In today’s briefing:
- SenseTime (20 HK): Index Inclusions Incoming?
- Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
- IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
- Adani Enterprises US$2.4bn FPO – Updates, Pricing, Structure, Anchor and Some More
- JAFCO Tender Offer Results – Low Pro-Ration Surprise, Murakami Overhang
- Northbound Stock Connect Expansion: Updated Details
- Nitto Denko Q3 Results and Buyback Announced
- Nifty the Clearest Short in Asia
- Xingda Int’l (1899 HK): Partial MBO Open For Tendering
- Acotec (6669 HK): Current Proration of 82.7%
SenseTime (20 HK): Index Inclusions Incoming?
- SenseTime Group (20 HK) was added to the Non-SDN Chinese Military-Industrial Complex Company (NS-CMIC) list on 10 December 2021. So, the stock is not a part of any global indices.
- There is a possibility that the stock is no longer restricted to U.S. investors and that could lead to multiple index inclusions over the next few months.
- Inclusion in the MSCI China Index could take place in February or May while inclusion in the FTSE All-World Index could take place in March.
Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
- The Adani Enterprises (ADE IN) Further Public Offering (“FPO”) expected to raise Rs 200bn has its first leg publicly complete with anchor investors taking Rs 59.849bn.
- Noted shortseller Hindenburg Research published a long report suggesting Adani Enterprises and indeed the Adani Group were over-priced according to fundamentals and were the result of a “con.”
- Now the book build starts. Deal structure and Adani Group CFO comments continue to suggest that Liquidity is a Bug, not a Feature.
IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
- There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
- Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ).
- With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.
Adani Enterprises US$2.4bn FPO – Updates, Pricing, Structure, Anchor and Some More
- Adani Enterprises is looking to raise INR200bn (US$2.4bn) via a further public offering (FPO). Bookbuild will begin tomorrow (27th Jan 23) and last till the end of the month.
- Adani Enterprises is the flagship company of the Adani Group. The group’s entities’ stock performance over the past few years has made the founder one of the richest persons globally.
- We have covered most aspects of the deal in our earlier note published. In this note, we talk about the recent updates and the deal pricing and structure.
JAFCO Tender Offer Results – Low Pro-Ration Surprise, Murakami Overhang
- Jafco Co Ltd (8595 JP) announced the results of its Tender Offer Buyback today. They wanted to buy 16.8mm shares including 13.9mm from Murakami-san. He sold 9.63mm. Oops.
- Pro-Ration was 69.25% which means that Murakami entities are still long about 4.276mm shares or 5.83% of shares out.
- There should be some index selling, and some Murakami Overhang. There may be more overhang at recent prices.
Northbound Stock Connect Expansion: Updated Details
- On 19 January, the HKEX clarified the liquidity criteria as well as treatment of Differentiated Voting Rights (DVR) stocks and the criteria for current Northbound stocks to become Sell-only.
- We currently see 975 China A-shares becoming eligible for Northbound Stock Connect when the extension is implemented.
- With the extension likely to be implemented in June, there will be additions to the MSCI China Index, FTSE All-World Index and FTSE All-Cap Index in August and September.
Nitto Denko Q3 Results and Buyback Announced
- Nitto Denko (6988 JP) today announced Q3 results, lower full-year guidance with one-quarter left to go, sharply undercutting implied Q4 results vs the Street.
- The company also announced a buyback of 4.1-4.7% of shares out over the next 6mos. Assuming the share price falls in reaction, this could be closer to the top end.
- The buyback is non-negligible as a portion of Likely Real World Float and as such the situation is worth a look – for those with a position and those without.
Nifty the Clearest Short in Asia
- We are lacking short ideas in Asia given we are long most markets. India presents a fresh short idea after failing at trend and price resistance.
- The failure at trendline and 18,200 price resistance was touted as a bearish turn. We have now formed a bear flat that is set to break lower.
- Macro: Remains bullish and we will probe for a long at 17,500/300. 19,470 is our macro bull projection.
Xingda Int’l (1899 HK): Partial MBO Open For Tendering
- Back on the 7th December, Xingda International (1899 HK) announced a partial Offer from a consortium comprising management (known as the Five parties) at HK$1.88/share, a 24.5% premium to undisturbed.
- Pre-Conditions were satisfied on the 15 December and the Composite Document was dispatched last night.
- The first close is the 24 February. Payment under the Offer is expected to be the 21 March.
Acotec (6669 HK): Current Proration of 82.7%
- With a minimum acceptance hurdle of 50% and irrevocables of 60.14%, Acotec Scientific Holdings (6669 HK)‘s partial offer was always going to turn unconditional.
- As per last night’s announcement, valid acceptances were 78.59%. The Offer has automatically been extended to the 9 February – this is the final close. Pro-ration is currently 82.7%.
- The minor quirk for partial Offers is that payment occurs within seven business days of the final close, not seven days from the Offer turning unconditional.
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