In today’s briefing:
- KRX Announces Final Version of Value-Up Disclosure Guidelines Alongside Dedicated Website Launch
- Chilled & Frozen Logistics (9099 JP): Irrational Exuberance Takes Hold
- HK Connect SOUTHBOUND Flows (To 24 May 2024); Strong Bank Buying and Tech Selling Continues
- Weekly Deals Digest (26 May) – Henlius, HKTV, SciClone, KFC, Best World, PropertyGuru, Modec
- KOSDAQ150 Index Rebalance: Short Sell Ban Definitely Helping
- Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition
- A/H Premium Tracker (To 24 May 2024): HK Stocks Have a BAD Week and AH Premium Rebounds In
- Merger Arb Mondays (27 May) – L’Occitane, SciClone, GA Pack, KFC Japan, CF Logistics, Best World
- Offshore China ETFs Rebalance Preview: Three Changes in June; Cutoff Today
- FXI Rebalance Preview: Cutoff Today; Two Changes Likely in June
KRX Announces Final Version of Value-Up Disclosure Guidelines Alongside Dedicated Website Launch
- Starting May 27th, KRX-listed firms can voluntarily disclose value-up details, publicly available on the website. Additionally, view five investment indicators for all KRX-listed companies below.
- Finalized version similar to draft, with added content requested by listed companies, like R&D investment growth rate. Tax incentives excluded, awaiting alignment with Ministry’s plan in July.
- KRX keeps a screening framework for the index akin to March’s criteria, with ROE likely having the highest weight. Recent signals hint at increasing dividend weighting.
Chilled & Frozen Logistics (9099 JP): Irrational Exuberance Takes Hold
- Chilled & Frozen Logistics Holdings (9099 JP) shares are trading 85.7% above AZ-Com Maruwa Holdings (9090 JP) JPY3,000 offer due to the disclosure of four counterbidders.
- The white knight “winning” bidder can secure the Board’s recommendation if it is the highest offer (likely well below the last close) and does not result in AZ-COM Maruwa-type dis-synergies.
- AZ-COM Maruwa would face the dilemma of bumping, particularly if the white knight bidder secures irrevocables and the Board presents a compelling case to support the white knight bidder.
HK Connect SOUTHBOUND Flows (To 24 May 2024); Strong Bank Buying and Tech Selling Continues
- SOUTHBOUND was again a net buyer for HK$18.6bn on strong two-way volumes. The top three net buys of the week were SOE banks. Some may be Central Huijin.
- Some of this may be driven by the dividend w/h tax cancellation on H divs and by significant H-share discounts, but high-div CNOOC was the biggest net sell.
- No end to the inflows, and HK valuations are not at a place where they would hamper continued flows. Alibaba making HK a Primary will spur more inflows over time.
Weekly Deals Digest (26 May) – Henlius, HKTV, SciClone, KFC, Best World, PropertyGuru, Modec
- 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: Modec Inc (6269 JP) prices its US$535 million secondary offering.
- Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Hong Kong Television Network (1137 HK). Sciclone Pharmaceuticals (6600 HK), Kfc Holdings Japan (9873 JP), Best World International (BEST SP), PropertyGuru (PGRU US).
KOSDAQ150 Index Rebalance: Short Sell Ban Definitely Helping
- There are 13 inclusions and 13 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance to be implemented at the close on 13 June.
- For the second consecutive review, Fadu (440110 KS) and Shinsung DeltaTech (065350 KS) have been kept out of the index. Not sure what the index committee’s beef with them is.
- The adds have outperformed the deletes and the KOSDAQ150 since the start of the review period. This has been helped, in no small, part by the ban on short selling.
Hoshino Resorts REIT Placement – Another Raising to Fund an Accretive Acquisition
- Hoshino Resorts Reit (3287 JP) is looking to raise US$125m from a primary follow-on. Proceeds will be used to acquire the OMO7 Osaka asset.
- The REIT has been active on the acquisition front, undertaking a number of capital raisings in recent years.
- In this note, we will talk about the placement and run the deal through our ECM framework.
A/H Premium Tracker (To 24 May 2024): HK Stocks Have a BAD Week and AH Premium Rebounds In
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND’s buy streak continued this past week; every day was net positive. NORTHBOUND was net positive too. It is not clear how much is National Team buying. Much may be.
- AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng and other HK indices fell sharply and A-shares did not fall as much.
Merger Arb Mondays (27 May) – L’Occitane, SciClone, GA Pack, KFC Japan, CF Logistics, Best World
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK), China Traditional Chinese Medicine (570 HK).
- Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Mimasu Semiconductor Industry (8155 JP), Boral Ltd (BLD AU).
Offshore China ETFs Rebalance Preview: Three Changes in June; Cutoff Today
- Based on the close of 24 May, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) in June.
- COSCO SHIPPING (601919 CH), CRRC (601766 CH) and China National NuclearPower (601985 CH) could replace LONGi GreenEnergy (601012 CH), CSC Financial (601066 CH) and China Tourism Group DutyFree (601888 CH).
- There are a couple of stocks that are close adds and could become adds if they outperform higher ranked stocks in trading today.
FXI Rebalance Preview: Cutoff Today; Two Changes Likely in June
- With a day to go in the review period, there could be 2 changes for the iShares China Large-Cap (FXI) (FXI US) in June.
- There should be more than 1x ADV to buy on one of the adds while there will be nearly 5x ADV to sell on one of the deletes.
- There will be positioning in all the potential changes but there appears to be higher interest in one of the potential adds and one of the potential deletes.
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