In today’s briefing:
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: A Week to Go
- HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect
- Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well
- Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks
- MVIS Australia A-REITs Index Rebalance Preview: Abacus Group Could Be Deleted
- MVIS Australia Equal Weight Index Rebalance Preview: Potential Deletes & Capping Increase Turnover
- Vinfast: Stock Is in Free Fall; Still Expensive
- (Mostly) Asia M&A, Aug 2023: Celltrion Inc/Healthcare, Itochu Techno, UMW, Boustead, SK Rent
- Bank Rakyat Indonesia (BBRI IJ) – Steering Towards Higher Returns
- Ventia Services Group Placement – Well Flagged and All past Deals Have Done Well
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: A Week to Go
- The changes for the next rebalance will use closing prices from 31 August, will be announced after the close on 8 September with implementation at the close on 15 September.
- One stock is very close to the 85% cumulative market cap inclusion threshold, while there are two stocks that are near the 98% cumulative market cap deletion threshold.
- With one inclusion and capping changes, estimated one-way turnover at the rebalance will be 3.5% resulting in a one-way trade of US$20m. That could change over the next week.
HSCI Index Rebalance: 22 Adds, 27 Deletes & Changes to Southbound Stock Connect
- There are 22 adds and 27 deletes for the Hang Seng Composite Index (HSCI) at the September rebalance to take the number of index constituents down to 518.
- We expect all 22 inclusions to the HSCI will be added to Stock Connect, while 24 of the 27 HSCI deletions will be removed from Southbound Stock Connect.
- Since the end of June, shares held though Southbound Connect have increased on 20 of the 27 HSCI deletions and there could be some unwinding in the next two weeks.
Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well
- Ventia Services Group Pty (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, will come off their placement linked lockup soon.
- The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
- In this note, we will talk about the likely placement and past deal performance.
Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks
- Four months ago, Rakuten Bank (5838 JP) was IPOed too low, then the price went up. It would appear foreign active ownership is relatively high.
- Rakuten Bank stands out with high ROE and earnings growth. Banks stand out because, well, they’re going up.
- Given expected 5yr earnings growth, Rakuten Bank at current price is probably “wrong.” But it has much less “bankness” than most banks, so you have to think about it differently.
MVIS Australia A-REITs Index Rebalance Preview: Abacus Group Could Be Deleted
- The review period for the September rebalance ended yesterday. There could be one deletion from the index and a bunch of capping changes.
- The index changes will lead to a one-way turnover of 3.4% resulting in a one-way trade of A$21m. There are two stocks with over A$5m to trade.
- Short interest has increased on a few REITs recently while decreasing on most of the other names.
MVIS Australia Equal Weight Index Rebalance Preview: Potential Deletes & Capping Increase Turnover
- JB Hi-Fi Ltd (JBH AU) and Charter Hall (CHC AU) could be deleted as the lowest ranked current index constituents.
- There are three other stocks that are close to the deletion threshold and a change in the free float could result in the stocks being deleted.
- Short interest has been increasing on JB Hi-Fi Ltd (JBH AU), Charter Hall (CHC AU) and Lendlease Group (LLC AU) and could be partially driven by potential index deletions.
Vinfast: Stock Is in Free Fall; Still Expensive
- Vietnamese automaker Vinfast (VFS US) made its public debut on 15th August via a SPAC deal which valued the company approx. US$23bn.
- Shares opened US$22 per share and went up to $37.06 at the end of first-day. Share price hit a peak of $82.35, however, shares closed last at $34.71 per share.
- Our forecasts and valuation for Vinfast suggest that the company’s shares are still overvalued even after falling more than 50% from its peak over the last few days.
(Mostly) Asia M&A, Aug 2023: Celltrion Inc/Healthcare, Itochu Techno, UMW, Boustead, SK Rent
- For the month of August 2023, 11 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$29bn.
- The average premium for the new deals announced (or first discussed) in August was 25%. The average YTD is 34%.
- This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.
Bank Rakyat Indonesia (BBRI IJ) – Steering Towards Higher Returns
- Bank Rakyat Indonesia (BBRI IJ) continues to be the key and unique proxy for micro and ultra-micro lending in Indonesia, with 1H2023 reflecting its increasingly strategic positioning in the space.
- Microloans now account for 48% of loans and of this higher-yielding Kupedes microloans make up an increasingly larger portion, as it diversifies its KUR exposure.
- The bank is set to see improving returns in 2H2023, with loan growth expected to pick-up and NIMs should also improve. 2.6x PBV with an ROE of 20.0% is attractive.
Ventia Services Group Placement – Well Flagged and All past Deals Have Done Well
- Ventia Services Group Pty (VNT AU) (VSG)’s two largest shareholders, Apollo Global Management and CIMIC Group, aim to raise around US$214m via selling 14% of the company.
- The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
- In this note, we will talk about the deal dynamics.
💡 Before it’s here, it’s on Smartkarma
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