In today’s briefing:
- Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
- Index Rebalance & ETF Flow Recap: STAR50, PCOMP, SET50, AMFI, ALX
- Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
- That’s It Then As Link Admin Rejects D&D’s Revised Terms
- OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
- FTSE Straits Times Index (STI): Quiddity Primer
- Onewo Space-Tech IPO – Appears Digestible Even on Conservative Assumptions
- A Walkthrough of Hyundai Department Store Demerger Event
- Toshiba – Japan Industrial Partners The Only Real Bid?
- Link’s On Again-Off Again Scheme Is All but Off
Taiwan Div+ Index Basket Trade Review – Time To Swing The Other Direction
- In August, Janaghan Jeyakumar, CFA published his leaderboard and flow estimates for the FTSE Taiwan Dividend+ Rebalance which starts today and runs through next Thursday.
- Late in August, I recommended a basket trade. Since then, the BUY basket has outperformed the SELL basket by 7.6%. Set & Forget it is up 7.2%.
- I provided timing in the basket trade. Now it is time to swing the other way.
Index Rebalance & ETF Flow Recap: STAR50, PCOMP, SET50, AMFI, ALX
- It was a busy week with a bunch of index rebalances being implemented at the close of trading on Friday.
- We list out potential changes to the STAR50 INDEX, Philippines Stock Exchange PSEi Index (PCOMP INDEX) and SET50 INDEX at the upcoming rebalances.
- There was a large outflow from the iShares MSCI ACWI ETF (ACWI US) for yet another week.
Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
- Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
- If no deal, there’s downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
- I don’t see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.
That’s It Then As Link Admin Rejects D&D’s Revised Terms
- After 23 months of negotiations, various bids from various parties, culminating in a protracted on-again, off-again, negotiation with Dye & Durham, Link Administration (LNK AU) has called it a day.
- D&D arguably did the right thing and tabled a revised proposal to account for any enforcement process after the UK’s FCA raised redress payments. Link has rejected the revised terms.
- Link will now pursue an in-specie distribution of a minimum of 80% of Link’s shareholding in PEXA Group (PXA AU).
OZ Minerals May Be Narrowing the Price Gap to a BHP Deal
- Six+ weeks ago, BHP Group Ltd (BHP AU) approached OZ Minerals Ltd (OZL AU) with a bid of A$25/share. Oz very quickly rejected it and said it was worth more.
- The back and forth immediately post-rejection was not conciliatory. My expectation was that if they came back quickly, they’d have to pay A$30. But coming back quickly was tough.
- There are hints now that may be the price. But it may not be. It will take time.
FTSE Straits Times Index (STI): Quiddity Primer
- FTSE Straits Times Index (STI) (STI INDEX) consists of the 30 largest companies listed in the Singapore Stock Exchange (SGX).
- This is one of the well-known national blue-chip indices in the Asia-Pacific region.
- In this insight, we will have a look at the selection criteria and the historical price performance of past Rebalance Events.
Onewo Space-Tech IPO – Appears Digestible Even on Conservative Assumptions
- Onewo Space-Tech (ONEWO HK) (OST) aims to raise upto US$784m in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke (2202 HK).
- As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
- In this note, we will run the deal through our ECM framework and talk about valuations.
A Walkthrough of Hyundai Department Store Demerger Event
- This is an equity spinoff where the existing shareholders receive shares in the spun-off company. But this creates two LISTED companies. In such a case, there won’t be appraisal rights.
- PASSIVE’s selling flow towards the trade suspension tends to be offset by ACTIVE’s buying flow aiming for value accretion. So, developing a timely entry/exit between these opposing flows is critical.
- Holdco’s 30% rule dynamic generally, in relative terms, leads to an increase in the value of Opco’s stake and a decline in the value of Holdco’s stake.
Toshiba – Japan Industrial Partners The Only Real Bid?
- Since the second of Jun Toshiba is down 14.7% while TOPIX is up 0.7%.
- This underperformance against TOPIX and industry peers suggests that some of the implied acquisition premium has dissipated.
- With reasonable potential for some form of bid coming through we consider the news about Japan Industrial Partners growing its consortium.
Link’s On Again-Off Again Scheme Is All but Off
- Dye & Durham/DND has proposed a revised Link Administration (LNK AU) offer to address any FCA redress payments. Around A$1.00 per share will hang on the outcome of the FCA investigation.
- The Link Board has said it cannot recommend the revised proposal based on value, structure and alternatives available to Link. We agree with the Board’s view.
- The scheme is all but dead. The shares are now a back-end play and remain attractive for value investors.
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