In today’s briefing:
- Smartkarma Webinar | Top Trade Ideas in European Event-Driven
- Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO
- HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
- Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
- HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
- Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
- Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
- Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki, Kerry Express Thailand, JOYY, Tietto Mins, Pact Group
- Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK
Smartkarma Webinar | Top Trade Ideas in European Event-Driven
- In the next installment of our Webinar series, we go live with Smartkarma Insight Provider Jesus Rodriguez Aguilar.
- He will be sharing with us his top trade ideas and insights in the European event-driven space.
- From current opportunities, to what we can expect next in the region, join us as we get the full picture from Jesus.
The webinar will be hosted on Wednesday, 23 August 2023, 17:00 SGT/HKT.
Jesus Rodriguez Aguilar is an Event-Driven Analyst looking across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations.
Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO
- It was a busy week with rebalance implementations at the close of trading on Thursday in Korea and then across the region on Friday.
- The SET 50 Index changes should be announced this week and the Yuanta TW Div+ ETF will continue to implement the changes till Thursday.
- There were inflows to China ETFs during the week while there were big outflows from Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) ETFs.
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
- We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
- We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
- There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
- The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
- The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
- There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).
HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
- Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
- With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
- Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.
Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
- On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
- On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
- “The Consortium stands ready to engage with the Board“. The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement.
Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
- The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO.
- This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO.
- This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.
Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
- Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio.
- Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki, Kerry Express Thailand, JOYY, Tietto Mins, Pact Group
- I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Two new deals discussed this week: AOKI Holdings (8214 JP)‘s MBO and in-specied-triggered MTO got Kerry Express Thailand (KEX TB).
- Key updates took place on: JOYY (YY US), Tietto Minerals Ltd (TIE AU)and Pact Group Holdings (PGH AU).
Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK
- Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
- There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
- Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.
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