Smartkarma Daily Briefs

There are 2 trading days left in the review period. We expect 5 changes at the rebalance that will be announced end-February and implemented at the close on 30 March.
A lot of the stocks were AMFI migrations and Biocon Ltd (BIOS IN) is a potential deletion from the MSCI India Index at the February QCIR.
The drop in the Adani Group stocks that are part of the index will result in passive inflows on the non-F&O constituents due to capping at 15% of index weight.

S&P/ASX Index Rebalance Preview: High Impact Changes in March

We currently see 1 change for the ASX20, 2 for the ASX100, 4 changes for the ASX 200 and 9 adds/ 6 deletes for the ASX300 Index in March.
Passive trackers will need to trade over 3 days of ADV on 13 stocks, over 5 days of ADV on 9 stocks and over 10x ADV on 4 stocks.
Shorts have been covering positions on stocks where there are expected to be passive inflows and increasing positions on stocks that are expected to have passive outflows.

2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales

By Tina Banerjee

Cipla Ltd (CIPLA IN) reported revenue growth of 6% in Q3FY23. Ex-COVID revenue growth was 11%. Despite price erosion and surging R&D investment, EBITDA margin expanded 153bps YoY to 24.2%.
Ex-COVID India business recorded 11% revenue growth, driven by double-digit traction in core portfolio across therapies and business segments. Branded prescription business reported seventh consecutive quarter of market beating growth.
US business recorded record high revenue, representing 30% growth in USD terms. Strong traction in respiratory products was further propelled by new launches including peptides. In December, Cipla launched leuprolide.

Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US

By Tina Banerjee

Dr. Reddy’s Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.

Pre-IPO New Ruipeng Pet Group (RPET.US)- The Industry, the Business and the Concerns

By Xinyao (Criss) Wang

Pet medical industry is the second largest core industry after pet food industry.Pet hospital,with dual attributes of medical treatment and consumption,represents the direction of consumption upgrading and has huge potential.
New Ruipeng maintained rapid growth these years, but its business is still in the investment period. The Company is hard to generate high profit/returns due to low gross margin level.
There’re still technical bottlenecks in China.If New Ruipeng can fill these market gaps in time and provide comprehensive pet medical solutions, its development space and moat will be much higher.

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Jan 30

Daily Brief Industrials: Adani Enterprises and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do

MSCI Wants a Consult on Adani Group – I’m Not Sure What They Can Do

The Adani Group listcos have been on a wild ride for the last few years, rising from 10x TTM EV/EBITDA in March 2020 to 60x at end-September 2022.
Adani Group “business incubator’ Adani Enterprises (ADE IN) last fall indicated it might raise $2.4bn of equity and combined 6 co market cap is down $135bn since.
A short seller report last week put the cat amongst the pigeons. Now MSCI is consulting investors about what it might do regarding Things.

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Jan 30

Daily Brief Consumer: Xiabuxiabu Catering, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023
Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices

Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023

By Eric Chen

China catering players have seen strong recovery during the Chinese New Year starting from Jan 22th, amidst a broad-based revival of the service sector as a whole.
For Xiabuxiabu, latest data points suggest significant progress in turnaround and higher visibility into 2023 performance.
We see upside to our financial projection for 2023 and are more confident that Xiabuxiabu is the most attractively-priced to play re-opening in China catering sector. Expect 50% upside.

Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices

By Aki Matsumoto

The fact that TSE, which has revised Corporate Governance Code several times, is now discussing improving the quality of corporate governance shows that the governance practices have become a formality.
Regarding the expansion of English-language disclosure, there is need to eliminate the mismatch between the documents that companies translate into English and those that overseas investors demand to be translated.
Asset owners should keep encouraging asset managers to follow Stewardship Code. Appropriate action by asset managers to deal with the BOJ owned ETFs will encourage changes in the companies.

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Jan 29

Daily Brief ECM: ECM Weekly (29th Jan 2023) – Adani and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

ECM Weekly (29th Jan 2023) – Adani, Oasis, Mankind Pharma, ZJLD, India IPO Bookrunners
Accenture plc: Acquisition of FiftyFive5 & Other Drivers
MongoDB Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

ECM Weekly (29th Jan 2023) – Adani, Oasis, Mankind Pharma, ZJLD, India IPO Bookrunners

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.
While the holiday shortened week didn’t see much action in Asia, but there was one more ADR filing in the US, adding to the mini-pipeline.
Adani’s ongoing FPO was the only live deal this week, although it had enough drama to make up for the lack of other deals.

Accenture plc: Acquisition of FiftyFive5 & Other Drivers

Accenture continued its acquisition-led growth strategy in the last quarter and delivered another all-around beat, increasing operating margin while making significant investments in related businesses.
Engineering and industrial digitization are still in high demand and experienced strong double-digit growth in Q1.
Furthermore, they are assisting Celanese to undergo a digital transformation that will boost their manufacturing production resilience, productivity, and plant operations predictability.

MongoDB Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

MongoDB performed well in the third quarter in both financial and operational terms.
In addition, ISVs are continuing to develop their solutions using MongoDB in an increasing number of cases.
MongoDB is looking to achieve profitable growth and focus on acquiring new workloads from both existing and new customers.

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Jan 29

Daily Brief Equity Bottom-Up: LG Energy Solution: Consensus Likely to Lower Sales and OP Estimates in 2023 and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

LG Energy Solution: Consensus Likely to Lower Sales and OP Estimates in 2023
Jabil Inc: Major Drivers
Kimberly-Clark Corporation: Major Drivers
Dropbox Inc: The FormSwift Acquisition & Other Drivers
Schlumberger NV: Major Drivers
Textron Inc: Major Drivers
Levi Strauss & Co: Major Drivers

LG Energy Solution: Consensus Likely to Lower Sales and OP Estimates in 2023

By Douglas Kim

On 27 January, LG Energy Solution provided financial and operational guidance for 2023.
We believe that the consensus is likely to reduce sales estimate by 3% and operating profit estimates by 10-15% in 2023.
Out of the total of 3.4% of ESOP shares, about 0.5% to 1.5% of the shares could be sold in the first few weeks after the end of the lock-up.

Jabil Inc: Major Drivers

Jabil’s Q1 performance was impressive and the company delivered an all-around beat which helped propel its stock price.
The company’s strength resulted in the quarter’s double-digit rise in revenue, core operating income, and core diluted profits per share.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Kimberly-Clark Corporation: Major Drivers

Kimberly-Clark delivered a mediocre performance in the last quarter of 2022 as it failed to meet the revenue expectations of Wall Street.
Despite that fact, the company managed to get 1/3rd of profit from the international market in the last quarter.
The new products created by Kimberly-Clark in the last 3 years have contributed to 60% of the total sales growth in 2022.

Dropbox Inc: The FormSwift Acquisition & Other Drivers

Despite a series of macroeconomic challenges, Dropbox had a good last quarter and managed an all-around beat.
They also continue to return a sizable percentage of their free cash flow to shareholders through share repurchases.
Although they are experiencing moderate growth in their Sign business, it is important to set Dropbox Sign apart from conventional eSign solutions.

Schlumberger NV: Major Drivers

Schlumberger maintained its growth momentum throughout the fourth quarter, producing significant revenue growth and additional sequential and annual margin increase.
They had sequential revenue growth and margin expansion in North America and internationally.
On the other hand, exploration data sales, INNOVATION FACTORI, and AI solutions saw a significant increase in the digital sector.

Textron Inc: Major Drivers

Textron delivered a decent result in the last quarter with revenues of $3.6 billion which surpassed Wall Street expectations.
The company faced a strong demand, a strong pricing net of inflation, and a higher aftermarket volume in this quarter.
It was a quarter of strong customer demand and solid cash flow.

Levi Strauss & Co: Major Drivers

Levi Strauss had a successful fourth quarter with strong fiscal 2022 performance.
Levi Stauss managed to enhance its brand positioning and market share in the global market.
40% of the company’s revenues came from outside of denim bottoms in this quarter.

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Jan 29

Daily Brief Thematic (Sector/Industry): China Healthcare Weekly (Jan.27) – Surgical Robots New Policy and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

China Healthcare Weekly (Jan.27) – Surgical Robots New Policy, COVID-19 Update, Policy Vacuum Period
Japan Weekly | Bullish Markets, Suzuki, Shin-Etsu
Sands China Ltd: Breakthrough to Profitability Is First Forerunner of Macau Recovery Cycle

China Healthcare Weekly (Jan.27) – Surgical Robots New Policy, COVID-19 Update, Policy Vacuum Period

By Xinyao (Criss) Wang

New policy was released to support the development of surgical robots in China, which would be short-term catalyst for related companies, but it may not bring high profits.
In fact, since March, it may not be appropriate for healthcare companies to use the COVID-19 as a reason if their performance in the following months is not as expected.
Before DRGs/DIP policy becomes very “lethal”, there is a “policy vacuum period” in the next two or three years, which is a good opportunity to go long in China healthcare.

Japan Weekly | Bullish Markets, Suzuki, Shin-Etsu

By Mark Chadwick

Global markets continued positive momentum on peaking in global inflation and expectations that the rate hike cycle is approaching its end
There is a slew of economic data next week and some major US tech company results announcements. Japanese earnings announcements get into full swing
Suzuki was the start performer last week as investors cheered the company’s new mid-term strategy and decarbonization plans

Sands China Ltd: Breakthrough to Profitability Is First Forerunner of Macau Recovery Cycle

By Howard J Klein

Revenues for 2022 just missed forecast, but enough to put the Macau market share leader over the top and into positive profit territory.
Indications during CNY show average bet of US$101 per hand clearly put premium mass play back in action with mass segment spurts evident during the holiday.
CNY arrivals hit 90,000 on Tuesday, best in three years. Current run rate now reaching 40% of pre-covid baseline 2019.

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Jan 29

Daily Brief Event-Driven: Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
Names to Watch for Inclusion in MSCI Korea May Review
Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation
Kanematsu Sustech (7961) ¥2250/Share Tender Offer by Parent – Supremely Illiquid But Interesting
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises
Weekly Deals Digest (29 Jan) – AAG Energy, Acotec, Xingda, Origin Energy, Tyro, Kanematsu, Toyo
Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Osstem, Warrego, Norwest Energy, Acotec, Sabana, Jafco, Toyo
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback

The Adani Group stocks have taken a dive following the Hindenburg Research report. Group market cap is down more than US$47bn with company promoters taking the biggest hit.
The Adani Enterprises FPO is almost certain to be undersubscribed. MSCI, in an unprecedented step, is monitoring publicly available information and is seeking feedback from the investment community.
We find that the real float of some Adani Group stocks is much lower than the headline numbers and there could be selling if MSCI lowers the FIF.

Names to Watch for Inclusion in MSCI Korea May Review

By Sanghyun Park

Posco International‘s recent merger with Posco Energy increased the share count. The distance from the float market cap borderline is catchable, given the current share price uptrend.
Hanwha Aerospace will likely fail inclusion in this February review. The gap with the hurdle is not large, so it can aim for inclusion in the May review.
Among Outside IMI, Korea Gas is tricky as it is a FOL stock. MSCI-concluded float is 30%, and the gap with the float market cap hurdle is still quite large.

Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation

By Arun George

Kanematsu Electronics (8096 JP) has recommended Kanematsu Corp (8020 JP)’s tender offer of JPY6,200 per share, an 32.9% premium to the undisturbed price (27 January).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
The tender offer is attractive as it represents an all-time share price high and a premium to peer multiples. This suggests a done deal.

Kanematsu Sustech (7961) ¥2250/Share Tender Offer by Parent – Supremely Illiquid But Interesting

Kanematsu Corp (8020 JP) announced two tender offers late Friday to take out minorities in subsidiaries. One larger, safer deal. One smaller, illiquid, but potentially interesting one.
This is the interesting one. It is being done at the wrong price, and it has investors who might care who have been long-time holders.
This could get interesting. You have a buyer. A target. It’s pretty clean except for shareholder structure. And the buyer has room to pay up.

Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani

The review period for the upcoming rebalance of the MSCI, Nikkei 225, NIFTY, Nifty Next 50, SSE STAR50 and KRX New Deal Indices ends on 31 January.
The IDX30, LQ45, IDX80, Global X Uranium ETF (URA US) rebalances will be implemented on 31 January while the PSEi Index (PCOMP INDEX) rebalance will be implemented on 3 February.
There were inflows to Asian country ETFs and iShares MSCI Emerging Markets (EEM), and outflows from IShares MSCI Min Vol EM ETF (EEMV) and iShares MSCI Pacific ex Japan (EPP).

Last Week in SPACE: Kawasaki Kisen Kaisha, Osstem, Fujitsu General, Adani Enterprises

By David Blennerhassett

Be long Kawasaki Kisen Kaisha (9107 JP) vs MOL and NYK. The shares are cheap on a forward basis. KLine is reducing the Real World Float, causing further potential squeeze.
Sabana Industrial REIT (SSREIT SP)‘s Partial Offer at 0.88x book is not overwhelming, but it is also not a control stake. It is probably priced near-right.
IF Osstem (048260 KS)‘s price were to go higher, it is conceivable there could be a bump, but don’t bet on it as long as the stock trades <KRW 190,000.

Weekly Deals Digest (29 Jan) – AAG Energy, Acotec, Xingda, Origin Energy, Tyro, Kanematsu, Toyo

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – New Ruipeng Pet Group (RPET US) and Hesai Group file for US$100 million IPOs for listing in the US.
Event-Driven developments – Aag Energy Holdings (2686 HK), Acotec Scientific Holdings (6669 HK), Xingda International (1899 HK), Kanematsu Electronics (8096 JP), Toyo Construction (1890 JP), Origin Energy (ORG AU).

Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout

Kanematsu Corp (8020 JP) announced two tender offers Friday to take out subsidiaries. One more liquid one. One very small sub. This is the larger, easier deal.
Kanematsu Electronics is an IT shop, designing and executing system integration and maintenance services. It is a great business. The takeout is a 33% premium to an all-time high.
It might still be a bit cheap, but it is not egregious, and it would be quite difficult to block.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Osstem, Warrego, Norwest Energy, Acotec, Sabana, Jafco, Toyo

By David Blennerhassett

There are 43 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma in the past week: MBK and Unison Capital MBO-style Tender Offer for Osstem Implant (048260 KS).
Key updates took place for: Warrego (WGO AU), Norwest Energy NL (NWE AU), Acotec (6669 HK), Sabana Industrial REIT (SSREIT SP), Jafco (8595 JP), and Toyo Construction (1890 JP).

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

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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Jan 29

Daily Brief Macro: Positioning Watch – Is This a Bear Market Rally or the Beginning of a Bull Run? and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Positioning Watch – Is This a Bear Market Rally or the Beginning of a Bull Run?
Europolitics Watch – A Continued European Surge?
Japan’s Corporate Balance Sheet Recession: Still Impacting Attitudes Towards Risk-Taking

Positioning Watch – Is This a Bear Market Rally or the Beginning of a Bull Run?

By Andreas Steno

Equity positioning remains very bearish despite the recent spike in price action
The EUR remains a crowded long in FX space, while the AUD and JPY are still short
The market continues to expect market rates to increase despite falling inflation

Europolitics Watch – A Continued European Surge?

By Mikkel Rosenvold

European equities have seen an incredible start to 2023 on top of strong performance in late 2022.
But European manufacturing and tech finds itself under pressure from massive public investments in both the US and China.
What to make of the EU’s response and how is the outlook for Europe?

Japan’s Corporate Balance Sheet Recession: Still Impacting Attitudes Towards Risk-Taking

By Said Desaque

Despite Abenomics, Japan’s non-financial corporations have continued to hoard cash since 2005 to its current level of 44% of GDP. Overseas investment has increased since 2005, indicating higher profitability.
Although share buybacks have surged in recent years, they remain significantly below US levels, but are arguably more sustainable due to high cash balances.
Japanese equities are cheap on a cross-border basis, but corporations’ shift to focus on shareholder value under Abenomics has not produced richer valuations.

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Jan 29

Most Read: Oriental Land, Kepco Engineering & Construction, Jb Financial Group, Adani Enterprises, Surya Esa Perkasa, Douzone Bizon, Adani Transmission, Kanematsu Electronics, Posco International Corporation, SenseTime Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes
KOSPI200 Index Rebalance: JB Financial (175330 KS) To Replace Meritz F&M (000060 KS)
Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation
IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
KRX New Deal Index Rebalance Preview: Some Big Impact Names
Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback
Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation
Names to Watch for Inclusion in MSCI Korea May Review
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani

Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End

The review period for the Nikkei 225 (NKY INDEX) March rebalance ends next week. We highlight the 3 potential inclusions and exclusions for the index.
Lasertec Corp (6920), Oriental Land (4661) and Renesas Electronics (6723) remain our top inclusions, while Toyobo Co Ltd (3101), Nippon Light Metal (5703) and Toho Zinc (5707) could be deleted.
Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 1x ADV on many index constituents.

Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes

Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There are 6 adds and 5 deletes with implementation at the close on 31 January.
Estimated one-way turnover is in excess of 12% and will result in a one-way trade of US$207m. There are 11 stocks with estimated passive flows greater than 5x ADV.
Some of the inclusions have had BIG rallies over the last couple of months and there could be profit taking on those names in the next few days.

KOSPI200 Index Rebalance: JB Financial (175330 KS) To Replace Meritz F&M (000060 KS)

Jb Financial Group (175330 KS) will replace Meritz Fire & Marine Insurance (000060 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 27 January.
We estimate passive KOSPI2 INDEX trackers will need to buy 3.494m shares (KRW 36.34bn; 4.04 days of ADV) of Jb Financial Group (175330 KS) at the close on 27 January.
DGB Financial Group (139130 KS) could be added to the KOSPI2 INDEX in April, replacing Meritz Securities (008560 KS) following its merger with Meritz Financial Group (138040 KS).

Adani Enterprises FPO Update: Hindenburg, Anchors, and Righteous Indignation

The Adani Enterprises (ADE IN) Further Public Offering (“FPO”) expected to raise Rs 200bn has its first leg publicly complete with anchor investors taking Rs 59.849bn.
Noted shortseller Hindenburg Research published a long report suggesting Adani Enterprises and indeed the Adani Group were over-priced according to fundamentals and were the result of a “con.”
Now the book build starts. Deal structure and Adani Group CFO comments continue to suggest that Liquidity is a Bug, not a Feature.

IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation

There are 3 changes for the IDX30 Index, 6 changes for the LQ45 Index, and 7 changes for the IDX80 Index at the rebalance to be implemented on 31 January.
Largest passive inflows are expected to be on Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) and Surya Esa Perkasa (ESSA IJ).
With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.

KRX New Deal Index Rebalance Preview: Some Big Impact Names

The review period for the March rebalance ends on 31 January, the changes will be announced towards end February and implemented at the close of trading on 9 March.
We forecast one add/delete for the Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).

Adani Group: Hindenburg Report Spurs MSCI to Invite Feedback

The Adani Group stocks have taken a dive following the Hindenburg Research report. Group market cap is down more than US$47bn with company promoters taking the biggest hit.
The Adani Enterprises FPO is almost certain to be undersubscribed. MSCI, in an unprecedented step, is monitoring publicly available information and is seeking feedback from the investment community.
We find that the real float of some Adani Group stocks is much lower than the headline numbers and there could be selling if MSCI lowers the FIF.

Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation

By Arun George

Kanematsu Electronics (8096 JP) has recommended Kanematsu Corp (8020 JP)’s tender offer of JPY6,200 per share, an 32.9% premium to the undisturbed price (27 January).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
The tender offer is attractive as it represents an all-time share price high and a premium to peer multiples. This suggests a done deal.

Names to Watch for Inclusion in MSCI Korea May Review

By Sanghyun Park

Posco International‘s recent merger with Posco Energy increased the share count. The distance from the float market cap borderline is catchable, given the current share price uptrend.
Hanwha Aerospace will likely fail inclusion in this February review. The gap with the hurdle is not large, so it can aim for inclusion in the May review.
Among Outside IMI, Korea Gas is tricky as it is a FOL stock. MSCI-concluded float is 30%, and the gap with the float market cap hurdle is still quite large.

Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani