In today’s briefing:
- L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
- LQ45 Index Rebalance: Two Changes in a Few Days
- India – Potential Float Changes & Impact
- KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
- July TOPIX FFW Rebal – Update With 2 Days To Go on $3bn a Side
- An Update on Medtronic’s Tender Offer of Eoflow
- KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
- Tata Motors (TTMT IN) – Goodbye to the DVR Arb
- Quiddity HSCEI Sep 23 Flow Expectations Update: US$367mn One-Way, Beigene Vs Peers Interesting
- Fadu IPO Book Building Results Analysis
L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
- L’Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
- The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
- L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples.
LQ45 Index Rebalance: Two Changes in a Few Days
- Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
- There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ).
- There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.
India – Potential Float Changes & Impact
- Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-June. There are a few companies with significant float changes from end-March and/or end-December.
- The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.
- We see 6 stocks where there could be passive inflows and 2 stocks that could have passive outflows – but there are caveats.
KRX New Deal Index Rebalance Preview: Review Period Nearly Complete
- The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
- There is one change currently for each of the Secondary Battery, Bio and Game indices. Then there are a couple of changes for the Internet and BBIG indices.
- There are four stocks that will have over 2 days of ADV to trade from passive trackers and these stocks could move around announcement of the changes.
July TOPIX FFW Rebal – Update With 2 Days To Go on $3bn a Side
- In the two weeks since the announcement, Large ADDs (>2d ADV, >$5mm) have outperformed Large DELs by 1.3%. Smaller ADDs vs DELs (>2d, >$2<$5mm) have outperformed by 1.3%.
- Using only >$20mm >2d DELs vs Top 5 $amt >2d ADDs, that’s a bit better than 1%. And the really obvious large ones? Not so obvious.
- There is still a large reverse funding trade, with some large sells.
An Update on Medtronic’s Tender Offer of Eoflow
- In this insight, we provide an update of Medtronic’s tender offer of Eoflow.
- The foreign ownership of Eoflow has surged in the past two months from 6.5% on 25 May to 33.2% as of 24 July.
- We continue to believe that there is 95%+ probability of this M&A getting completed at the tender offer price of 30,000 won and Eoflow eventually becoming delisted in 2H 2023.
KRX Latest Press Release: CFD Inspection Results & Immediate Impacts to Monitor
- KRX stated in this press release that they have identified the suspected stocks involved in illegal trading and have reported them to the financial authorities (Korea FSC and Korea FSS).
- The primary concern in the short term seems to revolve around whether the battery stocks are among the ones suspected of illegal trading, as reported to the financial authorities.
- We must remain vigilant and ready for the potential recurrence of CFD-related price plunges, as seen in the recent two instances, affecting specific stocks in the short term.
Tata Motors (TTMT IN) – Goodbye to the DVR Arb
- Tata Motors Ltd (TTMT IN) has announced a Scheme of Arrangement where all the Tata Motors DVR (TTMT/A IN) shares will be cancelled.
- For every 10 shares of Tata Motors DVR (TTMT/A IN) held, shareholders will receive 7 shares of Tata Motors Ltd (TTMT IN).
- The process is expected to take 12-15 months to complete and there will be passive buying in Tata Motors Ltd (TTMT IN) at the end of it.
Quiddity HSCEI Sep 23 Flow Expectations Update: US$367mn One-Way, Beigene Vs Peers Interesting
- In three more weeks, the index changes and the indicative capping changes for the September 2023 rebalance will be officially announced.
- We first looked at the potential HSCEI index changes and the resultant capping flows for September 2023 in Quiddity HSCEI Sep 23 Flow Expectations: Two Changes Likely, US$276mn One-Way
- In this insight, we take a look at Quiddity’s updated flow expectations which account for the changes in prices in the last ~1.5 months.
Fadu IPO Book Building Results Analysis
- Fadu’s IPO price has been confirmed at 31,000 won (top end of the IPO valuation range). A total of 1,082 institutions participated, with a demand ratio of 362.9 to 1.
- Fadu is one of the biggest IPOs in Korea so far in 2023.
- Our base case valuation analysis suggests implied market cap of 2.2 trillion won or 43,676 won per share, which represents 41% higher than the IPO price.
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