In today’s briefing:
- Targeting the Widening of KT Corp ADR Premium Amid MSCI Inclusion
- ZJLD Group (6979 HK): Index Inclusion Possibility & Timelines
- An Exposed Target for Flow Trading on KQ150 Ad-Hoc Change by BH’s KOSPI Transfer Listing
- Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma
- If HKBN Gets Taken Out, Who’s Next?
- Yuanta/P-Shares Taiwan Dividend Plus ETF: June Rebalance Preview
- Anta Sports (2020 HK): Our View After Placement
- Rakuten Bank IPO Trading – Ample Upside
- Rakuten Bank IPO: Trading Debut
- Mankind Pharma IPO – Quality Name but Might Not Have a Whole Lot of Upside
Targeting the Widening of KT Corp ADR Premium Amid MSCI Inclusion
- We should expect significant changes in KT’s ADR premium approaching the implementation date as foreign institutions leading the passive flow for MSCI Korea constituents have typically preferred ADRs.
- Looking at the previous two occasions, the ADR disparity widened from the midpoint of the review period. And this trend continued for a while after the implementation.
- Although KT’s ADR disparity has not yet significantly expanded, we may witness a similar pattern this time as well, given that it has been continuously moving in the premium recently.
ZJLD Group (6979 HK): Index Inclusion Possibility & Timelines
- ZJLD Group (ZJLD HK) is looking to raise between US$775m-US$933m (including the oversubscription option) in its IPO by selling 564.3m shares at a price range of HK$10.78-HK$12.98/share.
- ZJLD Group (ZJLD HK) will not get Fast Entry to any indices but should be added to the HSCI and Stock Connect in September.
- Peer performance has not been great this year and that could weigh on the ZJLD Group (ZJLD HK) listing.
An Exposed Target for Flow Trading on KQ150 Ad-Hoc Change by BH’s KOSPI Transfer Listing
- BH Co Ltd (090460 KS) will likely complete the transfer listing by early May, suggesting an ad-hoc change may occur before the regular rebalancing of the KOSDAQ 150 in June.
- BH’s GICS sector is INFORMATION TECHNOLOGY. It means the top reserved issue at the previous review gets to replace BH. At this point, it will be HFR Inc (230240 KS).
- We should build up a Long position on HFR right after KRX approves BH’s transfer and then close it on the next trading day after the KQ150 corporate action announcement.
Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma
- In May 2022, Yamada Denki (9831 JP) announced a very large buyback. GINORMOUS – in fact – at 23.9% of shares out ex-Treasury if maximum shares were bought.
- So far, YDH is 83.5% through, and at the recent pace, they will end it 8 May having bought 183-184mm shares (21.9% of TSO) spending 86.6% of funds allocated.
- That’s why the announcement lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.
If HKBN Gets Taken Out, Who’s Next?
- HKBN Ltd (1310 HK) spiked 12.3% yesterday in response to media reports (like this one) that China Mobile (941 HK) was running a ruler over the company.
- This follows Bloomberg reports last month and in May last year, that I Square’s HGC Global Communications and numerous PE outfits were kicking tyres of the Hong Kong broadband play.
- Over the weekend, Hong Kong’s security chief was quoted as saying “the internet could become a major loophole when maintaining national security“. HKT (6823 HK) is a potential privatisation candidate.
Yuanta/P-Shares Taiwan Dividend Plus ETF: June Rebalance Preview
- Using data from the close on 19 April, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
- There will also be capping and funding flows that will lead to a one-way turnover of 13.6% and a one-way trade of US$885m.
- There are 10 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1 day ADV to trade.
Anta Sports (2020 HK): Our View After Placement
- The new share placement of Anta Sports Products (2020 HK) has caught the market by surprise, but we think long-term story for the company should not be affected.
- With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated.
- An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta’s 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth.
Rakuten Bank IPO Trading – Ample Upside
- Rakuten Bank (5838 JP), the online banking arm of Rakuten (4755 JP), raised around US$630m in its Japan IPO.
- RB is the largest internet bank in Japan, by number of accounts. As of Dec 22, it had 13.3m deposit accounts with a total deposit base of JPY8.8tn.
- In our earlier notes, we have looked at various aspects of the deal. In this note, we talk about the deal dynamics and trading updates.
Rakuten Bank IPO: Trading Debut
- Rakuten Bank (5838 JP) priced its IPO at JPY1,400 per share to raise gross proceeds of US$620 million. The shares will start trading on 21 April.
- We previously discussed the IPO in Rakuten Bank IPO: The Investment Case, Rakuten Bank Vs SBI Sumishin Net Bank and Rakuten Bank IPO: New Price Range Is a Steal.
- Peers have re-rated and our valuation analysis points to a fair value of around JPY1,900 per share, 36% above the IPO price. Therefore, the IPO price remains attractive.
Mankind Pharma IPO – Quality Name but Might Not Have a Whole Lot of Upside
- Mankind Pharma (MP) is looking to raise up to US$527m in its upcoming India IPO.
- MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products
- We have looked at various aspects of the deal in our earlier notes. In this note, we talk about the implied valuations.
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