In today’s briefing:
- Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap
- Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
- CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
- KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out
- TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
- STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
- SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
- Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
- CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
- Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention
Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap
- On Friday, acquisitive wafer technology firm Rs Technologies (3445 JP) announced it would buy lamp and printing equipment maker Helios Techno Holding (6927 JP) at a 74% premium.
- The premium is big, but Helios is a steal at the price. Granted, it is a small potatoes steal.
- The register is not controlled by any one party or group of investors other than retail. That makes this interesting.
Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
- Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion.
- If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
- However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.
CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
- CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
- There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
- With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.
KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out
- ZX (9890 HK) will replace Fenbi Ltd (2469 HK) in the KraneShares CSI China Internet ETF (KWEB US) at the close on 14 June.
- There will be over 6 days of ADV to sell in Fenbi Ltd (2469 HK) and we estimate over 2 days of ADV to buy in ZX (9890 HK).
- There are other ETFs that track very similar indices and there could be a lot more to trade in the stocks at the close on 14 June.
TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
- There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
- One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
- The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.
STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
- There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.
- United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.
- United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.
SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
- There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
- The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
- The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.
Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
- The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
- There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
- Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%.
CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
- There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
- Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
- The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.
Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention
- The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
- Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
- The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.
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