommended a tender offer from DigitalBridge Group (DBRG US) at JPY3,600, a 161.8% premium to the undisturbed price of JPY1,375 (13 August).
- Despite the hefty takeover premium, the offer is light (compared to historical trading ranges and the recent placement) and opportunistically timed (the share price has fallen 61% since 9 May).
- Nevertheless, barring a spurt of activism, the offer should succeed as the required 40.7% minority acceptance rate is not onerous and should be comfortably met by Japanese cross-holders.
China Resources Beverage Pre-IPO – Thoughts on Valuation
- 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 our earlier notes, we talked about the company’s past performance and undertook a peer comparison. In this note, we will look at valuations.
SET50 Index Rebalance Preview: Four Changes & A Few Close Names
- Couple of weeks from the start of the review period for the December rebalance of SET 50 Index, we see four potential index changes.
- There are a few stocks that are close to the inclusion zone and there could be a reordering among the non-constituents as stock prices move around.
- The potential adds have outperformed the potential deletes since the start of the year with most of the outperformance coming over the last 6 weeks.
Quiddity Leaderboard MV Jr Gold Miners Sep 24: Mergers Mean Possible Up-And-Out DELETEs
- The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
- This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
- In this insight, we take a look at the latest lists of potential ADDs and DELs for the index rebal event in September 2024.
Piolax (5988 JP): Murakami Becomes a Substantial Shareholder
- Murakami’s entities, City Index Eleventh and City Index Third, reported a 5.05% position in Piolax Inc (5988 JP). The purchases were from 11 June to 6 August over 60 days.
- Murakami’s average buy-in price over the last 60 days was JPY2,286.61 per share, a 0.7% discount to the last close price.
- Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. The former is likely as Piolax is cash-rich with a P/B less than 1x.
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