In today’s briefing:
- Toshiba Tender Offer Ends Today – Upcoming Index Selldown Schedule
- Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
- Itochu TOB on Itochu Techno Solutions – The Index Selldown Schedule for $700mm+ of Flows
- PCOMP Index Rebalance Preview: MPI Delisting Could See Bloomberry Added
- Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb
- Newcrest-Newmont Merger: Fancy Index Shenanigans
- CellSource (4880) TOPIX Inclusion Coming Up
- Descente a Key Part of Itochu’s Plans in Sports
- StubWorld: PTT Public Is Trading Cheap
- Naspers (NPN) & Prosus (PRX): Initial Market Reaction to Leadership Changes
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.
Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
- The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
- Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
- We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.
Itochu TOB on Itochu Techno Solutions – The Index Selldown Schedule for $700mm+ of Flows
- In August, Itochu Corp (8001 JP) launched a Tender offer on Itochu Techno Solutions (4739 JP) to buy out minorities.
- That tender offer ended last week, with Itochu and the acquirer vehicle owning 85+%.
- Interestingly, there are near-term flow events as a result. Worth watching.
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.
Tata Motors (TTMT/A IN) – Index Inclusion & The DVR Arb
- Tata Motors DVR (TTMT/A IN) now trades at a 32.9% discount to Tata Motors Ltd (TTMT IN) and there is another 4.4% in the trade following the scheme of arrangement.
- Tata Motors DVR (TTMT/A IN) could be added to global indices in November and that will bring significant inflows to the stock.
- The pre-positioning and passive buying could lead to the DVR discount narrowing further and provide trading opportunities for the next few weeks.
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.
CellSource (4880) TOPIX Inclusion Coming Up
- Today, regenerative medicine service provider CellSource (4880 JP) announced a forecast revision lower for the year ending 31 October. It also announced a new dividend policy and dividend payout.
- It also announced an equity offering of up to 3.542mm shares, increasing float by 60% followed by a move from the TSE Growth segment to TSE Prime.
- The dynamics of shareholder structure and flow mean one can wait this one out.
Descente a Key Part of Itochu’s Plans in Sports
- Through all the upheavals in discretionary product distribution in the last decade, Itochu Corp (8001 JP)’s Itochu Textile subsidiary has managed to maintain huge power in the channel.
- While the trading firm has traditionally focused on premium fashion brands, in the last few years it has invested heavily in the sports market, including its growing investment in Descente.
- The move is part of wider plans to take lead share in sports, footwear and department store brands.
StubWorld: PTT Public Is Trading Cheap
- The recent share price pullback sees PTT PCL (PTT TB) trading below its long-term averages, and with respect to peers.
- Preceding my comments on PTT are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Naspers (NPN) & Prosus (PRX): Initial Market Reaction to Leadership Changes
- Early on Monday morning, Naspers and Prosus announced the immediate resignation of CEO Bob van Dijk. Management hosted an investor call shortly after. Key takeaways are included below.
- Ervin Tu, Group Chief Investment Officer, will take over as Interim CEO. Tu is a strong candidate for the permanent position.
- After an initial bounce at the open, both counters sold off, widening the discounts by more than 1 percentage point intra-day.
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