In today’s briefing:
- Nikkei 225 Rebal – Beating a Dead Horse
- Cainiao Pre-IPO – The Postivies – Evolving into a Global Player, Decent Revenue Growth
- Updated TOPIX Selldown and Index Flows This Week – Initial TOPIX Selldown of Toshiba NEXT Month
- Taiwan Cement GDRs Early Look – While Momentum Is Not the Greatest, the Deal Is Very Well Flagged
- NIFTY Family Index Rebalance: Flows at the Close Today + F&O Expiry
- Full-Year Results for Alibaba’s CaiNiao: Reduced Losses, Slower Growth, and A (Likely) 2024 IPO
- Hengan/Vinda: Pulp Friction
- Passive Flow Schedule Driven by Local Sector ETFs for Ecopro Materials
- Ohayo Japan: Stocks & SOX Higher; JapanX – Delayed UK Climate Plans Threaten Heat Pump Adoption
- Ecopro Materials IPO – Pushing Ahead with Listing Despite the Controversies
Nikkei 225 Rebal – Beating a Dead Horse
- The September 2023 Nikkei 225 Rebalance is tomorrow at the close. This will engender a lot of buying of three names, and a lot of selling of 3 names.
- It will also engender a funding trade of nearly ¥460bn.
- I am going to beat the dead horse and warn about certain issues with this rebalance.
Cainiao Pre-IPO – The Postivies – Evolving into a Global Player, Decent Revenue Growth
- Cainiao Smart Logistics , Alibaba Group Holding (9988 HK)’s logistics linked arm, is planning to raise at least US$1bn in its Hong Kong IPO.
- Cainiao is the largest provider of cross-border e-commerce logistics services globally and a leader in China logistics services, according to CIC.
- In this note, we talk about the positive aspects of the deal.
Updated TOPIX Selldown and Index Flows This Week – Initial TOPIX Selldown of Toshiba NEXT Month
- Last week on 20 Sep I published Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule and Sunday, The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour.
- They were based on an expectation the TSE would announce the initial selldown for Sep-end as they normally would. Unbeknownst to me, on 22 Sep they announced end-Oct.
- The initial TOPIX selldown is 30 Oct, not 28 Sep. This affects expected reverse funding today.
Taiwan Cement GDRs Early Look – While Momentum Is Not the Greatest, the Deal Is Very Well Flagged
- Taiwan Cement (1101 TT) is looking to raise US$400m in its upcoming global depository receipts (GDRs) offering. Included is another planned raising of US$500m via convertible bonds.
- Similar to previous GDR listings, the deal is a long drawn out process with TC requiring multiple approvals, and thus providing ample time for investors to position for the raising.
- As of last close, the amount of shares to be offered under the equity component is around 388m shares, or 19.5 days of three month ADV.
NIFTY Family Index Rebalance: Flows at the Close Today + F&O Expiry
- The rebalance of the NIFTY, Nifty Next 50, NSE Nifty Bank, CPSE ETF (CPSEBE IN) and a bunch of other indices will be implemented at the close of trading today.
- Depending on the index, there are constituent changes, changes to the number of shares and free float, plus capping changes. Put together, there is a lot of flow and impact.
- The round-trip trade will be in excess of US$1bn. Add in the futures & options expiry and volumes will be extremely high in the last 30 minutes of trading.
Full-Year Results for Alibaba’s CaiNiao: Reduced Losses, Slower Growth, and A (Likely) 2024 IPO
- Cainiao Smart Logistics (1437124D HK) ‘s March 2023 quarterly and full-year results can be found within Alibaba’s full-year earnings report, which was released on Thursday May 18
- In both the March quarter and its fiscal year, CaiNiao showed improved Adjusted EBITDA results, though in both periods the tech-centric logistics network still reported losses
- Revenue growth slowed to 18% Y/Y in the March quarter, and parent Alibaba (ADR) (BABA US) indicated CaiNiao will target an IPO in 2024, a bit later than some expected
Hengan/Vinda: Pulp Friction
- Hengan International Group (1044 HK) and Vinda International (3331 HK) are both market leaders in China’s personal care industry.
- Hengan’s operations have greater exposure to sanitary napkins and diapers; whereas tissues account for 83% of Vinda’s revenue. Both companies have been impacted by an increase in wood pulp prices.
- Hengan is trading cheap; but Vinda’s bottom line is forecast to return to its glory days. Plus rumours of a possible takeover of Vinda continue to do the rounds.
Passive Flow Schedule Driven by Local Sector ETFs for Ecopro Materials
- Ecopro Materials will benefit from passive flows generated by being a part of the battery-themed ETFs in the Korean local ETF market. And this will create noteworthy flow instances.
- There will be a total of six flow events occurring consecutively from March to June next year. For all except for K-New Deal, there is a high likelihood of inclusion
- In particular, it appears that we should target the rebalancing trading of the TIGER Secondary Cell ETF, which occurs on the second Thursday of April next year.
Ohayo Japan: Stocks & SOX Higher; JapanX – Delayed UK Climate Plans Threaten Heat Pump Adoption
- OVERSEAS: US stocks +0.6% – its all macro at the moment – higher interest rates, oil price volatility; US 30y mortgage rates now at 7.3%; Nike earnings beat
- JAPAN: NKY Futures +0.4% vs cash. Toyota Aug production +4%; EPCOs to lower residential electricity prices; Sony’s Game unit gets new interim boss.
- JAPAN X: Daikin’s concerns about the UK Government backtracking on its climate pledge highlight our concerns over heat pump adoption
Ecopro Materials IPO – Pushing Ahead with Listing Despite the Controversies
- EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO.
- Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
- Ecopro Materials’ revenue has grown by more than three times over the track record period. However, its parent company Ecopro and sister company Ecopro BM have been mired in controversy.
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