In today’s briefing:
- KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December
- S&P500 December 2024 Forecasts: APP, APO and TPL Leading the Pack
- Kansai Electric US$3.5bn Deal Updates – Has Delivered a Decent Correction, as Compared to past Deals
- KOSPI200 Index Rebalance: Adds in Line; Couple of Deletes Are Surprises
- KOSDAQ150 Index Rebalance: 8 Changes a Side; Fadu Appears to Be a 4 Letter Word
- LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon
- Rio Tinto/Arcadium: Trading Wide Ahead Of 23rd Dec Vote
- Qualcomm’s $4 Billion PC Chip Bet: Can It Dominate Beyond Smartphones?
- Dividend Tax Cut Decision Scheduled for 25th, Next Monday: Watch Sammy Prefs
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
- Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
- There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for December
- Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 December.
- With no increase in the number of index constituents this calendar year, there could be inclusions in December. The process of getting to 100 index constituents could drag into 2026.
- Short interest is especially large in Sinotruk, Giant Biogene, Kuaishou Technology, ASMPT and JD Logistics and inclusion could set off some short covering.
S&P500 December 2024 Forecasts: APP, APO and TPL Leading the Pack
- AppLovin (APP US) and Apollo Global Management (APO US) are the main candidates for addition by transition as they are passing the estimated transition threshold and have strong eligibility metrics.
- Texas Pacific Land (TPL US) is the main candidate for addition by migration – despite failing eligibility – due to its significant distance above the minimum S&P500 mcap threshold.
- Emcor Group (EME US) and Lennox International (LII US) are the next candidates for addition by migration with both passing eligibility and adequate distance above the mcap threshold.
Kansai Electric US$3.5bn Deal Updates – Has Delivered a Decent Correction, as Compared to past Deals
- Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
- In our earlier note, we talked about the placement and ran the deal through our ECM framework.
- In this note, we talk about the updates and share price performance since then.
KOSPI200 Index Rebalance: Adds in Line; Couple of Deletes Are Surprises
- There will be 4 additions and 5 deletions for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the next rebalance to be implemented at the close on 12 December.
- The 4 adds are exactly in line with our forecast but a couple of the deletions are surprises. Those two names were close deletes though.
- The are some large shorts on a few deletes and there could be covering over the next few weeks as borrows are recalled and as the stocks drop.
KOSDAQ150 Index Rebalance: 8 Changes a Side; Fadu Appears to Be a 4 Letter Word
- There will be 8 additions and 8 deletions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the next rebalance to be implemented at the close on 12 December.
- Most of the inclusions were forecast but there is a lot of variance among the list of deletions… index committee knows best!
- Fadu (440110 KS) was ignored for yet another rebalance, while Snh Inc (051980 KS) has also not been included in the index.
LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon
- The local market’s buzzing that LG Chem could face a 200-300 billion KRW tax hit from Pillar Two next year, with LGES ramping up U.S. production.
- LG Chem may be reconsidering its plan to sell 2% of its LGES stake, dropping ownership below 80%, shifting the tax burden to LGES instead of itself.
- Flagging this now—LG Chem’s tax burden looms. Consider shorting LGES or a long-short with LG Chem, plus prep for the 2T KRW block deal with the pre-disclosure process.
Rio Tinto/Arcadium: Trading Wide Ahead Of 23rd Dec Vote
- Back on the 9th October, Rio Tinto Ltd (RIO AU) reached an agreement to buy Arcadium Lithium (LTM AU/ALTM US) for US$5.85/share (~A$8.70/share), a ~90% premium to undisturbed.
- The proxy statement is now out, with a Scheme Meeting scheduled for 23 December. The transaction is expected to close in mid-2025. The long stop is the 9th October 2025.
- Trading wide-ish at a gross spread of 11.9%, reflecting the timing to secure regulatory approvals – notably from China – as opposed the Offer Price being viewed as opportunistic.
Qualcomm’s $4 Billion PC Chip Bet: Can It Dominate Beyond Smartphones?
- Qualcomm is aggressively pushing into the PC market, aiming to transform its identity from a mobile chip giant to a diversified computing powerhouse.
- At its recent investor day, Qualcomm announced bold revenue projections of $4 billion from PC chips by 2029, alongside significant strides in automotive, industrial IoT, and XR markets.
- This marks a pivotal moment as Qualcomm ventures beyond its traditional smartphone business, which currently accounts for 75% of its chip revenue.
Dividend Tax Cut Decision Scheduled for 25th, Next Monday: Watch Sammy Prefs
- The opposition’s pushing a Commercial Act amendment, and to gain ruling party support, they might strategically ease up on the dividend tax issue—classic quid pro quo.
- The Samsung family’s collateral risk eased with a 10 trillion won buyback, but local markets are still cautious. Local traders now eye another 10 trillion won shareholder return.
- The timing of the special dividend and tax deadlines may cause mismatches, but we should watch for earlier price moves in Samsung Electronics preferred shares.
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