In today’s briefing:
- KOSPI200 Index Rebalance Preview: A Busy December Rebalance
- Nikkei 225 Sep 2023 Review – The Mercari Conundrum
- KRX New Deal Index Rebalance Preview: Interesting Changes Emerging
- Quiddity Leaderboard ASX Sep 23: Many Changes Ahead
- Oriental Watch: Steady FY23, Dividend Yield 14%, Cash >50% of Market Cap
- Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
- Nitori: 33 Years of Revenue Growth
- SK Square’s Special Dividend Momentum Trading: Entry Timing at Month End.
- SK Square: Share Cancellation and More Share Buyback Likely from Sale of SK Shieldus in 2H 2023
- Ohayo Japan| Global Rate Hikes; SPX Rise Despite Powell; NUGGET: Daikin(6367)- Global Best in Class
KOSPI200 Index Rebalance Preview: A Busy December Rebalance
- Just over a quarter of the way through the review period, we see six changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.
- There are a few stocks that are close adds at the current time and a move higher can take them into inclusion zone leading to more deletions.
- While there is little to no short interest on the potential inclusions, short interest on the potential deletions ranges from 4.3-12.2 days of ADV and 0.5-3.5% of free float.
Nikkei 225 Sep 2023 Review – The Mercari Conundrum
- Mercari Inc (4385 JP) is potentially a leading candidate for inclusion in the Nikkei 225 in September.
- There are other technical reasons to think it is not.
- This insight looks at the issue of why it might be a leading candidate and why it might not be.
KRX New Deal Index Rebalance Preview: Interesting Changes Emerging
- The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
- There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. Plus there are a couple of changes for the BBIG indices.
- SK Biopharmaceuticals Co Ltd (326030 KS) has overtaken SK Bioscience (302440 KS) on average market cap and there will be large flows on both stocks at the rebalance.
Quiddity Leaderboard ASX Sep 23: Many Changes Ahead
- In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run up to the September 2023 Rebalance.
- I currently expect one change for the ASX 100 index and five changes (including one intra-review change) for the ASX 200 index.
- There could be 7 ADDs and 5 DELs for the ASX 300 index.
Oriental Watch: Steady FY23, Dividend Yield 14%, Cash >50% of Market Cap
- Oriental Watch (398 HK) reported a steady result, with 2023 earnings <18% YoY ( adjusted for one-time gains in 2022 <5% YoY), which was broadly in line with our expectations.
- The DPS for FY23 was 61 cents (FY22: 74 cents) lower than our expectation of 65 cents, a 100% payout ratio equating to a 14% dividend yield.
- Cash at 1.07 bn represents > 50% of market capitalization. We believe the management will dip into reserves when it requires to manage a decent payout for shareholders.
Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
- There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade.
- There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.
Nitori: 33 Years of Revenue Growth
- Nitori, Japan’s largest furniture retailer, once again grew consolidated revenues in its extended financial year to March.
- Despite the increased costs of imports, profits also rose, although net profits saw a rare decline.
- The group still has strong growth potential: it continues to diversify, including into apparel, expand its omnichannel operations and is now building more stores overseas.
SK Square’s Special Dividend Momentum Trading: Entry Timing at Month End.
- The market’s attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.
- There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.
- We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.
SK Square: Share Cancellation and More Share Buyback Likely from Sale of SK Shieldus in 2H 2023
- SK Square announced that it will cancel treasury shares worth 2.5 million shares on 4 October 2023, which represents 1.8% of its current outstanding shares.
- Our NAV analysis of SK Square suggests NAV of 9.4 trillion won or NAV per share of 66,421 won, representing a 45% upside from current levels.
- SK Square’s positive shareholder return policies including higher share buybacks, cancellations, and dividends are result in further outperformance of SK Square relative to KOSPI this year.
Ohayo Japan| Global Rate Hikes; SPX Rise Despite Powell; NUGGET: Daikin(6367)- Global Best in Class
- OVERSEAS. Hawish Powell wraps up testimony; Global Rate Hikes – from UK to Norway; SPX +0.4% gains despite rise in Yields; Confirmed- Titanic Sub Crew confirmed dead
- JAPAN. NKY Futs +0.5% vs Cash; USDJPY weaknes to 143 handle amid rise in US yields; Foreigners continue to buy Japan; Corp Governance loss as Cosmo(5021) approve Poison Pill
- NUGGET. Daikin(6367)- A Global Best in Class and winner – but waiting for a pull back to jump in.
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