In today’s briefing:
- HSI Index Rebalance Preview: Small Step or Giant Leap?
- FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Market Consultation Driven Changes
- Thinking Strategically About a Shinsei Position – Things To Do NOW
- CALB IPO Trading – Last of the Lot with the Least Demand of the Lot
- Rakuten – Sale of Stake in Securities Business Eases Funding Pressure
- Link’s Ongoing Overtures from DND Underscore Its Value
- CALB IPO: Trading Debut
- StubWorld: Link And D&D Continue Negotiations On Unlisted Ops
- KOSDAQ 150 Rebalancing: 7 Regular Changes + 2 Special Entries
- FTSE China 50 Index Rebalance Preview: One Change Could Increase to Three
HSI Index Rebalance Preview: Small Step or Giant Leap?
- Currently at 69 index members, we just could reach 80 constituents at the December rebalance. That would leave the index committee to plan the move to 100 constituents in 2023.
- We list 10 potential inclusions to the index in December. One-way turnover is just under 4% and inclusions of all stocks will increase index market cap coverage significantly.
- Shorts are more than 3% of free float on five of the potential inclusions and these stocks could see some short covering ahead of the announcement of the changes.
FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: Market Consultation Driven Changes
- A market consultation could result in an increase in the number of index constituents for the FTSE TWSE Taiwan Dividend+ Index from 30 to 50.
- As of the close on 4 October, we see 23 potential inclusions and 2 potential deletions in December. That could change to +24/-3 depending on the rank cutoff thresholds.
- FTSE plans to implement the changes in a single step at the December rebalance. That could lead to one-way turnover of TWD 62bn (US$1.97bn).
Thinking Strategically About a Shinsei Position – Things To Do NOW
- SBI Holdings (8473 JP)‘s subsidiary has reportedly filed its application to become a Bank Holding Company, the definition being a company holding a 50% or greater stake in a bank.
- The day after I last wrote, Shinsei announced it had received approval to change its name to SBI Shinsei Bank as of 4 January 2023.
- My expectation is the move above 50% happens sooner rather than later. And in that case, investors should think about their approach. Get your cowbells ready.
CALB IPO Trading – Last of the Lot with the Least Demand of the Lot
- CALB raised around US$1.2bn in its Hong Kong IPO, after pricing its offering at the low-end.
- CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
- In this note, we will talk about the demand for the deal and other trading dynamics.
Rakuten – Sale of Stake in Securities Business Eases Funding Pressure
- Rakuten is reportedly selling a stake in its Securities unit for ¥80bn, which probably means a near-term IPO of that business is off the table
- It may also give Rakuten greater flexibility on the timing of a Rakuten Bank IPO should pricing for that be problematic
- In terms of surfacing the value of Rakuten’s fintech assets this is good news but it is mobile losses that have held the shares back. We remain at Neutral.
Link’s Ongoing Overtures from DND Underscore Its Value
- Dye & Durham/DND is a persistent bidder and returned with a A$1.27 billion bid for Link Administration (LNK AU)’s CM and BCM businesses. The Board will update next week.
- The latest offer is attractive but curiously, contradicts DND’s previous comments that the FCA would make it challenging to distribute any part sale proceeds.
- Despite the overhang from the FCA fine, DND’s ongoing persistence and the Board’s potential in-specie distribution of the PEXA Group (PXA AU) stake highlight the underlying value.
CALB IPO: Trading Debut
- CALB (3931 HK) priced its H Share at HK$38.00 per share to raise net proceeds of HK$9.9 billion (US$1.3 billion). The H Share will start trading tomorrow.
- Grey market prices across various platforms show the shares last traded at HK$37.30-38.00 per share i.e., -2% down to unchanged compared to the IPO price.
- Despite peer multiple derating, the IPO price continues to imply a discount to the median peer CY2023 EV/EBITDA multiple. CALB should be, at least, valued in line with peer multiples.
StubWorld: Link And D&D Continue Negotiations On Unlisted Ops
- In a Musk/Twitter-like on/off/on-again situation, Link Administration (LNK AU) announced it received an improved offer for its corporate markets and Banking & Credit Management (BCM) businesses from Dye & Durham.
- Separately, Link is working with the Australian Tax Office on the in-specie distribution of a minimum of 80% of Link’s holding into PEXA Group (PXA AU).
- Preceding my comments on Link are the current setup/unwind tables for Asia-Pacific Holdcos. These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
KOSDAQ 150 Rebalancing: 7 Regular Changes + 2 Special Entries
- KOSDAQ 150’s December rebalancing will feature seven regular changes and two special entries.
- Among the additions, we should focus on Dear U and ISC, which have a balanced level of liquidity and flow, rather than those theme stocks with high volatility.
- As for Nature Holdings, Eoflow, and Nextin, I suggest a more aggressive entry point due to low trading volume. Then, I’d basket-trade the deletions on equal weight.
FTSE China 50 Index Rebalance Preview: One Change Could Increase to Three
- PICC Property & Casualty H (2328 HK) is a potential replacement for XPeng (9868 HK) at the December rebalance of the FTSE China 50 Index.
- There are a couple of index constituents that are close to the deletion threshold rank and that could drive two more changes. The review cutoff date is 21 November.
- Tianqi Lithium (9696 HK) will be eligible for index inclusion if it is added to the FTSE All-World Index in December – we have that as a high probability event.
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