In today’s briefing:
- Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
- REIT Pair Trade: Long DCREIT SP/ Short KDCREIT SP
- Ichigo (2337) Buyback – History and Shareholder Structure Give an Edge
- Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks
- End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2023
- Daiwa House REIT Placement – Sponsor Cutting Stake, Would Likely Need a Wider Correction
- Doosan Robotics IPO – Thoughts on Valuation – A Punt at Best, a Crash at Worst
- Auckland Airport Placement – Well Flagged, LO Support but Still a Bit Tricky
- Doosan Robotics IPO: Valuation Insights
- MVIS Australia A-REITs Index Rebalance Preview: Abacus Group Could Be Deleted
Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
- Jio Financial Services (JIOFIN IN) started trading on 21 August following its demerger from Reliance Industries (RIL IN). The stock was locked limit down on its first four trading days.
- Passive NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers hold Jio Financial Services (JIOFIN IN) stock and will need to sell over the next few days.
- We estimate passive trackers will need to sell around 188m shares (US$487m) of Jio Financial Services (JIOFIN IN) next week and the stock could head lower in the short term.
REIT Pair Trade: Long DCREIT SP/ Short KDCREIT SP
- After underperforming since listing, Digital Core REIT (DCREIT SP) has outperformed Keppel DC REIT (KDCREIT SP) over the last few months.
- However, Digital Core REIT (DCREIT SP) still trades at cheaper valuations as compared to Keppel DC REIT (KDCREIT SP).
- There could be relative outperformance over the next few weeks and any underperformance can be used to enter positions in the pair. There is an important catalyst.
Ichigo (2337) Buyback – History and Shareholder Structure Give an Edge
- Today after the close, Ichigo Inc (2337 JP) announced a stock buyback to go through the next 6 months. It is ¥3bn, which is not huge, but not nothing.
- It seems like a constant refrain, but shareholder structure matters.
- Ichigo has a history of doing buybacks (10% of shares out are in treasury), and the historical patterns are interesting when comparing announced intention and actual result.
Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks
- Four months ago, Rakuten Bank (5838 JP) was IPOed too low, then the price went up. It would appear foreign active ownership is relatively high.
- Rakuten Bank stands out with high ROE and earnings growth. Banks stand out because, well, they’re going up.
- Given expected 5yr earnings growth, Rakuten Bank at current price is probably “wrong.” But it has much less “bankness” than most banks, so you have to think about it differently.
End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2023
- We discuss the end of the mandatory lock-up periods for 49 stocks in Korea in September 2023, among which 7 are in KOSPI and 42 are in KOSDAQ.
- These 49 stocks on average could be subject to further selling pressures in September and could underperform relative to the market.
- Among these 49 stocks, top five market cap stocks include Kakao Games (293490 KS), SK Oceanplant (100090 KS), Korea Zinc (010130 KS), Fadu (440110 KS), and Vaxcell-Bio Therapeutics (323990 KS).
Daiwa House REIT Placement – Sponsor Cutting Stake, Would Likely Need a Wider Correction
- Daiwa House Industry (1925 JP) is looking to raise US$175m from trimming a portion of its stake in Daiwa House Reit Investment (8984 JP).
- Given that a selldown in the REIT hadn’t been explicitly guided, we would thus argue that the deal here isn’t particularly well flagged.
- Overall, the base deal would represent 4.09% of the REIT’s total outstanding shares, representing 20 days of three month ADV.
Doosan Robotics IPO – Thoughts on Valuation – A Punt at Best, a Crash at Worst
- Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO.
- Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
- In our previous notes, we looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuation.
Auckland Airport Placement – Well Flagged, LO Support but Still a Bit Tricky
- Auckland City Council plans to sell around 4.5% of Auckland Intl Airport (AIA NZ) to fund its budget requirements for 2023-24.
- The deal is very well flagged with Auckland City Council having publicly stated their intention to sell 7% of the stock in Jun 2023.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
Doosan Robotics IPO: Valuation Insights
- Doosan Robotics (454910 KS) is a global industrial and collaborative robotics leader. It has opened the books on an up to US$318 million IPO.
- We previously discussed the IPO in Doosan Robotics IPO: The Bull Case and Doosan Robotics IPO: The Bear Case.
- In this note, we look at the syndicate’s valuation methodology. Our valuation analysis suggests that the IPO price range is unattractive, and we would pass on the IPO.
MVIS Australia A-REITs Index Rebalance Preview: Abacus Group Could Be Deleted
- The review period for the September rebalance ended yesterday. There could be one deletion from the index and a bunch of capping changes.
- The index changes will lead to a one-way turnover of 3.4% resulting in a one-way trade of A$21m. There are two stocks with over A$5m to trade.
- Short interest has increased on a few REITs recently while decreasing on most of the other names.
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