In today’s briefing:
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June
- Hanwha Aerospace: Spin Off of Semiconductor Equipment and Video Surveillance Units
- Weekly Deals Digest (07 Apr) – Kokusai Electric, HD Hyundai Marine, Langham, Jastec, JSR, Best World
- Hanmi Science: If Talks With Mum and Sister Break Down, Then KKR May Provide a Partial Tender Offer
- Citic Resource Holdings (1205.HK) – A Play on Oil and Coal Demand
- (Mostly) Asia-Pac M&A: Austal, Best World, Isetan Singapore, Langham Hospitality, Azure, Genex Power
- Japan Weekly | Stocks Lower but Global Economy Remains Strong
- Ganz-Mavag/Talgo: Request for Offer Authorisation
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
- There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
- There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
- Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June
- With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
- Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.
- Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).
Hanwha Aerospace: Spin Off of Semiconductor Equipment and Video Surveillance Units
- On 5 April, Hanwha Aerospace (012450 KS) formally announced that it will spin off its semiconductor equipment and video surveillance units which contributed to about 16% of its revenue.
- We are Negative on Hanwha Aerospace mainly due to valuations. Its share price has risen so much in the past year that its valuations are no longer attractive.
- Hanwha Aerospace is trading at premium valuation to Lockheed Martin on an EV/EBITDA basis. Despite its recent strong growth, Hanwha Aerospace is no Lockheed Martin.
Weekly Deals Digest (07 Apr) – Kokusai Electric, HD Hyundai Marine, Langham, Jastec, JSR, Best World
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Kokusai Electric (6525 JP) lock-up expiry and HD Hyundai Marine Solution (443060 KS), Bharti Hexacom (6597372Z IN) IPOs.
- Event-Driven developments: Langham Hospitality Inv Ss (1270 HK), IntelliCentrics Global Holding (6819 HK) Jastec Co Ltd (9717 JP), JSR Corp (4185 JP), Best World International (BEST SP), Isetan Singapore (ISET SP).
Hanmi Science: If Talks With Mum and Sister Break Down, Then KKR May Provide a Partial Tender Offer
- The 2024 AGM of Hanmi Science is over and the two Lim brothers have control of the company. Nonetheless, the fight for the control of Hanmi Science is not over.
- There is an increasingly probable scenario where the KKR private equity firm gets involved, joining hands with the Lim brothers.
- If mum and sister do not sell their shares (which seems to be the higher likely scenario), then KKR may issue a tender offer to the remaining minority shareholders.
Citic Resource Holdings (1205.HK) – A Play on Oil and Coal Demand
- One of a basket of Hong Kong commodity stocks we like
- One off issues in 2023 which should reverse in 2024
- Can also be viewed as a tangential play on India’s industrial growth
(Mostly) Asia-Pac M&A: Austal, Best World, Isetan Singapore, Langham Hospitality, Azure, Genex Power
- I tally 52 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Four new deals discussed on Smartkarma: Austal (ASB AU)‘s spurned Offer; Best World (BEST SP)‘s Exit Offer; Isetan Singapore (ISET SP)‘s parent Offer; and (maybe) Langham Hospitality (1270 HK)‘s privatisation.
- Key updates took place on: Azure Minerals (AZS AU), Genex Power Ltd (GNX AU), IntelliCentrics Global Holding (6819 HK) and JSR Corp (4185 JP).
Japan Weekly | Stocks Lower but Global Economy Remains Strong
- US stocks recovered on Friday after a blow-out US jobs report. However, US 10 year yields ended the week up 19bps at 4.4%
- Japanese stocks sank for a second week as tech stocks came under selling pressure
- The 10% move in Sumitomo Metal Mining on higher copper prices highlights strength in global economy and perhaps sign of renewed growth in China
Ganz-Mavag/Talgo: Request for Offer Authorisation
- Ganz Mavag, a public/private consortium, requests authorisation for its €5/share offer for 100% of Talgo SA (TLGO SM). It needs approvals from Spain and seven other EMEA regulators.
- Yesterday’s close remains similar to the announcement date (7 March), gross spread of 11.3%, indicating uncertainty regarding timeline and development. The market is pricing a 48% probability of deal completion.
- The Spanish Government will delay the authorization process. Vs. comparables and considering uncertainties regarding backlog execution, investing in the company seems somewhat risky. The risk/reward ratio is not particularly attractive.
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