In today’s briefing:
- CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%
- How Has the Index Rebalance Strategy Performed in 2024?
- 7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
- Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- Japan: Potential Passive Selling in February
- S&P500 December 2024 Forecast (Final): Flipping the COIN
- Malaysia Airports (MAHB MK): IFA Says NOT Fair, But Reasonable; And To Accept Terms
- LG CNS IPO: Limited Float Pushes Back Passive Buying
- GAPack (468 HK): XJF’s Offer Now Open
- Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st
CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%
- China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, is offering to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
- CNBM’s parent – the CNBM Parent Concert Group – will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently.
- That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer.
How Has the Index Rebalance Strategy Performed in 2024?
- It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
- Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
- As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.
7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
- Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
- Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
- An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.
Honda (7267 JP) – MAMMOTH New ¥1.1Trln Stock Buyback
- Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025…
- Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
- Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.
Japan: Potential Passive Selling in February
- Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
- There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
- Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.
S&P500 December 2024 Forecast (Final): Flipping the COIN
- Coinbase Global (COIN US) can be the unexpected addition by transition because of a high liquidity score and a close distance below the estimated transition threshold.
- Lennox International (LII US) is the main candidate for addition by migration due to having the highest average mcap score and passing eligibility metrics.
- Illumina Inc (ILMN US) has a muted conviction for addition because of ineligible earnings and a recent deletion from the index.
Malaysia Airports (MAHB MK): IFA Says NOT Fair, But Reasonable; And To Accept Terms
- Back on the 15th May, a consortium (Khazanah Nasional, EPF, the Abu Dhabi Investment Authority, and Global Infrastructure Partners) collectively holding 41.22%, launched an Offer for Malaysia Airports (MAHB MK).
- After some political gymnastics, MAHB squared away the necessary regulatory approvals, and a firm Offer was made on the 15th November. The Offer Doc dispatched on the 6th December.
- In the Circular on Friday, the IFA said NOT fair – with reference to a SOTP; but reasonable referencing historical market pricing and that no competing Offer will emerge.
LG CNS IPO: Limited Float Pushes Back Passive Buying
- LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
- As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
- Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.
GAPack (468 HK): XJF’s Offer Now Open
- On Friday, the 20th December, GAPack (468 HK) announced that Shandong Xinjufeng Technology (301296 CH) (XJF) had satisfied all pre-conditions.
- The Offer Document has now been dispatched, and the Offer is now open for tendering. The First Close is the 21st January.
- This Doc is largely a nothing burger. The Response Document, which will include the IFA, is required to be dispatched on or before the 7 January 2025.
Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st
- Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
- Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
- The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.
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