In today’s briefing:
- Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
- HD Hyundai Marine Solution IPO Preview
- Globalwafers GDR Offering – Coming to Market Earlier than Anticipated
- Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large
- Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way
- Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
- Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
- HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment
Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
- DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
- Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
- Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.
TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
- The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
- For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
- Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.
HD Hyundai Marine Solution IPO Preview
- HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
- The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
- A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).
Globalwafers GDR Offering – Coming to Market Earlier than Anticipated
- Globalwafers (6488 TT) is looking to raise up to US$681m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
- The deal is a somewhat large one to digest at 20.2 days of three month ADV and the proceeds will be used to purchase raw materials overseas.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large
- BNP Paribas (BNP FP) is looking to raise around US$680m via selling 3.5% of its stake in Shinhan Financial (055550 KS).
- This will be the fourth selldown for the stock since the start of the year. It will also be the largest one of the lot, so far.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way
- In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
- I currently see 5 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
- The estimate for one-way flow in June 2024 is US$1.22bn.
Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
- In response to Roland DG Corp (6789 JP) request, on 22 March, Taiyo said it was considering a revised offer. However, Taiyo has since remained silent.
- Despite discussions with Brother Industries (6448 JP), the Board have not been able to eliminate dis-synergies concerns. The Board has left the decision to accept the Taiyo offer to shareholders.
- While the Board is trying to dissuade Brother, Brother will take its offer directly to shareholders if the Taiyo offer fails. Taiyo’s behaviour suggests a reluctance to bump.
Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
- After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares).
- The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
- We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons.
HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment
- HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
- Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
- Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.
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