Smartkarma Daily Briefs

• The National Company Law Tribunal (NCLT) has ordered a meeting of HDFC Limited and HDFC Bank shareholders on 25 November to consider and approve the proposed Scheme of Amalgamation.
• Pidilite Industries (PIDI IN) is a high probability ad hoc inclusion to the NIFTY Index (NIFTY INDEX) with Tata Power (TPWR IN) a lower probability inclusion candidate.
• Tata Motors Ltd (TTMT IN) and Adani Enterprises (ADE IN) could be added to the SENSEX INDEX in December replacing HDFC Limited (HDFC IN) and Dr. Reddy’s Laboratories (DRRD IN).

In our next Webinar, we welcome Analysts Chris Redl (SC Capital) and Sameer Taneja (Investics Research), who will be joined by Smartkarma CEO Raghav Kapoor in an exciting discussion on the EV landscape in China.

The webinar will be hosted on Friday, 21 October 2022, 11:00 SGT/HKT.

Chris Redl has over 20 years’ experience covering the global automotive industry both on the Sell-side (UBS & Morgan Stanley) and Buy-side (Och-Ziff). His current focus is on electric vehicle stocks & their supply chains, aiming is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well.

Sameer Taneja is the founder of Investics Research, a firm that engages in bottom-up sectoral research, fundamental research of publicly listed companies as well as forensic analysis. He started his career as a sell-side analyst in a stockbroking firm called B&K Securities (India) from 2004-07, covering the ferrous sector. From 2007-16 he worked as an investment analyst in a hedge fund called Kelusa Capital, covering the materials, utilities, construction & heavy machinery, and the auto sector. He continued to work on the buy-side from 2017-19 in a firm called Skale Investments (with similar sectoral coverage), before founding Investics Research in 2019.

Raghav is the co-founder and CEO of Smartkarma.

• The review period for the MSCI November SAIR starts this week and will run till 31 October. We also near the end of the review period for many local indices.
• AIPL has announced a S&P BSE SENSEX Index market consultation while FTSE has announced the result of the FTSE TWSE Taiwan Dividend+ Index market consultation.
• There were big weekly inflows to ETFs that track China, Taiwan, Korea and Hong Kong equities.

• Ming Yuan Cloud Group (909 HK) listed in September 2020 and was included in major indices (MSCI, FTSE, HSTECH) over the next few months.
• The stock price slide over the last few months could lead to the deletion of the stock from the MSCI China Index and Hang Seng Tech Index (HSTECH INDEX). 
• Deletion and downward migration could result in an increase in the real float of the stock by 15% and add further downward pressure. Short interest has been increasing steadily.

• In January 2022, Recruit Holdings (6098 JP) launched a Tender Offer buyback to buy back shares from NTT Data, Hakuhodo, and TBS. 
• Today, Recruit announced another buyback of up to 42mm shares (2.57% of shares out) spending up to ¥150bn, to go from now until 14 March 2023 (5mos).
• This time the buyback should have better traction and market impact, but it is not overwhelming, and the impact will likely lessen at higher share prices.

• Blibli (1437710D IJ) is offering 17.77bn shares in its IPO at a price range of IDR 410-460/share. That could raise up to US$530m and value the company up to US$3.64bn.
• The stock will not get Fast Entry to the IDX30, LQ45, MSCI and FTSE indices, so no near-term support from passive buying.
• The stock could make it into the MSCI Small Cap Index in February and the FTSE All-World/All-Cap Index in June. Earliest inclusion in IDX30/IDX80/LQ45 indices could be in July.

• Shandong Fengxiang (9977 HK) is a company engaged in chicken breeding, slaughtering, and processing.
• Its controlling shareholder with 70.9% of shares out, via domestic shares,  was unable to meet its debts, and had been forced into a judicial auction to sell its holding.
• The auction has completed. This forced stake sale should trigger an MGO, one that is likely to be unconditional. Expect an official announcement shortly. 

• Hong Kong Chief Executive John Lee Ka-chiu will deliver his inaugural policy address on the 19 October, where he is expected to announce a number of “ground-breaking” measures.
• One such measure is non-residents who have owned property in Hong Kong for 3+ years may get their extra stamp duty refunded – if they take up permanent residency.
• Secondary home prices have declined  8% year-to-date, and are approaching a five-year low. Goldman Sachs expects home prices to decline 30% in 2023 from last year’s levels.  

• Mitsubishi Estate Logistics (3481 JP) (MEL) is looking to raise US$145m from its primary follow-on offering to acquire eight properties.
• The offering is a large one, resulting in a 10.2% dilution, and would represent 34 days of three month ADV.
• In this note, we will look at the deal dynamics, and run the deal through our framework.

• Thailand SET Index (SET INDEX) is a composite index which represents the price movement for all common stocks trading on the SET.
• SET50 and SET100 indices are calculated, respectively, from the stock prices of the top 50 and 100 listed companies on SET in terms of market capitalization and liquidity.
• In this insight, we take a look at the selection criteria and the historical price performance of past Rebalance Events.