In today’s briefing:
- Taisho Pharma (4581 JP) – Japan’s Newest Biggest MBO; The Price Is Light!
- CES China Semiconductor Chips Index Rebalance: Another Inclusion for Hygon
- Asahi Group Placement – Follow Up – Shaping up for a Christmas Cheer
- CSI300 Index Rebalance: 14 Changes & A Few Surprises
- T&K TOKA (4636 JP): Imminent TOB Launch? Imminent Bump Needed?
- STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month
- KWEB Index Rebalance: Fenbi (2469 HK) & YSB (9885 HK) Added
- Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, Div+, Top50, ASX, FXI, Xiaomi, Tata Tech
- Quiddity Aggregation of CSI300/500 and SSE50/180 Index Flows for Dec 2023: US$4.2bn One-Way!
- SSE50 Index Rebalance: Five Changes; Adds & Deletes Moving in Lockstep
Taisho Pharma (4581 JP) – Japan’s Newest Biggest MBO; The Price Is Light!
- Just past the 22-year anniversary of the deal-break from a previous takeover involving the large OTC drug firm, Taisho Pharmaceutical Holdin (4581 JP) announced an MBO Takeover for the company.
- Set at a 55.5% premium, it is not particularly surprising as a deal. The family is rolling in their interests. It looks like estate planning. The Board supports and recommends.
- Unfortunately, like many recent MBOs, this one is light at 0.85 book where net cash, securities, and net receivables and inventory make up 68% of the takeover price.
CES China Semiconductor Chips Index Rebalance: Another Inclusion for Hygon
- There are 3 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 8 December.
- Hygon Information Technology C (688041 CH) will be added to a global index in a week and then there will be multiple index inflows at the close on 8 December.
- After underperforming from May to September, the adds have gained ground on the deletes over the last two months and there could be further outperformance over the next two weeks.
Asahi Group Placement – Follow Up – Shaping up for a Christmas Cheer
- A group of shareholders aims to raise US$1.3bn (JPY197.8bn) by selling their respective stakes in Asahi Group Holdings (2502 JP) via an extended secondary follow-on.
- We have covered the background of the deal in our earlier note, Asahi Group Placement – Relatively Small One when Compared to Previous Large JP Secondary Selldowns.
- In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.
CSI300 Index Rebalance: 14 Changes & A Few Surprises
- There are 14 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 8 December.
- While most changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used their discretion.
- The adds outperformed the deletes in the first half of the year with performance staying stable over the second half of the year. Position for outperformance ahead of implementation.
T&K TOKA (4636 JP): Imminent TOB Launch? Imminent Bump Needed?
- In August, T&K Toka Co Ltd (4636 JP) announced a TOB by Bain with a clearance hurdle of selling a 3.51% stake in Hangzhou Toka Ink (SH:688571) before launch.
- Friday, the company announced that they put up a 3.6% stake for auction, with the sale to be executed that day. That likely triggers an early launch of the TOB.
- The TOB Price is offensively cheap at 0.63x “official” book, and 0.53x book adjusted for equity affiliate price. The shares have traded through terms since launch. This should get bumped.
STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month
- As expected, the index committee has used a 6-month minimum listing history and that results in one change to the SSE STAR50 (STAR50 INDEX) in December.
- Sichuan Biokin Pharmaceutical (688506 CH) will replace Ninebot (689009 CH) in the index at the close on 8 December.
- One way turnover is estimated at 2.18% and will result in a one-way trade of CNY 3,065m. Sichuan Biokin Pharmaceutical (688506 CH) has moved up and there will be pre-positioning.
KWEB Index Rebalance: Fenbi (2469 HK) & YSB (9885 HK) Added
- The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 8 December.
- Fenbi Ltd (2469 HK) and YSB (9885 HK) will be added to the index and there are no deletions.
- There is a big lock-up expiry in YSB (9885 HK) soon after the index inclusion and this could be an opportunity to access liquidity in the stock.
Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, Div+, Top50, ASX, FXI, Xiaomi, Tata Tech
- The capping for the Hang Seng family of indices will use closing prices from 28 November while implementation will take place at the close on 1 December.
- The changes for the next S&P/ASX 200 (AS51 INDEX) rebalance will be announced after the close of trading on 1 December.
- It was another week of inflows for the iShares Emerging Markets (EMXC US) to take units outstanding to a new high.
Quiddity Aggregation of CSI300/500 and SSE50/180 Index Flows for Dec 2023: US$4.2bn One-Way!
- After market close on Friday 24th November 2023, the December 2023 index review results for CSI 300/500 and SSE 50/180 were announced.
- CSI 300 and CSI will have 14 and 50 changes while SSE 50 and SSE 180 will have 5 and 18 changes respectively. There are many overlapping flows.
- In this insight, I have presented the details of the index changes and aggregated the expected flows attributable to the four indices mentioned above.
SSE50 Index Rebalance: Five Changes; Adds & Deletes Moving in Lockstep
- There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 8 December. There is over 1x ADV to trade on some stocks.
- We estimate a one-way turnover of 5.4% at the December rebalance leading to a one-way trade of CNY 4.85bn. Index arb activity could add to the impact on the stocks.
- The adds, deletes and SSE50 Index (SSE50 INDEX) have moved nearly in lockstep since May and the passive flows could move things around a bit.
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