In today’s briefing:
- MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences
- Rakuten Bank (5838) IPO – Let’s Go! (Part 2)
- Anta Sports Placement – A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good
- Arclands (9842) Overpays for Arclands Service Holdings (3085)
- Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch
- Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review
- StubWorld: Genting Berhad Is Cheap
- ZJLD Group IPO – Sentiment Could See a Positive Shift, Mid-Bottom End Digestible
- ZJLD Group IPO: Valuation Insights
- Genesis To Acquire St Barbara’s Flagship As Merger Cancelled
MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences
- The review period for the price cutoff for the MSCI May Quarterly Comprehensive Index Review (QCIR) starts today. MSCI should choose a day from this week to compute market cap.
- The most changes (especially adds) are expected in mainland China following an expansion of the universe for inclusion of stocks in Northbound Stock Connect.
- There are stocks in India where there will be FIF changes triggering large flows and there are things to watch on some stocks in Korea and China.
Rakuten Bank (5838) IPO – Let’s Go! (Part 2)
- SBI Sumishin Net Bank (7163 JP) lowered its listing price vs what were already lowered expectations from a year prior. Then Rakuten Bank (5838 JP) lowered its IPO range.
- SBI Sumishin dilly-dallied around IPO price for three days then went nuts, rising 40% as of Friday morning. Rakuten Bank’s IPO looks dirt cheap now.
- But it is worthwhile comparing it on a spectrum of OTHER Japanese banks and neobanks.
Anta Sports Placement – A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good
- Anta Sports Products (2020 HK) aims to raise around US$1.5bn in its top-up placement.
- Anta hasn’t specified what it aims to do with the money that it’s looking to raise, furthermore, it’s already net cash.
- In this note, we will talk about the placement and run the deal through our ECM framework.
Arclands (9842) Overpays for Arclands Service Holdings (3085)
- On Friday Arcland Sakamoto (9842 JP) and restaurant franchise subsidiary Arcland Service (3085 JP), which it launched in 1993 and IPOed in 2007, announced they had agreed to merge.
- Arcland SHD runs 18 restaurant brands, of which Katsuya is most well-known, with a total of 750 or so restaurants managed globally. It has grown consistently.
- The merger ratio is at an all-time high for Arcland SHD. This should be a done deal but I might expect some complaints. I think Arclands is probably overpaying.
Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch
- With 3.5 months left in the dataset, the data is pretty close to settled. The interesting bits are elsewhere. There are three auto DELETEs and two auto ADDs. Maybe.
- One auto-ADD is Toshiba, which may have a deal on it. That leaves two to add for sector balance. That could be Nitori (9843 JP) and Zozo (3092 JP).
- Friday’s move on Fast Retailing brings in the issue of the new capping function. That would be a different US$2bn selldown. Lots of gory details here.
Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review
- We should aim for price movement patterns with relatively low market exposure. One of them is the post-effective upward price movement of deletions.
- The relative price performance for one week after the implementation compared to KOSPI 200 was consistently positive, ranging from 2.41% to 6.82%.
- Given the recent price movement of four deletion candidates, there is again a high possibility that the price distortion caused by MSCI flow will revert after the effective date.
StubWorld: Genting Berhad Is Cheap
- Genting Bhd (GENT MK)‘s implied stub and the simple ratio (GENT / Genting Singapore (GENS SP)) are at multi-year lows.
- Preceding my comments on Genting are the weekly setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
ZJLD Group IPO – Sentiment Could See a Positive Shift, Mid-Bottom End Digestible
- ZJLD Group (ZJLD HK) is looking to raise around US$811m in its Hong Kong IPO.
- ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu.
- In this note, we will look at deal dynamics and share our thoughts on valuation.
ZJLD Group IPO: Valuation Insights
- ZJLD Group (ZJLD HK) has launched its HKEx listing at HK$10.78-12.98 per share to raise up to US$811 million. Books are open from 17 to 20 April.
- We previously discussed the IPO in ZJLD Group IPO: The Bull Case, ZJLD Group IPO: The Bear Case and ZJLD Group IPO: Valuation First Look.
- Our valuation analysis suggests that the IPO price range is attractive. Therefore, we would participate in the IPO.
Genesis To Acquire St Barbara’s Flagship As Merger Cancelled
- Gold miner St Barbara Ltd (SBM AU)’s reverse merger with Genesis Minerals (GMD AU) always had a whiff of biting off more than they could chew. That’s now validated.
- St Barbara has confirmed it will sell its flagship Leonora gold project to Genesis for $600mn (in cash and GMD scrip). The reverse merger has been cancelled.
- Post transaction, St Barbara will hold up to ~19.5%, and be left with no debt and ~$197m in cash. Genesis will emerge with no debt, and ~$175mn cash (pre-transaction costs).
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