In today’s briefing:
- Shinko Electric (6967) – Waiting for a Package
- Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem
- WisdomTree Emerging Markets High Dividend Index Rebalance: Huge Turnover & Trade Next Week
- What EOflow Insiders Are Saying on the Current Situation & An Objective Interpretation of It
- NWS (659 HK): Final Divvie Assured. NWD Vote Risk Remains
- WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: 16% Turnover, US$660m Trade
- Major Revisions of the Corporate Governance Report Guidelines in Korea: To Reduce “Korea Discount”
- Ecopro Materials: Reduces IPO Price Range
- S&P/ASX 200 Index Adhoc Change: Light & Wonder (LNW) To Replace UMG
- Seven & I: Unimpressive Results & Potential Investor Exodus Amidst Superstore Transformation
Shinko Electric (6967) – Waiting for a Package
- Shinko Electric Industries (6967 JP) has been on the block. 2nd Round Bids were apparently due last month, but with “Economic Security” considerations, one wonders if that stretches a bit.
- The stock is now at the low end of its range vs Ibiden, and the timing is right for a deal which could give it a pop.
- A “split price” takeover seems reasonable as a structure. I expect upside. Still.
Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem
- Fast Retailing (9983 JP) today announced better than guided results, and 10% revenue growth, 18% OP growth to August 2024. NP is light, but still well higher than street consensus.
- At 10.37% Nikkei 225 weight, it is still above the target for 31 July 2024. If it does not underperform Nikkei 225 between now and then, US$2bn to sell end-Sep24.
- If people like the growthiness, that can be absorbed. But if the stock were to go up 10% vs Nikkei, there’d be US$2bn, then maybe another US$2bn to sell.
WisdomTree Emerging Markets High Dividend Index Rebalance: Huge Turnover & Trade Next Week
- The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
- The October rebalance will result in a one-way turnover of ~37% and in a one-way trade of US$926m. There are 92 stocks with over 1 day of ADV to trade.
- In Asia, the largest buy flows are expected on Astra International (ASII IJ) and the largest sell flows on POSCO Holdings (005490 KS).
What EOflow Insiders Are Saying on the Current Situation & An Objective Interpretation of It
- They said that EOflow has made a strategic decision not to raise any objections to the court’s injunction to temporarily suspend the sale and marketing activities of EOPATCH.
- They stated their commitment to making efforts to actively prove that they are not subject to KRX’s substantive delisting examination. Hence, they aim to resume trading from November 1st.
- They subtly hinted at a degree of caution, suggesting that the final agreement with Medtronic might undergo slight modifications to align with the outcome of this preliminary injunction.
NWS (659 HK): Final Divvie Assured. NWD Vote Risk Remains
- Accelerating the Offer timetable for NWS (659 HK) such that it closes before the dividend ex-date appeared stingy. But why pay dividends to shareholders that won’t hold the shares anymore?
- Those concerns have been put to rest with the despatch of NWS’ Composite Doc and New World (17 HK)‘s Circular, guaranteeing all shareholders the dividend, no matter the Offer outcome.
- The key risk now is NWD’s independent shareholder vote. On balance, this should get up.
WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: 16% Turnover, US$660m Trade
- The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
- The October rebalance will result in a one-way turnover of ~16% and in a one-way trade of US$329m. There are 16 stocks with over US$3m to trade.
- HDFC Bank (HDFCB IN) will be added to the index while there will be selling in Taiwan Semiconductor (TSMC) (2330 TT).
Major Revisions of the Corporate Governance Report Guidelines in Korea: To Reduce “Korea Discount”
- On 12 October, the Financial Services Commission (FSC) announced major Revisions of the Corporate Governance Report Guidelines, including improvement of dividend procedures and revisions of governance principles.
- The major revisions of the Corporate Governance Report Guidelines in Korea should be catalysts for reducing “Korea Discount.”
- These new Corporate Governance Report will recommend the KOSPI listed companies with assets of more than 500 billion won to comply with the new guidelines effective 2024.
Ecopro Materials: Reduces IPO Price Range
- Ecopro Materials reduced the upper end of the IPO price range from 46,000 won to 44,000 won.
- The bankers reduced the IPO discount, EV/EBITDA valuation multiple, and outstanding shares.
- We maintain our Bearish view of the Ecopro Materials IPO. Our base case valuation of 37,436 won per share is towards to lower end of the IPO price range.
S&P/ASX 200 Index Adhoc Change: Light & Wonder (LNW) To Replace UMG
- Shareholders have approved United Malt Group Ltd (UMG AU)‘s acquisition by Malteries Soufflet and UMG is expected to stop trading after the close on 17 October.
- United Malt Group Ltd (UMG AU) will be replaced by Light & Wonder (LNW AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 17 October.
- This is a surprise and there is unlikely to be a lot of pre-positioning on Light & Wonder (LNW AU). Buy Light & Wonder (LNW US) during US hours.
Seven & I: Unimpressive Results & Potential Investor Exodus Amidst Superstore Transformation
- Seven & I Holdings (3382 JP)‘s FQ2 OP exceeded consensus by ¥2.0bn (1.3%), but with FH2 revenue guidance lowered by ¥95bn, the overall outlook appears discouraging.
- The company’s shares fell by 5%, underperforming Topix by 3.8%, indicating investor concern about US growth and departing from activist proposals despite a ¥2.0bn earnings outperformance.
- If overseas investors who supported ValueAct’s proposals begin to exit, Seven & I could face substantial downside risks in the near term.
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