In today’s briefing:
- Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
- Newcrest-Newmont Merger: Fancy Index Shenanigans
- PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added
- Kokusai Electric (6525 JP) IPO: Listing in October, TPX Inclusion in November, Global Indices Later
- SK Square: Updated NAV Analysis Amid Potential Sale of 11st to Alibaba
- Midea A/H Listing – Early Look – Probably Raising Acquisition Currency
- Intage Holdings (4326 JP): NAVF Selldown and Proration for NTT’s Partial Offer
- A Proactive Long Short Basket Setup Targeting KOSPI Size Index’s Next Rebal
- LG Corp: Updated NAV Analysis & Outperformance Likely Driven by Value Investors
- KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening
Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
- The JIP Tender Offer for Toshiba Corp (6502 JP) closes today. I expect that we will see results announced as early as late tonight, but by law, by latest tomorrow.
- There will be at least three major index downweights, and possibly deletions, most likely in the following five trading days.
- This shows the approximate maximum share and dollar amounts to be sold, and approximate dates.
Newcrest-Newmont Merger: Fancy Index Shenanigans
- Back in February, Newmont Proposes Taking Newcrest Back Into The Fold. Newmont bumped, there was due dili, then Newcrest Backs Newmont’s US$19bn Offer in May.
- More recently, we have Newcrest: Shareholder Vote On 13th Oct, with a prescribed schedule. That makes things fun.
- There will be considerable movement of shares, and that will mean opportunity. Both up and down. I see US$3bn to buy, then A$1.5bn or more to sell a bit later.
PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added
- Metro Pacific Investments Co (MPI PM) has announced that the public float of the stock will drop to 2.78% following the Tender Offer.
- Metro Pacific Investments Co (MPI PM) shares are expected to be suspended from 26 September. That could see Bloomberry Resorts (BLOOM PM) added to the PCOMP INDEX on 25 September.
- There will be large passive inflows to Bloomberry Resorts (BLOOM PM) as well as flows from active managers that track the PCOMP INDEX.
Kokusai Electric (6525 JP) IPO: Listing in October, TPX Inclusion in November, Global Indices Later
- Kokusai Electric (6525 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
- At the reported indicative IPO price of JPY 1890/share, Kokusai Electric (6525 JP) will be valued at JPY 435bn (US$2.94bn).
- The stock should be added to the TPX INDEX at the close on 29 November where trackers will need to buy over 14% of the stock issued in the IPO.
SK Square: Updated NAV Analysis Amid Potential Sale of 11st to Alibaba
- In this insight, we provide an updated valuation analysis of SK Square (402340 KS) amid a potential sale of 11st to Alibaba (ADR) (BABA US).
- Our NAV analysis of SK Square suggests NAV of 9.2 trillion won or NAV per share of 65,069 won, representing a 55% upside from current levels.
- If SK Square is able to sell its stake in 11st to Alibaba, the capital inflow from the sale could be used to raise dividends and complete more share buybacks.
Midea A/H Listing – Early Look – Probably Raising Acquisition Currency
- Midea Group Co Ltd A (000333 CH), one of the world’s largest home appliance producers, aims to raise up to US$5bn in its H-share listing.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
Intage Holdings (4326 JP): NAVF Selldown and Proration for NTT’s Partial Offer
- Nippon Active Value Fund PLC (NAVF LN)’s jointly-held shareholding in Intage Holdings (4326 JP) has declined from 11.28% to 9.52% of outstanding shares (disclosed on 20 September).
- NAVF wants to take as much money off the table as possible as NTT (Nippon Telegraph & Telephone) (9432 JP)’s partial offer price represents an all-time high.
- Our revised minimum proration is 53.31%. NAVF’s action suggests that the minimum acceptance condition, which requires a 20% minority acceptance rate, should be satisfied.
A Proactive Long Short Basket Setup Targeting KOSPI Size Index’s Next Rebal
- We need to focus on the top 2 candidates among the Mid→Large candidates in the screening table mentioned above and the bottom 4 candidates among the Large→Mid candidates.
- Since they are relatively far from the borderline, there is a significant likelihood that their classification will change. So, flow trading timing on these candidates could be brought forward.
- Monitoring Doosan Robotics’s market cap potentially nearing ₩3T and keeping an eye on the listing date of Ecopro Materials, we should make changes to the Mid→Large candidates from early December.
LG Corp: Updated NAV Analysis & Outperformance Likely Driven by Value Investors
- Our NAV analysis of LG Corp suggests an implied market cap of 16.9 trillion won or 107,217 won per share which is 28.4% higher than current share price.
- We believe that LG Corp could announce another share buybacks representing 2-3% of outstanding shares in the next 6-12 months.
- Another reason that could result in LG Corp’s shares outperforming other major LG related shares is due to the value investors increasing capital allocation to higher dividend paying LG Corp.
KRX Plans to Introduce Float Market Cap & Extreme Price Increases to KOSPI 200 Screening
- In addition to full market cap and trading value, float-adjusted market cap will be added as a quantitative screening tool.
- Regarding extreme price increases, KRX plans to utilize the deviation between the average daily market capitalizations for two, three, and six months leading up to the screening base date.
- We should consider designing trading setups that target stocks with relatively low free-float rates and high price volatility in recent months.
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