In today’s briefing:
- 7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- Northern Star (NST AU) To Acquire De Grey Mining (DEG AU): Offer Details & Index Flow
- HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- Circumstances and GPIF Noises Could Mean Higher Equity Allocations In March 2025
- ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- Kioxia (285A JP) IPO: Valuation Insights
- CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting
- Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
- I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
- This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness
CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
- There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
- There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
- Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.
Northern Star (NST AU) To Acquire De Grey Mining (DEG AU): Offer Details & Index Flow
- Northern Star Resources (NST AU) has agreed to acquire De Grey Mining (DEG AU) by way of a Scheme of Arrangement in an all-stock deal.
- De Grey Mining (DEG AU) shareholders will receive 0.119 Northern Star Resources (NST AU) shares for each De Grey share held. That implies a 37.1% premium to the last close.
- There will be passive buying in Northern Star Resources (NST AU) at the time of merger completion, though there could be selling from some existing De Grey Mining (DEG) shareholders.
HKBN (1310 HK): China Mobile’s Half-Baked Preconditional VGO
- HKBN Ltd (1310 HK)‘s preconditional voluntary conditional offer from China Mobile (941 HK) is HK$5.23. Including the HK$0.165 dividend, the total offer is HK$5.395, an 11.0% premium to last close.
- The offer seems rushed and a reaction to a potential competing offer from I Squared. The lack of privatisation through a scheme and MBK’s irrevocable suggest the offer is light.
- An unattractive offer, a lengthy precondition long-stop date and the irrevocable competing offer clause invite I Squared to enter the fray.
Circumstances and GPIF Noises Could Mean Higher Equity Allocations In March 2025
- A Bloomberg article mid-day suggested Japan’s Ministry of Health, Labour and Welfare proposed a new “wage growth +1.9%” (vs 1.7% now) return bogey for the US$1.7trln Government Pension Investment Fund.
- The GPIF is conducting its quinquennial review to assess markets, long-term prospects, correlations, etc, to set a CAPM asset allocation mix to meet the bogey.
- The combination of higher USDJPY, Japan inflation, wider valuation spreads, and the prospect of higher yen rates suggests the review might result in lower yen bond allocs, higher equity allocs.
ChiNext/ChiNext 50 Index Rebalance: US$1.7bn Round-Trip Trade
- There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the December rebalance.
- We correctly forecast 4/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
- Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 12.24bn (US$1.69bn).
Kioxia (285A JP) IPO: Valuation Insights
- Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$727 million.
- We previously discussed the IPO in Kioxia (285A JP) IPO: The Bull Case and Kioxia (285A JP) IPO: The Bear Case.
- Our valuation analysis suggests that the IPO price range of JPY1,390-1,520 per share is attractive. Therefore, we would participate in the IPO.
CNI Semiconductor Chips Index Rebalance: One Change with Big Flow
- There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 December.
- Passive trackers are estimated to buy 0.9x ADV in Hwatsing Technology (688120 CH) and sell 0.5x ADV in StarPower Semiconductor (603290 CH).
- The add has outperformed the delete, but not by a lot. There could be more outperformance over the next couple of weeks.
Kioxia IPO – Should Price at the Top, Though Peers Are Still Correcting
- Kioxia Holdings (285A JP) is aiming to raise around US$840m (including over-allocation) in its Japan IPO.
- It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
- Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
- At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
- TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
