In today’s briefing:
- KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)
- Last Week in Event SPACE: Toshiba, Perpetual/Pendal, News Corp/Fox Corp
- Index Rebalance & ETF Flow Recap: TW Div+, CSI500, ChiNext, SSE180, KS200, KQ150, FTSE CH50, AMFI
- MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning
- Mitsui & Co (8031) Buyback – Big Profit, Big Div, Big Buyback, Some Index Selling
- MSCI SEA EM Nov SAIR: High Impact Deletions Expected
- KOSPI 200 Index Review: Names Subject to Float Rate Adjustment
- ECM Weekly (6th Nov 2022) – Giant Biogene, Blibli, Betagro, Bionote, Fusion, Medanta, Bikaji, Axis
- Blibli IPO: Trading Debut
- I-Tail Corporation IPO: The Bull Case
KLine (Kawasaki Kisen 9107) Announced Q2 Earnings and Possibly Game-Able Buyback (And Index Impact)
- Strong but slightly disappointing Q2 earnings from Kawasaki Kisen Kaisha (9107 JP), and full-year forecasts are higher, but not as high as consensus.
- The company has announced a buyback, to be executed on ToSTNeT-3. Effissimo and Mizuho Bank will participate. Other crossholders could too.
- Strategy depends on whether you think they will. If they do not, post-buyback float drops sharply.
Last Week in Event SPACE: Toshiba, Perpetual/Pendal, News Corp/Fox Corp
- There is potentially a premium of about 20-25% being assessed for the possibility of a deal for Toshiba Corp (6502 JP), but there is also fundamental risk beyond this.
- Perpetual Ltd (PPT AU) rejects EQT/BPEA/Regal’s Offer, a proposal that is contingent on PPT ceasing its Scheme with Pendal Group (PDL AU)
- News Corp (NWS AU) is trading rich. The net EV/EBITDA for the stub ops trades closely matches to Fox (FOXA US). And Fox is preferable over NWS’ print media business.
Index Rebalance & ETF Flow Recap: TW Div+, CSI500, ChiNext, SSE180, KS200, KQ150, FTSE CH50, AMFI
- MSCI announces the changes at the November SAIR pre-market open (Asia time) on 11 November. That day is also the market cap cutoff for the FTSE December QIR.
- There are some pretty big changes to the flows for the FTSE TWSE Taiwan Div+ Index following changes to forward dividend estimates and stock prices.
- Quiet week for ETF flows with large inflows to Huatai-PB CSI 300 ETF (510300 CH) and Tracker Fund of Hong Kong Ltd (2800 HK).
MSCI Korea November SAIR: Potential Changes, Impact, Short Interest & Pre-Positioning
- We see 1 potential inclusion and 12 potential deletions for the MSCI Korea Index at the November SAIR. The final changes will depend on what day MSCI uses.
- Nearly all the stocks have over 4 days of ADV to trade from passive trackers. There have been big moves on short interest and excess volume on some stocks.
- The announcement will be made Friday morning pre-market open and there could be some big moves in the stocks this week.
Mitsui & Co (8031) Buyback – Big Profit, Big Div, Big Buyback, Some Index Selling
- Mitsui & Co Ltd (8031 JP) on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.
- Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.
- The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There’s also a fair bit of index selling the next 6mos.
MSCI SEA EM Nov SAIR: High Impact Deletions Expected
- There should be quite a few deletions for South East Asia Emerging Markets. The number of potential inclusions is smaller and have a smaller probability of being added.
- While the passive flow on the potential deletions is not massive, the impact in terms of days of ADV to trade is very high in most cases.
- There has been a steady increase in cumulative excess volume on a few of the potential deletions and there will be unwinding against the passive flow.
KOSPI 200 Index Review: Names Subject to Float Rate Adjustment
- We have seven constituents of KOSPI 200, which are subject to a float rate adjustment due to major shareholder stake sales and lockup release in the upcoming rebalancing in December
- In terms of passive impact x ADTV, LG Energy Solution, KT Corp, and Shinhan Financial are expected to receive the most attention from flow traders.
- The preemptive setups of flow traders will likely be more inclined toward these float rate changes since this December rebalance will have the lowest number of constituent changes ever.
ECM Weekly (6th Nov 2022) – Giant Biogene, Blibli, Betagro, Bionote, Fusion, Medanta, Bikaji, Axis
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, a number of companies in India have launched thier IPOs recently, even as HK and rest of Asia remains dormant.
- The only notable placement this week was the selldown in Axis Bank Ltd (AXSB IN) by Bain Capital.
Blibli IPO: Trading Debut
- Blibli (1437710D IJ) priced its IPO at IDR450 per share to raise net proceeds of US$508 million. The shares will start trading on 8 November.
- We have previously discussed the IPO in Blibli IPO: The Bull Case, Blibli IPO: The Bear Case, Blibli Vs Tokopedia Vs Bukalapak Vs Lazada Vs Shopee, Blibli IPO: Valuation Insights.
- Despite peer multiple derating, the IPO price remains unattractive compared to global and Asian-focused e-commerce peers.
I-Tail Corporation IPO: The Bull Case
- I-Tail (ITC TB), Thai Union Group (TU TB)’s pet care division, has started pre-marketing an up to US$600 million SET IPO, according to press reports.
- I-Tail is one of the largest original equipment manufacturers (OEMs) for wet cat & dog food in Asia, according to Frost & Sullivan.
- The key elements of the bull case rest on strong top-line growth, market share gains, ambitious growth plans and the highest margin profile among peers.
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