In today’s briefing:
- Kenedix Office/Resi/Commercial Three-Way Merger – Size Matters and Index Flows Do Too
- Seino (9076) – More Seino, Seino More. Know What I Mean? Eh Eh? Seino Goes Big on Capital Policy
- HSCEI Index Rebalance Preview: Two Changes Likely in September
- MVIS Australia A-REITs Index Rebalance: Float & Capping Changes
- Potential Delisting of 5 Preferred Stocks in Korea at End of June
- Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names
- KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)
- Kenedix Merger: Office, Residential, Retail & Index Implications
- HSTECH Index Rebalance Preview (Sep): One Change or Two?
- Tesserent (TNT AU)’s Offer From Thales
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.
Seino (9076) – More Seino, Seino More. Know What I Mean? Eh Eh? Seino Goes Big on Capital Policy
- Three years ago, Seino Holdings (9076 JP) delivered a lot of its cash back to shareholders in a big buyback. They bought back almost 15mm shares (7.5%).
- Since then, they’ve bought another 2.5%. In February, they changed their Dividend Policy to max(2.4% DOE, 30% payout ratio). Then they set a cap and floor on the dividend.
- Four months later they have a new MTMP, and a new Dividend Policy. Simple. 4.0%+ DOE. Div +70% vs last year. Oh… and there’s an 11% buyback.
HSCEI Index Rebalance Preview: Two Changes Likely in September
- Trip.com (9961 HK) and Chow Tai Fook Jewellery (1929 HK) could replace Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) at the upcoming rebalance in September.
- Estimated one-way turnover at the rebalance is 1.2% resulting in a one-way trade of HK$744m. The official capping will be done based on closing prices from 29 August.
- Short interest has been rising on the potential adds and short covering could take the stocks higher, especially Chow Tai Fook Jewellery (1929 HK).
MVIS Australia A-REITs Index Rebalance: Float & Capping Changes
- The upcoming rebalance of the MVIS Australia A-REIT Index will be implemented at the close on 16 June. There are no constituent changes, but there are float and capping changes.
- Estimated one-way turnover at the rebalance is 2.7% resulting in a one-way trade of A$16.6m. There is limited impact on the index constituents.
- The largest inflows are on Scentre Group, HomeCo Daily Needs REIT and Region Re, while the largest outflows are on Stockland, Mirvac Group, Dexus Property and Goodman Group.
Potential Delisting of 5 Preferred Stocks in Korea at End of June
- In this insight, we discuss the increasing likelihood of delisting of five preferred stocks in Korea at end of June.
- These five preferred stocks are as follows: Samsung Heavy Industries Pref, SK Networks Pref, DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B.
- Because the combined market cap of these five preferred shares is 37 billion won, it will have only a minor, positive impact on their common counterparts.
Korea FSS Favors 10% Treasury Stock Limit over Mandatory Cancellation: At-Risk Names
- The local market believes that the FSS plans to push forward with the 10% limitation measure. Last week’s seminar served as a proactive way to inform the market about it.
- The market is paying attention to the potential emergence of stock overhang risks due to the establishment of limits on listed companies’ treasury stock holdings.
- Lotte Holdings and Doosan Corp are considered to fall into this category. They may attempt to sell treasury stock early on to meet the 10% limit.
KOSDAQ150 Ad Hoc Index Rebalance: HFR (230240) To Replace BH (090460)
- Following Bh Co Ltd (090460 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with HFR Inc (230240 KS).
- The change will be implemented at the close on 19 June and passive trackers will need to trade over 1x ADV on both stocks.
- We had HFR Inc (230240 KS) as a potential replacement candidate and there could be pre-positions built up on the stock.
Kenedix Merger: Office, Residential, Retail & Index Implications
- Kenedix Office Investment Co, Kenedix Residential Investment and Kenedix Retail REIT have announced a three-way absorption merger to create Kenedix Realty Investment Corporation.
- The increased size and liquidity of the merged entity will put the stock on the radar of active investors and there could be a re-rating higher.
- There will be some passive flows into the merged entity at the time of merger implementation and this will help the stock outperform its peers.
HSTECH Index Rebalance Preview (Sep): One Change or Two?
- We expect one change to the Hang Seng Tech Index (HSTECH INDEX) in September – though there could be a second change as well.
- Estimated one-way turnover is 2.13% resulting in a one-way trade of HK$2.01bn in case there are two index changes. Turnover will be lower if there is only one change.
- Short interest on some of the potential changes is over 15% of float and there could be big moves on the stocks post announcement of the changes.
Tesserent (TNT AU)’s Offer From Thales
- Cybersecurity firm Tesserent Ltd (TNT AU) has announced it has entered into a Scheme with France’s Thales SA (HO FP).
- Thales is offering A$0.13/share, a whopping 165% premium to last close. Although, TNT is down 87% from its January 2021 high.
- The Offer is conditional on TNT shareholder approval and FIRB/OIO approvals. Those regulatory approvals will not be straightforward.
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