In today’s briefing:
- 7&I (3382) – What If… A Modest Proposal
- Quiddity Leaderboard TDIV Dec 24: Trade Successful; +9.5% in Three Weeks; More Upside Possible.
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
- Ping An Healthcare and Technology (1833 HK) – Privatization Ahead?
- My Take on the Three Scenarios that Sammy Buyback Stirred up in the Market Today
- KLCI Index Rebalance Preview: One High Probability Change; One at the Cusp
- WH Group (288 HK)’s US/Mexican Spin-Off
- TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week
- TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact
- KRX Value-Up Special Rebalance in December: Playbook & Screening Rundown
7&I (3382) – What If… A Modest Proposal
- A lot of the talk around the news that Ito family scion Ito Junro had proposed to Seven & I Holdings (3382 JP) an MBO was about thwarting Alimentation Couche-Tard.
- Several mentioned that this bid – seemingly uncompetitive at the moment – would make ACT back down. I discussed the bid and its repercussions here.
- Here I suggest an alternate solution which might get everyone what they want.
Quiddity Leaderboard TDIV Dec 24: Trade Successful; +9.5% in Three Weeks; More Upside Possible.
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2024 index rebal event.
- I currently see 5 ADDs and 4 DELs but some of these names are different from what we had last time (link).
- The current estimate for one-way flow in December 2024 is US$1.54bn.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 6 Adds, 5 Deletes, Capping, US$3.5bn Trade
- Using data from the close on 15 November, there could be 6 adds and 5 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
- There will also be capping and funding flows that will lead to a one-way turnover of 16.9% and a one-way trade of TWD 57.5bn (US$1.77bn).
- Short interest is at the highs in most forecast deletes, while the trend is mixed among the potential inclusions.
Ping An Healthcare and Technology (1833 HK) – Privatization Ahead?
- PAGD’s business model is problematic, leading to continuous shrinking revenue scale. As PAGD will entirely lose competitiveness in the future, the management wants to find a suitable way to “exit”.
- Privatizing PAGD at low price and integrating it into the Ping An Group’s system is a good choice. In other words, Ping An hopes other shareholders to choose cash dividends.
- Due to high tax, Hong Kong Stock Connect investors would prefer to sell in advance. Arbitrageurs can wait until stock price drops then make decisions based on new conversion price.
My Take on the Three Scenarios that Sammy Buyback Stirred up in the Market Today
- The market’s reaction to Samsung Fire’s stake sale seems overhyped. Given past share sales, Life may outperform Fire as this momentum unfolds.
- I don’t see SDS merging with Samsung Electronics. It lacks synergy and could stir up PR issues. If Sammy’s stock stalls, Lee Jae-yong might sell more of his SDS stake.
- I’m still bullish on Sammy prefs. If the tax reform passes, a special dividend, not a buyback, will be the cleanest way for Samsung to address inheritance tax.
KLCI Index Rebalance Preview: One High Probability Change; One at the Cusp
- There is a high probability of Gamuda Bhd (GAM MK) replacing Genting Malaysia (GENM MK) in the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) in December.
- 99 Speed Mart Retail Holdings (99SPD MK) is a close add and needs small outperformance over the next week to be added. That could see Genting Bhd (GENT MK) deleted.
- Passive funds benchmarked to the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX) will need to buy 0.3-0.75x ADV on the potential adds and sell 0.9-1.3x ADV on the potential deletes.
WH Group (288 HK)’s US/Mexican Spin-Off
- Back on 14 July 2024, WH Group (288 HK) (WHG) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ
- WHG the world’s largest pork producer, has now confirmed it will sell up to 20% of Smithfield’s shares on a fully diluted basis, in an initial public offering.
- WHG has also proposed an assured entitlement for existing shareholders by way of a distribution in specie of existing shares of Smithfield, or a cash alternative.
TIP Taiwan Value High Dividend Index Rebalance: A Lot to Trade This Week
- There are 15 changes for the TIP Taiwan Value High Dividend Index in November. The Yuanta Taiwan Value High Dividend ETF (00940 TT) has an AUM of US$5bn.
- Estimated one-way turnover is 26% and there are 16 stocks with over 4 days of ADV left to trade. The rebalance commenced yesterday and will end on Friday.
- An equal weighted basket of inclusions has outperformed an equal weighted basket of deletions since July. That could continue over the week as the ETF continues to rebalance their portfolio.
TIP Customized Taiwan Select High Div Index Rebalance Preview: 32% T/O; US$2.75bn Trade; HUGE Impact
- The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 284bn (US$8.7bn).
- We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 15.8% and a round-trip trade of around US$2.75bn.
- An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since beginning September with a pick-up in pace over the last 2-3 weeks.
KRX Value-Up Special Rebalance in December: Playbook & Screening Rundown
- Since Sep 24, 32 companies made Value-Up disclosures. After filtering, 17 remain, but KRX will keep inclusions tight. They’ll likely use PBR and ROE rankings for final selection.
- We have 6 names—3 financials, 2 healthcare, 1 industrial. New Value-Up disclosures through Dec 6 could add more, but these 6 are the frontrunners for now.
- KRX is likely to announce results by Dec 10-11. Start eyeing entry points 10 days prior, and if price action heats up early, consider pulling the trigger sooner.
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