In today’s briefing:
- The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair)
- HDFC/HDFC Bank Mega Merger: Are We There Yet?
- NTT’s Really Big/Weird Stock Split Goes Ex- 29 June 2023. Now With D-Points!
- Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?
- Swire Coke Sale Special Div Impacts B/A Ratio
- StubWorld: Swire Sells US Coke Ops To Parent
- BBL/KBANK: Hitting a Wall
- Preemptive Short Position Buildup on SFA Engineering for Samsung’s Next Stake Sale
- Redox IPO Trading – Peers Have Mostly Corrected over the past Month
- AMFI Stock Reclassification Preview (June 2023): Outperformance Continues
The Prosus/Naspers Ouroboros Spits Out Its Tail (Unwinds Cross-Holding to Go Back to Old Pair)
- In mid-September 2019, Naspers (NPN SJ) listed Prosus (PRX NA) on international markets, but the law required Naspers own 70+% of Prosus and it created a dual-layer NAV Discount Trade.
- In summer 2021, they announced an Exchange Offer, where Naspers holders could get Prosus, and Prosus would end up owning 49% of Naspers, creating a cross-holding circularity – an Ouroboros.
- In summer 2022, they launched open-ended buyback programmes, and they’ve bought back a lot. NOW they are unwinding the Ouroboros, going back to the pre-EO structure. buybacks will continue.
HDFC/HDFC Bank Mega Merger: Are We There Yet?
- An interview with Deepak Parekh set a bunch of stocks on fire. Then came the HDFC Bank (HDFCB IN) exchange announcement that said the dates were still tentative.
- Indications are that the merger could be effective 1 July and HDFC Limited (HDFC IN)‘s last trading day would be 13 July.
- The merger will have an impact on both HDFC stocks and on other stocks that could be added to the NIFTY Index, NIFTYJR INDEX and SENSEX Index.
NTT’s Really Big/Weird Stock Split Goes Ex- 29 June 2023. Now With D-Points!
- NTT (Nippon Telegraph & Telephone) (9432 JP) is splitting its stock 25:1 on record date 30 June 2023. That means it goes ex- at the new price on 29 June.
- The day before, the stock is up nearly 5% on heavy volume. This is likely punters buying before it splits so one round lot will be <¥20,000 vs ~¥420,000 yesterday.
- But there is a new attraction for retail, somewhat un-noticed.
Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?
- Delta Electronics Thai (DELTA TB) has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.
- Given the big turnover every time Delta Electronics is added to and deleted from the index, there could be another go at weighting the SET50 Index by free-float market cap.
- Deletion from the index will have a big impact on Delta Electronics Thai (DELTA TB) and the passive selling could help narrow the gap with Delta Electronics (2308 TT).
Swire Coke Sale Special Div Impacts B/A Ratio
- Last night, Swire Pacific announced it planned to sell its US Coca Cola Distribution business to its parent company. That means a Circular, an IFA Opinion, and an EGM.
- I expect a September EGM and the Special Div to follow in Q4. While I find the price low, I expect the deal to be approved by Swire shareholders.
- This deal has an effect on the Swire B/A ratio. Some may get it. Some may not. Makes sense to be ready. Swire A is cheap. Swire B is cheaper.
StubWorld: Swire Sells US Coke Ops To Parent
- Swire Pacific (19 HK) has announced it is selling its US Coca-Cola ops to its parent for HK$30.4bn (US$3.9bn). That’s 40% of its market cap.
- Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
BBL/KBANK: Hitting a Wall
- Bangkok Bank Public (BBL TB) is trading very close to its historic highs versus Kasikornbank PCL (KBANK TB) and keeps hitting a wall at that level.
- The number of NVDRs issued on Bangkok Bank Public (BBL TB) has been rangebound while there has been a steady decrease for Kasikornbank PCL (KBANK TB).
- At current level, the risk/reward looks favourable to a short Bangkok Bank Public (BBL TB) / long Kasikornbank PCL (KBANK TB) position for the near to medium term.
Preemptive Short Position Buildup on SFA Engineering for Samsung’s Next Stake Sale
- Samsung Display still holds a 5.85% stake. Hankyung reported that this remaining stake would also be disposed of in the future.
- Then the key lies in timing. Considering the ongoing pattern of block deals being exposed during the pre-sounding phase, we may be able to capture clues for preemptive trading.
- As seen from the chart depicting SFA’s loan balance and the percentage of short-selling to daily TV, we can observe a significant increase in activity just before today’s sale event.
Redox IPO Trading – Peers Have Mostly Corrected over the past Month
- Redox (RDX AU), a chemical and ingredients distributor, raised around US$270m in its Australia IPO. The stock will begin to trade on 3rd July 2023.
- In 2022 it was ranked as the largest chemicals and ingredients distributor in Australia, as well as the 13th largest in the Asia Pacific region and the 35th largest worldwide
- We have looked at the company’s past performance in our previous note, in this note we will talk about the updates since then and the trading dynamics.
AMFI Stock Reclassification Preview (June 2023): Outperformance Continues
- We see 7 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 10 stocks from MidCap to SmallCap.
- The expected migrations from SmallCap to MidCap have outperformed the other migrations and some stocks have seen large price moves over the last couple of weeks.
- Active managers would have started realigning their portfolios and that could continue for a couple of weeks. Unwind long positions into strength.
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