In today’s briefing:
- Tencent (700 HK) – This Is Not the Selldown You Are Looking For
- Japan’s Governance Changes I – The PBR 1.0 Target
- Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
- 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)
- Analysis of Adani Group Shareholder Structure Changes in Q1 – Stock Moved
- Rakuten Bank (5838 JP) – A Keenly Priced Quality Addition to the Global Neobanks Universe
- Hong Kong CEO & Director Dealings (13 Apr): Melco, CMGE, Differ, Sino Biopharmaceutical
- Jardine Strategic’s Dissentient Shareholders: The Sensible And Workable Approach
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.
Japan’s Governance Changes I – The PBR 1.0 Target
- The TSE went through a multi-year period of planning a “Market Restructuring” which ended on 4 April 2022 as the TSE split into three Sections, TSE Prime, Standard, and Growth.
- After that, the TSE formed a “Council of Experts” (some very senior people) that would follow up on the changes, and recommend new measures. In January, new rule proposals dropped.
- There was talk of a hard end to the transition period. Also, the Council harped on Awareness of Capital Cost and Efficiency. Most notably, for companies with PBR < 1.
Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
- With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it’s been a year later than originally planned to reach 80 index constituents.
- We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
- There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.
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.
Analysis of Adani Group Shareholder Structure Changes in Q1 – Stock Moved
- Every quarter, Indian companies report their “Shareholding Pattern” for all to see. They show holdings by category type, and holders over 1%.
- The big news in Q1 in AdaniLand was the failed FPO, thwarted by the Hindenburg Research report, and the Adani Promoter sale of stakes in 4 companies to GQG Partners.
- The details in the change of the shareholder structure are, however, interesting.
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
Hong Kong CEO & Director Dealings (13 Apr): Melco, CMGE, Differ, Sino Biopharmaceutical
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- Stocks mentioned in this insight include: Melco International Development (200 HK), CMGE Tech (302 HK), Differ Group Auto (6878 HK), and Sino Biopharmaceutical (1177 HK)
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.
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