In today’s briefing:
- Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge
- Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!
- SATS SP: S$800m Rights Issue to Fund WFS Acquisition
- Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
- KOSPI200 Index Rebalance Preview: Changes in April & June
- Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising
- SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
- Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations
- Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
- Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms
Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge
- Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
- MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
- There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.
Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!
- Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
- That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic.
- It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.
SATS SP: S$800m Rights Issue to Fund WFS Acquisition
- SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
- The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
- There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
- Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
- A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
- This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.
KOSPI200 Index Rebalance Preview: Changes in April & June
- Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
- We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
- Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.
Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising
- Looking at the recent pattern, SKT’s fast-rising is quite noticeable. Its foreign room rose to 12.08%. On the other hand, KT’s foreign room growth seems to be slowing somewhat.
- SKT’s pace is fast. If the current pace continues, there will be even the possibility of inclusion with a full adjustment factor of 1.0, exceeding 25%, by the August review.
- We should design a momentum trading setup targeting the point when SKT’s foreign room decline trend will be reflected into an MSCI re-inclusion momentum.
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
- Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
- They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
- Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.
Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations
- The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review.
- Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday’s close (they weren’t going to change as of Friday).
- In this insight, we take a look at Quiddity’s expectations for index flows resulting from these events.
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
- Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
- The deal would be worth around US$9bn and could come as soon as next month.
- In this note, we talk about the news and take an early look at the possible selldown.
Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms
- The Brookfield/EIG consortium has reduced its Offer for Origin (ORG AU) to ~A$8.90/share, down from A$9.00/share, after conducting due diligence in the wake of the Aussie government’s gas price intervention.
- Oddly, this revised proposal remains non-binding, suggesting a number of political kinks still need to be ironed out.
- For its part, Origin’s board reckons the revised proposal has the potential to deliver significant value to shareholders, all but guaranteeing board support, assuming a firm Offer unfolds.
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