Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>With one day left in the review period, we see 4 potential changes for the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> at the June rebalance.</li>
<li>
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> could be added to the index following the market consultation that lowered the inclusion thresholds for Average Daily Trading Values and Turnover ratios.</li>
<li>An equally weighted basket of potential adds has outperformed the potential deletes but there has been a deterioration in performance over the last month.</li>
</ul>


With one day left in the review period, we see 4 potential changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.

Berli Jucker (BJC TB) could be added to the index following the market consultation that lowered the inclusion thresholds for Average Daily Trading Values and Turnover ratios.
An equally weighted basket of potential adds has outperformed the potential deletes but there has been a deterioration in performance over the last month.


SET50 Index Rebalance Preview: 4 Changes as Review Period Ends Today

Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

<ul><li>We maintain our Neutral recommendation and the FY2024E fair value of Bt35.50. KCE’s core earnings grew YoY and QoQ in 1Q24, mainly from a rebound in the gross margin.</li><li>The result was slightly above our expectation, comprising 25% of our FY2024E forecast.</li><li>While we maintain our Neutral recommendation, our valuation metrics indicate that it could be upgraded to Outperform, especially as the current valuation has been upgraded to overvalued from sell previously. </li></ul>

We maintain our Neutral recommendation and the FY2024E fair value of Bt35.50. KCE’s core earnings grew YoY and QoQ in 1Q24, mainly from a rebound in the gross margin.The result was slightly above our expectation, comprising 25% of our FY2024E forecast.While we maintain our Neutral recommendation, our valuation metrics indicate that it could be upgraded to Outperform, especially as the current valuation has been upgraded to overvalued from sell previously. 

Kce Electronics - Earnings Growth in 1Q24 Driven by Strong Gross Margin

<ul><li>We initiate our coverage on KCE with a Neutral rating and a FY2024E fair value of Bt35.50, based on a required rate of return of 4.91%.</li><li>While we believe KCE’s FY2024E core earnings will rebound to Bt2.1bn (+20% YoY), driven by cost savings, product mix improvement, and increased sales, we view the current valuation as unfavorable.</li><li>Our model also suggests that KCE’s valuation will remain unattractive until FY2025E (FV: Bt40.75), and a rerating to a Buy would only be possible in FY2026E (FV: Bt52.50) on the back of continued EV momentum and demand for safety auxiliary systems (ADAS) driving KCE’s sales.</li></ul>

We initiate our coverage on KCE with a Neutral rating and a FY2024E fair value of Bt35.50, based on a required rate of return of 4.91%.While we believe KCE’s FY2024E core earnings will rebound to Bt2.1bn (+20% YoY), driven by cost savings, product mix improvement, and increased sales, we view the current valuation as unfavorable.Our model also suggests that KCE’s valuation will remain unattractive until FY2025E (FV: Bt40.75), and a rerating to a Buy would only be possible in FY2026E (FV: Bt52.50) on the back of continued EV momentum and demand for safety auxiliary systems (ADAS) driving KCE’s sales.

Kce Electronics - Cost Savings and Product Mix Should Help Earnings Recover

<ul>
<li>The SET has run a market consultation on relaxing liquidity thresholds for inclusion of stocks in the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> universe.</li>
<li>The consultation is the result of an increase in Average Daily Trading Values and lower turnover ratios, especially for large cap stocks.</li>
<li>
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> is now a potential index inclusion in June and that could result in four constituent changes at the next rebalance.</li>
</ul>


The SET has run a market consultation on relaxing liquidity thresholds for inclusion of stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) universe.
The consultation is the result of an increase in Average Daily Trading Values and lower turnover ratios, especially for large cap stocks.

Berli Jucker (BJC TB) is now a potential index inclusion in June and that could result in four constituent changes at the next rebalance.


SET50 Index Rebalance Preview: Market Consultation & More Changes in June

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).</li>
<li>In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.</li>
<li>With roughly half of the 3-month reference period now complete, I see three changes for the SET 50 index but one of those names is still close to the border.</li>
</ul>


The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
With roughly half of the 3-month reference period now complete, I see three changes for the SET 50 index but one of those names is still close to the border.


Quiddity Leaderboard SET50 Jun 24: 3 Changes Likely; Banpu Still Not Safe from Deletion

Thailand

KCE Electronics Public Company Limited and its subsidiaries manufacture and export single-layered, multi-layered, and double-sided printed circuit boards (PCBs) under its KCE trademark.  Multi-layered PCBs are used mainly in high technology equipment and high precision instruments.  Double-sided PCBs are used largely in telecommunication and computing equipment.

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KCE Electronics PCL (KCE TB)

SET50 Index Rebalance Preview: 4 Changes as Review Period Ends Today

With a day left in the review period, we forecast 4 changes for the SET50 in June. The largest impact will be on ITAIL and BJC. The adds have...

Brian Freitas

Kce Electronics - Earnings Growth in 1Q24 Driven by Strong Gross Margin

We maintain our Neutral recommendation and the FY2024E fair value of Bt35.50. KCE’s core earnings grew YoY and QoQ in 1Q24, mainly from a rebound...

Krungthai XSpring

Kce Electronics - Cost Savings and Product Mix Should Help Earnings Recover

We initiate our coverage on KCE with a Neutral rating and a FY2024E fair value of Bt35.50, based on a required rate of return of 4.91%.

Krungthai XSpring

SET50 Index Rebalance Preview: Market Consultation & More Changes in June

The market consultation proposes adjustments to the minimum thresholds for trading value and turnover ratio. That should result in 4 constituent...

Brian Freitas

Quiddity Leaderboard SET50 Jun 24: 3 Changes Likely; Banpu Still Not Safe from Deletion

Srisawad is currently an expected DEL. However, the gap between 51st-ranked Srisawad and 50th-ranked Banpu is very small and it is still possible...

Janaghan Jeyakumar, CFA

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