In today’s briefing:
- Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
- KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
- NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks
- The Bigger Picture As Aussie Government “Approves’ Hanwha Ocean’s Austal Bid
- Austal (ASB AU): Spurned Suitor, Hanwha Ocean, Gets a Vote of Confidence
- Bukalapak (BUKA IJ) – Eureka Moment with Better Visibility Ahead
- Corporate Value Up Program Guidelines Proposed by the FSC – Disappointing & Needs Improvement
- Honasa Consumer IPO Lock-Up Expiry – US$500m+ Lockup Expiry with Everyone Well in the Money
Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
- The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
- Below I present a study using data from 2012-2023 and this year’s portfolio.
ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
- The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
- Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.
KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
- With the review period complete, there could be up to 5 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
- Hahn&Co now own over 96% of the shares in Ssangyong Cement Industrial (003410 KS) and there could be another change at or before the June rebalance.
- Passive trackers will need to trade between 0.5-15x ADV on the index changes. There are big shorts in L&F (066970 KS) and Lotte Tour Development Co, Ltd. (032350 KS).
KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
- With the review period complete, there could be up to 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
- Even with 15 changes, there is some sector balance among the potential adds and deletes with big churn in the Information Technology sector.
- The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the review period but performance has flattened over the last month.
NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks
- Today, NPS made the final decision to introduce a reference portfolio. The critical point is the increase in risky assets from 56% to 65%, also decided at today’s meeting.
- Initially, overseas equity was prioritized, but recent forecasts suggest significant potential in increasing local equity, aligning with the value-up policy.
- Monitoring NPS’s execution plan, including allocation and timing by asset class, is vital to gauge inflow size, especially for Value-up beneficiaries.
The Bigger Picture As Aussie Government “Approves’ Hanwha Ocean’s Austal Bid
- Recently, I surmised FIRB would approve Sociedad Quimica y Minera (SQM US)/Hancock’s bid for Azure (AZS AU); but ding Hanwha Ocean (042660 KS)‘s Austal (ASB AU) tilt. I’m batting 50%.
- Whereas FIRB gave the green light for Azure this week; reportedly (no official ASX announcement as yet), the Aussie government is “not concerned” with Hanwha’s acquisition. Austal gained 3% yesterday.
- Even Austal didn’t high hopes of securing Aussie approval. Presumably the US government is similarly onboard. This development also signals an expanding AUKUS security pact.
Austal (ASB AU): Spurned Suitor, Hanwha Ocean, Gets a Vote of Confidence
- On 2 April, Austal Ltd (ASB AU) rejected a non-binding proposal from Hanwha Ocean (042660 KS) at A$2.825 due to concerns about obtaining Australian and US regulatory approvals.
- The Board’s claims are on shaky grounds. On 1 May, the AFR reported that Australian Defence Minister Richard Marles had no concerns with Hanwha’s privatisation bid.
- The Board’s rejection is a clumsy attempt to negotiate better terms, such as a bump, ticking fees, or significant break fees. At the last close, the gross spread was 21.8%.
Bukalapak (BUKA IJ) – Eureka Moment with Better Visibility Ahead
- Bukalapak released its 1Q2024 results this week with some palpable relief as it booked its first adjusted EBITDA but underlying revenue growth remains strong, especially for its O2O business.
- The company saw take rates improve for both its Mitra O2O business and its marketplace businesses, helping to drive revenue growth. Costs were also reduced allowing for positive contribution margins.
- Bukalapak is expected to see sustainable profitability accompanied by revenue growth, with the marketplace recovering with improving product mix. BUKA’S “orphan” cash pile remains an issue but valuations are attractive.
Corporate Value Up Program Guidelines Proposed by the FSC – Disappointing & Needs Improvement
- Some of the Corporate Value Up program’s initial guidelines proposed by the Financial Services Commission (FSC) were announced today.
- Overall, the initial guidelines were disappointing mainly because they lacked concrete figures with regards to tax incentives for companies that make significant improvements to their corporate governance.
- More concrete measures announced today included recommendations for overlapping parent company listing (split listing) and disclosure recommendations for the majority shareholder’s profit transfer to an unlisted private company (tunneling).
Honasa Consumer IPO Lock-Up Expiry – US$500m+ Lockup Expiry with Everyone Well in the Money
- Honasa Consumer (HONASA IN) raised about US$200m in its India IPO. Its pre-IPO investors will be released from its IPO linked lockup soon.
- HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
- In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.
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