In today’s briefing:
- JD.com (9618 HK): Index Implications of Walmart Placement
- S&P/ASX Index Rebalance Preview: Review Period Nearly Done; Big Impact Changes
- FnGuide Semiconductor Top10 Index Rebalance Preview: Two Changes Likely in October
- China A50 ETFs Rebalance Preview: Two High Probability Changes in Sep
- (Mostly) Asia-Pac M&A: APM Human Services, TCM, Alps Logistics, Fancl, Jeisys Medical, PropertyGuru
- ESR Group (1821 HK): A Rumoured Offer Price Surfaces
- Henlius (2696 HK): Share Alternative Facilitates the Vote
- Japan Tobacco/Vector Group: Possible Bump-Up?
- NIFTY Bank Index Rebalance: Canara Bank IN; Bandhan Bank OUT
- CMES AI Robotics IPO Preview
JD.com (9618 HK): Index Implications of Walmart Placement
- Media reports indicate that Walmart (WMT US) is looking to sell 144.5m shares of JD.com (JD US) to raise up to US$3.74bn. That would be substantially all of its stake.
- There will be passive buying from global index trackers at the time of settlement of the placement shares and could absorb around 12% of the placement shares.
- There will be no passive buying from HSI, HSCEI, HSTECH and HSIII trackers in the short-term. An increase in CCASS holdings should result in passive buying in December.
S&P/ASX Index Rebalance Preview: Review Period Nearly Done; Big Impact Changes
- With 2 trading days left in the review period, there could be 30 adds/deletes across the S&P/ASX family of indices in September.
- Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
- The forecast adds have hugely outperformed the forecast deletes. Borrow recall on the deletes and increased borrow availability on the adds could result in underperformance following announcement of the changes.
FnGuide Semiconductor Top10 Index Rebalance Preview: Two Changes Likely in October
- With the start of the review period around the corner, there could be two changes for the FnGuide Semiconductor Top10 Index at the October rebalance.
- Wonik Ips (240810 KS) and Techwing Inc (089030 KS) are potential adds while ISC Co Ltd (095340 KS) and Dongjin Semichem (005290 KS) are potential deletes.
- Passives will need to trade more than 2x ADV on two potential changes and more than 1x ADV on another potential change.
China A50 ETFs Rebalance Preview: Two High Probability Changes in Sep
- With the review cutoff done, there should be two changes for the CSOP FTSE China A50 (HKD) (2822 HK) / iShares FTSE/Xinhua A50 China (2823 HK) ETFs in September.
- Huaneng Lancang River Hydropow (600025 CH) and China National Nuclear Power (601985 CH) should replace China Tourism Group Duty Free Corp (601888 CH) and Yihai Kerry Arawana (300999 CH).
- China Tourism Group Duty Free (1880 HK) will be deleted from a global index later this month and there could be some opportunities to trade the A/H arb.
(Mostly) Asia-Pac M&A: APM Human Services, TCM, Alps Logistics, Fancl, Jeisys Medical, PropertyGuru
- I tally 45 – 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 were discussed this week: Alimentation Couche-Tard (ATD CN)‘s non-binding proposal for Seven & I Holdings (3382 JP).; and EQT’s Offer for PropertyGuru (PGRU US).
- Key updates took place on APM Human Services (APM AU), TCM (570 HK), GaPack (468 HK), Alps Logistics (9055 JP), Fancl Corp (4921 JP), and Jeisys Medical (287410 KS).
ESR Group (1821 HK): A Rumoured Offer Price Surfaces
- A media outlet that Reports on Deals reported that the consortium will offer HK$14.50 per share, a 22.1% and 61.8% premium to the last close (HK$11.88) and undisturbed price (HK$8.96).
- While not a knockout offer, the consortium’s impending binding proposal suggests confidence that the offer price and structure would gain the support of the substantial shareholders.
- The downside to a deal break is low as ESR’s valuation is undemanding. Its forward EV/EBITDA multiple is at a 30% discount to the median peers’ multiple.
Henlius (2696 HK): Share Alternative Facilitates the Vote
- Shanghai Fosun Pharmaceutical (Group) (2196 HK) announced the Shanghai Henlius Biotech (2696 HK) share alternative offer, subject to proration due to a cap of 8% of outstanding shares.
- The share alternative offer was necessary to facilitate the vote as the HK$24.60 offer is half the HK$49.60 IPO price.
- The co-founders, HenLink and LVC, will likely tender some or all their shares for scrip. At the last close and for the December-end payment, the gross/annualised spread is 7.4%/17.9%.
Japan Tobacco/Vector Group: Possible Bump-Up?
- JT plans to acquire 100% of Vector Group at $15.00/share, a 29.9% premium. The offer requires over 50% acceptance, with Board support and completion expected by late 2024, pending approvals.
- The shares go ex-dividend on August 30, with payment on September 12. Adjusted for the dividend, shares trade at a -0.4% gross spread. My fair value estimated is $15.92/share.
- Consensus sets a target price of $16/share. JT may consider raising its offer to this level (6.67%), especially if they see Vector as a strong long-term investment.
NIFTY Bank Index Rebalance: Canara Bank IN; Bandhan Bank OUT
- In line with our forecast, Canara Bank (CBK IN) will replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the close on 27 September.
- Bandhan Bank Ltd (BANDHAN IN) will be deleted from a global index at the close on 31 August, so real float will increase a lot over the next month.
- Passive trackers will need to buy over 2 days of ADV in Canara Bank (CBK IN) and sell 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN).
CMES AI Robotics IPO Preview
- CMES AI Robotics is getting ready to complete its IPO on KOSDAQ in October. The expected IPO price is 20,000 won to 24,000 won.
- CMES provides intelligent robot solutions that combine artificial intelligence (AI) and three-dimensional (3D) vision technology. CMES’s core technologies include 3D vision sensors and image processing algorithms.
- Robotics related IPOs have generated enormous interest in Korea. Although CMES is a small cap name, this robotics related IPO is also likely to garner high interest as well.
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