In today’s briefing:
- KWEB Index Rebalance: 1 Add & 4 Deletes in December
- Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
- NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- LG Electronics India: IPO Details & Index Entry Timing
- Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light
- [Japan Activism] Exedy (7278 JP) – Buying Back Bigly
- Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
- Vesync (2148 HK): Expect The Yangs To Privatise
- Broadcom: AI Hyper-Growth to Continue – Worries of a Slowdown Are Wrong – Positive to SK Hynix, TSMC
- Blackstone Eyes Move On Dexus (DXS AU)
KWEB Index Rebalance: 1 Add & 4 Deletes in December
- The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
- Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
- The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
- When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
- Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
- The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
- There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
- Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
- The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.
LG Electronics India: IPO Details & Index Entry Timing
- LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
- The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
- The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.
Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light
- IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
- The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers.
- Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.
[Japan Activism] Exedy (7278 JP) – Buying Back Bigly
- Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
- Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
- There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.
Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
- ~4 weeks ago, Fuji Soft Inc (9749 JP) responded to Bain’s Proposal to take over the company but got KKR to bid ¥1 more, then said that covered it.
- The Special Committee then asked the FSI Board to halt further negotiations with Bain, and to ask Bain to destroy all confidential documentation.
- Bain rejected saying it contravened METI Guidelines on Corporate Takeovers and reappeared 2 days ago with a ¥9,600 bid. The structure/details of Bain’s bid was probably a strategy mistake.
Vesync (2148 HK): Expect The Yangs To Privatise
- Vesync (2148 HK), a manufacturer of small home appliance, is currently suspended pursuant to the Takeovers Code.
- FY23 was Vesync’s best result since its December 2020 listing; and FY24E is on track to go one better. Yet the share price is 24% adrift of the IPO price.
- The Yang family, led by chairman/CEO, control ~69.26% of Vesync. An Offer price around the IPO price may be enough to take Vesync private.
Broadcom: AI Hyper-Growth to Continue – Worries of a Slowdown Are Wrong – Positive to SK Hynix, TSMC
- FY24 AI revenue as guided US$12.2bn. 1Q25 AI revenue to increase 65% YoY. FY27 “serviceable market” or “opportunity” could reach US$60-90bn. Actual revenues could be ~70% of that.
- Mngt announced another 2 hyperscale customers (one is Apple). At least 1 new new customer could add significant revenues before FY27 (adding to the 60-90bn above).
- Stock up 14% aftermarket, trading at 32x FY25 EPS. We expect Consensus EPS to revise up 10-20%. Nvidia trades at 32x next FY (FY26). Positive to suppliers Hynix and TSMC.
Blackstone Eyes Move On Dexus (DXS AU)
- Reportedly, Blackstone is running a ruler over Dexus Property (DXS AU), one of Australia’s leading fully integrated real estate groups.
- The Australian article flips flops: “Blackstone is understood to have been back on the scene“; but “cooled on the opportunity for now“.
- Almost exactly four year ago, Blackstone paid A$2.1bn for a 49% stake in the Dexus Australian Logistics Trust, a prime logistics portfolio managed and jointly owned by Dexus.
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