In today’s briefing:
- S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September
- Yuanta ETFs Rebalance Preview: Soaring Stocks, Rising Shorts; AI Beats Shipping
- What We Know Until Now About L&F & Ecopro BM’s Kospi Transfer Listing
- Important Rule Changes in Block Deals Pre-Disclosure in Korea: Analyzing Trading Dynamics
- Lasertec (6920) – The State of Things May Be Different Than You Think
- Invincible Investment Corp Placement – Decent Accretion Despite the Large Dilution
- Lalatech IPO: The Bear Case
- Nidec (6594) | Big Revision Down to E-Axle Sales
- Rakuten Securities IPO: The Bull Case
- Quiddity Primer for CSI 300/500 Index Rebalance Events
S&P/ASX200 Ad Hoc Index Rebalance & Update to Potential Changes in September
- Ventia (VNT AU) will replace Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 21 July.
- The ad hoc change will lead to changes in the list of potential adds and deletes at the regular scheduled rebalance in September.
- Weebit Nano Ltd (WBT AU) is now a potential add in September and could see some pre-positioning in the near future.
Yuanta ETFs Rebalance Preview: Soaring Stocks, Rising Shorts; AI Beats Shipping
- Using data from the close on 19 July, there could be 5 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 2 deletions for the Yuanta/P-Shares Taiwan Dividend Plus ETF.
- Stocks that are expected to benefit from the AI revolution could gain ETF inclusion while shipping stocks are the ones expected to be deleted from the ETF.
- There has been a huge increase in shorts on some of the potential inclusions and on most of the potential deletions. That will affect how stocks trade near term.
What We Know Until Now About L&F & Ecopro BM’s Kospi Transfer Listing
- Yonhap News reported on the exclusive coverage of Ecopro BM and L&F’s KOSPI transfer listing.
- L&F announced through the disclosure that they are considering the KOSPI transfer listing. Ecopro BM told another local news outlet that they are not currently reviewing the KOSPI transfer listing.
- It seems that L&F’s KOSPI transfer listing is almost a confirmed fact. However, the Ecopro company in question may be Ecopro Co, not Ecopro BM.
Important Rule Changes in Block Deals Pre-Disclosure in Korea: Analyzing Trading Dynamics
- Insiders holding more than 10% of SO must disclose block deals 30 days in advance if they plan to sell more than 1% of SO or an amount exceeding ₩5B.
- The trading window and pricing range for short positions, based on the assumption of deal-taking, will likely vary significantly as the timing of price reflection will see a drastic change.
- There is an increasing likelihood that major shareholders will accelerate their planned block deals and bring them to the market in abundance before October.
Lasertec (6920) – The State of Things May Be Different Than You Think
- Lasertec (6920) is a shoo-in for Nikkei 225 inclusion in September according to the quantitative analysis. The amount to buy is a small multiple of ADV, making the inclusion “unimpressive.”
- It is probably worth looking at the details of ownership, of volume, and of relationship to other stocks in the same general sector.
- It is also worth thinking about flow channels (stock up or down changes flows) and forward fundamental calculations.
Invincible Investment Corp Placement – Decent Accretion Despite the Large Dilution
- Invincible Investment (8963 JP) plans to raise around US$230m to fund the acquisition of six hotel assets in Japan.
- The stock has done well over the past year and so have most of its deals which we have covered in the past.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
Lalatech IPO: The Bear Case
- Lalatech Holdings Co Ltd (LALA HK), a leading logistics transaction platform, has filed for an HKEx IPO to raise US$1 billion, according to press reports.
- In Lalatech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The key elements of the bear case rest on market share pressure, KPIs declining growth, declining revenue visibility, maiden profitability built on a shaky foundation and barely positive underlying FCF.
Nidec (6594) | Big Revision Down to E-Axle Sales
- Nidec reported strong Q1 results – operating profit of ¥60.2 billion (+35% YoY), significantly above Street expectations of ¥45 billion
- The big positive was a rebound in profitability following successful structural cost cuts last year. The key negative is a cut to unit shipments for key growth driver, E-axles.
- We remain bearish for now given valuation of 25x EV/EBIT. We are not sure that the new growth driver in Motion & Energy will offset lowered expectations for EVs.
Rakuten Securities IPO: The Bull Case
- Rakuten Securities (RAKUSEC JP), a leading Japanese online brokerage, seeks to raise US$500 million. Rakuten Bank (5838 JP) (80.01%) and Mizuho Financial Group (8411 JP) (19.99%) are its shareholders.
- Rakuten Securities has grown its business by pursuing a low-cost, high-volume strategy. It has the largest number of non-consolidated securities accounts among Japanese securities companies.
- The key elements of the bull case rest on rapid customer growth, low-cost fees, market share gains, synergies with the Rakuten ecosystem and improving profitability trends.
Quiddity Primer for CSI 300/500 Index Rebalance Events
- CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
- During the periodic index rebalance events, a large number of stocks move into or out of these indices giving rise to significant flow events and attractive trading opportunities.
- In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of the CSI 300/500 index rebalance baskets.
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