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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<ul>
<li>We see three potential changes to the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> at the February rebalance. Two are higher probability changes, while one has a lower probability.</li>
<li>Typically, the inclusions rally and the deletions drop between announcement and implementation with a big jump immediately post announcement. Pre-positioning prior to announcement is important.</li>
<li>
<a href="https://www.smartkarma.com/entities/bloomberry-resorts-corp" target="_blank" data-smartkarma-citation="entities:17961:1" rel="noopener">Bloomberry Resorts (BLOOM PM)</a> and <a href="https://www.smartkarma.com/entities/robinsons-retail-holdings-inc" target="_blank" data-smartkarma-citation="entities:10598:1" rel="noopener">Robinsons Retail Holdings (RRHI PM)</a> are reopening plays and investors that are looking to buy the stocks could wait for index deletion to get liquidity.</li>
</ul>


We see three potential changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the February rebalance. Two are higher probability changes, while one has a lower probability.
Typically, the inclusions rally and the deletions drop between announcement and implementation with a big jump immediately post announcement. Pre-positioning prior to announcement is important.

Bloomberry Resorts (BLOOM PM) and Robinsons Retail Holdings (RRHI PM) are reopening plays and investors that are looking to buy the stocks could wait for index deletion to get liquidity.


PCOMP Index Rebalance Preview Feb22: Three Potential Changes & Large Impact

The Philippines Stock Exchange has announced the changes to the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> as part of the August rebalance.<a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> and <a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc-609f7498-aeeb-430e-a07d-50503172a1e3" target="_blank" data-smartkarma-citation="entities:31210:1" rel="noopener">Converge ICT Solutions (CNVRG PM)</a> have been added to the index while <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> and <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> have been deleted.There are minimal assets tracking the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a>. However, there are active funds using the index as a benchmark and some of the funds track the benchmark pretty closely. The impact is clearly visible today with <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> and <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> lower by 9.5% and 5%, while <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> and <a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc-609f7498-aeeb-430e-a07d-50503172a1e3" target="_blank" data-smartkarma-citation="entities:31210:1" rel="noopener">Converge ICT Solutions (CNVRG PM)</a> are up 4% and 13% respectively.We had <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> as an inclusion and <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> as a deletion. <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> was a close delete. <a href="https://www.smartkarma.com/entities/converge-ict-solutions-inc-609f7498-aeeb-430e-a07d-50503172a1e3" target="_blank" data-smartkarma-citation="entities:31210:1" rel="noopener">Converge ICT Solutions (CNVRG PM)</a> was added following a rule change that was announced and implemented at the same time as the constituent changes and that resulted in the deletion of <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> as well.There are also some rule changes related minimum free float, to Fast Entry for stocks, and to the inclusion/exclusion cutoff rankings at the regular rebalances.

The Philippines Stock Exchange has announced the changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) as part of the August rebalance.AC Energy Corp (ACEN PM) and Converge ICT Solutions (CNVRG PM) have been added to the index while Emperador Inc (EMP PM) and DMCI Holdings (DMC PM) have been deleted.There are minimal assets tracking the Philippines Stock Exchange PSEi Index (PCOMP INDEX). However, there are active funds using the index as a benchmark and some of the funds track the benchmark pretty closely. The impact is clearly visible today with Emperador Inc (EMP PM) and DMCI Holdings (DMC PM) lower by 9.5% and 5%, while AC Energy Corp (ACEN PM) and Converge ICT Solutions (CNVRG PM) are up 4% and 13% respectively.We had AC Energy Corp (ACEN PM) as an inclusion and Emperador Inc (EMP PM) as a deletion. DMCI Holdings (DMC PM) was a close delete. Converge ICT Solutions (CNVRG PM) was added following a rule change that was announced and implemented at the same time as the constituent changes and that resulted in the deletion of DMCI Holdings (DMC PM) as well.There are also some rule changes related minimum free float, to Fast Entry for stocks, and to the inclusion/exclusion cutoff rankings at the regular rebalances.

PCOMP Index Rebalance: ACEN, CNVRG Added; EMP, DMCI Deleted

The <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> is the main index of the Philippines Stock Exchange (PSE). The index is free float market cap weighted and is made up of the 30 largest and most active common stocks listed at the PSE.The next rebalance will become effective in mid-August and the changes will be announced around 5 trading days prior to implementation.We see <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> as a likely inclusion in the index. Potential deletions are <a href="https://www.smartkarma.com/entities/emperador-inc" target="_blank" data-smartkarma-citation="entities:3485:1" rel="noopener">Emperador Inc (EMP PM)</a> on liquidity and possibly free float and <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> as the lowest ranked index constituent.There are minimal assets tracking the <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a>. However, there are active funds using the index as a benchmark and some of the funds track the benchmark pretty closely. Historically, the adds have performed well in the period leading up to implementation.

The Philippines Stock Exchange PSEi Index (PCOMP INDEX) is the main index of the Philippines Stock Exchange (PSE). The index is free float market cap weighted and is made up of the 30 largest and most active common stocks listed at the PSE.The next rebalance will become effective in mid-August and the changes will be announced around 5 trading days prior to implementation.We see AC Energy Corp (ACEN PM) as a likely inclusion in the index. Potential deletions are Emperador Inc (EMP PM) on liquidity and possibly free float and DMCI Holdings (DMC PM) as the lowest ranked index constituent.There are minimal assets tracking the Philippines Stock Exchange PSEi Index (PCOMP INDEX). However, there are active funds using the index as a benchmark and some of the funds track the benchmark pretty closely. Historically, the adds have performed well in the period leading up to implementation.

PCOMP Index Rebalance Preview: Inclusion Fairly Certain; Deletion Undecided

The <a href="https://www.smartkarma.com/entities/philippines-stock-exchange-psei-index" target="_blank" data-smartkarma-citation="entities:22912:1" rel="noopener">Philippines Stock Exchange PSEi Index (PCOMP INDEX)</a> is the main index of the Philippines Stock Exchange (PSE). The index is free float market cap weighted and is made up of the 30 largest and most active common stocks listed at the PSE.Even though the passive assets tracking the index are very small, the strategy of buying the inclusions and selling the exclusions has performed very well at every rebalance over the last 5 years.For the August rebalance, we see a possibility of <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a> being included in the index, which would see <a href="https://www.smartkarma.com/entities/dmci-holdings-inc" target="_blank" data-smartkarma-citation="entities:8026:1" rel="noopener">DMCI Holdings (DMC PM)</a> being excluded.The SEC has approved <a href="https://www.smartkarma.com/entities/ac-energy-corp" target="_blank" data-smartkarma-citation="entities:23188:1" rel="noopener">AC Energy Corp (ACEN PM)</a>'s <a href="https://acenergy.ph/wp-content/uploads/2021/04/SEC-17C-Update-on-the-Company-Follow-on-Offering.pdf" target="_blank" rel="noopener">follow on offering</a> for the sale of 2.01bn shares at a price range of PHP 6-8.2/share, of which 1.58bn shares will be a primary offering and 330.248m shares will be a secondary offering by AC Energy &amp; Infrastructure Corp (ACEIC). The public offering will run from 3-7 May and the shares will be listed on 14 May.

The Philippines Stock Exchange PSEi Index (PCOMP INDEX) is the main index of the Philippines Stock Exchange (PSE). The index is free float market cap weighted and is made up of the 30 largest and most active common stocks listed at the PSE.Even though the passive assets tracking the index are very small, the strategy of buying the inclusions and selling the exclusions has performed very well at every rebalance over the last 5 years.For the August rebalance, we see a possibility of AC Energy Corp (ACEN PM) being included in the index, which would see DMCI Holdings (DMC PM) being excluded.The SEC has approved AC Energy Corp (ACEN PM)'s follow on offering for the sale of 2.01bn shares at a price range of PHP 6-8.2/share, of which 1.58bn shares will be a primary offering and 330.248m shares will be a secondary offering by AC Energy &amp; Infrastructure Corp (ACEIC). The public offering will run from 3-7 May and the shares will be listed on 14 May.

PSEi Index Rebalance Preview: Follow-On Offering Could See ACEN Added, DMC Deleted

APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

San Miguel Food & Beverage / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/22728" target="_blank" data-smartkarma-citation="entities:22728:1">San Miguel (SMC PM)</a> looking to sell 523m (including 174.3m upsize option) <a href="https://www.smartkarma.com/entities/22934" target="_blank" data-smartkarma-citation="entities:22934:1">San Miguel Food and Beverage (FB PM)</a>'s shares with a 15% over-allotment option, downsized from the initial 1.02bn size. The selldown is part of SMC's effort to improve liquidity in FB and comply with the minimum public ownership rule.
The deal scores well on our placement framework owing to its strong fundamentals, inexpensive valuation, and a good track record. The deal provides an opportunity to get exposure to a market leader in various markets in the Philippines. In our previous note, our valuation was based on bullish assumptions whereas in our revised SOTP valuation here, it suggests that there is a decent 8% potential upside from the bottom end of the price range, however, the top end implies a 3% downside. There is also a good chance that the company will be included in the MSCI Philippines Index on the back of an increased float. 
<hr>
<div class="content-highlight">
<h2>Placement specifics </h2>
</div>
<table class="table table-striped">
<tbody>
<tr>
<td>Company Name</td>
<td style="text-align: center;">San Miguel Food and Beverage Inc</td>
</tr>
<tr>
<td>Ticker</td>
<td style="text-align: center;">FB PM Equity</td>
</tr>
<tr>
<td>Deal nature</td>
<td style="text-align: center;">Secondary offering / Re-IPO</td>
</tr>
<tr>
<td>Bookrunners</td>
<td style="text-align: center;">JPM, MS, DB, UBS, GS, BDO, BPI</td>
</tr>
<tr>
<td>Indicative deal price</td>
<td style="text-align: center;">PHP85 - 95</td>
</tr>
<tr>
<td>Last Traded Price</td>
<td style="text-align: center;">PHP85.5</td>
</tr>
<tr>
<td>Implied placing premium</td>
<td style="text-align: center;">1% discount - 11% premium</td>
</tr>
<tr>
<td>Offer Size (m) (assuming full upsize option + 15% over-allotment)</td>
<td style="text-align: center;">
USD947/PHP51,119
</td>
</tr>
<tr>
<td>ADV (m)</td>
<td style="text-align: center;">USD1.5/PHP78.9</td>
</tr>
<tr>
<td style="text-align: left;">Current Shares Outstanding (m): </td>
<td style="text-align: center;">5,909.2</td>
</tr>
</tbody>
</table>

San Miguel (SMC PM) looking to sell 523m (including 174.3m upsize option) San Miguel Food and Beverage (FB PM)'s shares with a 15% over-allotment option, downsized from the initial 1.02bn size. The selldown is part of SMC's effort to improve liquidity in FB and comply with the minimum public ownership rule.
The deal scores well on our placement framework owing to its strong fundamentals, inexpensive valuation, and a good track record. The deal provides an opportunity to get exposure to a market leader in various markets in the Philippines. In our previous note, our valuation was based on bullish assumptions whereas in our revised SOTP valuation here, it suggests that there is a decent 8% potential upside from the bottom end of the price range, however, the top end implies a 3% downside. There is also a good chance that the company will be included in the MSCI Philippines Index on the back of an increased float. 


Placement specifics 




Company Name
San Miguel Food and Beverage Inc


Ticker
FB PM Equity


Deal nature
Secondary offering / Re-IPO


Bookrunners
JPM, MS, DB, UBS, GS, BDO, BPI


Indicative deal price
PHP85 - 95


Last Traded Price
PHP85.5


Implied placing premium
1% discount - 11% premium


Offer Size (m) (assuming full upsize option + 15% over-allotment)

USD947/PHP51,119



ADV (m)
USD1.5/PHP78.9


Current Shares Outstanding (m): 
5,909.2




San Miguel Re-IPO Valuation - Decent Upside from the Low-End of the Price Range

Philippines

The Philippine Stock Exchange PSEi Index is a capitalization-weighted index composed of stocks representative of the Industrial, Properties, Services, Holding Firms, Financial and Mining & Oil Sectors of the PSE. The index has a base value of 1022.045 as of February 28, 1990. 

Philippines Stock Exchange PSEi Index (PCOMP INDEX)

Philippines Stock Exchange PSEi Index (PCOMP INDEX)

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San Miguel Re-IPO Valuation - Decent Upside from the Low-End of the Price Range

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Zhen Zhou, Toh