In today’s briefing:
- Nikkei 225 Index Rebalance Preview (Mar 2024): Ranking, Capping, Funding & Other Changes
- Shinko Electric (6967) Update – MitCorp In The Mix?
- Newcrest/Newmont & Potential S&P/ASX Changes
- Liontown Resources (LTR AU): Trading Halt Extended; Passive Selling Update
- ANTA Sports Investor Day Targets DESCENTE (8114) For Growth
- Shinko Electric (6967 JP): Bidders Circle for Fujitsu’s Stake
- Lithium Power (LPI AU): Cedelco’s Offer
- US Masters (URF AU): Almost Too Good To Be True
- Kenedix J-REIT Family Merger – Still Room (But Less Time) To Move (Redux-Ish)
- IndusInd Bank (IIB IN): Passive Buying Coming Up as Foreign Room Crosses Key Threshold
Nikkei 225 Index Rebalance Preview (Mar 2024): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) March rebalance ends end January. There could be three changes at the rebalance with sector balance in focus.
- Depending on the changes, passive trackers will need to buy between 6-28x ADV (11-50% of real float) on the inclusions and sell between 2.8-44x ADV on the deletions.
- Fast Retailing (9983 JP) could be capped at 11% of the index weight and there will be buying in Nitori Holdings (9843 JP) due to the stepwise addition.
Shinko Electric (6967) Update – MitCorp In The Mix?
- Yesterday about 5 minutes before the close, Shinko Electric Industries (6967 JP) went into kehai, rising 8.6%, then falling back to end + 3% on the day.
- This morning, the stock opened down 2%, rose 4%, fell 4%, then rose 4%. All in the first 45 minutes. Then it fell back 4% and ended down 2% today.
- The proximate cause of all of this was a Reuters article out 5mins before the close yesterday suggesting Mitsubishi Corp (8058 JP) is considering bidding for Shinko Electric.
Newcrest/Newmont & Potential S&P/ASX Changes
- Newcrest Mining (NCM AU) shares stop trading after the close on 26 October and Newmont Mining (NEM US) CDIs will start trading from the open on 27 October.
- Newmont Mining (NEM US) CDIs should replace Newcrest Mining (NCM AU) in the S&P/ASX indices from 27 October. But there could be index changes at the subsequent rebalances.
- Based on the case of Block (SQ2 AU), we could see Newmont Mining (NEM US) CDIs deleted from the ASX20 Index in December and from the ASX50 Index in March/June.
Liontown Resources (LTR AU): Trading Halt Extended; Passive Selling Update
- Liontown Resources‘ Suspension from Quotation “pending the release of an announcement regarding the finalisation of funding arrangements associated with the Kathleen Valley Project” could last till the open 20 October.
- Short interest continued to increase prior to the trading halt and passive selling will be higher following Hancock increasing its stake to 19.9%.
- The immediate funding for Liontown Resources (LTR AU) could come from debt sources with an equity raise coming later this year or early next year.
ANTA Sports Investor Day Targets DESCENTE (8114) For Growth
- Yesterday, Anta Sports Products (2020 HK) held its Investor Day in Beijing. They talked about Descente Ltd (8114 JP) and their plans.
- The presentation made by the Descente China Chairman talked about the evolution of performance and the target for 2026, suggesting higher profit now and growth going forward than market expectations.
- None of this changes my outlook for why Itochu Corp (8001 JP) is buying Descente shares in the market. And the stock is going up.
Shinko Electric (6967 JP): Bidders Circle for Fujitsu’s Stake
- Reuters reported that Mitsubishi Corp (8058 JP) is considering a joint bid for Fujitsu Ltd (6702 JP)’s 50% stake in Shinko Electric Industries (6967 JP).
- Fujitsu first flagged a potential stake sale in its 1HFY22 results last October. Previously rumoured suitors include Apollo Global Management, Bain Capital, Dai Nippon Printing, JIC and KKR.
- Shinko’s shares are up 73% YTD, which is not excessive compared to Ibiden Co Ltd (4062 JP) (up 63.2% YTD). The valuation is undemanding, which facilitates a potential offer.
Lithium Power (LPI AU): Cedelco’s Offer
- Lithium Power International (LPI AU) has announced it has entered into a Scheme Implementation Deed with Chilean state miner Codelco, the world’s largest copper producer.
- Codelco is offering LPI shareholders A$0.57/share, a whopping 119% premium to last close. LPI’s major shareholder, Minera Salar Blanco SpA with 28.25%, is supportive. As is LPI’s board.
- The Scheme Meeting is expected to be held on the 23 January with implementation on the 8 February. Clean deal.
US Masters (URF AU): Almost Too Good To Be True
- US Masters Residential Property Fund (URF AU), an ASX-listed real estate trust investing in single-family homes in gentrifying New York metropolitan neighbourhoods – what could go wrong?
- Quite a lot, apparently. Shares are down bigly from the 2011 listing; the responsible entity faced ASIC-backed court proceedings for misleading clients; plus dissent emerged over appointing a new RE.
- URF is gradually offloading its entire portfolio, and buying back shares, which are trading at 0.49x price-to-book. So, where’s the rub?
Kenedix J-REIT Family Merger – Still Room (But Less Time) To Move (Redux-Ish)
- A month ago I wrote there was still time, and room, to move on the Kenedix Merger.
- Now there’s less time, but the situation and relationships are better understood.
- Tracking Excess Volume during the period since the announcement is interesting. And it may tell you less than you think.
IndusInd Bank (IIB IN): Passive Buying Coming Up as Foreign Room Crosses Key Threshold
- Foreign investors sold ~5.7m shares of Indusind Bank (IIB IN) from July to September. That selling has pushed foreign room above the key 15% threshold.
- With foreign room crossing 15%, passive trackers will need to buy a chunk of Indusind Bank (IIB IN) stock at the end of November.
- There will be positioning on Indusind Bank (IIB IN) though it appears some of that was taken off in the last couple of days.
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