In today’s briefing:
- MSCI May Index Rebalance Preview: Potential Listing Switches & Implications
- Air New Zealand’s Rights Offering – Take Advantage Of the Arb
- Toshiba (6502) – 3D Writes Another Letter
- SK Shieldus IPO: Offering Details, Valuation Issues, & Index Fast Entry
- HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?
MSCI May Index Rebalance Preview: Potential Listing Switches & Implications
- We expect Baidu (9888 HK), Bilibili (9626 HK), GDS Holdings Ltd (9698 HK) and New Oriental Education & Technology Group (9901 HK) to replace their ADRs in the MSCI indices.
- The subsequent increase in CCASS shares and/or shares held outside the ADR depositary will result in an increase in the weights of the stock in the HSCEI INDEX and HSTECH INDEX.
- The higher index weight for Baidu (9888 HK) in the HSCEI and potential inclusion of Bilibili (9626 HK) will add downward pressure on the HSCEI 2022/23 dividend steepener.
Air New Zealand’s Rights Offering – Take Advantage Of the Arb
- Air New Zealand (AIR NZ) is the latest airline do a Covid Recapitalisation with a “heavy rights issue” where
- The dynamics will likely play out somewhat similarly to the way Singapore Air’s did. The initial squeeze and first leg down have.
- But that means LOTS of opportunity here for long only, passive, and arbitrageurs alike.
Toshiba (6502) – 3D Writes Another Letter
- On 24 March, the EGM defeated both company and 3D Investment proposals. That night, a leak in the Nikkei said the company would pursue privatisation measures. Supply side interest. Check.
- That same day, Bain signed a “Confirmation Agreement” with lead Toshiba shareholder Effissimo would tender into a Bain Tender Offer. Demand Side interest confirmed. Check.
- Now we have a 3D public letter to the Board demanding 3 measures before the AGM.
SK Shieldus IPO: Offering Details, Valuation Issues, & Index Fast Entry
- S1 Corp is more giant in sales and ranks first in the local on-site security market, so it is tough to understand why SK Shieldus should receive a higher valuation.
- If the growth story is sexier, the story may be different. Still, many investors will have doubts about whether SK Shieldus’ growth story is convincingly explained in the IPO prospectus.
- Even the lower end of the indicative price band is likely to be downwardly corrected in the post-IPO price-finding. Hence, I do not recommend an aggressive approach to this IPO.
HSI Index Rebalance Preview: Will The Pace of Inclusions Pick Up?
- Current at 66 constituents, we expect to reach 80 HSI INDEX constituents by the end of the year before moving higher towards 100 index members in 2023.
- We list 10 stocks that could be added to the index in June – with one-way turnover close to 6%, the actual number of inclusions will be lower.
- We also list out another 8 stocks that could possibly be added in June, though the probability of a September/ December inclusion is higher.
Before it’s here, it’s on Smartkarma
