In today’s briefing:
- ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Auckland Airport (AIA NZ) Placement: Index Impact
- HSCEI Index Rebalance Preview: High & Low Probability Changes
- HK RE Series (4) With Macro Backdrop in US & China, HK Is Positioned for a Strong Rerating, Buy Now!
- Quiddity Mar25 Nikkei 225 Rebal: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family
- Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)
- (Mostly) Asia-Pac M&A: Descente, Shin Kong Financial, T Gaia, Shinsegae E&C, MPHB, Pacific Smiles
- ASX Short Interest Weekly (Sep 27th): Rio Tinto, BHP, Fortescue, Goodman, Santos
- Weekly Deals Digest (06 Oct) – Tokyo Metro, Rigaku, CR Beverage, K Bank, ASMPT, Samson, T-Gaia
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
- Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
- Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
- There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.
Auckland Airport (AIA NZ) Placement: Index Impact
- Auckland Intl Airport (AIA NZ) has announced an underwritten placement of NZ$1.2bn and a non-underwritten retail offer to raise NZ$200m.
- The stock is trading near the low end of its range over the last few years and the 7% discount from the last close should attract investor interest.
- We estimate passive trackers will need to buy around 13.5% of the placement shares coinciding with the settlement date on 20 September.
HSCEI Index Rebalance Preview: High & Low Probability Changes
- PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
- There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
- There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.
HK RE Series (4) With Macro Backdrop in US & China, HK Is Positioned for a Strong Rerating, Buy Now!
- The wait is finally over. The Fed delivered a 50bps rate cut in September meeting, kick- starting a new rate cut cycle
- The rate cut is an absolute game changer for Hong Kong real estate. Physical market will recover with lower mortgage rate and companies will enjoy lower borrow rate
- With the macro backdrop in US and China, Hong Kong is well positioned for as strong re-rating with mega catalysts ahead – Buy HK real estate, especially SHKP and NWD
Quiddity Mar25 Nikkei 225 Rebal: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I see 2 IN and 2 OUT for the Mar25 Nikkei 225 Rebal.
- There is also a capping event for Fast Retailing which on mild outperformance could become a double-capping event.
- There is a bit of a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. The Committee will regret not adding PPIH last time.
Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family
- We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares.
- Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc.
- We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc.
Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)
- In August, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
- Everyone had expected a delay, but the stock fell. Then tech/AI fell out of bed, Ibiden crashed, China export restrictions noise/pushback caused further upset. But Ibiden and tech are rebounding.
- At 9% it was a raging buy;post-dip at 7% it was good. Now it’s 6+%. Still wide, still interesting, still stable but year-end path dependency… So I still like Ibiden.
(Mostly) Asia-Pac M&A: Descente, Shin Kong Financial, T Gaia, Shinsegae E&C, MPHB, Pacific Smiles
- I tally 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Three new deals discussed this week: T Gaia (3738 JP)‘s and Shinsegae E&C (034300 KS) Tender Offers, and MPHB (MPHB MK)‘s SCR. Plus ASMPT (522 HK) in the crosshairs. Again.
- Key updates took place on: Sigma Healthcare (SIG AU), Descente Ltd (8114 JP), Shin Kong Financial Holding (2888 TT), Pacific Smiles (PSQ AU), and Greatview Aseptic Packaging (468 HK).
ASX Short Interest Weekly (Sep 27th): Rio Tinto, BHP, Fortescue, Goodman, Santos
- We analyzed the changes in short interest of ASX Stocks as of Sep 27th (reported today) which has an aggregated short interest worth USD27.6bn.
- We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
- We highlight short interest changes in Rio Tinto, BHP, Fortescue, Goodman, Santos.
Weekly Deals Digest (06 Oct) – Tokyo Metro, Rigaku, CR Beverage, K Bank, ASMPT, Samson, T-Gaia
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), K Bank (279570 KS) and China Resources Beverage (CRB HK) IPOs.
- Event-Driven developments: ASM Pacific Technology (522 HK), Greatview Aseptic Packaging (468 HK), Samson Holding (531 HK), Descente Ltd (8114 JP), T Gaia Corp (3738 JP).
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