In today’s briefing:
- MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- Toshiba (6502) – Whoop! There It Is!
- MSCI Feb 2023 QCIR: Mostly In-Line; Couple of Surprises
- Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case
- Toshiba – The Nikkei Finally Speaks
- Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part
- Haw Par Corp Is Still Trading Cheap
- CATL GDR Listing Early Look – Past Deals Have Done Well. Valuations Somewhat Justifiable
- Korea Spin-Offs: Details and KOSPI200 Index Impact
- Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun
MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
- In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
- The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
- Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.
Toshiba (6502) – Whoop! There It Is!
- As mentioned yesterday here and more clearly by Mio Kato in Toshiba – Good News?, the Nikkei was strangely silent over the fact that loan details were agreed.
- The Nikkei comes out with a surprise article this morning saying they hear the Commitment Letter has been handed over. It also says the “Final Bid” is “about ¥2trln.”
- Toshiba shares quickly reacted badly quickly. The article deserves parsing and I try to clarify the arguments.
MSCI Feb 2023 QCIR: Mostly In-Line; Couple of Surprises
- MSCI has announced the changes for the February QCIR. For Asia Pacific, there are 20 adds and 14 deletes for the MSCI Standard Index with the most changes in China.
- There are no surprises on the adds or deletes. However, there are a couple of stocks that are surprises on not being added to or deleted from the index.
- The largest impact will be on Ebos Group Ltd (EBO NZ) – though there will be pre-positioning on the stock.
Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case
- Shortly after the Hindenburg Report came out, MSCI said it was seeking feedback from clients. They got it, and last night announced they would conduct a special review.
- They concluded some holders heretofore in the float might not be float. They announce results tonight. That can only be bad news for Adani Group companies.
- We don’t know numbers yet, but passive inclusion was one reason why stocks skyrocketed. Few of the companies will be unaffected. Some could be heavily affected.
Toshiba – The Nikkei Finally Speaks
- The Nikkei was out this morning with its belated take on JIP securing financing.
- The article was nevertheless rather negative in its tone causing Toshiba to drop as much as 3.6% before recovering most of those losses.
- We aren’t entirely sure it should have but Toshiba Tec does pique our interest.
Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part
- The Nikkei reports that Japan Industrial Partners (JIP), the preferred bidder, has finally secured financing and submitted a final offer to Toshiba Corp (6502 JP)’s Board.
- Nikkei notes that JIP expects to spend about JPY2 trillion on the acquisition suggesting an offer price around JPY4,750 per share, -4% below the undisturbed price of JPY4,957.60 (21 April).
- The hard part now is getting the Board to accept the unremarkable offer and the banks’ conditions. If the Board succumbs, the next challenge is to get shareholders to accept.
Haw Par Corp Is Still Trading Cheap
- Last November I highlighted Haw Par Corp (HPAR SP)‘s multi-year trough levels on an implied stub valuation, and on an HPAR/UOB (UOB SP) ratio.
- That trade has panned out well as the ratio steadily increased. But it remains below the 200 MDA.
- A recovery in Tiger Balm sales is expected in Haw Par’s full-year results later this month. UOB’s financials, and UOL (UOL SP)‘s, are also due out this month.
CATL GDR Listing Early Look – Past Deals Have Done Well. Valuations Somewhat Justifiable
- CATL (A) (300750 CH) is looking to raise up to US$6bn in its upcoming Swiss GDR listing. Bookrunners on the deal are CICC, China Securities, Goldman Sachs, and UBS.
- The relatively large listing comes after the firm has been undertaking a series of capital raisings, since it’s A-share debut back in Jun 2018, to fund its expansion.
- In this note, we discuss GDR timelines, and the firm’s recent financial performance/valuations.
Korea Spin-Offs: Details and KOSPI200 Index Impact
- Hyundai Dept Store Co (069960 KS), Hyundai Greenfood (005440 KS) and Oci Co Ltd (010060 KS) will spin-off divisions and list them prior to the next rebalance in June.
- The equity spin-offs will result in passive flows prior to the trading suspension as well as on relisting of the stocks post the spin-off.
- We expect one change to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in April as one stock will be deleted due to low market cap following the spin-off.
Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun
- The term of Lee’s trust contract with Hana Bank is from February 2nd to April 28th, and the volume is 1.95% of SO, the total remaining quantity owned by Lee.
- The price movement on the day the previous block deals by the Lee family were executed was substantial. Of particular note is that SDS showed the most significant price impact.
- We should focus on the possibility that a block deal will come to the market much earlier, as SDS is in short-term overbought territory from a valuation perspective.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
