In today’s briefing:
- JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks
- TOPIX Inclusions: Who Is Ready (Aug 2022)
- Canon (7751) – Second Buyback This Year – Last Happened in 2014
- Lifestyle International’s HK$5.00 Privatisation Bid
- 2022 JPX Nikkei 400 Rebal – 36 IN, 34 OUT, 4.9% One Way
- Messed up Korea IPO Pipeline and Unexpected Beneficiaries
- Index Rebalance & ETF Flow Recap: NKY, JPXNK400, FTSE CH50/A50/TW50, SenseTime, Orica
- ECM Weekly (7th Aug 2022) – Zomato, Orica, China Tourism, Hongjiu Fruit, Giant Biogene, Socar
- Lifestyle Int’l (1212 HK): Thomas Yau Offer?
- Merger Arb Mondays (08 Aug) – Yashili, Lifestyle, Link, Infomedia, Ramsay, ResApp, Alliance Aviation
JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks
- There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.
- Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).
- Oriental Land (4661 JP) is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the Nikkei 225 (NKY INDEX) at the September rebalance.
TOPIX Inclusions: Who Is Ready (Aug 2022)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- In this insight, I have defined six key Segment Transfer requirements which prove to be decisive in this process.
- At present, there are 51 names that satisfy all of these conditions and there are more names that are close to being that group.
Canon (7751) – Second Buyback This Year – Last Happened in 2014
- Canon Inc (7751 JP) reported Q2 earnings early last week. Shares dropped 4% the next day but closed down only 1%. Now they are above the prior close.
- They biked the dividend nicely (was ¥45/share last year, guided to ¥50 this year, but made ¥60/share instead.
- And now they have announced another ¥50bn buyback on top of the one announced in May. Fourth time in 14 years a second tranche is announced in one year.
Lifestyle International’s HK$5.00 Privatisation Bid
- Lifestyle International Holdings (1212 HK) announced a privatisation offer from Mr Lau, the controlling shareholder and Chairman, at HK$5.00 per scheme share, a 62.3% premium to the undisturbed price.
- The offer price is final. Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
- The offer price is unattractive for long-term shareholders and below average sell-side price targets. Nevertheless, this deal likely goes through as the headcount test is not applicable.
2022 JPX Nikkei 400 Rebal – 36 IN, 34 OUT, 4.9% One Way
- The Ninth Annual JPX Nikkei 400 Index Review was announced on Friday 5 August. There are 36 Inclusions, 34 Deletions. They are mostly in line with Janaghan Jeyakumar, CFA‘s predictions.
- The “BIG SELL” is Oriental Land (4661 JP). The “BIG BUY” is Softbank Corp (9434 JP) as he predicted 11 months ago. There are some down-weights from capping.
- Oriental Land is also a potential Nikkei 225 Inclusion as discussed in Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved.
Messed up Korea IPO Pipeline and Unexpected Beneficiaries
- Hyundai Oilbank, this year’s biggest fish, dropped the IPO. Another big fish, CJ Olive Young, also officially announced that it would give up its listing.
- The bookbuilding results of SOCAR turned out to be disastrous, suggesting an increased possibility that a higher-than-typical flow level will likely be seen in WCP and K Bank.
- In particular, despite the valuation issues, we should pay attention to the possibility of an unexpected level of local institutional flows flocking to WCP, which has less schedule risk.
Index Rebalance & ETF Flow Recap: NKY, JPXNK400, FTSE CH50/A50/TW50, SenseTime, Orica
- The rebalances of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) and NIFTY100 Index were implemented at the close on Friday.
- MSCI will announce the results of the August QIR pre-market on 12 August (Asia time). This is the last QIR to use the current methodology before we move to QCIRs.
- There were large outflows from KraneShares CSI China Internet ETF (KWEB US) during the week as investors pulled US$267m from the ETF.
ECM Weekly (7th Aug 2022) – Zomato, Orica, China Tourism, Hongjiu Fruit, Giant Biogene, Socar
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- Placements continued to take center stage this week, beginning with Uber’s clean-up sale of Zomato.
- Socar launched its one-day bookbuild earlier in the week. We continued looking at the upcoming deals in our pipeline.
Lifestyle Int’l (1212 HK): Thomas Yau Offer?
- Lifestyle International Holdings (1212 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code.
- Thomas Lau is the largest shareholder with 74.97%, as he has been since April 2019.
- A possible Offer ahead of a (potentially) improving retail outlook and the imminent opening of its Kai Tak project?
Merger Arb Mondays (08 Aug) – Yashili, Lifestyle, Link, Infomedia, Ramsay, ResApp, Alliance Aviation
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
- Highest spreads are Lifestyle International Holdings (1212 HK), 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Infomedia Ltd (IFM AU), Yashili, ResApp.
- Lowest gross spreads are Excelpoint Technology (EXLP SP), Frasers Hospitality Trust (FHT SP), MyDeal.com.au Ltd (MYD AU), Cocoaland Holdings (COLA MK), True Corp Pcl (TRUE TB), China VAST.
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