In today’s briefing:
- ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)
- Australia: Six Stocks in Passive Selling Crosshairs for February
- ITC Hotels Demerger: Listing Anticipation and Index Implications
- HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable
- Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- (Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
- Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2025
- Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Jan25), TSE Updates
- Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (November and December 2024)
ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)
- ITC Ltd (ITC IN) will demerge its Hotels business with the ex-date set as 6 January and shareholders receiving 1 share of ITC Hotels for 10 shares of ITC Ltd.
- ITC Ltd (ITC IN) shareholders will own 100% of ITC Hotels – 60% will be owned directly and 40% will be owned through their shareholding in ITC Ltd (ITC IN).
- There will be a lot of selling in ITC Hotels within a few days of listing from different passive index trackers and that could provide buying opportunities for those interested.
Australia: Six Stocks in Passive Selling Crosshairs for February
- Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
- If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
- The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.
ITC Hotels Demerger: Listing Anticipation and Index Implications
- ITC Hotels is demerging with ITC Ltd (ITC IN) to create value for ITC shareholder and unlock value in hotel business.
- Record date for ITC Hotel demerger is 6-Jan-25 and listing can be done in 60 days after NCLT order i.e. 16-Dec-24.
- Discussed inclusion and exclusions of various Index including MSCI Emerging Markets Index (MXEF INDEX), FTSE and NIFTY Index (NIFTY INDEX) & S&P BSE SENSEX Index (SENSEX INDEX EQUITY).
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
- BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
- There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
- There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.
Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable
- On 26 December, CVC extended its Macromill, Inc. (3978 JP) offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.
- The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication.
- Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
- HK$1.38/Share. That’s the key takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 14.13% discount to undisturbed.
- The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
- Should the SPA complete, an unconditional MGO is triggered. But the question is: why would BABA be cashing out at this price?
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
- For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
- The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2025
- In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 1Q 2025.
- The recent martial law cancellation and numerous impeachments of acting Presidents have raised political uncertainty in Korea resulting in widening of some gaps among numerous holdcos and opcos in Korea.
- Of the 38 pair trades, 25 of them involved holdcos outperforming opcos in the past six months and the other 13 opcos outperforming holdcos in the same period.
Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Jan25), TSE Updates
- TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
- 609 new CGRs were filed since 31-Nov-2024. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
- A surprising number of smaller companies have yet to file a MCoCC/SP Awareness report. As cross-holdings get sold down, I expect they will become activists targets in 2025.
Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (November and December 2024)
- In this insight, we discuss the alpha generation through companies that have been buying back their shares in the Korean stock market in November and December 2024.
- On average, the share buyback announcements for the 52 companies that announced share buybacks in Korea represented 2.2% of outstanding shares.
- Major companies that have announced share buybacks in Korea in the past two months include Celltrion, Samsung Electronics, Doosan Bobcat, and Hyundai Motor.
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