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Toshiba Corp

Last Week in Event SPACE: Toshiba, Softbank, Cardinal Resources, Sembcorp, Intouch, SingTel, 58.Com

360 Views06 Sep 2020 07:52
SUMMARY

Last Week in Event SPACE ...

  • The right trade for Toshiba Corp (6502 JP) is to range trade the stock against expectations. The path forward was and is still pretty clear and that was going to take 5yrs+ to get where it wanted to go.
  • Anchoring points on buying a deal like Softbank Corp (9434 JP) would be "Will they pay a dividend for a long time? Can I trust them? Will they go bankrupt?", and "Is it priced OK?", and "Will I get a better dividend?"; while the question about funding the purchase will be "Am I OK selling this?" and "Will I 'lose money' by selling the thing I have sell to generate funds to buy it?"
  • Nordgold goes all-in on Cardinal Resources (CDV AU). Shandong Gold Mining Co., Ltd. (1787 HK) has until tomorrow utilise its matching rights.
  • Own Sembcorp Industries (SCI SP) and to NOT OWN Sembcorp Marine (SMM SP). If you really like SMM, you will get a lot of it by owning SCI.
  • The board of Gulf Energy Development Public Company (GULF TB) has approved its investment in Intouch Holdings (INTUCH TB) up to 10% of shares out, from 7.99% currently. Gulf reckons Intouch provides a steady dividend yield; but Investors expect listed companies to focus on their core competencies, and return excess capital to shareholders, so that they can invest it.

  • Investors and Singtel (ST SP) have unerringly been disconnected in 2020. Shares are currently trading at their lowest level outside the GFC. The implied stub - net of all its listed holdings - at an all-time low.

  • It's a low-ball proposal. And proxy advisor recommends 58.Com Inc Adr (WUBA US) shareholders vote down the merger resolution. But voting is ring-fenced. That leaves the appraisal rights route, for the long-term hardy investor.
  • Plus, other events, CCASS movements, and Mood Spins.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)

M&A - ASIA

Kioxia (6600 JP) / Toshiba Corp (6502 JP)

In a compendium insight to Kioxia IPO - The Flow Dynamics, Travis Lundy took a deeper look at the combination of the TOPIX inclusion, the Kioxia IPO and subsequent long-term sell-down, the expected Toshiba Tec sale, buybacks by Toshiba of "the majority portion of net proceeds" of these events, the evolution of passive, individual, and cross-holder investor types, and the ultimate effect on Active/Activist shareholders. Such Foreign Active/Activist Shareholders surely have elaborate models of what a stock is worth over time. I generally argue that behaviourally speaking, long positions tend to be underwritten by optimistic assumptions, and possibly optimistic valuation multiples, but rarely do they include the nitty-gritty of exit details.

  • The easy conclusions here are that Foreign Active/Activist Shareholders who currently own ~51% of shares out will own less when shares are included in the TOPIX Index and when Toshiba "returns capital" to shareholders to the tune of "the majority portion of the net proceeds" of the various capital events to come. They will likely own in the mid-high 30s by a year from now. From that point onward, it will be a long multi-year slog down to the 26-32% ownership range. That would still be high. The way out of that position is to sell when there are no natural buyers.
  • The price may rise. Indeed, Travis' basic model suggests about 12%p.a. total return for the shares over the next 6 years to Sep 2026 assuming asset sales, buybacks, and 10% Net Income Growth of the core business. Make it 15% and share price appreciation could be 14.5%p.a. Terminal multiple of 18x EPS against 10% EPS growth? That makes it 13.9%. But given a "straight line" path along the assumptions included would mean it would still take 2-2.5 years to get to ¥4,000/share. Medium-term, an MBO is not a bad idea for everyone involved.
  • The current price is OK, not great. I would rather buy 10% lower. The fact that the position is still an "event situation" means correlation to other positions in the sector may be reduced, making this a slightly better risk in a diverse portfolio than you'd otherwise expect. But it is not a going-to-go-gangbusters tech/machinery play. There is a specific strategy we may see play out with buybacks. Watch for more discussion about this in an insight coming near-term. long-term Travis thinks the current price offers acceptable but not great returns given volatility.

(link to Travis' insight: Toshiba: Kioxia IPO Impact & Activist Positioninge)

Softbank Corp (9434 JP) (Mkt Cap: $62bn; Liquidity: $108mn)

The previous Friday saw the announcement of a large offering by Softbank Group (9984 JP) of Softbank Corp shares. The dynamics of the offering itself were discussed in Travis' Softbank Corp (9434) BIGGER Block Offering. What is not discussed is the significantly large funding trade which has to come. There is ¥1.47trln of Softbank Corp shares to be bought at last trade, and if the stock falls to its March low and trades at a 3% discount from there, there is still near ¥1.35trln of stock to buy. There is another ¥378bn of Kioxia to buy at the indicative IPO price. All together it is probably ¥1.7trln of stock to buy.

  • That's enough money that it comes from savings rather than sofa cushions and while it is enticing to think that Japan's savers will pull $15bn from bank deposits earning 0.001% a year, what usually needs to happen is investors pull money from shares where they have a profit, and sell those to buy the next new thing. So Japan's retail savers will have to cough up nearly ¥1.2trln for those two deals, and foreign institutional investors will have to fork over ¥600bn. So the question is what will they sell and what are trades we can do around that?
  • The Softbank announcement came a day after it was announced that Kioxia (6600 JP) would sell nearly ¥400bn in an IPO to be launched in September 2020, discussed in Kioxia IPO - The Flow Dynamics.

  • The Trade? The medium-term trade will be to get long NTT vs Docomo and expect that Docomo (and NTT) might raise their dividends to put a little more pressure on Softbank. NTT has a long history of raising its dividend in the modern era since it has decided that it is an investment vehicle for delivering the returns of capital allocation to its own shareholders.

Cardinal Resources (CDV AU) (Mkt Cap: $0.4bn; Liquidity: $2mn)

Nordgold has bumped its Offer by 36.4% to A$0.90/share from A$0.66/share. This is an unconditional on-market takeover Offer. Its Offer will remain open to acceptance until the close of trading on the 10 September - unless extended.

  • That's a full Offer. If you were already in - then now's the time to cash out. If you are just coming to this, one could probably find an excuse to buy a spread or two above Nordgold's terms on the expectation Shandong comes in over the top, and Nordgold hasn't declared it "final" but that's still a pretty full offer. That said, the price of gold remains high.

  • Under the BIA, Shandong has the opportunity (but not the obligation) to match or provide a superior proposal to Nordgold - that matching rights period expires on Monday, the 7th. But if Shandong does not provide a matching Offer on Monday - that's not to say it cannot return with a higher Offer at a later date.

(link to my insight: Cardinal Resources (CDV AU): Nordgold's Knockout Offer)

Sembcorp Industries (SCI SP) (Mkt Cap: $2.6bn; Liquidity: $12mn)

2 September 2020 was the last day for investors in Sembcorp Marine (SMM SP) ("SMM") to exercise and pay for their rights to purchase 5 new shares for every 1 held at S$0.20/share. Next stop, information about the disposition of the "excess" rights application, if any, and on 9 September SCI will trade without rights to receive shares in SMM. The price of SCI shares will be revised sharply downward on the morning of the 9th to account for the value of the SMM shares, which then trade separately starting the 11th of September (p16), theoretically.

  • You have two more days left to buy SCI as a complicated and slightly messy asset. This coming Wednesday, you will be able to buy SCI as a "pristine" energy and real estate development and other asset which has no O&M business hanging over it. That business has earned, ex-exceptionals and ex-marine, S$0.23/share on average the last five years. If it continued to do so, at 10x earnings, the future SCI share price would be S$2.30.
  • Currently, it is S$1.94 and before it goes ex- next Wednesday, it trades with a side order of 4.279-4.911 shares of SMM (which currently trade at S$0.20 apiece. At current price, that package is worth S$0.856-0.982/share meaning the residual portion of FUTURE SCI is worth S$0.958-1.084/share.
  • If you take a 10% loss on the SMM to get the upside on the SCI, that might be worthwhile. If you think SCI won't trade up without the SMM risk attached, you can wait. The trade is to be long SCI. Travis can't understand why more people aren't buying.

(link to Travis' insight: Sembcorp - Last Chance Before.... )

O-Net Technologies (Group) (877 HK) (Mkt Cap: $0.7bn; Liquidity: $3mn)

The Scheme Document is now out. The Scheme Meeting will be held on 25 September with expected payment (assuming shareholders approve the Scheme) on the 27 October, just under a week past my initial timetable expectation. The IFA (Somerley) considers the offer to be "fair and reasonable." To recap, on the 8 July, O-Net announced an Offer by way of a Scheme, with a cancellation price of HK$6.50/share, a 23.57% premium to last close and a 43.18% premium to the six-month average close. The Offer price was final. Na Qinglin (chairman of O-Net) (34.5% of shares out), Shenzhen Kaifa Technology A (000021 CH) (20.52%) and HC Capital (0.33%) are acting in concert, leaving 44.65% (372.408mn shares) in the hands of Disinterested Shareholders.

  • I see the gross/annualised spread at 2.7%/19.2% - reasonably wide. This is not a slam dunk premium - the average premium for Asia-Pac transactions this year is ~34% ((Mostly) Asia M&A: August 2020 Roundup); but O-Net was up 27% YTD, ahead of the Offer announcement.
  • In my insight Leyou (1089 HK): Reg Approvals Not An Issue. Unless Politicised, I was bullish Leyou Technologies (1089 HK) when it was trading at a gross/annualised spread of 2.8%/10.3%, assuming early December completion. Leyou is also Cayman incorporated.
    • O-Net appears a far more attractive proposition than Leyou, with an expected completion two months earlier. And without the possible political/regulatory risk/headache heading into the US election. I'd get involved here.

(link to my insight: O-Net (877 HK): Offer Doc Out. Priced To Complete)

Showa Corp (7274 JP) (Mkt Cap: $1.6bn; Liquidity: $7mn)

Honda Motor (7267 JP) made the announcement that the Tender Offers for the three subsidiaries (Showa, Keihin Corp (7251 JP) and Nissin Kogyo (7230 JP)) will go through as planned, commencing 2 September. The background on this from a fundamental basis was discussed lightly in the three insights linked above, and also in two pieces by Mio Kato both at the time and a week later.

  • While some people thought Showa (7274) in particular was cheap, the fact that they were heavily arbed and owned prior to COVID-19, spilled out then re-owned by arbs, during and through the worst market fears, and have seen foreign owners gain more shares means that lots of people now have Honda TOB Fatigue. In addition, the very weak new autos market for most Japanese OEMs in the US has not helped. While on a long-term view Showa in particular is still cheap, it doesn't feel like people are going to fight this one. A priori, Travis expects these to trade tight, and expect it to get there pretty early.

(link to Travis' insight: The Honda TOBs: FINALLY. Tenders for Showa, Keihin, and Nissin Kogyo)

Ryoyo Electro (8068 JP) (Mkt Cap: $0.6bn; Liquidity: $3mn)

15 months ago, an electronics trading company called Restar Holdings Corporation (3156 JP) purchased a 20.00% stake (a bit higher in terms of voting rights) in Ryoyo, another semiconductor and electronics trading house. Ryoyo has now announced it will conduct a Tender Offer to buy back its shares and Restar has agreed to sell. The Tender Offer is set at ¥2,990 which means Restar has made serious coin on its position of a year and change. The Tender Offer quantity is set at a maximum of 7,357,900 shares which is 5% more than the quantity Restar has agreed to sell. The purchase amount is ¥22 billion. There are some who would call this greenmail.

  • This is a corporate buying back 28% of its shares out in one shot, in order to get a hostile owner out of their shares, under the guise of raising ROE. This will increase EPS and increase ROE, but while it targets a much higher ROE than it has, this perennial value stock was probably a sell a few hundred yen ago.
  • The company will continue to pay a very high dividend. And the policy to pay out 5% of net assets per year as a dividend will mean that the dividend will still likely be higher than EPS for years to come. The dividend of ¥180 for the year to March has allowed the stock to run-up. When the company pays that out this year, the forecast dividend for the year to Jan 2022 will likely be on the order of ¥120/share if the same policy is continued so Travis would not expect the shares to drop measurably below something like ¥1800 (a 6.5% dividend yield).
  • Long-term, the shares may not be a short precisely because the shareholder payout scheme is relatively aggressive, but I am not sure that it is a buy. Short-term, Travis'd rather be short.

(link to Travis' insight: Ryoyo Electro Corporate Activism Ends in Buyout)

Halcyon Agri Corp (HACL SP) (Mkt Cap: $0.2bn; Liquidity: <$1mn)

In late morning 22 June 2020, after asking for a trading halt earlier in the day, natural rubber producer HACL (11% global market share) made a release to the SGX announcing a 1-for-2 (one new share for every 2 shares held) non-underwritten renounceable rights issue. Now HACL announced alternate funding possibilities, with respect to the issuance of Guaranteed Perpetual Securities.

  • The original plan for a rights issue was backed by the major shareholder, which is a subsidiary of Sinochem Intl Corp A (600500 CH), which said it intended to subscribe for its pro-rata entitlement to the Rights Shares. Sinochem owns ~54.99% of the shares outstanding. The Rights Issue was expected to raise US$125.4mm after expenses (if they had been fully-subscribed). The proposal here would raise US$200mm.

  • Travis would not necessarily want to be long. Liquidity on this stock is much lower than you'd expect it to be. The company has a debt/equity ratio of 2.2x and a debt/tangible equity ratio of 5.5x, and the last five years to end-2019 have produced a very choppy average annualized ROE of 1% which is positive ONLY because of a writeback in 2015. Eventually this company will need more equity. I expect they just want to make sure that when they want it, they can get it.

STUBS

I see the discount to NAV at ~21%, versus an average of 26%. The implied stub is nudging its 12-month high. Back on the 26 June, Gulf Energy Development Public Company (GULF TB) disclosed it held 147mn shares (~4.58%) in Intouch. By the 30 June, it held 5.0718%. As at the 21 August, it held 7.99% of shares out, making Gulf the second-largest shareholder in Intouch behind Singtel (ST SP). Its board has said it will take the stake up to 10%.

  • This is not a shareholder I am terribly comfortably with long-term. Investors invest in Gulf for its qualities an energy/power-related investment, not for its portfolio management skills. Its shareholders should receive excess capital to invest as they please - including in Intouch direct.
  • Intouch was a great trade at the time of my last insight in the 8 April - Intouch: Temasek Trims Stake; More To Come. This looks like a level to unwind here.

(link to my insight: StubWorld: Gulf's Questionable Stake In Intouch)

Singtel (ST SP) / Bharti Airtel (BHARTI IN)

SingTel's 1Q20 (March-June 2020) results highlight the challenging market conditions and disruptions fanned by COVID-19. However, gradually easing pandemic restrictions, amidst a diversified portfolio of operations, should help to offset depressed international roaming revs. Pre-tax profit from regional associates increased by 11%, brought about by lower operating losses in India, which in turn offset the declines in Indonesia, the Philippines and Thailand. SingTel largely performed in line with its February guidance.

  • Capex spotlight will focus on the 5G roll-out, currently on a trial basis. The service desperately needs a compelling usage status before SingTel commits to a blanket roll-out. The fact the 3.5GHz spectrum band can only be fully enabled in 2021 should curtail roll-out - currently, the service uses the 3.5 GHz frequency as well as the existing 2.1 GHz spectrum. SingTel's management has not provided guidance on its outlook, capex and dividends (although a 75% payout is generally anticipated) for FY21. Potential monetisation of non-core assets may provide a financial boost. There has been no further announcement on the sale of the telecom towers in Australia since SingTel's comments in early April.
  • I see the NAV discount at a multi-year low of ~44%, against a one-year average of 28%. I estimate the long-term average is 15-20%. Stripping out its listco holdings, the market is assigning a value of ~S$7.7bn for its unlisted Sing ops, Optus, and its 35% stake in Telkomsel, a reduction of S$19bn since the beginning of the year. That's a massive haircut, and one that looks excessive.

  • I see the implied stub, net of listed holdings, trading at 4.8x forward EV/EBITDA - not excessively cheap - but inexpensive against an average of 6.7x for a peer basket. This time last year, the implied stub was trading at 9.1x forward EV/EBITDA vs 7.5x for the basket. I'd get involved - either as a deep value play (I think the stub ops should be trading at least in line with its peers) or an inexpensive proxy to Airtel (albeit SingTel is a weak-ish holdco).

(link to my insight: SingTel: Make The Call)

M&A - US

58.Com Inc Adr (WUBA US) (Mkt Cap: $8.3bn; Liquidity: $107mn)
The Merger requires the affirmative vote of two-thirds of 58.com's total voting power (present and via proxy) at an EGM. This will be held on the 7 September - tomorrow. Jinbo Yao (58.com's chairman and CEO) and General Atlantic will vote their collective 44.02% voting power in favour of the merger. Tencent is not obligated to vote in a specific way under its rollover Agreement. But assuming Tencent does, its 28.3% voting power takes the total to 72.3% - exceeding the two-thirds threshold.
  • Tencent is not expressly working in concert with the Buyer Group. As such, Tencent is not obligated one way or the other on how to vote; BUT it does have a contractual obligation to roll over its shares into the parent shares. A rundown of the financing for the deal suggests Tencent will rollover shares.
  • Both ISS and Glass Lewis recommend shareholder vote AGAINST the proposal.
  • But this proposal is all wrapped up. Shareholders who dissent from the merger will have the right to receive payment of the fair value of their shares as determined by the Grand Cayman Court in accordance with Section 238. Such an approach can take years. And the findings of the Court are not necessarily worth the time and effort.

(link to my insight: 58.com: Foregone Conclusion Amidst Proxy Advisor Pushback)

TOPIX INCLUSIONS

COPRO-HOLDINGS Co Ltd (7059 JP) (Mkt Cap: $0.1bn; Liquidity: $1mn)

TSE Mothers-listed Copro announced (J-only) after market-close today it had received approval to move to TSE1 as of 11th September 2020. In conjunction, they also launched a tachiaigai bunbai (equity offering) to satisfy some of the TSE1 Section Transfer requirements. TSE1 reassignment triggers inclusion into the TOPIX Index and I expect the Inclusion Event to be at the close of trading 29th October 2020.

  • Janaghan Jeyakumar estimates the inclusion size to be in the range of 200-225,000 shares (¥0.56-0.63bn) and the Impact of the Inclusion to around 6-7 days of Volume going by 3-month ADV. Both are below the estimated medians for historical TOPIX Inclusion Events.
  • However, the fundamentals do not raise any serious concerns of overvaluation. The company has been enjoying stable margins and has recorded Revenue and NP CAGRs of 19% and 21%, respectively, during FY2017-2020. Copro's current EV/EBITDA (LTM) and PER (LTM) multiples of 5.7x and 12.6x, respectively, are lower than the means and medians estimated for peers.
  • The Trades. Avoid "Buy-and-hold" because of index inclusion. Avoid "Shorting". Longer-term, this is not an expensive stock.

(link to Janaghan's insight: TOPIX Inclusion (7059 JP): COPRO Holdings)

Frontier Management Inc (7038 JP) (Mkt Cap: $0.3bn; Liquidity: $3mn)

TSE Mothers-listed Frontier announced (J-only) after market close yesterday it had received approval to move to TSE1 as of 7th September 2020. TSE1 reassignment triggers inclusion into the TOPIX Index and I expect the Inclusion Event to be at the close of trading 29th October 2020.

  • The Index Inclusion Parameters are good (BLUE) but the event seems to have been well-anticipated. Janaghan estimates the Inclusion size to be ¥1.85 - 2.22 bn and Impact to ~5 days going by 3-month ADV. Consequently, this event will fall in the "Large Size Small Impact" (BLUE) category in Quiddity's TOPIX Inclusion Framework. BLUE category events have historically had a win rate of around 62% against TOPIX from Announcement Date to Inclusion Event.
  • Peer Comps seem to suggest that the stock is overvalued. Frontier management's LTM EV/Revenue, EV/EBITDA, and PER multiples of 5.6x, 35.0x, and 61.3x, respectively are higher than the peer-medians of 3.1x, 16.8x, and 43.6x.
  • The trade. The stock is up ~259% YTD and it seems overvalued against comparable peers. I also think the newly-issued shares could offset the expected demand from Index buyers. The upside potential from demand/supply imbalance does not seem exciting and I recommend avoiding this event.

(link to Janaghan's insight: TOPIX Inclusion (7038 JP): Frontier Management Inc)

M&A - EUROPE

Suez (SEV FP) (Mkt Cap: $11bn; Liquidity: $31mn)

Veolia Environnement Sa (VIE FP) announced on 30 August a firm offer to acquire a 29.9% stake in Suez at €15.5 per share. If this offer is accepted by Engie, Veolia intends to launch a voluntary takeover offer for the remaining shares of Suez and estimates the process to last between 12 and 18 months. Veolia’s offer represents a 26.6% premium to the closing day on 28 August, the last trading day prior to Veolia’s announcement, and a 38.6% premium to the closing a month before. The offer is open until 30 September.
In CaixaBank-Bankia Merger Conversations Announcement: First Take, Jesus also discusses the possible merger between CaixaBank SA (CABK SM) and Bankia SA (BKIA SM) which would create the biggest retail bank operating in Spain.

M&A ROUND-UP IN JANUARY

For the month of August, 9 new deals were discussed on Smartkarma with an overall announced deal size of ~US$35bn. The average premium for the new deals announced (or first discussed) in August was ~49% and the YTD average premium for all deals discussed on Smartkarma (95 all-in) is 34%. The average for all deals discussed on Smartkarma in 2019 (145 deals all-in) was 31.5%.

INDEX REBALS

The Korea Exchange (KRX) will announce the results of the December 2020 review of the KOSDAQ150 Index in November. The constituent changes will be effective from 11 December 2020 and the rebalancing trades will need to be done at the closing auction on 10 December 2020. At the current time, Brian Freitas sees 15 stocks being added to and deleted from the index. This is up from the 11 names we saw being included/ excluded at the end of June. With the index methodology using a 6 month average, the list should be a lot more stable going forward. KOSDAQ150 Index Rebalance Preview: Strong Momentum Driving Gains

Nikkei has just announced the changes to the Nikkei 225 (NKY INDEX) as part of its periodic review. In a 'surprise', Softbank Corp (9434 JP) will be added to the index and Nippon Kayaku (4272 JP) will be deleted from the index. The changes will be made prior to the open of the market on 1 October, so passive funds will trade at the closing auction on 30 September. Surprisingly, FamilyMart Co Ltd (8028 JP) has not been deleted from the Nikkei 225 (NKY INDEX) following Itochu Corp (8001 JP)'s offer to take the company private. The FamilyMart deletion could be done in an adhoc review or announced after the implementation of the Share Consolidation and implemented along with the annual review. Brian sees ZOZO Inc (3092 JP), Kakaku.com Inc (2371 JP) and Square Enix Holdings (9684 JP) as the most likely replacement candidates. Brian's insight: Nikkei 225 Index Rebalance: Softbank Corp IN, Nippon Kayaku OUT; Travis' insight: The 2020 Nikkei 225 Rebalance: Nippon Kayaku OUT and Softbank Corp IN

FTSE Japan Sep2020 Rebal: JREITs and the Other Stuff. The large J-REITs have outperformed the TSEREIT Index and FTSE EPRA NAREIT Global Index in yen. Generically the BIG REITS have also outperformed a basket of high div large-cap stocks. For this, Travis believes that the low day-count and one-year lead time mean this event is probably something of a nothing-burger overall. The contrarian in him looks at that previous bullet point and says "Perhaps everyone else will ignore the trade then... Hmmm...." but Travis still thinks it is not that special a trade, and expects the right trade might be to short Logistics REITs if they perform well into the inclusion. He would also I would tend to short the 4 non-REIT inclusions into strength. Travis' insight: FTSE Japan Sep-2020 Rebalance: The JREIT Portion& FTSE Japan Sep2020 Rebal: JREITs and the Other Stuff

FTSE China 50 Index Rebalance. The additions are Semiconductor Manufacturing (981 HK), Wuxi Biologics (2269 HK) and BYD (1211 HK), while the stocks that have been deleted are Picc Property & Casualty H (2328 HK), China Railway Construction Corp (1186 HK) and China Gas Holdings (384 HK). All changes are in line with our predictions. Alibaba Group (9988 HK)'s weight in the index increases as part of the three-part tranched inclusion of the stock in the index. Brian's insight: FTSE China 50 Index Rebalance: Turnover Is Big, Changes Were Expected, There Are Trades To Do.

FTSE China A50 Index Rebalance. The inclusions are Wanhua Chemical Group Co A (600309 CH), 002607 CH (Offcn Education Tech), LONGi Green Energy Technology (601012 CH), Chongqing Zhifei Biological Products (300122 CH) and East Money Information Co A (300059 CH), and the exclusions are Wens Foodstuff Group Co., Ltd. (300498 CH), CRRC Corp Ltd A (601766 CH), Guotai Junan Securities (A) (601211 CH), Will Semiconductor Ltd (603501 CH) and Zte Corp A (000063 CH). Brian's insight: FTSE China A50 Index Rebalance: Five Changes, Inclusions Outperforming Exclusions.

ASX200 Index Rebalance. The inclusions are Auckland Intl Airport (AIA AU), Austbrokers Holdings (AUB AU), Ramelius Resources (RMS AU), Westgold Resources (WGX AU) and Zip Co Ltd (Z1P AU) and the exclusions are Mcmillan Shakespeare (MMS AU), New Hope Corp (NHC AU), oOh!Media Ltd (OML AU), Orocobre Ltd (ORE AU) and Southern Cross Media (SXL AU). Brian's insight: ASX200 Index Rebalance: More Changes Than Expected.

FTSE Taiwan 50 Index Rebalance, The inclusions are Realtek Semiconductor (2379 TT) and Silergy Corp (6415 TT) while the deletions are Shin Kong Financial Holding (2888 TT) and China Life Insurance (2823 TT) and the changes will be effective after the close of trading on 18 September. Brian's insight: FTSE Taiwan 50 Index Rebalance: Silergy Makes It Three In A Row.

OTHER M&A & EVENT UPDATES

CCASS

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.

Often these moves can easily be explained - the placement of new shares, rights issue, movements subsequent to a takeover, lock-up expiry, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.

Name

% chg

Into

Out of

OKG (1499 HK) 35.48%DBSGet Nice
China Geo (8128 HK) 26.29%BOCIOutside CCASS
Mi Ming (8473 HK)19.76%CitiKingston
Newton Resources (1231 HK) 10.00%Get NiceVMS
Hevol (6093 HK)13.00%InteractiveCLC
Sheng Ye (6069 HK)19.86%MacqBOCI
Source: HKEx

The following large movement(s) concern recently listed companies, and therefore are (likely) lock-up related.

Name

% chg

Into

Out of

B&S (1705 HK)25.00%UBSOutside CCASS
Kangji Medical (9997 HK) 17.25%MLOutside CCASS
Chen Lin (1593 HK)10.00%HaitongSolomon
Source: HKEx
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