In today’s briefing:
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December
- HSCEI Index Rebalance: PICC P&C (2328 HK) Replaces Longfor (960 HK)
- Dividend Tax Cut Decision Scheduled for 25th, Next Monday: Watch Sammy Prefs
- (Mostly) Asia-Pac M&A: Sayona/Piedmont, I D & E Holdings, Arcadium, Pacific Smiles, HKBN, MAHB
- LG Corp: Key Highlights from Its Corporate Value-Up Plan and Updated NAV Valuation
- SK Square: A Solid Corporate Value Up Plan Likely to Lead to Continued Outperformance
- Meiji Holdings (2269 JP) Offering – May Approach a 9Yr Low
- Kioxia IPO Preview
- Last Week in Event SPACE: Seven & I, Amcor/Berry, WH Group/Smithfield, Tuya
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
- Using data from the close on 15 November, there could be 6 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
- There will also be capping and funding flows that will lead to a one-way turnover of 16.9% and a one-way trade of TWD 57.5bn (US$1.77bn).
- Short interest is at the highs in most forecast deletes, while the trend is mixed among the potential inclusions.
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December
- Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 December.
- With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.
- Short interest is especially large in Sinotruk, Giant Biogene, Kuaishou Technology, ASMPT and JD Logistics and inclusion could set off some short covering.
HSCEI Index Rebalance: PICC P&C (2328 HK) Replaces Longfor (960 HK)
- PICC Property & Casualty H (2328 HK) will replace Longfor Properties (960 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 6 December.
- Estimated one-way turnover is 2.68% resulting in a round-trip trade of HK$2.84bn (US$365m). The final capping will use the close of trading on 3 December.
- There could be a move higher in PICC Property & Casualty over the next few days while any selling in Longfor Properties will be a covering opportunity for the shorts.
Dividend Tax Cut Decision Scheduled for 25th, Next Monday: Watch Sammy Prefs
- The opposition’s pushing a Commercial Act amendment, and to gain ruling party support, they might strategically ease up on the dividend tax issue—classic quid pro quo.
- The Samsung family’s collateral risk eased with a 10 trillion won buyback, but local markets are still cautious. Local traders now eye another 10 trillion won shareholder return.
- The timing of the special dividend and tax deadlines may cause mismatches, but we should watch for earlier price moves in Samsung Electronics preferred shares.
(Mostly) Asia-Pac M&A: Sayona/Piedmont, I D & E Holdings, Arcadium, Pacific Smiles, HKBN, MAHB
- I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Six new deals this week: Amcor (AMC AU)takes out Berry Global (BERY US);Sayona (SYA AU)and Piedmont (PLL AU) merge; and Integrated Design & Engineering (9161 JP)‘s TOB.
- Key updates/news took place on: Arcadium Lithium (LTM AU), Pacific Smiles (PSQ AU), Hotel Property Investments (HPI AU), HKBN (1310 HK), Xingda International (1899 HK), and Malaysia Airports Holdings (MAHB MK).
LG Corp: Key Highlights from Its Corporate Value-Up Plan and Updated NAV Valuation
- In this insight, we provide the major highlights of the solid Corporate Value Up plan announced by LG Corp on 22 November.
- The key highlights include about 500 billion won worth of share cancellation by 2026, improved dividend policy, and higher ROE target.
- Our base case NAV valuation analysis of LG Corp suggests implied NAV of 16.1 trillion won or NAV per share of 102,426 won, which is 33.4% higher than current price.
SK Square: A Solid Corporate Value Up Plan Likely to Lead to Continued Outperformance
- SK Square (402340 KS) announced a solid corporate value up plan pushing up its share price by 8.8% to 87,500 won on 22 November.
- Major highlights of the corporate value up plan included cancellation of 200 billion won of treasury shares, higher ROE target, and achieve 1x PBR ratio (nearly double the current ratio).
- Our NAV analysis of SK Square suggests NAV of 15.2 trillion won or 112,822 won per share, representing 29% higher than current share price.
Meiji Holdings (2269 JP) Offering – May Approach a 9Yr Low
- Meiji Holdings (2269 JP) on Friday announced 9 different banks would sell 4.7% of float in an equity offering to price in the first few days of December 2024.
- The shares closed Friday within 1.5% of a 52wk low. The shares are less than 9% off a 9-year low. The offering is about US$300mm and 15 days of ADV.
- Given the stock is under-levered, and structurally a low volatility name, a large move should encourage buying.
Kioxia IPO Preview
- Kioxia plans to complete its IPO on 18 December, valuing Kioxia at 750 billion yen ($4.8 billion), down nearly 50% from the initial market value estimates about 2-3 months ago.
- Kioxia had revenue of 909.4 billion Yen (up 84.6% YoY) and EBITDA of 449.6 billion Yen in 1H FY24, driven by the recovering demand for data center and enterprise SSDs.
- As of 2Q 2024, Samsung Electronics was the largest player in the global NAND Flash market with a 36.9% market, followed by SK Group (22.1%), and Kioxia (13.8%).
Last Week in Event SPACE: Seven & I, Amcor/Berry, WH Group/Smithfield, Tuya
- At equal price to ACT, Ito-san wins because of certainty/immediacy, but provided his price is above the bottom of the range and adequately compensates 7&i for “additional actionable avenues.”
- The Amcor Limited (AMC AU)/Berry Global Group (BERY US) merger looks clean. However, Berry’s % of earnings (revs, EBITDA, and profit), are higher than the % under the share split
- This Temasek-led development will have a marginal impact on Tuya Inc (TUYA US). Creating supply and demand is hard. And Temasek-held/backed vehicles on the SGX are already abundant.
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