In today’s briefing:
- S&P/ASX Index Rebalance Preview: Potential Changes from Now to June
- Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade
- HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)
- Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Softbank (9984 JP): This Time, It’s Different
- What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?
- TOPIX Inclusions: Who Is Ready (June 2024)
- MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June
- Guzman Y Gomez IPO – The Negatives – Lawsuits and Management Churn
- Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal
S&P/ASX Index Rebalance Preview: Potential Changes from Now to June
- With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
- The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
- There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.
Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade
- With the review period now complete, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
- Price changes and changes to dividend estimates have led to names dropping off the list of potential adds and deletes over the last week.
- Constituent changes, capping and funding flows will lead to a one-way turnover of 12.7% and a one-way trade of US$1.17bn. There are 12 stocks with over 4x ADV to trade.
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)
- The June rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$32bn (US$4.1bn).
- Li Auto, Alibaba, NetEase, Zijin Mining, SenseTime and BYD Electronics are the largest buys while Tencent, Meituan, JD.com, Kuaishou Technology, Xiaomi and HSBC Holdings are the largest sells.
Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
- It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
- Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.
Softbank (9984 JP): This Time, It’s Different
- Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
- Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
- Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount
What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?
- FSS wants Nikke’s MAU data to address revenue concerns. They also seek April and May sales data for Stellar Blade to address valuation concerns despite its recent launch.
- Shift Up updated the prospectus with Nikke’s increasing MAU data but didn’t include Stellar Blade sales data. FSS may request further revisions, possibly delaying the IPO again.
- Nikke’s MAU has risen but plateaued versus the previous quarter, and uncertainty surrounds Stellar Blade’s April-May sales, potentially impacting IPO pricing.
TOPIX Inclusions: Who Is Ready (June 2024)
- 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.
- There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
- However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.
MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June
- With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the June rebalance.
- Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.6% and a one-way trade of A$83m.
- There are 6 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.
Guzman Y Gomez IPO – The Negatives – Lawsuits and Management Churn
- Guzman Y Gomez plans to raise around US$160m in its Australian IPO.
- GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
- In this note, we talk about the not-so-positive aspects of the deal.
Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal
- Back on the 15th Feb, Renesas Electronics (6723 JP), a supplier of advanced semiconductors, entered into a Scheme with Altium Ltd (ALU AU).
- Altium shareholders are being offered A$68.50/share, in cash, a lifetime high.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th July. Expected implementation on the 1 August. The IE says fair & reasonable.
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