In today’s briefing:
- TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)
- Russia-Ukraine War: Longer Term Implications for China Utilities and Energy
- Zip to Acquire Sezzle: Buy Now, Pray Later?
- NIO Secondary Listing (9866 HK): Index Entry & Flow; HSCEI 22/23 Div Steepener Catalyst
- ZIP Acquisition and Unlinked Placement – Too Many Things at Once
TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)
- The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
- For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
- Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade.
Russia-Ukraine War: Longer Term Implications for China Utilities and Energy
- Russia-Ukraine war has raised commodity prices which are negative towards commodity users in short term. However, we see silver linings for Chinese utilities and energy companies in the longer term.
- The conflict is expected to accelerate the progress of renewable projects currently under development, lead to a faster diversification away from fossils and increase gas supply from Russia to China.
- Key beneficiaries include Xinjiang Goldwind (2208 HK), Dongfang Electric (1072 HK), China Longyuan Power (916 HK), Energy China (3996 HK), Power China (601669 CH) and the gas utilities.
Zip to Acquire Sezzle: Buy Now, Pray Later?
- Zip Co Ltd (Z1P AU) has agreed to acquire Sezzle Inc (SZL AU) in an all-scrip deal where Sezzle shareholders will receive 0.98 shares of Z1P per shares of SZL.
- At last closing prices, the deal values Sezzle Inc (SZL AU) at A$2.1658/share, a 21.7% premium to the last close and a 31.7% premium to 30 day VWAP.
- Zip Co Ltd (Z1P AU) has also announced a A$148.7m fully underwritten institutional placement and a A$50m non-underwritten share placement plan to strengthen its balance sheet.
NIO Secondary Listing (9866 HK): Index Entry & Flow; HSCEI 22/23 Div Steepener Catalyst
- NIO Inc (NIO US) has applied to list in Hong Kong by way of Introduction. No new shares will be issued or sold in connection with the Secondary Listing.
- NIO Inc (9866 HK) will not get Fast Entry to the HSCEI INDEX and is unlikely to get Fast Entry to the Hang Seng Tech Index (HSTECH INDEX) either.
- NIO Inc (9866 HK) should be included in the HSTECH INDEX in June, while inclusion in the HSCEI INDEX in September will require the stock to trade higher.
ZIP Acquisition and Unlinked Placement – Too Many Things at Once
- ZIP announced that it would acquire Sezzle in an all-stock deal. It also announced its earnings and that it would raise A$149m (A$107m) from a placement.
- We have also covered the Oct 2020 placements in our earlier note, Zip Placement – Sorry, It’s Not You. It’s Me.
- In this note we will talk about the recent developments and run the deal through our ECM framework.
Before it’s here, it’s on Smartkarma
