In today’s briefing:
- Share Buybacks In Japan – A 2023 Primer
- HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks
- E-Guardian (6050) Partial Offer Update
- Hang Seng TECH Sep23 Index Review – A Few BIGLY Events and One-Way Flow of 3.4%
- Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
- Market Information About Samsung Electronics’ Shareholder Return
- HSCEI Sep23 Index Review/Flows – Trip.Com (9961) Added, CG Svcs (6098) Deleted; ~2.5% One Way
- Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?
- SK Rent A Car: SK Networks’ Tender Offer
- Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well
Share Buybacks In Japan – A 2023 Primer
- The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
- Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
- So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.
HSTECH Index Rebalance: East Buy (1797 HK) Replaces AAC Tech (2018 HK); Big Shorts on Both Stocks
- As expected, East Buy Holding (1797 HK) replaces AAC Technologies Holdings (2018 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the close on 1 September.
- Estimated one-way turnover is 3.5% leading to a one-way trade of HK$3.4bn (US$435m). There are 4 stocks with over 1 day of ADV to trade.
- Short interest is 15% of float on both stocks. Short covering could take East Buy Holding (1797 HK) higher while providing support for AAC Technologies (2018 HK) closer to deletion.
E-Guardian (6050) Partial Offer Update
- When this was launched, it traded more volume than expected on the first day, then again on the second day. Since then it has traded cheap vs initial estimates.
- A week after the launch, two separate Large Shareholder Filings came out. Those bear scrutiny.
- The back end trade is still an interesting one in my opinion.
Hang Seng TECH Sep23 Index Review – A Few BIGLY Events and One-Way Flow of 3.4%
- The Sep 23 review results for the Hang Seng Tech Index were announced on Friday 18 August after the close.
- East Buy Holding (1797 HK) (formerly Koolearn) was an ADD. AAC Technologies Holdings (2018 HK) is a DELETE.
- AAC is a significant flow event, and worth looking at. There are a few odds and ends too.
Yuanta ETFs Rebalance Preview: Changes Galore as Stocks Soar; Shorts Increase, Then Cover
- There should be 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
- The potential adds are driven by the AI-frenzy that has swept the market for the last few months. Most potential deletions are shipping stocks that are way off their highs.
- Short interest on the potential deletions is high in terms of days of ADV and free float. The rise in shorts on the potential adds is being rapidly covered.
Market Information About Samsung Electronics’ Shareholder Return
- The local market is increasingly convinced that Samsung Electronics’ quarterly dividends for the latter half of this year will experience a reduction.
- Samsung Electronics plans to apply the updated regulations from the 2024 1st quarter dividends, following the conclusion of the capital market law revision at the end of this year.
- It might be prudent to refrain from trading that bets on a reduction in the 1P discount in the first half of this year.
HSCEI Sep23 Index Review/Flows – Trip.Com (9961) Added, CG Svcs (6098) Deleted; ~2.5% One Way
- The HSCEI Review for Sep 2023 was announced on Friday 18 August. There is one ADD Trip.com Group (9961 HK) and one DELETE Country Garden Services (6098 HK).
- Neither of these two are a surprise. Neither are hugely impactful.
- There is about 2.5% one-way to trade. Alibaba (ADR) (BABA US) is a sell across all three major indices.
Ping An A/H Premium: Sell the A’s, Buy the H’s; National Team at Work?
- The premium of Ping An Insurance Group of (601318 CH) to Ping An Insurance (H) (2318 HK) has jumped from 4% to 14% in the space of a week.
- There has also been a jump in the Hang Seng Stock Connect China AH Premium Index and big inflows to mainland China ETF raising the possibility of National Team buying.
- A stabilisation in onshore China markets could lead to the AH premium dropping back towards parity and we would gradually scale out of long A/ short H positions.
SK Rent A Car: SK Networks’ Tender Offer
- Korean car rental play SK Rent A Car (068400 KS) has announced a Tender Offer from SK Networks (001740 KS), its largest shareholder with ~76%.
- SK Rent shareholders have the option of receiving cash or SK Networks scrip. Appraisal rights are also afforded.
- The shareholder vote is a lock. The current trade is the cash offer, which is trading tight to terms.
Ventia Services Group US$450m Placement Lockup Expiry – Past Deals Have Done Well
- Ventia Services Group Pty (VNT AU)’s two largest shareholders, Apollo Global Management and CIMIC Group, will come off their placement linked lockup soon.
- The two largest shareholders together owned nearly 30% of the company and have pared their stake twice this year.
- In this note, we will talk about the likely placement and past deal performance.
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