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Smartkarma Daily Briefs

Jul 03
0

Daily Brief Event-Driven: Toyo Construction AGM : YFO Wins on Dramatic Foreign Shareholder Discontent and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toyo Construction AGM : YFO Wins on Dramatic Foreign Shareholder Discontent
  • HSCI Index Rebalance Preview and Stock Connect: The Final List for September
  • KRX’s Official Selection Results of SSF & SSO Adds/Deletes: New Rules & Trading Ramifications
  • United Malt (UMG AU): Malteries Soufflet’s Binding Offer
  • Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser
  • CSI300 Index Rebalance Preview: Early Look at Potential Changes in December
  • Weekly Deals Digest (02 Jul) – JSR, Dali Foods, NWS, Poly Culture, Yitai, DDH1/Perenti, Tryt
  • Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder
  • Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage

Toyo Construction AGM : YFO Wins on Dramatic Foreign Shareholder Discontent

By Travis Lundy

  • In my piece Yamauchi Family Office Buys More Toyo; Toyo Claims More Malfeasance, ISS Supports YFO I said I thought YFO would lose, but it would be close.
  • I thought it hinged on the shape of the register. It turns out it did. And it turns out they won, and it was close. Analysis is presented.
  • What next? The new board takes its seats and may entertain a new takeover offer. I could see a buyout price a fair bit higher than here. 

HSCI Index Rebalance Preview and Stock Connect: The Final List for September

By Brian Freitas

  • There could be 25 inclusions, including many new listings, to the Hang Seng Composite Index (HSCI) in September. Another 6 stocks are close adds on liquidity and market cap.
  • We see 19 potential deletes and 2 close deletes on market cap, 5 potential deletes on prolonged trading suspension, and 2 close deletes on liquidity.
  • There are 8 potential deletions where holdings via Stock Connect are more than 20% of shares outstanding. There could be some unwinding of positions over the next couple of months.

KRX’s Official Selection Results of SSF & SSO Adds/Deletes: New Rules & Trading Ramifications

By Sanghyun Park

  • The latest update will feature the addition of 25 single stock futures, as well as five single stock options from KOSPI. Eight single stock futures will be removed.
  • The selection will now take place twice a year, in March and September. Also, the selection requirement includes being included in the KOSPI 200 and KOSDAQ Global.
  • The shortened selection cycle and the significant potential for the change range to vary based on index review results can indeed have a notable impact.

United Malt (UMG AU): Malteries Soufflet’s Binding Offer

By Arun George

  • The AFR reports that United Malt Group Ltd (UMG AU) has received a binding offer from Malteries Soufflet at A$5.00 per share, a 13.6% premium to the last close price.
  • The high spread reflected the risk of a no-deal or price cut due to the weak 1HFY23 results and lack of updates since the end of the 10-week due diligence.
  • The offer is conditional on shareholders and FIRB approval. Shareholders will be supportive and breathe a sigh of relief at receiving a binding offer with unchanged terms. 

Merger Arb Mondays (03 Jul) – Dali Foods, Poly Culture, NWS, Yitai, JSR, DDH1, Silk Laser

By Arun George

CSI300 Index Rebalance Preview: Early Look at Potential Changes in December

By Brian Freitas

  • Two thirds of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
  • We estimate a one-way turnover of 1.98% at the December rebalance leading to a one-way trade of CNY 5.32bn.
  • The potential adds have outperformed the potential deletes and the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) over the last five months, though there is some near-term underperformance.

Weekly Deals Digest (02 Jul) – JSR, Dali Foods, NWS, Poly Culture, Yitai, DDH1/Perenti, Tryt

By Arun George

Hong Kong CEO & Director Dealings: Red Star’s New Controlling Shareholder

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
  • The key stock mentioned in this regular insight is Red Star Macalline Group Corp (1528 HK).

Apollo/Applus: Somewhat Cheap Offer and First Mover Advantage

By Jesus Rodriguez Aguilar

  • On 30 June, Apollo placed itself ahead of competitors with a €9.5/share cash offer for Applus Services SA (APPS SM), whose shares rose to €9.9, in the hope of a counter offer.
  • The market is capable of forcing Apollo to sweeten its proposal to reach 75% acceptances. Many risk arbitrageurs have positions in Applus and may not settle for the current premium.
  • This situation has been flagged for a while. If already long, it is worth holding for a possible better offer, which could come around €10/share, a 5.2% increase.

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Jul 03
0

Daily Brief Macro: Japanese Equities Underpinned by BoJ and Buybacks and more

By | Daily Briefs, Macro

In today’s briefing:

  • Japanese Equities Underpinned by BoJ and Buybacks, but Longer-Term Issues Persist
  • A Q2 Global Market Review
  • Macro Watch – Why Surveys Struggle to Get Anything Right in This Environment
  • Afc Vietnam Fund Update – 30th June 2023
  • Is the Bidenomics Electoral Focus a Contrarian Economic Indicator?
  • Second Order China RMB Weakness
  • Sri Lanka Is Bouncing Back – AFC on the Road – Sri Lanka
  • TPW Advisory July Monthly: The Great In Between
  • CX Daily: Proposed Biden Curbs Could Starve Chinese Tech of Early Funding, Expertise

Japanese Equities Underpinned by BoJ and Buybacks, but Longer-Term Issues Persist

By Said Desaque

  • Continued monetary accommodation by the Bank of Japan (BoJ) and hype about corporate governance improvements are the main reasons for the uptrend in equity prices.
  • Unlike the late-1980s, forward P/E multiple valuations have not become completely divorced from the real economy due to the proliferation of value companies, although the Buffet Ratio is elevated. 
  • Value companies will benefit the most from the Tokyo Stock Exchange’s directive to boost their valuations via an improved return on equity, but buybacks can only help in the short-term. 

A Q2 Global Market Review

By Cam Hui

  • A review of the relative performance of global equities shows preliminary signs of faltering U.S. leadership. 
  • Japan is slowly gaining and showing constructive signs of revival.
  • Anecdotal bottom-up indications of a Chinese cyclical rebound could spark a rally in China-sensitive stocks around the world,

Macro Watch – Why Surveys Struggle to Get Anything Right in This Environment

By Andreas Steno

  • The spread between surveys and the reality is all-time-wide due to inflation
  • When will soft data turn into realiable indicators again ?
  • We find credit data to be a game-changer and credit is not looking pretty in Europe – especially not in France.

Afc Vietnam Fund Update – 30th June 2023

By Asia Frontier Capital

  • In June, the VN-Index showed a robust increase of 3.87% in USD terms to reach 1,120.2 points, accompanied by a significant improvement in market liquidity.
  • However, our fund slightly underperformed against the index, gaining 2.6% to reach a NAV of USD 3,205, according to internal estimates.
  • The month of June brought several positive developments that supported the market.

Is the Bidenomics Electoral Focus a Contrarian Economic Indicator?

By Cam Hui

  • President Joe Biden’s focus on his economic record based on Bidenomics may be a contrarian economic signal in the current environment of elevated recession risk.
  • While indicators show a mixed picture, equity risk is high.
  • Investors should find better clarity from the results and guidance from Q2 earnings season.

Second Order China RMB Weakness

By Untying The Gordian Knot

  • Yesterday, the People’s Bank of China fixed the CFETS Basket to be stronger than expected in a survey.
  • State banks intervened to support offshore CNH.
  • However, the strength of CNY is starting to wear off as industrial profits data were announced this morning to be at minus 18.

Sri Lanka Is Bouncing Back – AFC on the Road – Sri Lanka

By Asia Frontier Capital

  • Ruchir Desai, co-fund manager of the AFC Asia Frontier Fund, travelled to Colombo from 19th-21st June 2023 to meet with policymakers and various Sri Lankan companies, some of which the fund is invested in.
  • On my last visit to Sri Lanka in November 2022, my key takeaway was that the economy and stock market had bottomed out as inflation and interest rates had peaked, and the country was on the verge of gaining approval for an IMF (International Monetary Fund) loan.
  • Fast forward to June 2023: inflation has reduced significantly, benchmark interest rates have been cut by 250 basis points, and the IMF has disbursed the first tranche of its loan to Sri Lanka.

TPW Advisory July Monthly: The Great In Between

By TPW Advisory

  • We remain zeroed in on the multiple transitions we see occurring across risk assets and economies. We focus on 5 transitions in this monthly:
  • From rate hikes to rate cuts – from a finished Fed to a just getting started EM cutting cycle – inflation is a DM not EM problem 
  • From monetary to fiscal policy – aka from the Fed to Bidenomics & its EU equivalent 

CX Daily: Proposed Biden Curbs Could Starve Chinese Tech of Early Funding, Expertise

By Caixin Global

  • Investment /: In Depth: Proposed Biden curbs could starve Chinese tech of early funding, expertise
  • Summer Davos /: Global debt crisis requires China, U.S. to put aside their differences, economist says
  • Law /: New law sets out China’s foreign relations goals, response to national security threats

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Jul 03
0

Daily Brief Equity Bottom-Up: Panin Financial – Vanishing Growth and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Panin Financial – Vanishing Growth, Falling ROE, Despite Likely Rebalancing Beneficiary
  • Taiwan Tech Weekly: New ASML Restrictions Tighten Vice Further on China; AI & The Nvidia/AMD Family
  • Will Group (6089 Jp) – 4Q Follow-Up
  • Gracell Biotechnologies Inc (GRCL.US) – May Fail to Solve the Real Pain Points in CAR-T Field
  • Sanofi (SAN FP): It Is Not Just Only Dupixent; New Drugs and Vaccine Launches to Augment Growth
  • Bosideng (3998 HK): Outlook Stays Promising
  • General Mills: A Disappointing Quarter For Short-Term Investors And Speculators
  • Malaysia’s EPF lifts its AEM stake, crossing 10% level
  • REIT Watch – 10 S-REITs buck the trend despite REITs lagging in June

Panin Financial – Vanishing Growth, Falling ROE, Despite Likely Rebalancing Beneficiary

By Daniel Tabbush

  • PNLF has seen its asset growth ratchet downward, running at near 12-year lows at +2% YoY 
  • Phases of ROE decline are apparent, from 12-13%, then to 9%, and now to 5-6%
  • At least, there is a rebound in profit growth in FY22, after dismal 3 years

Taiwan Tech Weekly: New ASML Restrictions Tighten Vice Further on China; AI & The Nvidia/AMD Family

By Vincent Fernando, CFA

  • Netherlands expands range of semiconductor tech restricted for export; Tightening the vice further on China’s semiconductor industry.
  • AI In The Family: Nvidia founder Jensen Huang a distant cousin of AMD CEO Lisa Su.
  • TSMC supplier hit by cyberattack, Hon Hai expanding EV in Vietnam, plus our recent research notes on Hon Hai, Nanya Tech, Himax, Yageo, and Delta.

Will Group (6089 Jp) – 4Q Follow-Up

By Sessa Investment Research

  • The day after the Company announced 4Q FY23/3 results and FY24/3 initial guidance for consolidated revenue flat and OP -21.0%, the share price dropped -6.3% on heavy volume, maintaining a weak trend thereafter relative to a strong underlying market.
  • SIR believes this is because the new MTP differed from investors‘ growth image.
  • While the Company would be remiss not to highlight the high base from the post-COVID surge in special demand for permanent placement as a short-term risk for this term, investors may have been sensitive to the slowdown in growth over the coming two years.

Gracell Biotechnologies Inc (GRCL.US) – May Fail to Solve the Real Pain Points in CAR-T Field

By Xinyao (Criss) Wang

  • The latest data of GC012F/GC007g at ASCO/EHA drove up share price, but the current clinical data do not necessarily guarantee the final druggability. So, we advise investors to be rational.
  • Gracell’s pipeline may not solve the real pain points of CAR-T therapy. Until the global momentum of cell therapy is reversed, there’s no need to expect too much from Gracell.
  • Gracell’s stock price would continue to fluctuate with positive clinical data or progress. However, the liquidity of this stock isn’t good. In this situation, both ups and downs are meaningless. 

Sanofi (SAN FP): It Is Not Just Only Dupixent; New Drugs and Vaccine Launches to Augment Growth

By Tina Banerjee

  • Sanofi (SAN FP) earns more than 20% revenue from its key growth driver, Dupixent. With expanding indications, Dupixent is on track to record €10B revenue in 2023.
  • The company has added two new drugs in its portfolio this year. Since the beginning of 2023, Sanofi has reported five positive readouts for its pipeline.
  • Sanofi aims to reach €10B vaccine sales by 2030 from €7B in 2022, fueled by accelerated pace of innovation. The company plans to launch RSV vaccine for infants this winter.

Bosideng (3998 HK): Outlook Stays Promising

By Osbert Tang, CFA

  • While having a slow FY23, Bosideng International Holdings (3998 HK) is well-positioned to capture the rebound in down apparel sales growth as pent-up demand is released.  
  • We also expect a recovery in margin, further improvement in channel efficiency and operating leverage from cost control will add to earnings momentum. 
  • Management expects revenue growth will at least sustain at the rate in the last 5 years. The stock’s valuations are cheap when compared with growth outlook and global peers. 

General Mills: A Disappointing Quarter For Short-Term Investors And Speculators

By Vladimir Dimitrov, CFA

  • General Mills has just reported its full fiscal year results and investors are not impressed.
  • Expectations of lower organic revenue growth and uncertainties around profitability would likely continue to weigh on the share price.
  • Long-term investors, however, could take advantage of this near-term dynamic while enjoying the higher dividend.

Malaysia’s EPF lifts its AEM stake, crossing 10% level

By Geoff Howie

  • Share buybacks by primary listed companies 23 – 29 Jun 2023 As at Jun 28, the three SDR collectively garnered close to S$0.2 million retail net inflows, with largest net buys in Airports of Thailand.
  • His preceding acquisitions were on Jun 6 and 5, with 17,000 shares and 6,800 shares acquired respectively, at S$0.96 per share.

REIT Watch – 10 S-REITs buck the trend despite REITs lagging in June

By Geoff Howie

  • 10 S-Reits buck the trend despite Reits lagging in June The month of June (till Jun 28, 2023) saw the iEdge S-Reit index record flattish performance at 0.3 per cent total returns for the month, improving from the 3.0 per cent declines in May.
  • The 10 best performing S-Reits for the month of June (till Jun 28, 2023) averaged over 7 per cent in total returns.

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Jul 02
0

Daily Brief United States: Talos Energy Inc, Cardano, Culp Inc, Earthstone Energy and more

By | Daily Briefs, United States

In today’s briefing:

  • Talos Energy, Inc. – Value Creation Catalysts
  • Q2 Liquidity Ranking for Crypto Assets
  • Culp, Inc. – 4QFY23: Results Beat Estimates; Trends Improve in Mattress Fabrics
  • Earthstone Energy, Inc – Delaware Expansion Adds Quality Inventory

Talos Energy, Inc. – Value Creation Catalysts

By Water Tower Research

  • Talos’s current valuation implies a steep discount to net asset value (NAV).

  • Management estimates the company’s year- end 2022 pro forma proved reserves have a gross PV-10 value of ~$5.5 billion (~$4.8 billion net of asset retirement obligations [ARO]) based on oil and natural gas prices of $75/bbl and $3.50/Mcf.

  • Adjusting for March 31, 2023, balance sheet items, leaves an estimated NAV of ~$3.6 billion, or $28.38/share.

Q2 Liquidity Ranking for Crypto Assets

By Kaiko

  • Towards the end of last year, I published the first liquidity ranking system for crypto assets, comparing each asset’s liquidity ranking to its market cap and investigating which token’s market cap is the most misleading from a liquidity standpoint.
  • In Q1 of this year I provided an update to the ranking system as overall market liquidity hit 10 month lows. 
  • The good news is that global liquidity has been more or less flat over Q2, with no further drops apart from  the tokens featured in the SEC lawsuits and a handful of exchange-specific drops in liquidity, such as Binance.US.

Culp, Inc. – 4QFY23: Results Beat Estimates; Trends Improve in Mattress Fabrics

By Water Tower Research

  • Beat expectations. After market close on June 28, Culp reported 4QFY23 results that exceeded expectations.

  • Total revenues were $61.4 million, beating our $54 million estimate and consensus of $55.5 million.

  • On the bottom line, the company’s EPS of ($0.38) beat our ($0.50) estimate and consensus of ($0.45).

Earthstone Energy, Inc – Delaware Expansion Adds Quality Inventory

By Water Tower Research

  • Earthstone announced an agreement to acquire Novo Oil & Gas Holdings LLC for $1.5 billion on June 15, 2023.

  • Concurrently, Northern Oil & Gas will acquire a pro rata one-third of the assets for $500 million from Earthstone, resulting in a net purchase price of $1.0 billion.

  • The transaction is expected to close in 3Q23 and will have an effective date of May 1, 2023.

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Jul 02
0

Daily Brief Singapore: Singapore Airlines and more

By | Daily Briefs, Singapore

In today’s briefing:

  • ECM Weekly (2nd July 2023) – Tryt, J&T Express, Redox, Kelun, 4Paradigm, SIA, M&A Research, Walsin

ECM Weekly (2nd July 2023) – Tryt, J&T Express, Redox, Kelun, 4Paradigm, SIA, M&A Research, Walsin

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • In the IPO space, Tryt Inc (9164 JP) will announce its price range in the coming week, while Kelun Biotech tries to break the US$100m+ deal silence in HK. 
  • On the placement front, even Singapore joined in the placement action this week, with only HK deal remaining absent over the past month.

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Jul 02
0

Daily Brief Indonesia: Ace Hardware Indonesia and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Ace Hardware Indonesia (ACES IJ) – Reasons to Be Helpful

Ace Hardware Indonesia (ACES IJ) – Reasons to Be Helpful

By Angus Mackintosh

  • Ace Hardware Indonesia is starting to see the seeds of recovery come through in SSSG through April and May and should get a further boost from its BOOM sale.
  • The company has resumed its store opening with plans for 13 new stores this year and a new store concept being rolled out across existing stores providing a potential boost. 
  • Ace Hardware Indonesia has a more cohesive digital strategy and has taken on its first brand ambassadors to boost millennial demand. Valuations remain attractive. 

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Jul 02
0

Daily Brief India: HDFC Bank and more

By | Daily Briefs, India

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: KQ150, LQ45, PCOMP, HDFC/HDFCB, Delta Electronics, Redox IPO, AMFI

Index Rebalance & ETF Flow Recap: KQ150, LQ45, PCOMP, HDFC/HDFCB, Delta Electronics, Redox IPO, AMFI

By Brian Freitas

  • The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
  • There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
  • There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

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Jul 02
0

Daily Brief China: Tencent, Meituan, Xpeng, Hong Kong Hang Seng Index and more

By | China, Daily Briefs

In today’s briefing:

  • Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling
  • [Meituan (3690 HK, BUY, TP HK$165) TP Change]: Competition with Douyin Continues, Cut TP to HK$165
  • [XPeng Inc. (XPEV US, BUY, TP US$13.7) Target Price Change]: Buy on More Visibility of Future Growth
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Chasing Stocks Higher

Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling

By David Blennerhassett

  • The Naspers (NPN SJ) / Prosus (PRX NA) circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile. 
  • Swire Pacific (19 HK) was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops
  • A residual NTT (9432 JP) individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn’t mean much, but it’s an interesting artefact. 

[Meituan (3690 HK, BUY, TP HK$165) TP Change]: Competition with Douyin Continues, Cut TP to HK$165

By Shawn Yang

  • We expect that Meituan and Douyin engaged in fierce competition in 2Q23. Meituan intensified its efforts in three aspects: commission reduction and rebates, promotion of “Meituan Quanquan,” and video subsidy. 
  • However, our 2Q23 Meituan revenue/profit estimates are in-line/34% higher vs. cons. This is mainly because it was Meituan’s first quarter of counterattack.
  • Meituan’s counterattack has shown initial results, in Douyin’s slowing local services growth during 618, and the return of merchants. We maintain Meituan’s BUY rating, but lowered TP to HK$ 165.

[XPeng Inc. (XPEV US, BUY, TP US$13.7) Target Price Change]: Buy on More Visibility of Future Growth

By Shawn Yang

  • We are more positive on G6’s potential due to attractive pricing and higher conversion rate brought by nationwide availability of display vehicles. 
  • The success of G6 will add visibility of its growth due to the shared architecture.  We reiterate a rebound of sales momentum starting from 2Q23, driven by: 
  • 1) increased order intake of P7i and G6; 2) faster channel expansion than its peers. We raise our TP to US$ 13.7. Our TP implies 2.5x PS.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Chasing Stocks Higher

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

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Jul 02
0

Daily Brief Japan: JSR Corp, Tokyo Stock Exchange Tokyo Price Index Topix, Japan Elevator Service Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: DDH1/Perent, NWS, Mandala Multifinance, JSR Corp, Silk Laser
  • The TSE’s New ‘Better’ Index:  JPX Prime 150
  • Japan Elevator Service Holdings (6544) – Going up to Reach New Heights
  • Learning Through Engagement Takes a Certain Period of Time to Show Results

(Mostly) Asia-Pac Weekly Risk Arb Wrap: DDH1/Perent, NWS, Mandala Multifinance, JSR Corp, Silk Laser

By David Blennerhassett

The TSE’s New ‘Better’ Index:  JPX Prime 150

By Travis Lundy

  • In April 2022, after long prep and considerable public comment as to desires and design, the TSE launched its new market segments designed to encourage governance and foreign investment.
  • At the time, the TSE wanted to showcase Japan’s best blue chips. In March, JPX announced JPX Prime 150, designed to make visible
  • In March 2023, JPX announced JPX Prime 150, to “make visible the leading Japanese companies that are estimated to create value.” Ambitious? Yes. Fated to fail? Probably. Badly constructed?  Definitely. 

Japan Elevator Service Holdings (6544) – Going up to Reach New Heights

By Astris Advisory Japan

  • A successful market disruptor – Japan Elevator Service (JES) has been executing its growth strategy, increasing market share in the domestic elevator maintenance market via organic and acquisitive growth.

  • Operating in a market dominated by OEMs, it is making solid headway by 1) offering a cost-effective solution, 2) a differentiated service offering technical services and availability of parts on par with the OEMs, and 3) experiencing rapid growth through by establishing a nationwide network providing regionally rooted services.

  • Pursuing growth opportunities – we highlight two drivers for the company; 1) secular growth as building owners convert to reputable independent providers for cost management, and 2) structural demand from aging elevators requiring modernization.

Learning Through Engagement Takes a Certain Period of Time to Show Results

By Aki Matsumoto

  • 8 years after the introduction of Corporate Governance Code and “Ito Report,” which showed the relationship between P/B and ROE as the cornerstone of management, few companies improved their management.
  • Companies with sustained share price growth were executing excellent growth policies and IR disclosures that were likely learned from their engagement with overseas investors.
  • It takes a certain period of time for a company to learn through engagement, for the results to show up in improved management, and for other investors to notice it.

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Jul 02
0

Most Read: ZOZO Inc, Mercari Inc, Mitra Adiperkasa, JSW Steel Ltd, Bloomberry Resorts, Lunit , Tencent, HDFC Bank and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
  • Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
  • KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December
  • LQ45 Index Rebalance Preview (July): Review Period Nearly Complete
  • HDFC/​​​​​​HDFC Bank Mega Merger: Are We There Yet?
  • PCOMP Index Rebalance Preview: Just the Ad Hoc Change
  • End of Mandatory Lock-Up Periods for 41 Companies in Korea in July 2023
  • HDFC Bank – Ranks 2nd After Merger Compared With Asia Pacific Banks
  • Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling
  • Index Rebalance & ETF Flow Recap: KQ150, LQ45, PCOMP, HDFC/HDFCB, Delta Electronics, Redox IPO, AMFI

Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes

By Brian Freitas

  • The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
  • There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade. 
  • There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.

Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO

By Brian Freitas

KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December

By Brian Freitas

  • Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
  • There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
  • The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.

LQ45 Index Rebalance Preview (July): Review Period Nearly Complete

By Brian Freitas

  • The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
  • Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
  • The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

HDFC/​​​​​​HDFC Bank Mega Merger: Are We There Yet?

By Brian Freitas

  • An interview with Deepak Parekh set a bunch of stocks on fire. Then came the HDFC Bank (HDFCB IN) exchange announcement that said the dates were still tentative.
  • Indications are that the merger could be effective 1 July and HDFC Limited (HDFC IN)‘s last trading day would be 13 July.
  • The merger will have an impact on both HDFC stocks and on other stocks that could be added to the NIFTY Index, NIFTYJR INDEX and SENSEX Index.

PCOMP Index Rebalance Preview: Just the Ad Hoc Change

By Brian Freitas

End of Mandatory Lock-Up Periods for 41 Companies in Korea in July 2023

By Douglas Kim

  • We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in July 2023, among which 6 are in KOSPI and 35 are in KOSDAQ.
  • These 41 stocks on average could be subject to further selling pressures in June and could underperform relative to the market. 
  • Among these 41 stocks, the top five market cap stocks include Lunit, Sungeel Hitech, KG Mobility, Enchem, and E&D Co. 

HDFC Bank – Ranks 2nd After Merger Compared With Asia Pacific Banks

By Daniel Tabbush

  • New HDFC Bank appears to have far better returns and credit metrics that large Asian peers
  • Pro-Forma amalgamation puts HDFC Bank as 2nd largest bank in Asia Pacific in market cap 
  • Comparably large banks in Asia are concentrated in China, where credit metrics are opaque

Last Week in Event SPACE: Naspers/Prosus, Swire Pacific, NTT, Aussie Tax-Loss Selling

By David Blennerhassett

  • The Naspers (NPN SJ) / Prosus (PRX NA) circularity was too complex. Lots of people hated it. It was actually easier than most thought, but optically was difficult to reconcile. 
  • Swire Pacific (19 HK) was a clear buy: there is no justification for assigning a similar discount for cash from the US Coke ops as you would to unlisted ops
  • A residual NTT (9432 JP) individual small-holder shareholding tenure reward does not get split 25:1 when the stock gets split 25:1. It doesn’t mean much, but it’s an interesting artefact. 

Index Rebalance & ETF Flow Recap: KQ150, LQ45, PCOMP, HDFC/HDFCB, Delta Electronics, Redox IPO, AMFI

By Brian Freitas

  • The review period for a bunch of indices ended last week though the announcement of the changes will take 4-6 weeks.
  • There are no rebalance implementations in the coming week though focus will move to the implementation of the HDFC Limited/ HDFC Bank merger and index changes the following week.
  • There were big inflows to China focused ETF with a lot of money going into Semiconductor and Chip focused ETFs.

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