In today’s briefing:
- LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
- Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
- S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible
- Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support
- Asia Top Short Update
- CALB IPO – Low-End Appears Reasonable but Will Still Need Some Charging Support
- Softbank – So The Arm IPO Isn’t Looking All That Hot Then?
- Pine Care Group (1989 HK): Chinachem Takeover Offers a Good Exit Opportunity for Investors
- Jenscare (健世科技) IPO: Candidate for Shorts
- CALB IPO Valuation Analysis
LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
- LG Energy’s locked shares approach 96-97% of SO. Now, we will see an additional passive flow equivalent to another 1% of SO: KOSPI 200/MSCI Standard up-weights and LIT inclusion.
- Each passive impact is also substantial. The MSCI up-weight alone will cause an impact equivalent to 2.44x ADTV. It would be 2.20x for the KOSPI 200 and 1.03x for LIT.
- For the KOSPI 200 December review, the event-driven flow will likely focus on up-weights, including LG Energy. For LIT, we should consider an aggressive LONG/SHORT with LG Chem.
Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
- Today, Nagoya Premier-listed Chubu Steel Plate (5461 JP) announced that it had applied today to be listed in Tokyo.
- It is one of very few Japan names not listed in Tokyo. A TSE listing examination will be conducted, and there is a possibility it moves to TSE Prime.
- There are 6 key segment transfer and listing requirements to gain a listing in TSE Prime. Chubu Steel Plate is really close.
S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible
- In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
- Tassal (TGR AU) and Nearmap Ltd (NEA AU) could get deleted from ASX200 before the December Rebalance, triggering high-impact intra-review additions. There should be two changes in the Review itself.
- Pilbara Minerals (PLS AU) is close to becoming an ASX 50 ADD and Lendlease Group (LLC AU) is close to becoming an ASX 50 DEL in the December 2022 review.
Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support
- Leapmotor (9863 HK) is looking to raise between US$800m-US$1.03bn by selling 130.82m shares at a price range of HK$48-62/share. Between 30-39% of the shares will be taken by cornerstone investors.
- The continued slide in its closest peers could put pressure on the stock post listing, though there could be some passive buying in December.
- Leapmotor (9863 HK) could be added to the HSCI and Hang Seng Tech Index (HSTECH INDEX) in December. Stock Connect could come online in December too.
Asia Top Short Update
- Our top short bets in Asia (HSI, Taiwan, Korea) show risk of breaking to new lows. The RTY breaks gives the bear trade another leg down.
- Our relative perform longs (STI and SET 50) are due to drift to support but holding up well. USD is breaking to new highs with momentum.
- Asian markets that have held up are now at risk of late-stage capitulation – ASX, Nifty and NKY.
CALB IPO – Low-End Appears Reasonable but Will Still Need Some Charging Support
- CALB aims to raise up to US$1.7bn in its Hong Kong IPO.
- CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
- In this note, we will run the deal through our ECM framework and talk about IPO pricing.
Softbank – So The Arm IPO Isn’t Looking All That Hot Then?
- Apparently prospects for a high valuation on a potential Arm IPO are so staggeringly, AI-rifically good that Masayoshi Son is now sounding out Samsung on a strategic partnership.
- Samsung itself has not been having the greatest time of late with Micron and SK Hynix making serious inroads against its prior technological leadership in memory.
- So as desperate and desperate-er ponder an alliance we can only be thoroughly convinced that this move absolutely, positively has nooooothing to do with trying to prop up share prices.
Pine Care Group (1989 HK): Chinachem Takeover Offers a Good Exit Opportunity for Investors
- Hong Kong’s leading property developer, Chinachem Group agreed to acquire a 56.15% stake in Pine Care Group (1989 HK) for HKD451.2 million ($57.5 million) from its controlling shareholders.
- Post-Acquisition, Chinachem will launch an unconditional mandatory offer for the remaining shares, which it does not hold at HKD0.89 per share, same as the purchase price.
- Considering delisting risk, limited upside potential of the shares after a huge run-up, and muted growth outlook of the company, investors should tender their holdings.
Jenscare (健世科技) IPO: Candidate for Shorts
- Jenscare is a China-based medical device company with a focus on structural heart disease. The company launched a deal to raise up to USD 30m via a Hong Kong listing.
- In our previous note, we looked at the company’s product lines and provided a brief overview on the company’s valuation.
- In this note, we provide an update for the book building. We provide our quick thoughts on the valuation and deal dynamics.
CALB IPO Valuation Analysis
- CALB (3931 HK) is getting ready to complete its IPO in early October in Hong Kong. The IPO price range is between HK$38 and HK$51 per share.
- Based on our valuation sensitivity analysis, our base case valuation of CALB is HK$53 per share, which is 20% higher than the mid-point of the IPO price range.
- CALB has a rare combination of surging sales growth rate, operating profitability, and increasing market share in the EV battery market globally.
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