In today’s briefing:
- Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT
- The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
- Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst
- Golden Agri-Resources (GGR SP): Could Outperform Peers
- Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023
- Doosan Robotics Institutional Lockups Breakdown Leaked Pre-Disclosure: Analyzing Flow Schedule
- Kokusai Electric Pre-IPO – The Positives – Well Established with High Market Share
- Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
- Ecopro Materials IPO Prospectus Filed Today: Anticipating Inevitable Valuation Controversy
- Quiddity Leaderboard TDIV Dec 23: Many Changes and One-Way Flows of US$1.2bn+!
Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT
- Mercari (4385 JP), Lasertec (6920 JP) and Nitori (9843 JP) will replace Nippon Sheet Glass (5202 JP), Mitsui E&S (7003 JP) and Matsui Securities (8628 JP) in the Nikkei 225.
- As expected, Nitori Holdings (9843 JP) will be added at half the planned PAF since the trading value is low compared to the expected index weight.
- Passive trackers need to buy between 1-17 days of ADV on the adds while selling between 1.2-16.5 days of ADV on the deletes. There is a big funding trade too.
The Biggish Sep 2023 “Wednesday-Thursday Trade” With Added Monday/Friday Flavour
- Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
- But there may be ¥800bn+ to buy on one day into the close later this month (+ another ¥200-300bn on two other days). Then a ¥500bn sell two days later.
- Over the past ten years, the two day return on the March trade is great. In Sep, not so much. This year there are Extra Special Flows.
Thai Beverage (THBEV SP): Cheaper than Peers with an Upcoming Catalyst
- Thai Beverage (THBEV SP) has trended lower over the last couple of years and the stock is trading very close to its lows.
- There has been a contraction in multiples and Thai Beverage (THBEV SP) trades cheaper than a lot of its Asia listed peers.
- A potential index inclusion could bring in significant passive inflows and result in a rerating of the stock.
Golden Agri-Resources (GGR SP): Could Outperform Peers
- Golden Agri Resources (GGR SP) has traded lower over the last year and trades cheaper than some of its peers.
- Revenue, income and net profit margins have been moving higher over the last few years and EPS/DPS have increased sharply over the last two years.
- Potential passive buying could result in Golden Agri Resources (GGR SP) outperforming peers in the near term.
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023
- We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
- Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
- We add UMP Healthcare (722 HK) to our list of small/mid-cap names we track. The company has just recently declared its full-year results.
Doosan Robotics Institutional Lockups Breakdown Leaked Pre-Disclosure: Analyzing Flow Schedule
- The immediate float rate on the listing date (October 5) has reached 19.25% as the institutional lockup volume is not as high as initially expected.
- Even with a low institutional lockup level, there seems to be a possibility of a certain IPO day pop.
- The first exit point we can look for in the short term would be the 1-month lockup release (1.44% of SO) one month after listing.
Kokusai Electric Pre-IPO – The Positives – Well Established with High Market Share
- KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
- KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
- In this note, we talk about the positive aspects of the deal.
Kokusai Electric (6525 JP) IPO – Index Demand On The Follow
- Niche Japanese Semiconductor Production Equipment specialist Kokusai Electric (6525 JP) last Thursday announced the TSE approved its late October IPO (with indicative pricing, shares to be sold, and initial prospectus).
- This insight looks at initial shareholder structure, selling group, post-IPO shareholder structure with index inclusion timing, and follow-on flow possibilities.
- At ¥435bn indicative market cap, it will be the largest IPO in Japan since pre-covid, despite coming in a cycle trough. I expect it will be hot.
Ecopro Materials IPO Prospectus Filed Today: Anticipating Inevitable Valuation Controversy
- The indicative price band is ₩36,200 to ₩46,000. Accordingly, the market capitalization implied by the price band is ₩2.68T to ₩3.40T.
- The concern arises as to whether Ecopro Materials can consistently deliver a level of profitability that justifies receiving an equivalent valuation multiple to that of Ecopro BM.
- The timing of this IPO coincides with the ongoing valuation correction in the local battery sector, making the valuation issue the most critical point to watch in this IPO.
Quiddity Leaderboard TDIV Dec 23: Many Changes and One-Way Flows of US$1.2bn+!
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2023 review.
- I currently see 5 ADDs and 4 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
- The estimate for one-way capping flow in December 2023 is US$1.2bn.
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