In today’s briefing:
- Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
- HSCI Index Rebalance Preview: Low Probability Add in December
- S&P/ASX Index Rebalance Preview: Changes from Now to December
- Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, CSI500, STAR50, FnGuide Top10
- EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition
- Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
- Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer
- SK Innovation – Why It Hasn’t Worked
- Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52
- Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick
Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
- The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
- Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
- We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.
HSCI Index Rebalance Preview: Low Probability Add in December
- There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
- Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
- Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.
S&P/ASX Index Rebalance Preview: Changes from Now to December
- Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
- Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
- The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, CSI500, STAR50, FnGuide Top10
- It was a busy Friday with a bunch of indices rebalancing at the close and big volumes trading on a lot of stocks.
- Brilliance China Automotive (1114 HK) had a good week with the stock rallying on Thursday and Friday on huge volumes amid expectations of upcoming passive buying.
- A quiet week for ETFs with mainland China ETFs seeing some outflows after the huge inflows over the last couple of months.
EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition
- After Insulet Corp (PODD US) lodged a lawsuit against EOFlow (294090 KS), Flex, inter alia, on the 3rd August, the judge has thrice extended the temporary restraining order.
- But the big (ger) news is that a preliminary injunction comes into force today. Shares are down 2.5% as I type.
- This latest development should have been expected. And put simply: a proposed preliminary injunction doesn’t prevent Medtronic Plc (MDT US) from acquiring EOFlow.
Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
- Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
- They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
- There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.
Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer
- Aeon Co Ltd (8267 JP) has announced a partial tender offer for Inageya Co Ltd (8182 JP) to make it a consolidated subsidiary. Aeon flagged this intention on 25 April.
- The tender offer is for a maximum of 15.7 million shares (33.78% ownership ratio) at JPY1,610, a 23.2% premium to the undisturbed price. There is no minimum acceptance condition.
- The offer price is reasonable. Longer-term, Aeon aims to make Inageya a wholly-owned subsidiary of United Super Markets (3222 JP) by November 2024.
SK Innovation – Why It Hasn’t Worked
- Has SK Innovation raised enough money for its longer term ambitions?
- What is the stock pricing in that is not apparent on the balance sheet?
- It seems really given their capex outlet, dilutive cap raising is the only solution
Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52
- Haitong International Securities Group (665 HK) announced a pre-conditional privatisation offer from Haitong Securities Co Ltd (H) (6837 HK), the controlling shareholder, at HK$1.52, a 114.1% premium to the undisturbed price.
- The pre-condition related to regulatory approvals are a formality as Haitong Securities’ largest shareholder is the Shanghai SASAC. The offer price is final.
- The key conditions are approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and headcount test. The highest HKEx takeover premium in a year facilitates approval.
Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick
- When Haitong International Securities Group (665 HK) was suspended on the 27 September, a punchy premium was expected if controlling shareholder Haitong Securities Co (600837 CH) was launching an Offer.
- And that is what we got: a $1.52/share Offer, by way of a Scheme, and a 114% premium to last close. Terms have been declared final.
- This is a pre-conditional Offer, requiring approvals from approvals from Shanghai SASAC, CSRC, NDRC, and the Shanghai branch of the PBOC.
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