In today’s briefing:
- Socionext Placement – Valuation More Reasonable but past Secondary Offerings Have a Mixed Record
- Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex
- Socionext (6526 JP): The Current Playbook
- Ant Group’s $6.0bn Buyback Move Casts Doubt on IPO Prospects
- Plus Alpha Consulting Placement – Pulling Out All Stops for Deal Success as Insiders Are Selling
- ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance
- TOPIX Inclusions: Who Is Ready (Jul 2023)
- JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- Kelun-Biotech (科伦博泰) IPO Trading: Lukewarm Demand but Peers Have Done Well Recently
- S&P/ASX Index Rebalance Preview: Potential Changes in September
Socionext Placement – Valuation More Reasonable but past Secondary Offerings Have a Mixed Record
- Three shareholders of Socionext (6526 JP) aim to raise around US$1.4bn via selling all of their shares in Socionext.
- We have covered the background of the deal in our earlier note, Socionext Placement – A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains.
- In this note, we talk about the updates and look at the performance of some of the past Japan deals.
Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex
- Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
- The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
- There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.
Socionext (6526 JP): The Current Playbook
- Since the announcement of the US$1.9 billion secondary placement, Socionext (6526 JP)’s shares are down -25.0% from the undisturbed price of JPY21,950 per share (5 July).
- So far, Socionext’s shares have mostly followed the pattern of previous large placements. Investors participating in previous large Japanese placements tend to secure positive returns.
- The offering will likely be priced on 11 July. Due to the steep share price decline, Socionext is trading at an undemanding multiple compared to global SoC peers.
Ant Group’s $6.0bn Buyback Move Casts Doubt on IPO Prospects
- China’s regulators on Friday imposed Ant Financial Services Group (6688 HK) with a fine of RMB 7.12bn. A day later, Ant Group unveiled a share buyback program worth $6bn.
- The last time media created a positive narrative around Ant Group was in January 2023 when Jack Ma relinquished control of the company.
- However, the media excitement was short-lived as Alibaba Group Holding (9988 HK)‘s share price quickly resumed a downward trend after rising by around 22%.
Plus Alpha Consulting Placement – Pulling Out All Stops for Deal Success as Insiders Are Selling
- Three shareholders of Plus Alpha Consulting (4071 JP) (PAC) aim to raise around US$230m via selling over 26% of the company.
- PAC was listed in 2021 and after a somewhat tepid initial performance it has been doing well over the past year.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework
ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance
- One third of the way through the review period, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
- Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
- The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the 5 months. We’d wait for a pullback to re-enter positions.
TOPIX Inclusions: Who Is Ready (Jul 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Anycolor (5032 JP) and Lifedrink (2585 JP) have already confirmed their moves to the Prime Market and are expected to have TOPIX Inclusion Events at the end of July 2023.
- More recently, Plus Alpha Consulting (4071 JP) announced their move to the Prime Market and are likely to have a TOPIX Inclusion Event at the end of August 2023.
JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
- In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally.
- It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too.
- FUD and Flows mean that it is likely to continue to trade wide for the near future.
Kelun-Biotech (科伦博泰) IPO Trading: Lukewarm Demand but Peers Have Done Well Recently
- Kelun-Biotech raised HKD 1,259m (USD 161m) from its global offering and will list on the Hong Kong Stock Exchange on Tuesday, July 10th.
- In our previous note, we looked at the company’s business lines of ADC products. We were of the view that the IPO is fairly priced, at best.
- In this note, we provide an update for the IPO before trading debut.
S&P/ASX Index Rebalance Preview: Potential Changes in September
- We forecast 22 changes across the ASX50 Index, ASX100 Index, S&P/ASX 200 (AS51 INDEX) and ASX300 Index at the September rebalance.
- Some of the changes are high probability while others are close to cutoffs. The impact of passive trading will be pretty large on a lot of stocks.
- Short interest on the potential deletes indicates some pre-positioning but there should still be a fair bit more to do.
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