In today’s briefing:
- MSCI August 2022 Index Rebalance: The Last QIR Throws Up One Big Surprise
- Swire A/B (19 HK / 87 HK) Buyback Programme – It’s REALLY BIG
- Swire Pacific (19 HK/87 HK) Buyback: Bigger Than It Appears
- China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation
- Japan Post Insurance (7181 JP) – Reading Between The Lines
- China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
- Swire A/B (19 HK / 87 HK)’s BIG Buyback Programme
- Swire A Vs Swire B – Regulatory Nuances REALLY Matter
- Taiwan Dual-Listings – TSMC Premium Decline Could Highlight Foreign Vs. Domestic Sentiment Mismatch
- CTG Duty Free H Share Listing: Valuation Insights
MSCI August 2022 Index Rebalance: The Last QIR Throws Up One Big Surprise
- As announced, there are 8 adds and 3 deletes for the MSCI Standard indices in Asia Pacific. To trade, there are 8 adds and 2 deletes.
- Most of the changes are inline with what we forecast. The non-inclusion of Gcl Poly Energy Holdings Limited (3800 HK) is the big surprise, though that could change.
- All the adds in China are potential inclusions to the FTSE All-World Index in September and that will add to the passive inflows on the stocks.
Swire A/B (19 HK / 87 HK) Buyback Programme – It’s REALLY BIG
- Today Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced earnings, and they announced a large (HK$4bn) buyback.
- Details are somewhat thin, but there are a bunch of possibilities, and all of them should have non-negligible impact on Swire and Swire vs Peers.
- The immediate market response was to send them up 10% on the day. That puts both at somewhere near one-year highs, but the discount to NAV is still big.
Swire Pacific (19 HK/87 HK) Buyback: Bigger Than It Appears
- Swire Pacific (A) (19 HK)/Swire Pacific Ltd-Cl B (87 HK) has announced a HK$4bn buyback. While that is 6.5% of shares out, it is over 15% of real float.
- Swire Pacific (A) (19 HK) was trading at a 50% discount to NAV and near the widest level over the last few years.
- There will be passive selling once the buyback is complete, but the stocks should run up prior to that.
China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation
- China Tourism Group Duty Free Corporation Limited (CDF) now aims to raise US$2-3bn in its H-share listing in Hong Kong.
- As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
- In this note, we will talk about the recent updates from its revised filings and revisit valuations.
Japan Post Insurance (7181 JP) – Reading Between The Lines
- Japan Post Insurance (7181 JP) reported soft Q1 Tuesday on negative existing policy premium growth and higher (covid-related) underwriting claims costs. Guidance was unchanged but JPI also announced a buyback.
- The buyback structure is designed to keep Japan Post Holdings (6178 JP) under 50% to continue to abide by the strictures and goals of the Japan Postal Privatisation Act.
- 50% or more will be done in a ToSTNeT-3 buyback Thursday morning 12 August. The rest will be bought on market. Impact is non-negligible. And JPI is cheap cheap cheap.
China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
- China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
- As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
- In this note, we talk about the deal pricing and run the deal through our ECM framework.
Swire A/B (19 HK / 87 HK)’s BIG Buyback Programme
- Swire Pacific (19 HK) has announced a “small” buyback at HK$4bn, but it is a material portion of ADV.
- What remains unknown is how the buyback will be split. The split will only be known once buyback volumes are announced.
- Swire is trading cheap at a look-through forward P/B of 0.28x compared to its five-year average of 0.38x, and the two-year average pre-Covid of 0.48x.
Swire A Vs Swire B – Regulatory Nuances REALLY Matter
- Yesterday Swire Pacific (A) (19 HK) (and Swire Pacific Ltd-Cl B (87 HK)) announced a buyback of shares according to the 2022 AGM mandates approved in May, limited to HK$4bn.
- A reader question prompted me to look more closely at the rules. There are nuances NOT covered in the announcements. So I work through them.
- The conclusions are surprising, and lead to one clear trading idea.
Taiwan Dual-Listings – TSMC Premium Decline Could Highlight Foreign Vs. Domestic Sentiment Mismatch
- TSMC’s ADR premium has fallen substantially and is at the lower end of its 3-year range
- ASE’s ADR premium is in contrast near the upper end of its range
- ChipMOS ADRs are now trading at a discount to their Taiwan shares
CTG Duty Free H Share Listing: Valuation Insights
- China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
- In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
- Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.
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