In today’s briefing:
- Tencent (700 HK) – This Is Not the Selldown You Are Looking For
- S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200
- MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions
- KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)
- Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
- A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June
- Jardine Strategic’s Dissentient Shareholders: The Sensible And Workable Approach
- Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe
- Ecopro BM: Considering on a CB Issuance of 500 Billion Won
- PharmaEssentia GDS Issuance – Strong Revenue Growth and Narrowing Losses
Tencent (700 HK) – This Is Not the Selldown You Are Looking For
- On April 11, Prosus (PRX NA) made an Update on Repurchase Programme that it had repurchased shares in the market from the 3-7 April. They do so every week.
- This one said they would move 96 million shares of Tencent (700 HK) currently held in non-transferrable shares into CCASS so they could be sold.
- The ADRs dropped in New York time. Tencent shares fell hard today. If the share price fell because of a block offering, that would be unwarranted.
S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200
- Shareholders have approved OZ Minerals Ltd (OZL AU)‘s acquisition by BHP Group Ltd (BHP AU) and OZL is expected to stop trading after the close on 18 April.
- OZ Minerals Ltd (OZL AU) will be replaced by Bellevue Gold (BGL AU) in the S&P/ASX 200 (AS51 INDEX) and by Seven Group Holdings (SVW AU) in the S&P/ASX 100.
- There has been huge short covering on Seven Group Holdings (SVW AU) and Bellevue Gold (BGL AU) over the last few months.
MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions
- Based on closing prices from 12 April, we forecast 2 adds and 2 deletes for the MSCI Taiwan Index at the May QCIR.
- Global Unichip (3443 TT) is a high probability index inclusion and that will drive the deletion of Giant Manufacturing (9921 TT) from the index.
- Wistron Corp (3231 TT) is a potential inclusion and that could result in the deletion of Win Semiconductors (3105 TT) from the index.
KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)
- Following SK Oceanplant (100090 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with Sun Kwang (003100 KS).
- The change will be implemented at the close on 18 April and passive trackers will need to trade over 1x ADV on both stocks.
- Sun Kwang (003100 KS) was a high probability index inclusion in June, so this brings forward the inclusion by a couple of months.
Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
- In mid-February 2023, Citizen Watch (7762 JP) announced another buyback. It had averaged nearly two small buybacks a year for the past four years for a total of ¥10bn.
- This new one was ¥40bn, which assuming a 20% share price jump was 12% of ADV for a year. Bigly! We got the 20% jump, then not much more.
- But Citizen has been buying fiercely. In the first 25 days of trading they averaged 25.8% of volume and bought back 11.5% of shares out. There’s a story here.
A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June
- WCP will likely be included in the rebalancing of Samsung KODEX Secondary Battery Industry ETF in June. And we should consider the possibility of this happening to be quite high.
- We can expect a daily passive inflow of around 0.3x compared to WCP’s typical DTV. The practical correlation with the price should be higher than the theoretical level.
- We should consider using SKIET, which engages in the same business in the same sector, as a hedge. WCP/SKIET Long Short achieved considerable performance within the past week’s window.
Jardine Strategic’s Dissentient Shareholders: The Sensible And Workable Approach
- Back on the 8 March 2021, Jardine Matheson (JM SP) made a cash acquisition for the 15% of Jardine Strategic (JS SP)‘s share capital it did not already own.
- The US$33/share Offer price was arguably light. But with the amalgamation requiring 75% approval and Matheson providing an irrevocable to vote its 84.89% stake for the transaction, it was done.
- On the 20 April 2022, the Bermuda Court dismissed Jardine’s application to strike out dissenting shareholders who acquired shares after the Offer was announced. Last month, Jardine lost its appeal.
Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe
- Rakuten Bank’s IPO will add an attractively valued Japanese neobank to the globally listed neobank universe; furthermore, the Rakuten Group ecosystem is a powerful tool for customer acquisition and retention
- On efficiency metrics, Rakuten Bank scores well versus its key domestic peers as well as global comparables; Rakuten Group companies act as a key conduit for new clients
- At the announced issue price of ¥1,400, Rakuten Bank’s PBV ratio implies an attractive 25% discount to its core Japanese peer SBI Sumishin Net Bank, for similar ROE
Ecopro BM: Considering on a CB Issuance of 500 Billion Won
- According to Hankyung Business Daily, Ecopro BM Co Ltd (247540 KS) is considering on issuing a CB worth 500 billion won to various private equity and asset managment companies.
- We would be negative on the potential CB issuance of nearly 500 billion won by Ecopro BM.
- The potential issuance of this CB is a signal from the management that it is trying to capitalize on the recent sharp increases in share price to raise more capital.
PharmaEssentia GDS Issuance – Strong Revenue Growth and Narrowing Losses
- Pharmaessentia Corp (6446 TT) aims to raise around US$412m (TWD12.6bn) via a GDS issuance. The issuance will be a large one to digest, representing 17.6 days of three month ADV.
- The proceeds will be used to accelerate the commercialization, further global clinical trials of BesREMi and conduct R&D in the US for the expansion of the company’s product portfolio.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
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