In today’s briefing:
- HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June
- HSCEI Index Rebalance Preview: One Change or Two in June?
- Updated TOPIX Big April Basket Flows; More Big Flows and ¥270bn a Side
- COSCO Shipping Energy (1138 HK): Surfing the High Tide
- Genex Power (GNX AU): J-Power’s Binding Proposal as Skip’s Intentions Remain Unknown
- Roland DG (6789) – Brother Still Not Making Friends
- EQD | Nikkei 225 What’s Up Next: Up or Down?
- Ansarada (AND AU): Scheme Vote on 14 June
- GEMWeekly (12 Apr 2024): South Korea, China Macro; Wipro, TSMC, Samsung Electronics, NetEase
- Weekly Deals Digest (14 Apr) – L’Occitane, CGN New Energy, Azure, Genex, C&F Logistics, Riso Kyoiku
HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June
- With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
- Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.
- Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).
HSCEI Index Rebalance Preview: One Change or Two in June?
- SenseTime Group (20 HK) is a potential deletion in June while Zijin Mining Group Co Ltd H (2899 HK) is a potential inclusion.
- For yet another review, BeiGene (6160 HK) is a close add with the Velocity Test determining if the stock will be added to the index or not.
- Estimated one-way turnover at the rebalance is 2.95% resulting in a one-way trade of HK$1.6bn. Official capping will be based off the close of trading on 4 June.
Updated TOPIX Big April Basket Flows; More Big Flows and ¥270bn a Side
- Several days ago I published a piece showing the data for TOPIX flows for April month-end.
- This is an update reflecting new data companies have reported to regulators, one large correction to a data provider’s data, and one Very Large Flow.
- I believe that the revised data is more accurate. And there is more flow. With a spreadsheet attached.
COSCO Shipping Energy (1138 HK): Surfing the High Tide
- Despite YTD strengths in share price, Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is still cheap at 5.7x PER and 0.9x P/B.
- VLCC is forecast to stay undersupplied in FY24 and FY25, supporting the rates and CSET’s profitability. YTD, the VLCC rates have recovered by 19.5%.
- LNG transportation generated 19% of FY23 earnings. With 40 more vessels on order, compared with a current fleet of 43, there is immense upside from this segment.
Genex Power (GNX AU): J-Power’s Binding Proposal as Skip’s Intentions Remain Unknown
- Genex Power Ltd (GNX AU) has entered a transaction implementation deed with Electric Power Development C (9513 JP) for a scheme (A$0.275) and an off-market takeover offer (A$0.270).
- Skip could vote against the scheme due to the low 10% premium to its 2022 offer and Genex’s operational capacity rising by 2.7x by the end of 2024.
- The likely scenario is that J-POWER succeeds with its takeover offer. At the last close, the gross spread of the scheme and takeover offer was 3.8% and 1.9%, respectively.
Roland DG (6789) – Brother Still Not Making Friends
- Taiyo Pacific’s Tender Offer for Roland DG Corp (6789 JP) was to end Friday, but it was extended 10 days.
- Roland DG provided an update regarding the status of the Brother overbid. It did not show as much strategic-mindedness as it might have.
- Shares are now trading at a post-overbid high. Strategic missteps up the risk but Brother can pay more.
EQD | Nikkei 225 What’s Up Next: Up or Down?
- The Nikkei 225 Index last week bounced back, after a 2-weeks down pullback.
- The index is at a fork in our view: it could go higher from here, but we would like to see a sustained, multi-week rally to be convinced.
- If doubt about this potential rally continuation is strong, target the 40500-40800 price area to place SHORT trades against the index.
Ansarada (AND AU): Scheme Vote on 14 June
- The Ansarada Group Ltd (AND AU) IE considers Datasite’s A$2.50 scheme offer fair and reasonable. However, the inter-conditional carve-out transaction is NOT fair but reasonable.
- ACCC clearance (findings on 6 June) is a prerequisite for FIRB approval (scheme condition). As Datasite has a limited Australian presence, ACCC approval should be forthcoming.
- The offer is attractive, with no vocal shareholder opposition. At the last close and for the 1 July payment, the gross/annualised spread was 2.5%/12.2%.
GEMWeekly (12 Apr 2024): South Korea, China Macro; Wipro, TSMC, Samsung Electronics, NetEase
- The Global Emerging Markets Weekly summarizes the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
- Macro data points: South Korean interest rates, Chinese inflation data.
- Companies mentioned:Wipro Ltd (WPRO IN), Taiwan Semiconductor (TSMC) (2330 TT), Samsung Electronics (005930 KS), NetEase (9999 HK)
Weekly Deals Digest (14 Apr) – L’Occitane, CGN New Energy, Azure, Genex, C&F Logistics, Riso Kyoiku
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Kokusai Electric (6525 JP) and J&T Global Express (1519 HK) lock-ups. HD Hyundai Marine Solution (443060 KS), ZEEKR (ZK US)and Sichuan Baicha Baidao Industrial (SCBCBDID CH) IPOs.
- Event-Driven developments L’Occitane (973 HK), CGN New Energy Holdings (1811 HK), Azure Minerals (AZS AU), Genex Power Ltd (GNX AU), Riso Kyoiku (4714 JP), Chilled & Frozen Logistics Holdings (9099 JP).
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