In today’s briefing:
- Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End
- Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed
- Ola Electric IPO – Thoughts on Valuation
- KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today
- Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer
- Rio Tinto (RIO AU/LN): Thinking About The “Unification”
- Southern Cross Gold (SXG AU)/Mawson (MAW CN): Hybrid Dual-Listing
- KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG
- End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024
Sep24 Nikkei 225 Rebal Final Predictions – Fastie Capped, Still 1 ADD, 1 DELETE, 1 Dark Horse and ?s
- The Sep 2024 Nikkei 225 Review base date is here. As before, I see one ADD, one DELETE, one capping, and one Very Dark Horse.
- The rules are clear, but not. This causes confusion. There may be unwritten rules keeping the Very Dark Horse out til next time.
- The Nikkei Index Team announced Fast Retailing (9983 JP) would be capped. I didn’t expect that now. That means $2.2bn+ of selling 30Sep and a reverse funding trade.
True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End
- On 10 June, Sun Corp subsidiary Cellebrite DI (CLBT US)‘s SPAC sponsor True Wind Capital launched a Tender Offer for 19% of SunCorp at a premium but discount to NAV.
- The price was too low. CLBT shares rose. They lifted the TOB price by 8% to ¥4750. Still too low. It was trading there. Now they have lifted to ¥5500.
- Now a 49% premium to undisturbed, 29.4% premium to all-time high prior to the first tender. Changes in terms means this could get done. More bullish than it looks.
Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.
- Fast Retailing (9983 JP)‘s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September.
- Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.
Ola Electric IPO – Thoughts on Valuation
- Ola Electric is now looking to raise about US$730m in its India IPO.
- Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
- In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.
KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today
- The review period for the September rebalance ends today, the changes will be announced in the first week of September and implemented at the close of trading on 12 September.
- There is at least one change expected for each of the Secondary Battery, Bio, Internet, Game and BBIG indices.
- The largest flows will be in Posco Future M, Ecopro BM, SK Biopharmaceuticals, Alteogen, Celltrion, SKC Co, Kakao Corp, Douzone Bizon, Krafton and Samsung Biologics.
Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer
- True Wind has increased its partial offer for Sun Corp (6736 JP) to JPY5,500 and materially lowered the minimum number of shares to be purchased from 3.3m to 1.1m.
- True Wind’s previous two offers were a non-starter due to an unattractive price and an onerous minimum acceptance threshold. The final offer addresses both these issues.
- The offer will succeed due to the low minimum acceptance threshold and the 25% price uplift vs. the 19% value increase in the Cellebrite stake (since the offer announcement).
Rio Tinto (RIO AU/LN): Thinking About The “Unification”
- Just shy of three years ago, BHP (BHP AU) announced the unification of its dual-headed corporate structure to make BHP “simpler and more agile”.
- Collapsing DLCs/share-classes was all the rage back then. The prior year, Unilever (UNA NA) collapsed its DLC; and Royal Dutch Shell unified its A and B lines in 2021.
- Rio (RIO AU/LN) is one of only a handful of remaining DLCs. Renewed investor calls to unwind the DLC and the recent UK’s listing regime reform necessitate a rethink.
Southern Cross Gold (SXG AU)/Mawson (MAW CN): Hybrid Dual-Listing
- On the 11th June, Southern Cross Gold (SXG AU) announced a proposed merger with Mawson Gold (MAW CN). It’s a novel approach to dual-list both companies in Australia and Canada..
- MAW intends to divest all its non-SXG assets, and reduce its shares out to mirror shares held in SXG. Then issue new shares to SXG shareholders on a one-for-one basis.
- Terms are now firmed for what the media calls a “reverse spin-out”, with a Scheme Meeting expected in October, and potential implementation late-October/early-November.
KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG
- The KRX BBIG’s concentrated weight and top three replacements still attract significant flow trading interest despite a decline in AUM.
- In the Battery Sector, Posco Future M will replace Ecopro BM, while in the Bio Sector, Alteogen will replace SK Biopharmaceuticals.
- A significant single-day passive flow is expected, especially for SK Biopharm. Additionally, a day trading setup with Posco Future M and Ecopro BM will likely attract substantial interest.
End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024
- We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in August 2024, among which 2 are in KOSPI and 39 are in KOSDAQ.
- These 41 stocks on average could be subject to further selling pressures in August and could underperform relative to the market.
- The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in August include APR, Fadu, and Kuk Il Paper.
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