In today’s briefing:
- HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September
- Nikkei 225 Sep 2023 Review – Still Fastie, Nitori, Zozo, and Lasertec as Interesting Names
- No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea
- TOPIX Inclusions: Who Is Ready (Jun 2023)
- Austal (ASB AU): Privatisation on the Cards?
- Alibaba Potential IPOs – The Final Part – Quick Look at Investees and Eventual Holdco
- Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June
- Infratil (IFT NZ): NZ$850m Placement & Index Implications
- CR Power (836 HK): Upside From Clean Energy Spin-Off
- Lifedrink Company (2585 JP) Ascends to TSE Prime and TOPIX But An Offering Produces Overhang
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in September
- Fenbi Ltd (2469 HK) was added to the Hang Seng Composite Index (HSCI) at the close Friday and will be added to Southbound Stock Connect from open of trading today.
- We see 22 potential adds, 19 potential deletes, couple of close deletes, 5 deletes on prolonged suspension and 4 close liquidity deletes for the HSCI in September.
- There are 11 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.
Nikkei 225 Sep 2023 Review – Still Fastie, Nitori, Zozo, and Lasertec as Interesting Names
- The Nikkei 225 Sep 2023 review has 2 months left of data collection. That means the rankings are quasi-fixed. So then the question is what to do with them.
- There is a consultation in progress. You still have one week to respond, but that doesn’t change the names.
- The top inclusion is the big one in dollar terms but low in liquidity. The next two are likely to be consumer names, and much more impactful.
No Foreigner ID/Trade Report Obligation Starting Dec 14: Impact on Event Trading in Korea
- The abolition of the foreign investor registration system was approved in a Cabinet meeting. They will be promulgated on June 13th and implemented starting December 14th of this year.
- This change is not just about reducing administrative tasks, as it also eliminates the reporting obligations of foreign investors, thereby reducing their position exposure risk.
- This could improve event outcome and price prediction accuracy. Therefore, it is crucial to keep a close eye on event trading when this measure takes effect in December.
TOPIX Inclusions: Who Is Ready (Jun 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Zuiko Corp (6279 JP), Anycolor (5032 JP), and Lifedrink (2585 JP) will have TOPIX Inclusion events at the end of June (Zuiko) or July 2023 (the other two).
- One of our pre-event TOPIX Inclusion candidates CELSYS (3663 JP) has experienced sharp price moves over the last few weeks.
Austal (ASB AU): Privatisation on the Cards?
- Media reports indicate that Austal Ltd (ASB AU) is in the crosshairs of investors looking to take the company private.
- In an announcement, Austal Ltd (ASB AU) said it is regularly involved in discussion with strategic parties to create value for shareholders.
- The recent large contract from the US Navy, potentially more contracts in the pipeline and a weak AUD could result in investors paying up to take the company private.
Alibaba Potential IPOs – The Final Part – Quick Look at Investees and Eventual Holdco
- On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
- Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
- In this note, we will talk about some of the company’s investments and how the overall Holdco would look post restructuring.
Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June
- Back on the 9 May, Inner Mongolia Yitai Coal Company Ltd (3948 HK) announced an H-share buyback at HK$17.50/share.
- With no pre-conditions attached to this hybrid Scheme/Tender Offer, my expectation was this could be wrapped up by mid-August.
- The dispatch of the Offer Document yesterday evening indicates even this timeline was conservative, with payment potentially occurring in the third week of July.
Infratil (IFT NZ): NZ$850m Placement & Index Implications
- Infratil Ltd (IFT NZ) is acquiring Brookfield Asset Management Lt (BAM US)‘s 49.95% stake in One NZ for NZ$1.8bn. This will be partly funded through a NZ$850m placement.
- There will be a NZ$750m underwritten placement at NZ$9.2/share (an 8.9% discount to the last close) and a retail offering of NZ$100m.
- There will be passive buying from index trackers post the completion of the placement and the settlement of the shares and that will remove some of the overhang.
CR Power (836 HK): Upside From Clean Energy Spin-Off
- Late March, SOE-backed power play China Resources Power Holdings Co Ltd. (836 HK) announced it intends to spin off its energy unit via an A-share listing.
- Shares gained 4.9% on the news – gains which were promptly given back over the ensuing fortnight.
- Renewable energy profits have been the driving force behind CRP’s bottom line strength the last two years. But how best to assign a value to the remaining loss-making thermal ops?
Lifedrink Company (2585 JP) Ascends to TSE Prime and TOPIX But An Offering Produces Overhang
- On 1 June, Lifedrink (2585 JP), which listed in early 2022, announced it would move to TSE Prime in late June, leading to a TOPIX inclusion in late July.
- The offset to that was an announcement of an offering, whereby the PE Fund which brought the company to market would sell up to 3.87mm shares, effectively doubling float.
- The offering is larger than the TOPIX inclusion. The stock fell the next day, rebounded, then rebounded 11% Monday. Now it’s up more and hit a lifetime closing high.
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