In today’s briefing:
- Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
- ANZ’s Equity Raise Successful, Trading at TERP, and STILL Cheap To Peers
- Link Admin And Dye & Durham Agree On Terms
- Hitachi Transport (9086 JP): STILL Trading Too Wide
- Emperador (EMI SP) Secondary Listing: Still a Borderline STI Inclusion, But Could Be a Double Up
- Xtep International Placement – Parent Trimming at ATHs, Last Deal Didn’t Do Well
- NIFTY100 Index Rebalance Preview: Couple of Changes in August, Then 5 More in September
- Link and DND Shake Hands at A$4.81
- Kotak Mahindra Bank (KMB IN): FTSE Inclusion Likely; Flows Will Be Staggered
Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
- I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
- The impact on Real World Float is non-negligible. One name in particular is deserving of attention.
KRX New Deal Index Rebalance Preview: KMW Into BBIG to Drive Flows
- The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 29 July. Implementation is on 8 September.
- Intellian Technologies (189300 KS) and Seojin System Co, Ltd. (178320 KS) could replace Danal Co Ltd (064260 KS) and Kcp Co Ltd (060250 KS) in the Internet Index.
- Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, and KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the BBIG Index.
ANZ’s Equity Raise Successful, Trading at TERP, and STILL Cheap To Peers
- ANZ got about half its equity raise done, with the shortfall bookbuild only being 5% of the institutional total and clearing above TERP. Now the retail rights.
- Risk management mechanisms suggest rights trade expensive to stock near-term, then cheapen, as ANZ shares experience some selling pressure from arbs.
- But ANZ is cheap. Relative weakness on FY2-FY3 EPS forecasts has contributed to 25% underperformance vs Peers since January but Relative Multiple Deterioration has contributed more.
Link Admin And Dye & Durham Agree On Terms
- Link Administration (LNK AU) announced it has agreed to Dye & Durham’s latest $4.81/share offer, which is 13% below its initial $5.50/share approach last December.
- Link shareholders may also receive an additional A$0.13 from the sale of the Banking and Credit Management (BCM) business under the latest offer.
- This transaction is still subject to Australian Competition and Consumer Commission clearance, which should happen once D&D undertakes to offload its GlobalX ops.
Hitachi Transport (9086 JP): STILL Trading Too Wide
- Overnight we got news that the EU had cleared the purchase of Hitachi Transport System (9086 JP) by the KKR bidco.
- What started as an expected five-month process to gain regulatory clearances should now be down to two months. Risk arb is trading wide, but this is an “easy” deal.
- Now trading at 10% annualised to the cash-out date implied by a 30-Sep start date, this is a “good risk.”
Emperador (EMI SP) Secondary Listing: Still a Borderline STI Inclusion, But Could Be a Double Up
- Emperador (EMI SP) started trading on the SGX (SGX SP) on 14 July and so far meets all criteria to be included to the FTSE Straits Times Index (STI INDEX).
- However, it is still a borderline inclusion on free float, market cap and liquidity and will need to pass all three criteria to be added to the index in September.
- If added to the STI, the inclusion will take place on the same day as the potential inclusion of Emperador (EMP PM) in the FTSE All-World Index.
Xtep International Placement – Parent Trimming at ATHs, Last Deal Didn’t Do Well
- Group Success Investments is looking to raise up to US$133m by trimming its holdings in Xtep International (1368 HK).
- We can’t say that the deal is expected and short interest on the stock hasn’t been creeping up as well.
- While the deal won’t be a large one, representing just 5.7 days of three month ADV, the firm’s last deal hasn’t done well.
NIFTY100 Index Rebalance Preview: Couple of Changes in August, Then 5 More in September
- Life Insurance Corp of India (LIC) (LICI IN) and Tata Power (TPWR IN) will replace Nmdc Ltd (NMDC IN) and Piramal Enterprises (PIEL IN) at the close on 5 August.
- In September, Adani Wilmar (AWLTD IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN), Hindustan Aeronautics Ltd (HNAL IN) and Mphasis Ltd (MPHL IN) are potential inclusions.
- At over 4 days of deliverable volume to trade, the impact is especially large on Bharat Electronics (BHE IN), Zydus Lifesciences Ltd (ZYDUSLIF IN) and Lupin Ltd (LPC IN).
Link and DND Shake Hands at A$4.81
- Link Administration (LNK AU) has entered a revised scheme implementation deed with Dye&Durham/DND at A$4.81 per share. The scheme meeting will be held in mid-August.
- Shareholders will be supportive due to deal fatigue, and the offer price is 11% above the undisturbed price and at the low end of the original IE valuation range.
- Regulatory approvals are a key risk. DND is presumably confident in its undertakings to gain ACCC approval. At last close, the gross spread is 7.8%.
Kotak Mahindra Bank (KMB IN): FTSE Inclusion Likely; Flows Will Be Staggered
- Kotak Mahindra Bank (KMB) was deleted from the FTSE All-World Index following the introduction of the minimum headroom rule. With foreign room below 20%, the stock was not added back.
- The latest shareholding pattern as of 30 June shows foreign room at 20.01%. This means that Kotak Mahindra Bank (KMB IN) should be added to the index in September.
- However, the inclusion will take place in a staggered manner. Subject to foreign room staying above 20%, the inflows will come over the next couple of years.
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