Smartkarma Daily Briefs

• With the review period for the September rebalance of the Nikkei 225 (NKY INDEX) complete, we take a look at the potential inclusions and exclusions for the index.
• The conclusions of the market consultation have been announced and that will mean we switch to a semi-annual rebalance. So we take a look at potential changes in March 2023.
• The announcement of the changes for the next rebalance should be made in the first week of September and will be implemented at the close on 30 September.

• SJM Holdings (880 HK) announced earnings on Monday and a HK$3bn Rights Issue last night designed to inject capital into Macau gaming licensee SJM Resorts. 
• An increase in share capital is required to pre-qualify for then tender process where the Macau Govt would allocate a 10-year gaming concession starting 1 Jan 2023. 
• 54.7% SJM Holder/Parent Sociedade de Turismo e Diversões de Macau (STDM) had previously extended a loan to SJM designed to allow SJM to inject capital to SJM Resorts.

PT Metrodata Electronics, Tbk (MTDL:IJ), publicly listed company on Indonesia Stock Exchange since 1990, is a Digital Solution Provider and Technology Innovator in Indonesia that leads and enables the digital economy hub. MTDL builds strategic alliances with world-class ICT companies. The Company has two main business units, including Distribution Business (providing World-Class ICT Hardware and Software) that handles distribution through Omnichannel to partnered dealers (both offline and online) and ICT solution companies, as well as runs an e-commerce business (e-catalogue for Government/B2G). Its Distribution network covers more than 150 cities in Indonesia and has more than 5,200 channel partners and more than 100 world-class IT products and service brands. The second business unit, Solution & Consulting Business, is a digital solution provider that provides a complete range of ICT solutions based on Metrodata’s 8 Pillars of Digital Solutions, which consist of Cloud Services, Big Data & Analytics, Hybrid IT Infrastructure, Security, Business Application, Digital Business Platform, Consulting & Advisory Services, and Managed Services to support digital business transformation, for Enterprise, Corporate, SME, and Public Sector segment.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• Semirara Mining And Power Corp (SCC PM) will replace Security Bank (SECB PM) in the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the close of trading on 5 August.
• Passive trackers will need to buy 5.5 days of ADV on Semirara Mining And Power Corp (SCC PM) and sell nearly 30 days of ADV on Security Bank (SECB PM).
• Historically, the adds have outperformed the deletes and there has been a pop/drop in the adds/deletes the day after announcement. Square off existing pre-positions by mid week.

• Alibaba’s revenue stopped growing for the first time on record.
• We still believe the revenue growth rate will recover in the December quarter.
• We believe the stock price will have at least an upside of 29% after a significant plunge.

• Shenzhou Intl Group Holdings (2313 HK) is a high probability deletion in September, while JD Health (6618 HK) is currently the highest ranked non-constituent stock.
• There are a couple of other stocks that are close to the inclusion/exclusion thresholds and price changes over the next few weeks will determine if there are any more changes.
• Short interest on JD Health (6618 HK) is high in terms of days to cover and as a percentage of free float. Covering could take the stock higher.

• Alibaba Group (9988 HK)’s 1QFY23 results were above consensus but it was still quite disappointing with revenue and OP declining 0.1% and 19.1% YoY respectively.
• Withholding the disclosure of active buyers, which Alibaba was proudly speaking of in the previous quarter, is a tell-tale sign that the business is undergoing some serious trouble.
• With expectations of 9.4% YoY OP growth in the next 3-quarters and 42% YoY OP growth in FY24, we think consensus is optimistic from 2QFY23 and bound for a correction.

• Canon Inc (7751 JP) reported Q2 earnings early last week. Shares dropped 4% the next day but closed down only 1%. Now they are above the prior close. 
• They biked the dividend nicely (was ¥45/share last year, guided to ¥50 this year, but made ¥60/share instead. 
• And now they have announced another ¥50bn buyback on top of the one announced in May. Fourth time in 14 years a second tranche is announced in one year. 

• Lifestyle International Holdings (1212 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• Thomas Lau is the largest shareholder with 74.97%, as he has been since April 2019.
• A possible Offer ahead of a (potentially) improving retail outlook and the imminent opening of its Kai Tak project? 

• The ACCC is seeking views on whether Dye & Durham’s proposed sale of GlobalX and the Australian operations of SAI Global, is sufficient to approve Link Administration (LNK AU)‘s takeover.
• Separately, the postponed Scheme meeting will be held on the 22 August.  The Independent Expert continues to conclude that the Revised Scheme is fair and reasonable.
• The proposed date for the announcement of ACCC’s findings is the 8th September, one day prior to the Second Court Date.