In today’s briefing:
- S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete
- Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
- NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
- Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
- Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
- Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value
- AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG
- ECM Weekly (19th Feb 2023) – Rakuten Bank, ZJLD, REPT, Link REIT, SoCar, Ryman, Indigo, ESR, Oasis
- SET50 Index Rebalance Preview: Changes from Now to June
S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete
- We currently see 1 change for the ASX20 Index, 2 changes for the ASX100 Index, 4 changes for the ASX200 Index, 10 adds/7 deletes for the ASX300 Index in March.
- On average, the potential adds to each of the indices have outperformed the potential deletes with the largest outperformance for the ASX300 Index.
- Shorts have continued to increase positions on the potential deletes while covering their positions on the potential adds. We expect there are large pre-positions on some of the stocks now.
Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
- This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
- This insight discusses the dynamics of Sembcorp Marine (SMM SP) as the takeover of Keppel O&M nears. The deal goes effective 28 February after last week’s SMM shareholder approval.
- That will mean overhang. Lots of active overhang. There WILL be some index upweights, but index treatment remains nebulous, and one has to expect a lot more net index outflow.
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
- ABB India Ltd (ABB IN), Adani Wilmar (AWLTD IN), Canara Bank (CBK IN), Page Industries (PAG IN) and Varun Beverages Ltd (VBL IN) will be added to the index.
- Bandhan Bank Ltd (BANDHAN IN), Biocon Ltd (BIOS IN), Gland Pharma Ltd (GLAND IN), Mphasis Ltd (MPHL IN) and Paytm (PAYTM IN) will be deleted from the index.
- Given the large drop in the stock prices of the Adani Group companies, capping changes will result in buying on all non-F&O stocks in the index.
Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
- The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
- Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX).
- There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.
Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
- This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
- This insight discusses the dynamics of Keppel Corp (KEP SP) as the SMM takeover of Keppel O&M nears. The deal goes effective 28 February but KEP trades ex- on 23 February.
- While not as egregiously mis-priced as SCI vs SMM in autumn 2021, NEW KEPPEL appears under-priced here.
Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value
- The transaction completes on 28 February and the distribution in-specie of 49% new Sembcorp Marine (SMM SP) shares will be credited to Keppel Corp (KEP SP)‘s shareholders on 1 March.
- While the potential index inclusions are likely to support new SMM shares, there is likely to be greater short-term downward pressure from the overhang created by the distribution in-specie.
- New SMM trades at a premium P/NAV multiple of 1.81x vs peers. However, New SMM’s order book of S$18.1 billion implies an undemanding EV/order book of 0.60x vs historical ranges.
AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer
- On the 14 May 2018, coalbed methane producer AAG Energy Holdings (2686 HK) announced a partial offer (50.5%) from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.75/share.
- Xinjiang Xintai has returned to the pit with a $1.85/share Offer by way of a Scheme. The Cancellation Price will NOT be increased.
- This is hardly a knockout price, at a 10.1% premium to undisturbed; and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG
- There are 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
- Onr new deals was discussed on Smartkarma this past week – AAG Energy (2686 HK)‘s Scheme. Jiangnan (1366 HK) also suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
- Key updates took place for: Toshiba Corp (6502 JP), Newcrest Mining (NCM AU), Yashili International Holdings (1230 HK), Sembcorp Marine (SMM SP), and O2Micro International (OIIM US).
ECM Weekly (19th Feb 2023) – Rakuten Bank, ZJLD, REPT, Link REIT, SoCar, Ryman, Indigo, ESR, Oasis
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, Pertamina Geothermal is set to make its debut in the coming week.
- Placements picked up pace this week, with multiple deals across geographies.
SET50 Index Rebalance Preview: Changes from Now to June
- Srisawad Power 1979 (SAWAD TB) is likely to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in early March following the DTAC/TRUE merger.
- Then there should be one change in June with Thai Life Insurance (TLI TB) replacing Jaymart PCL (JMART TB) in the index.
- There is one stock close to failing the liquidity test and that could lead to another change with a few stocks vying for index inclusion.
💡 Before it’s here, it’s on Smartkarma
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