In today’s briefing:
- KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
- INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
- CES China Semiconductor Chips Index Rebalance Preview: Three Changes in December
- Tire Industry: Premium Brands Exit Small-Rim Market Amidst Rising Competition
- SF Holding Pre-IPO: Three Important Issues for Long-Term Investors to Consider
- China Healthcare Weekly (Nov.17) – TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross
- Weekly Deals Digest (17 Nov) – Seven & I, Fuji Soft, Nishimoto, Macromill, CPMC, KEPCO, SF Holding
- FXI Rebalance Preview: One Change in December as Shorts Spike
- Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry
- China A50 ETFs Rebalance Preview: One Change to Close Out the Year
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.
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
- The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
- There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
- There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.
CES China Semiconductor Chips Index Rebalance Preview: Three Changes in December
- There could be three changes for the CES China Semiconductor Chips Index at the close of trading on 13 December.
- Based on the assets tracking the index, passive trackers will need to trade between 0.1-0.3x ADV in the stocks.
- There will be selling in Semiconductor Manufacturing International Corporation (SMIC) (688981 CH) to cap the stock at 10% of the index weight.
Tire Industry: Premium Brands Exit Small-Rim Market Amidst Rising Competition
- Premium brands focus on high-value large rims, leaving small-rim markets.
- Factory closures signal overcapacity as brands exit small-rim tire production.
- New players gain ground in small-rim segments in Europe and North America.
SF Holding Pre-IPO: Three Important Issues for Long-Term Investors to Consider
- SF Holding’s domestic parcel volumes have grown slower than overall market volumes recently; is this strategic, or simply a loss of share?
- SF Holding is not closely aligned with any of the large online retail platforms in China; ultimately, is this independence an advantage or a disadvantage?
- When will SF Holdings’ varied international operations — and there are a few of them — begin to pull their own weight, in terms of profitability and growth?
China Healthcare Weekly (Nov.17) – TCM VBP New Updates, CR Boya Completes Acquisition of Green Cross
- The new round of national TCM decoction pieces VBP has started. We think the overall price reduction would be relatively mild, and the impact on related TCM enterprises is limited.
- The NHSA will vigorously promote the expansion of TCM VBP, which is another challenge for TCM injections. But the impact on exclusive TCM varieties and innovative TCM injections is smaller.
- CR Boya has completed the acquisition of 100% equity of Green Cross and has included it in the scope of consolidated financial statements starting from November. Future M&As will continue.
Weekly Deals Digest (17 Nov) – Seven & I, Fuji Soft, Nishimoto, Macromill, CPMC, KEPCO, SF Holding
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: S.F. Holding (002352 CH) is premarketing an H Share listing to raise US$1.0-1.5 billion, Kansai Electric Power (9503 JP)‘s US$3.5 billion placement.
- Event-Driven developments: Seven & I Holdings (3382 JP), Fuji Soft Inc (9749 JP), Nishimoto (9260 JP), Macromill, Inc (3978 JP), Agro Kanesho (4955 JP), Renewable Japan (9522 JP), CPMC.
FXI Rebalance Preview: One Change in December as Shorts Spike
- With one trading day left in the review period, we expect one change with China Merchants Securities Co Ltd (H) (6099 HK) replacing Yankuang Energy Group (1171 HK) in December.
- Capping will result in selling for Meituan (3690 HK) and buying in Tencent (700 HK) and Alibaba Group Holding (9988 HK).
- Short interest has jumped on both stocks, but the increase is far higher in China Merchants Securities Co Ltd (H) (6099 HK) compared to Yankuang Energy Group (1171 HK).
Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry
- KKR & Co (KKR US) has secured the Fuji Soft Inc (9749 JP) Board’s unanimous support by bumping its second tender offer to JPY9,451, a JPY1 premium to Bain’s JPY9,450 offer.
- The Board is claiming a “fiduciary duty” win as it has secured a higher offer from KKR but paradoxically signalling that it will not negotiate a bump from Bain.
- Bain will likely walk rather than try to win the Board’s support by revising terms. At the last close, the gross spread to KKR’s offer is 3.7%.
China A50 ETFs Rebalance Preview: One Change to Close Out the Year
- The December review will use closing prices from 18 November to determine the list of stocks that will be included into and excluded from the ETFs.
- As of the close on 15 November, we see NAURA Technology Group (002371 CH) replacing Huaneng Lancang River Hydropow (600025 CH) in the ETFs.
- NAURA Technology has doubled in price this year, while Huaneng Lancang has corrected from its highs and could be deleted from the ETF in just one quarter.
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