In today’s briefing:
- Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too
- SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle
- Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
- KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
- Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
- AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
- Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
- STAR CM (6698 HK): Grave Accusations
- Doosan Robotics IPO: The Bear Case
Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too
- Today after the close, Kenedix Office Investment Co (8972 JP), Kenedix Retail REIT (3453 JP), and Kenedix Residential Investment (3278 JP) announced a three-way merger for Nov 1.
- Kenedix Office REIT (KDO) will be the surviving entity, and what is now three REITs of ¥150-250bn in size will become one diversified REIT of ¥630-650bn.
- That will trigger a size uplift and should also trigger index inclusion.
SBI Shinsei Bank (8303) Calls Its EGM and Appraisal Rights Seekers Prepare for Battle
- The SBI Holdings Tender Offer for SBI Shinsei Bank (8303 JP) was completed about four weeks ago, and in something of a surprise, only 3.7% of 26.98% minority holdings tendered.
- The stock traded above terms every day during the Tender Offer Period. People accumulated in order to pursue their appraisal rights later. That is big.
- This week, SBI Shinsei announced the schedule of dates relating to the squeezeout EGM. The record date was early. The reverse stock split announced is as expected, possibly game-able.
Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
- Shareholders of Prosus NV (PRX NA) and Naspers (NPN SJ) approved AGM agenda items late last week to enable the two Capitalisation Issues and Naspers’ Share Consolidation to move forward.
- What Will Happen: Prosus will issue new N shares to its shareholders and Naspers will reject them. Naspers will issue new shares to its shareholders, and Prosus will reject them.
- Naspers will own ~42.9% of Prosus, Prosus will own 0.02% of Naspers. Sales of Tencent shares will continue. Share Buybacks too. But the ouroboros will have spit out its tail.
KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
- Nearly two-thirds of the way through the review period, we see nine potential changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
- The potential adds are dominated by the Materials sector while the potential deletions are mainly from the Consumer Discretionary sector.
- The impact on the potential inclusion ranges from 0.14-12 days of ADV while the impact on the potential deletions varies from 3.1-30 days of ADV.
Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
- The Hang Seng announces changes along with prospective flows 2wks before the actual change. Capping flows are calculated off the close three days before implementation. That was today.
- There have been some minor movements in the rankings. Nothing major. There is still just over US$1bn to trade, one-way.
- Enclosed are totals for each of the three major indices (Hang Seng, HSCEI, and HS Tech) and then netted flows. The biggest is US$470mm of BABA to sell. Spreadsheet attached.
AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows
- We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
- The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
- Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
- The September rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- The largest passive inflows will be on East Buy (1797 HK), JD.com (9618 HK), Ping An (2318 HK), Sinopharm (1099 HK), BYD (1211 HK), Lenovo (992 HK) and Trip.com (9961).
- The largest passive outflows will be on Alibaba (9988 HK), Li Auto (2015 HK), Meituan (3690 HK), AAC Technologies (2018 HK), Kuaishou (1024 HK), COGARD (2007) and CG Services (6098).
Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
- Last week I wrote about another situation, noting Equity Offering Into TOPIX Inclusion is a standard construct. Here we have another.
- DX and HR Support company Core Concept Technologies Inc (4371 JP) today announced a large (it ups Real World Float by 64%, and is 33 days of ADV) secondary offering.
- The “reason” for the offering mentions a desire to move to TSE Prime in future.
STAR CM (6698 HK): Grave Accusations
- STAR CM Holdings (6698 HK), a variety program intellectual property creator and operator, was listed last December and promptly gained 475% by early August. All good so far.
- Shares cratered on the 18 August (-23.4%) and are currently 76% adrift from its recent high. The reason? A viral clip from late pop diva Coco Lee discussing unfair treatment.
- The music competition show, in which Coco appeared, pushed back on any impropriety; however, its broadcaster has temporarily suspended the program. This is no easy fix.
Doosan Robotics IPO: The Bear Case
- Doosan Robotics (DOOSANROBO KS) is a global industrial and collaborative robotics leader. It has opened the books on an up to US$318 million IPO.
- In Doosan Robotics IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on business plan forecasts based on shaky assumptions, high cash burn, rising cash collection cycle and deteriorating balance sheet strength.
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