Event-Driven

As expected, NIO Inc (9866 HK) will be added to the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 June replacing ASM Pacific Technology (522 HK).
We estimate passive trackers will need to buy over 9 days of ADV on NIO Inc (9866 HK) while selling 11 days of ADV on ASM Pacific Technology (522 HK).
NIO Inc (9866 HK)‘s inclusion in the Hang Seng Tech Index (HSTECH INDEX) could create significant arb opportunities versus NIO Inc (NIO US) on 10 June.

HSCEI Index Rebalance: Lenovo In, Hansoh Out; Sunac Survives (For Now)

As expected, Lenovo (992 HK) will replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) after the close of trading on 10 June.
Sunac China Holdings (1918 HK) has been kept in the index for now, though suspension till 30 June will see it deleted early July.
Changes to the stocks, number of shares, float and capping results in an estimated one-way turnover of 3.7% and will result in a one-way trade of HK$2,977m.

KOSPI 200 IT Sector Index Rebalancing Flow: Watch Kakao Pay & LG Corp

We should focus on the weight changes of the existing constituents. For this, two names really stand out: Kakao Pay (+0.44x ADTV) and LG Corp (+0.37x ADTV).
It is because Kakao Pay and LG Corp will undergo an increase in their float rate in the KOSPI 200 rebalancing, and these up-weights will also affect this sector index.
Their combined inflow size (KOSPI 200 & KOSPI 200 IT) will be 1.41x and 1.16x ADTVs. This will be the most substantial, except for Kakao Bank and the new additions.

Index Rebalance & ETF Flow Recap: MSCI, ASX, NIFTY, KRX, PCOMP, HSI, HSCEI, HSTECH, SK Tel, GoTo

Plenty of review announcements after the close on Friday – HSI, HSCEI, HSTECH, FTSE AW/AC, Sensex. Most changes were as expected.
There are a lot of review cutoffs on Monday and announcements expected later in the week (KOSPI200, KOSDAQ150, CSI300, STAR50).
There were inflows to Hong Kong, Taiwan, Korea and Australia focused ETFs during the week, while there were outflows from China, Japan and India focused ETFs.

Asia-Pac Weekly Risk Arb Wrap: Kinetsu World, Hwa Hong, MyDeal, Kito, Virtus Health, Irongate, HKBN

There are 41 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three news deals this week: Kintetsu World Express (9375 JP)‘s Tender Offer, Woolies tilt for MyDeal.com (MYD AU), Hwa Hong (HWAH SP)‘s MBO, & KKR’s bid for Kito (6409 JP)
Key updates took place for: Virtus Health (VRT AU) &Irongate Group (IAP AU)

Last Week In Event SPACE: Woodside Petroleum, Brambles, Tabcorp, HKBN, Japan

The downside to Woodside Petroleum (WPL AU) remains, but the reasoned downside is smaller than it was before.
CVC walks, but it doesn’t stop Brambles Ltd (BXB AU) privatisation speculation.
If Tabcorp and The Lottery Corp are seen as low volatility growth properties, then the stability of cashflow puts it into rarified air among “growth bias” which has gotten trashed.

Before it’s here, it’s on Smartkarma

May 21

Event-Driven: Celltrion Inc, MyDeal.com.au Ltd, Irongate Group, Orient Overseas International, SK Telecom, HomeServe PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time
Woolies Moves On MyDeal (MYD AU)
Irongate (IAP AU): 29th June Shareholder Vote On Charter Hall/PGGM Offer
HSI Index Rebalance: Four Weddings & A Funeral
MyDeal.com.au Gets a A$1.05 Offer from Woolworths
SK Telecom: Historical Price Analysis of Reaching 100% Foreign Ownership Limit
Brookfield/HomeServe: Agreed 1200p Offer
Irongate’s Scheme Meeting on 29 June, IE’s Opinion

FnGuide Top 10 Rebalancing on June 10: More Substantial Flow Impact than Last Time

Celltrion Inc (068270 KS)’s deletion seems pretty much a foregone conclusion as its average float-adjusted market cap on May 3-19 is way below the next one in line.
Shinhan Financial (055550 KS) is the one to replace Celltrion based on the numbers so far. There is close to a ₩1T gap with the next one, POSCO (005490 KS).
In this rebalancing, the flow impact of the addition/deletion is even more significant. So, their share price fluctuations on June 10 will likely be more substantial than last time.

Woolies Moves On MyDeal (MYD AU)

Woolworths Ltd (WOW AU) proposes to acquire all shares in MyDeal.com.au Ltd (MYD AU) other than those held by Sean Senvirtne and other key management personnel.
MyDeal shareholders will receive $1.05/share in cash, a punchy 62.8% premium to last close, but just 5% above its 2020 IPO price.
This proposal is being done by way of a Scheme with expected completion in Q3/Q4 2022.

Irongate (IAP AU): 29th June Shareholder Vote On Charter Hall/PGGM Offer

Irongate Group (IAP AU) has convened a Scheme Meeting on the 29 June to vote on the proposal from Charter Hall and PGGM.
The vote, for all intent and purposes, appears a formality. The Independent Expert considers the Offer to be fair and reasonable.
Trading at a gross/annualised spread of 2.1%/14.5%, assuming mid-July completion. Get involved.

HSI Index Rebalance: Four Weddings & A Funeral

The inclusion of Orient Overseas International, Zhongsheng Group, Semiconductor Manufacturing International Corp (SMIC) and China Hongqiao plus the deletion of AAC Technologies Holdings takes us to 69 index stocks.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover is 3.43% and will result in a one-way trade of HK$7,444m.
There is huge short interest on Zhongsheng Group (881 HK) and China Hongqiao (1378 HK) and there could be some short covering from now to implementation.

MyDeal.com.au Gets a A$1.05 Offer from Woolworths

MyDeal.com.au Ltd (MYD AU) entered a SID with Woolworths Ltd (WOW AU) to acquire an 80.2% interest. Shareholders will receive A$1.05 per share, a 62.8% premium to the unaffected price.
The three largest shareholders, representing 76.0% of outstanding shares, will vote in favour of the deal. The scheme meeting is set for 3Q.
This is a done deal. At the last close price, the gross and annualised spread for an October implementation date is 4.5% and 10.1% respectively.

SK Telecom: Historical Price Analysis of Reaching 100% Foreign Ownership Limit

In this insight, we analyzed the different share price movements of SK Telecom relative to KOSPI from 2005 to 2022 when foreign ownership remained above 99%.
Once MSCI announces the potential deletion of SK Telecom from MSCI Korea Index in the next several weeks, there could be some short term temporary weakness on SK Telecom.
Over a longer period, SK Telecom is well poised to outperform the market amid the market’s rotation into value stocks and the company’s strong earnings and cash flow growth.

Brookfield/HomeServe: Agreed 1200p Offer

HomeServe has reached an agreement on a 1,200p cash offer (vs. my 1,206 TP), 71% premium and an implied EV of £4,706 million; 13.3x EV/Fwd EBITDA, 25.7x Fwd P/E.
While the deal is highly likely to close (15.3% IRR by year 8) and the founder will bag £490 million, HomeServe could still attract interest from other parties.
Gross spread as of today’s close is 3.4% and the estimated annual return would be 7.9% assuming settlement on 30 October. Reiterate long HSV LN.

Irongate’s Scheme Meeting on 29 June, IE’s Opinion

Unsurprisingly, the independent expert (IE) considers the offer for Irongate Group (IAP AU) to be fair and reasonable. We think that IE’s valuation approach is sound.
The key condition is approval from shareholders and regulatory authorities (FIRB, OIO, SARB). The scheme meeting is scheduled for 29 June.
We continue to think that offer is attractive. At the last close price and for the 15 July implementation date, the gross and annualised spread is 1.4% and 9.2%, respectively.

Before it’s here, it’s on Smartkarma

May 20

Event-Driven: Core Lithium Ltd, SK Telecom, Woodside Petroleum, HKBN Ltd, Seiko Epson, Enchem, Siemens Gamesa Renewable Energy, S.A., Tencent and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P/ASX Index Rebalance Preview: Tabcorp, Crown & Potential Changes in June
SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall
Woodside Shareholders Approve Deal but Not WPL’s Green Credentials; Now People Talk About Flows
SK Telecom (017670 KS): Implications of Zero Foreign Room
HKBN (1310 HK): KKR & PAG’s Pipe Dreams
Epson (6724) – A Big Buyback Amid Benign Backdrop
HKBN in the Crosshairs of KKR and PAG
KOSDAQ 150 Rebalancing: Complete List of Candidates, Including Enchem
Siemens Energy/Siemens Gamesa: Possible Delisting Offer
Shanghai/Shenzhen Southbound Connect: Weekly Moves (20 May 2022)

S&P/ASX Index Rebalance Preview: Tabcorp, Crown & Potential Changes in June

The Crown Resorts Scheme Meeting is scheduled for 20 May and the last trading day could be 24 May, while The Lottery Corp is expected to start trading 24 May.
The changes for the S&P/ASX 50 Index and S&P/ASX 100 Index will depend on the market cap of The Lottery Corp (TLC AU) and new Tabcorp Ltd (TAH AU).
The potential adds have outperformed the potential deletes over the last week and couple of months so there will be some pre-positions in there already.

SK Telecom: MSCI Special Deletion & Immediate Price Spike on Share Recall

Looking at these past similar cases, the MSCI will likely announce SKT’s special deletion within 2-3 days of reaching zero foreign room and rebalancing within 2-3 days after the announcement.
We will see a passive outflow of about 2M shares or about ₩115B, equivalent to 2.7x ADTV, which will likely lead to an immediate price spike.
ETF funds tracking the MSCI have a large proportion of loaning SKT shares. So, when an MSCI down-weight occurs to SKT, an immediate recall will push up the price.

Woodside Shareholders Approve Deal but Not WPL’s Green Credentials; Now People Talk About Flows

The EGM of Woodside Petroleum (WPL AU) today approved the BHP Petroleum merger in overwhelming fashion. 98.66% FOR.
They did not approve of the Climate Report the board submitted to vetting by shareholders for the first time. That got 51% “support.”
But now that’s done, people will talk about flows. So far the trade has worked but now time to think about how far to stretch it.

SK Telecom (017670 KS): Implications of Zero Foreign Room

Foreign investors hold 106.51m shares of SK Telecom (017670 KS) versus a limit of 107.23m shares. There are only 723k more shares (1 day of ADV) available for foreign buying.
MSCI will delete SK Telecom (017670 KS) from its indices once the foreign room reaches zero, while FTSE will likely reduce the investability weight in two tranches of 5% each.
SK Telecom (017670 KS) could continue underperforming KT Corp (030200 KS) in the short-term due to passive selling and inability of foreign investors to buy the stock.

HKBN (1310 HK): KKR & PAG’s Pipe Dreams

According to Bloomberg, KKR and PAG are considering bids for Hong Kong broadband play HKBN Ltd (1310 HK).
Private equity firms, possibly including Stonepeak, are understood to be conducting due diligence on HKBN, which has a current market cap of ~US$1.6bn.
Increased broadband usage became a Covid trend. That looks set to continue. This is a steady business, with an attractive yield.

Epson (6724) – A Big Buyback Amid Benign Backdrop

Seiko Epson (6724 JP) announces the first special div for the 2023 Nikkei 225 dividend futures.
And it also announces a VERY big buyback. The headlines say 9.5%. The reality is more like 4.0-4.4%, but that is still going to be 15-20% of Real World Float.
Given mildly positive backdrop, a net cash position, low multiples, and lack of major Real World Float active investor, this could go up.

HKBN in the Crosshairs of KKR and PAG

Bloomberg reported KKR & Co Inc (KKR US) and PAG are carrying out due diligence on HKBN Ltd (1310 HK), with a view to launching a privatisation bid.
HKBN has a relatively concentrated shareholder register which suggests a requirement for a high takeover premium.
Precedent transactions suggest a privatisation forward EV/EBITDA multiple of at least 10x, implying a minimum offer price of HK$11.80 per share, a 23% premium to the last close.

KOSDAQ 150 Rebalancing: Complete List of Candidates, Including Enchem

Enchem (348370 KS) is in a bit tricky situation. Applying the KRX’s review period calculation criterion to Enchem satisfies the minimum listing requirement.
So, we should consider Enchem’s addition odds quite high. Enchem’s inclusion will pave the way for Sungwoo Hitech (015750 KS) to leave the Index.
We have ten adds/deletes, and WYSIWYG Studios (299900 KS) leads the adds for the passive impact, whereas JNTC Co Ltd (204270 KS) will suffer the most relative to ADTV.

Siemens Energy/Siemens Gamesa: Possible Delisting Offer

Siemens Energy is considering a cash offer for the 32.9% of Siemens Gamesa it does not own. Group simplification and major restructuring would make sense.
Applying the 6-month VWAP rule, the offer price could reach c. €18.1/share. Takeover regulation says the offer must be in cash and the price equitable, allowing for other calculation methods.
Siemens Energy does not need to offer a high premium and could make an announcement on 24 May (CMD). Recommendation is long.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (20 May 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the total value increased US$12.5bn in the past week, with Shanghai accounting for US$5.7bn and Shenzhen US$6.8bn. Tencent (700 HK) is the dominant holding across both programs
Glory Sun Financial Group Limited (1282 HK) saw the biggest upward movement as the chairman sold to pay off debt. China South City (1668 HK) was reduced by both programs.

Before it’s here, it’s on Smartkarma

May 19

Event-Driven: JD.com Inc (ADR), GoTo, Semirara Mining And Power Corp, Woori Financial Group , Toyo Construction, Humm Group, True Corp Pcl, Dongwon Industries, OCI NV and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?
PCOMP Index Rebalance Preview Aug 22: One Set of Potential Changes
Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying
Yamauchi No.10 Announces Its Offer (If Toyo Accepts)
Humm’s Rump Diminished Amid Proxy War
DTAC/True Merger VTO Risk/Reward
Dongwon Industries Listens to Minority Shareholders and Changes Merger Ratio with Dongwon Enterprise
STOXX Europe Indices: Quiddity Leaderboard for June 2022 2.0

JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now

By Sumeet Singh

On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
In this note, we talk about the shareholding pattern and increase in shares held in CCASS.

GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?

GoTo (GOTO IJ) completes 20 trading days today. Based on the average price over the period and the last close, the stock meets the Fast Entry criteria for IDX30/LQ45/IDX80 inclusion.
Using a free float of 66%, we estimate passive trackers buying 5.42bn shares (US$74m) of GoTo (GOTO IJ). Announcement could come in a few days with implementation at month-end.
With the real float close to 4%, passive trackers will need to buy 11.6% of the real float and the stock could move higher in the short-term.

PCOMP Index Rebalance Preview Aug 22: One Set of Potential Changes

With just over a month to go in the review period for the August rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX), we expect one potential change.
Security Bank (SECB PM) is a potential deletion. Semirara Mining And Power Corp (SCC PM) has a higher inclusion probability as compared to UnionBank of the Philippines (UBP PM).
Passive funds will need to trade quite a few days of ADV on the stocks. Historically, the adds have outperformed the deletes in the last leg of the review period.

Woori Financial Block Deals: Another Shares Let-Go Event for Passive Buying

The KDIC sold a 2.33% stake in Woori Financial through an after-hours block sale. From a passive flow perspective, this is quite similar to KSOE’s HHI block deals yesterday.
Woori is likely to show a similar share price movement as HHI. Expectations for the passive inflow effect must have dissipated, and a short-term share price correction is now inevitable.
However, the passive inflow sizes are still too substantial. With this in mind, we need to consider a strategy that approaches this price correction as a re-entry opportunity.

Yamauchi No.10 Announces Its Offer (If Toyo Accepts)

Yamauchi No.10 Family Office and Toyo Construction (1890 JP) have been going back and forth in the last few weeks, with TC trying to figure out if it accepts YFO.
The Infroneer Tender Offer ends today, and with that – perhaps coincidental timing and perhaps not – YFO has formally announced an intention to launch a Tender Offer.
That puts the ball back in Toyo Construction’s court. The deal would be at ¥1,000/share and would launch in late June… if TC is ready and willing.

Humm’s Rump Diminished Amid Proxy War

Humm Group (HUM AU) shareholders will vote on the sale of the HCF business to Latitude Group (LFS AU) on the 23 June.
If the sale is approved, Humm will retain the commercial business and remain listed. However major shareholder/founder Andrew Abercrombie rejects the deal.
Since the Latitude transaction was announced on the 28 February, the market is assigning the lowest implied value for the remaining ops, ex-HCF.

DTAC/True Merger VTO Risk/Reward

At the last close prices, Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB)’s gross spread to the dividend-adjusted VTO price is 5.6% and 11.1%, respectively.
The merger has received DTAC and True shareholder approvals. The merger hinges on regulatory approval.
The LONG True and SHORT DTAC trade is attractive, with the current spread of 5.5% trading above the average spread since the merger announcement of 3.4% (ex. transaction costs).

Dongwon Industries Listens to Minority Shareholders and Changes Merger Ratio with Dongwon Enterprise

In a surprising move, Dongwon Industries announced that it will listen to the demands of the minority shareholders and change the merger ratio with Dongwon Enterprise.
This is likely to have a positive impact on Dongwon Industries since it boosts the value of Dongwon Industries’ minority shareholders at the expense of controlling shareholders of Dongwon Enterprise.
The merger price of Dongwon Industries will be raised from 248,961 won to 384,140 won (reflecting net asset value). The merger ratio will be adjusted from 1:3.8385530 to 1:2.7023475.

STOXX Europe Indices: Quiddity Leaderboard for June 2022 2.0

By Janaghan Jeyakumar, CFA

The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
This is a follow-up insight to STOXX Europe Indices: Quiddity Leaderboard for June 2022 Rebalance with an updated look at potential index changes in June 2022.

Before it’s here, it’s on Smartkarma

May 18

Event-Driven: Ryohin Keikaku, Tabcorp Ltd, Faith Inc, Hwa Hong Corp, Virtus Health, Woori Financial Group , SAMPYO Cement, John Laing Environmental Ass, Turkiye Garanti Bankasi As and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment
Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co
Hwa Hong’s Conditional Offer Amid Family Tussle
Virtus Health & BGH: Truth in Takeovers
Hwa Hong’s Voluntary Conditional Offer at S$0.370
Block Deal Sale of Woori Financial Group
Sampyo Cement: Likely Exit from KOSDAQ150 & Move to KOSPI
FTSE UK: Quiddity Leaderboard for June 2022 2.0
BBVA/Garanti: End of Offer Period

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup

There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.
Over the last month, the largest increase in shorts as a percentage of passive selling was on Mercari Inc, Ryohin Keikaku, Tokyo Century Corp, Sohgo Security Services, Pola Orbis Holdings.
The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.

Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment

Tabcorp Ltd (TAH AU) will soon spin out its Lottery and Keno business, to be called The Lottery Corp (TLC AU). TAH shares go ex-TLC on 24 May.
The question is where do they trade. What is in the price? What is not? What are the potential index implications?
This insight provides a grid of index implications and pro-forma valuations (EV/EBITDA, PER, Dividend Yield) for each and both and the combined entity.

Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co

Faith Inc (4295 JP) is a very smallcap contents management and platform business. As a business, one could give it a miss forever, but it is cash-rich.
The company is doing a very large buyback, and for someone who decided they’d be interested, there is a large block for sale.
The thing is… one would have to act quickly and aggressively.

Hwa Hong’s Conditional Offer Amid Family Tussle

Ong Choo Eng and his son Ong Eng Yaw, together with Roswell Assets, Dymon Asia Private Equity, and Crytalic Star have launched a voluntary Offer for Hwa Hong (HWAH SP).
The S$0.37/share Offer is a nine-year high and a 27.6% premium to last close. It has not been declared final.
However, it appears not all of the founding members of the company are on the same page. The family fissure became public after the last independent director resigned this month.

Virtus Health & BGH: Truth in Takeovers

With under three weeks until Virtus Health (VRT AU) shareholders vote on CapVest’s Offer, BGH continues to gradually push out the tendering period for its own Offer.
The outcome of the Scheme Meeting is all but a foregone conclusion assuming BGH sticks to its guns and is not supportive; which then potentially rekindles this competitive bidding situation.
This insight discusses the constraints BGH needs to adhere to in “truth in takeover” statements. There are still a handful of moving parts to unfold in this transaction.

Hwa Hong’s Voluntary Conditional Offer at S$0.370

Hwa Hong Corp (HWAH SP) announced a voluntary conditional cash offer from Mr Ong Choo and partners at S$0.370 per share, a 27.6% premium to the last close.
The offer is the culmination of a brewing family feud which pits Mr Ong Choo against the families of his five brothers.
The offer price is a 9-year share price high. We estimate around 60% of the public float needs to accept the offer to meet the 50%+ minimum acceptance condition.

Block Deal Sale of Woori Financial Group

After the market close today, it was announced that KDIC will sell its 1.81% stake of Woori Financial Group.
The block deal price will range from 15,229 won to 15,700 won (0 to 3% discount) and we would take the deal even at little discount.
Woori Financial Group’s share price continues to trade at deep valuation multiples as it is trading at P/B of 0.4x and P/E of 3.9x (using 2022 consensus earnings estimates).

Sampyo Cement: Likely Exit from KOSDAQ150 & Move to KOSPI

Sampyo Cement which is currently included in KOSDAQ150 is likely to be removed from this index in the coming months as the company wants to move to KOSPI.
If Sampyo Cement is excluded from KOSDAQ150, we estimate there could be about 9 billion won worth of passive funds which could exit the stock. ADTV is 1.6 billion won.
Therefore, we believe Sampyo Cement’s shares could face further weakness in the next several months. It will hold an EGM to vote on the move to KOSPI on 4 July.

FTSE UK: Quiddity Leaderboard for June 2022 2.0

By Janaghan Jeyakumar, CFA

The FTSE UK Index Series is a widely tracked family of indices representing the performance of the UK public equity market. These indices are reviewed on a quarterly basis.
In FTSE UK Index Series: Leaderboard for June 2022, I discussed the potential constituency changes for FTSE 100 and FTSE 250 for the upcoming June 2022 index review.
Below is an updated look at these potential index changes.

BBVA/Garanti: End of Offer Period

Until last week, BBVA had already secured a 71.1% stake in Garanti. The deadline to accept BBVA’s takeover bid ends on 18 May. Settlement will take place on 19 May.
Gross spread is 0.2%. Recently, the offer price has acted as a support for the share price, which may drop if BBVA doesn’t reach the squeeze-out threshold. Tender.
The squeeze-out threshold is 98% (95% for delisting). My understanding is that the squeeze-out price is arithmetic average of the daily VWAP in the 30 days before threshold disclosure.

Before it’s here, it’s on Smartkarma

May 17

Event-Driven: Kito Corporation, Bharat Electronics, Hyundai Heavy Industries, KT Corp, Brambles Ltd, KMW Co Ltd, HomeServe PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register
NIFTY100 Index Rebalance Preview: Five Potential Changes in September
Block Deal Sale of Hyundai Heavy Industries
SK Telecom Nearing Zero Foreign Room & May Spark Alternative Trading for KT Corp
CVC Sizes Up Brambles (BXB AU)
Hyundai Heavy Liquidation by KSOE & Passive Flow Tightening Recalculations
CVC to Lob an Offer for Brambles?
KRX New Deal Index Rebalance Preview: Buying on KMW; Selling on AfreecaTV
Brookfield/HomeServe Close to Reaching an Agreement

Kito (6409) Goes Private. Again. This Time With KKR, But Watch the Register

Kito Corporation (6409 JP) was taken private in 2003. It was re-IPOed by Carlyle in 2007 but Konecranes stayed an investor until 2016. Then it unwound.
Today, Kito announced the best results since pre-covid and forecasts for growth. They also announced KKR unit Crosby would launch a Tender to buy them out at a 62% premium.
Shareholder structure is highly unusual, and interesting to boot, especially looking at the most recent arrival in the top two. The fact there is a break fee is… telling.

NIFTY100 Index Rebalance Preview: Five Potential Changes in September

We are past the halfway mark in the review period for the September rebalance of the NIFTY100 Index. We see five potential changes which should be announced end August.
There is a high probability of Tata Power (TPWR IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN) and Mphasis Ltd (MPHL IN) being added to the index.
High probability deletions are Lupin Ltd (LPC IN), Jubilant Foodworks (JUBI IN), Zydus Lifesciences Ltd (ZYDUSLIF IN), Punjab National Bank (PNB IN) and Steel Authority of India (SAIL IN).

Block Deal Sale of Hyundai Heavy Industries

After the market close today, Korea Shipbuilding & Offshore Engineering announced that will sell 1.7% of its shares (1.5 million shares) in Hyundai Heavy Industries in a block deal.
The block deal sale is expected to take place on the morning of 17 May. The block deal price is expected to be 120,650 won.
We would take this deal as we believe this sale is likely to have a short term positive impact on HHI and increase the free float of HHI.

SK Telecom Nearing Zero Foreign Room & May Spark Alternative Trading for KT Corp

What immediate impact will SKT’s zero foreign room have? The recent trading theme that the local market is paying attention to is the alternative purchase of KT instead of SKT.
The recent driving force behind SKT’s foreign buying is the growing market preference for defensive stocks with high dividend yields. And KT also meets this condition.
However, SKT’s foreign room may turn around temporarily: 1. SKT’s deletion possibility from the MSCI through a special change and 2. the FTSE investability down-weight at the June QIR.

CVC Sizes Up Brambles (BXB AU)

Brambles Ltd (BXB AU) has confirmed that it has had a preliminary engagement with Luxembourg-based CVC in regard to an unsolicited proposal to acquire all of its shares.
No formal proposal has yet been received. No price was made public although various media reports indicate a A$20bn bid, which may or may not hinge off an EV figure.
In is 3Q22 trading update, Brambles upgraded its FY22 revenue and earnings guidance, despite ongoing cost inflation and pallet shortages.

Hyundai Heavy Liquidation by KSOE & Passive Flow Tightening Recalculations

KSOE will sell 1.5M shares, equivalent to 1.70% of SO, at an expected discount rate of 5%. After the disposal, KSOE’s stake will fall to 78.02%.
The need to increase float shares (and loan balance) due to the MSCI inclusion and the KOSPI 200 up-weight should be considered as the company’s pre-emptive response to the market.
But even with today’s disposal, the MAXIMUM real-world float will be 11.29%. An additional passive inflow equivalent to 1.73% of SO will occur until June 9th, 5.13x ADTV.

CVC to Lob an Offer for Brambles?

Brambles Ltd (BXB AU) responded to press speculation by stating it had preliminary discussions with CVC Capital on a privatisation proposal. The shares rose 11.2% to close at A$11.60.
The AFR’s rumour of “a bid valuing Brambles at more than $20 billion, including debt” would imply an offer price around A$11.50, a 10% premium to the undisturbed price.
As the Australian takeover premium ranges from 20% to 40%, we think that a bid of around A$13 per share (25% takeover premium) will be necessary for due diligence access.

KRX New Deal Index Rebalance Preview: Buying on KMW; Selling on AfreecaTV

The review period for the September rebalance of the KRX New Deal indices started on 1 May and will run till 31 July. Implementation is on 8 September.
Intellian Technologies (189300) could replace Danal Co Ltd (064260) in the Internet index, while KMW Co Ltd (032500 KS) could replace AfreecaTV (067160 KS) in the top 3 index stocks.
Nexon Games (225570 KS) could replace Devsisters (194480 KS) in the Game Index, though the flows are small on the stocks given the small benchmarked AUM.

Brookfield/HomeServe Close to Reaching an Agreement

Media reports that HomeServe and Brookfield are close to reaching an agreement. Since news of the approach broke, the share price of HomeServe has increased by c. 52%.
My fair value estimate (DCF based) is 1,206p, which could presumably be enough for the founder to sell its 12.1% stake (enough to prevent a squeeze-out).
At1,206p (71% premium to the price prior to disclosures), a financial buyer could obtain a 15.3% cumulative IRR by year 8. Long HSV LN.

Before it’s here, it’s on Smartkarma

May 16

Event-Driven: Japan Post Holdings, Adani Enterprises, Link Administration Holdings, Kintetsu World Express, Woori Financial Group , Yamaguchi Financial Group In, Brambles Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback
NIFTY50 Index Rebalance Preview: High Probability Add; Impact Higher than the Headline Numbers
Merger Arb Mondays (16 May) – Link Admin, Infomedia, VNET, Alliance Aviation, Ramsay, Link Net
Japan Post Holdings – Silly Guidance And A Not So Silly Buyback
Kintetsu World Express (9375 JP) Tender Offer by Parent – Too Cheap But Tough To Block
MSCI Korea Standard: Constituents with Index Up/Down-Weight in May SAIR
Yamaguchi Financial (8418) – Big On-Market Buyback for Middling Not Too Expensive Regional Bank
Brambles (BXB AU): Where Could CVC’s Bid Come In?

Japan Post Holdings (6178 JP) – Ugly Group Forecasts But a Very Bigly Buyback

Japan Post Holdings (6178 JP) and its two main components Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP) reported excellent earnings for the year to March 2022…
….but not so excellent forecasts for the year to March 2023. Some of that is conservative. Some is “finger-in-the-air”, and some of it is the vagaries of insurance sales accounting.
But they all pay high dividends and Japan Post Holdings announced a ¥200bn buyback. And remember, there will likely Never Be Another JPH Equity Offering, Ever Again. Ever.

NIFTY50 Index Rebalance Preview: High Probability Add; Impact Higher than the Headline Numbers

We are past the halfway mark in the review period of the NIFTY Index (NIFTY INDEX) September rebalance. We see one potential change which should be announced end August.
There is a high probability of Adani Enterprises (ADE IN) being included in the index, while either Shree Cement (SRCM IN) or Hero Motocorp (HMCL IN) will be deleted.
The impact of passive fund trading on the stocks is high in terms of days of ADV, but very high in terms of delivery volume.

Merger Arb Mondays (16 May) – Link Admin, Infomedia, VNET, Alliance Aviation, Ramsay, Link Net

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia and the US (ADRs only).
This week, highest gross spreads are Dongzheng Automotive Finance (2718 HK), Sezzle Inc (SZL AU), 21Vianet Group (VNET US), Infomedia Ltd (IFM AU), Link Administration Holdings (LNK AU), Alliance Aviation.
Lowest gross spreads are Virtus Health (VRT AU), China Logistics Property Holdings (1589 HK), Uniti Group Ltd (UWL AU), Mapletree North Asia Commercial Trust (MAGIC SP), Irongate Group (IAP AU).

Japan Post Holdings – Silly Guidance And A Not So Silly Buyback

By Mio Kato

Japan Post Holdings beat by 1.5% at the revenue line and 1% at the NP line with each of the three major businesses beating guidance slightly.
Guidance was, as usual, for NP to decline YoY and at ¥400bn was slightly below consensus at ¥428bn.
The more important news was a buyback for ¥200bn or 7.6% of outstanding shares.

Kintetsu World Express (9375 JP) Tender Offer by Parent – Too Cheap But Tough To Block

Kintetsu Group Holdings Co L (9041 JP) has announced a Tender Offer to acquire the shares in Kintetsu World Express (9375 JP) that it doesn’t hold (it controls 47%)
This is not a done deal, but they only need about 20% of the remaining 53%.
At a 40% premium to last after a great year, this is still being done at the wrong price. But it will likely get done

MSCI Korea Standard: Constituents with Index Up/Down-Weight in May SAIR

Woori Financial has a 15%p upward adjustment in its float rate. The other 15 constituents will get a 5%p upward adjustment. We then have nine constituents suffering a 5%p drop.
We need to approach them with LONG/SHORT basket trading. However, some have recently shown excessive price volatility, so we should consider setting a basket excluding those with relatively large fluctuations
Another thing to consider is the coupling effect with the KOSPI 200 inflow. Since the lag gap between the two is not large, we expect a substantial coupling effect.

Yamaguchi Financial (8418) – Big On-Market Buyback for Middling Not Too Expensive Regional Bank

Yamaguchi Financial Group In (8418 JP) is the holding company for three western Japan regional banks. Cheapish/overcapitalised, restructuring painfully, but aimed at 5% ROE and capital efficiency.
To that end, it is buyback back a lot of stock.
Compared to its Real World Float, it really is a lot of stock, and it is on-market.

Brambles (BXB AU): Where Could CVC’s Bid Come In?

Brambles Ltd (BXB AU) is in preliminary discussions for CVC to acquire all shares in the company. Media speculation indicates the bid would be at an Enterprise Value > A$20bn.
Brambles Ltd (BXB AU) trades cheaper than its peers and a bid at an EV/EBITDA of 9x would imply a buyout price of A$12.84/share, a 23.1% premium to last close.
At the last traded price of A$11.58/share, there is upside. Especially if other private equity investors enter the fray. Buy on weakness; hedge market risk with ASX200 futures.

Before it’s here, it’s on Smartkarma

May 15

Event-Driven: Toshiba Corp, Wacoal Holdings, Sakata Inx Corp, Tata Elxsi Ltd, Infomedia Ltd, Maxell Ltd, Nintendo Co Ltd, AGL Energy Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toshiba (6502) – Iffy Earnings, Worse Projections, A Special Div, But Privatisation Process Proceeds
HUGE Wacoal (3591) Buyback – Buyback Structure Unknown But Interesting Possibilities Exist
Sakata Inx (4633) HUGE Buyback Makes Things Interesting
Index Rebalance & ETF Flow Recap: MSCI STD/SC, FTSE AW/AC, EPRA, MVIS, TW50, Mindtree/L&T, AMFI
Infomedia (IFM AU): TA Associates/Viburnum Funds Proposal
Hitachi Maxell (6810 JP) – Very Big On-Market Buyback
Last Week in Event SPACE: NTT, Link Admin, AGL, Mindtree/Larsen & Toubro, Sihuan Pharma
Infomedia Receives a A$1.70 Per Share Offer from TA Associates and Viburnum
Asia-Pac Weekly Risk Arb Wrap: Mindtree/Larsen, AGL, Link Admin, Link Net, Comany, Infomedia

Toshiba (6502) – Iffy Earnings, Worse Projections, A Special Div, But Privatisation Process Proceeds

Toshiba announces meh-to-weak earnings and surprisingly conservative revenue guidance for next year given better order books and backlog and much higher USD/yen.
The company announced a slightly higher March 2022 dividend (giving money to past shareholders) and a big special dividend and higher March 2023 dividend.
The Privatisation Proposal Process continues. It may get a result, or not. New director choices will wait. Now we start a quiet period where privatisation news competes with analyst bearishness.

HUGE Wacoal (3591) Buyback – Buyback Structure Unknown But Interesting Possibilities Exist

On Friday, Wacoal Holdings (3591 JP) announced earnings, adoption of IFRS this year (US GAAP til now), dividends, a div hike and higher earnings this year, and a HUGE buyback.
The buyback is for up to 5.5mm share (8.95% of shares) spending up to ¥10bn.
Given the structure of the shareholder base, this opens up interesting possibilities.

Sakata Inx (4633) HUGE Buyback Makes Things Interesting

Sakata Inx Corp (4633 JP) and Toyo Ink Sc Holdings (4634 JP) are finally getting around to unwinding the rest of their cross-holdings from their decision 5yrs ago.
This is highly accretive. +10% on EPS this year on a weighted average basis and +16.8% on a spot basis.
The reason is good governance and capital efficiency. A side effect is it shifts the shareholder structure more in favor of economic investors.

Index Rebalance & ETF Flow Recap: MSCI STD/SC, FTSE AW/AC, EPRA, MVIS, TW50, Mindtree/L&T, AMFI

MSCI announced the changes to the Standard and Small Cap Indexes, along with FIF/NOS changes as part of the May SAIR. Plenty of flows in Asia Pacific.
Announcement of changes to the FTSE AW/AC, HSI INDEX, HSCEI INDEX, HSTECH INDEX and SENSEX INDEX will be made after market close on Friday.
There were inflows into Taiwan, Australia and Hong Kong focused ETFs, while there were redemptions from China and Korea focused ETFs.

Infomedia (IFM AU): TA Associates/Viburnum Funds Proposal

Online auto parts and service provider Infomedia Ltd (IFM AU) has received a non-binding proposal – by way of a Scheme – from TA Associates and Viburnum Funds.
The Offer price is A$1.70/share, a 32.8% premium to last close.
Via a tie-in with Viburnum, TA disclosed a 14.46% interest. IFM said it is also in preliminary discussions with other interested parties.

Hitachi Maxell (6810 JP) – Very Big On-Market Buyback

Maxell Ltd (6810 JP) has been restructuring itself and the cost-cutting and rationalising of sales efforts and regions has led to post-relisting record OP.
But another (non-cash) write-off this past year has led to the third year of net losses in a row.
The company has, however, taken its actual cashflows and turned them into a large buyback

Last Week in Event SPACE: NTT, Link Admin, AGL, Mindtree/Larsen & Toubro, Sihuan Pharma

The NTT (9432 JP) / NTT Data (9613 JP) transaction is a little complicated, but the end goal appears, like before, to push operating control below holdcos on the chain.
Both Link Administration (LNK AU) and Dye & Durham tanked over the unfortunate timing of an ACCC delay and MAC disconnect – before a price recovery to close the week.
MCB says the AGL Energy Ltd (AGL AU) de-merger plan is bad, and now analysts say it is “underwhelming.” Duh. But the alternative? Underwhelming too, but less independent.

Infomedia Receives a A$1.70 Per Share Offer from TA Associates and Viburnum

TA Associates and Viburnum Funds’ non-binding indicative privatisation proposal is A$1.70 per Infomedia Ltd (IFM AU) share in cash, a 32.8% premium to the last close.
The timing of the bid looks opportunistic in the context of the shares hitting a 3-year low on 9 May. Viburnum with a 14.5% stake is the largest shareholder.
The Board notes expressions of interest from other parties. TA and Viburnum’s bid is the catalyst for other bidders to show their hands.

Asia-Pac Weekly Risk Arb Wrap: Mindtree/Larsen, AGL, Link Admin, Link Net, Comany, Infomedia

There are 37 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three news deals this week: Mindtree Ltd (MTCL IN)/ Larsen & Toubro Infotech (LTI IN)‘s merger, Comany Inc (7945 JP) ‘s MBO, Infomedia Ltd (IFM AU)‘s proposal from TA/Viburnum Funds.
Key updates took place for: AGL Energy Ltd (AGL AU), Link Administration Holdings (LNK AU), Virtus Health (VRT AU), Link Net (LINK IJ) & Beijing Enterprises Urban Resources (3718 HK).

Before it’s here, it’s on Smartkarma

May 14

Event-Driven: Tencent, Core Lithium Ltd, Cosmo Energy Holdings, Sihuan Pharmaceutical Hldgs, SK Telecom, Link Administration Holdings, NTT (Nippon Telegraph & Telephone), Swedish Match AB and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MSCI May 2022 Index Rebalance: Flow Due to FIF Changes
MSCI May 2022 Index Rebalance: Small Cap Changes and Flow
Cosmo Oil (5021) Shareholder Return Policy Is Bigger Than It Looks
Sihuan Pharma (460 HK) Denies China Resources Approach
Short-Term Reverse Flow Trading on SK Telecom
Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call
MSCI May 2022 Rebalance: South Korea
NTT (9432) – Salutary Earnings Salutary Buyback, More to Go
Swedish Match Set Alight by Philip Morris

MSCI May 2022 Index Rebalance: Flow Due to FIF Changes

There are quite a lot of stocks that have changes to their Foreign Inclusion Factor (FIF) at the May SAIR since MSCI comprehensively assesses the float for stocks.
The largest passive inflows will be on Tencent, Kuaishou Technology, JD Health, Macquarie Group, Shin Etsu Chemical, Recruit Holdings, Olympus Corp, Naver Corp and Sun Hung Kai Properties.
Changes to FIFs are tougher to forecast and not very widely tracked, so pre-positions are likely to be lower and the stocks with higher ADV to buy/sell should outperform/underperform.

MSCI May 2022 Index Rebalance: Small Cap Changes and Flow

MSCI has announced changes to the Small Cap Index. For Asia Pacific, there are 220 adds and 160 deletes. Most adds are in India, most deletes are in Japan.
Flows are not huge, but there is a big impact on a lot of stocks. Some of the stocks have moved today and there could be more.
There are a lot of stocks that crossover with changes on other indices and there will be same way flow on a lot of stocks over the next few weeks.

Cosmo Oil (5021) Shareholder Return Policy Is Bigger Than It Looks

Cosmo Energy Holdings (5021 JP), subject of a selldown by its major shareholder (discussed here), then a large stake purchase by activist Murakami-san (discussed here) announced earnings and a buyback.
The buyback is large enough to matter to other shareholders.
The shareholder structure is interesting enough that investors need to pay attention to the possibilities.

Sihuan Pharma (460 HK) Denies China Resources Approach

Sihuan Pharmaceutical (460 HK) has shot down rumours that it is under negotiation with potential investors in respect of privatisation.
Reportedly SOE China Resources is in talks with Sihuan Pharma’s chairman in a deal valuing the company at US$3bn or a 114% premium to the current price.
The logic of a privatisation makes sense. I would not be so quick to dismiss the denial. Plus Sihuan Pharma is very cash-rich.

Short-Term Reverse Flow Trading on SK Telecom

Heavy shorts came out in a short trading window. Usually, this is likely to be strategic trading by a few institutional investors, which causes PBS to set up loan transactions.
We should then consider the possibility that short positions betting on MSCI deletion will be sold back to the market by PBS who set up loan transactions after short-covering
SKT is likely to undergo a share price correction due to a short-term overhang, and we need to consider setting up a position aimed at this.

Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call

DND’s 3QFY22 last night continued to suggest DND’s commitment to complete the Link Administration Holdings (LNK AU) acquisition.
DND management’s messaging in the call downplayed the MAC risk of a contract renewal but shifted incrementally more bearish on the ACCC review, in our view.
The risk-reward calculus is now incrementally more positive. The gross spread is wide at 24.4% with the “deal-break” valuation of A$4.18 (-5% below the last close) limiting downside risk.

MSCI May 2022 Rebalance: South Korea

MSCI announced its May 2022 rebalance results today. Hyundai Heavy Industries was the only new addition, which was mostly expected.
Despite continued concerns about SK Telecom being excluded in the next round of MSCI rebalancing, its improving fundamentals and shift to more value stocks are more important factors.
There are 18 additions and 17 deletions for the MSCI Korea small cap index. Among the additions, 6 of them are also potential inclusions in the KOSDAQ150 rebalance in June.

NTT (9432) – Salutary Earnings Salutary Buyback, More to Go

The three Japanese telecoms reported earnings this week. Softbank Corp (9434 JP) was disappointing (and slightly confusing). KDDI Corp (9433 JP) was much of a muchness.
NTT (Nippon Telegraph & Telephone) (9432 JP) looked the best, and announced the largest buyback – ¥400bn or 3%. But it comes from a government sale, not the market.
Nevertheless, the company is doing what it promised and executing on its promise. And despite the “bullishness” in the revenue forecast, earnings forecasts to March 2023 look conservative.

Swedish Match Set Alight by Philip Morris

PMI is making a recommended cash offer for the Swedish Match at SEK106/share, valuing it at SEK161.2 billion ($16 billion), 39% premium, 17.5x EV/Fwd EBITDA and 23.1x Fwd P/E.
Swedish Match is strategic for PMI and a valuable asset amidst big tobacco diversification drive. Some shareholders make this point to try to extract a higher price.
As of close of 12 May, gross spread is 3.3%, an interesting 8.7% annualised (assuming settlement by 7 October). The risk of not completing the offer seems low.

Before it’s here, it’s on Smartkarma

May 13

Event-Driven: MR D.I.Y. Group, Link Net, Microstrategy Inc Cl A, Tabcorp Ltd, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises
Link Net (LINK IJ): Axiata To Vote On The 26 May. Timeline Intact
MicroStrategy (MSTR US): Money From Nothing Is Worth?
Tabcorp’s Demerger Approved Paving the Way to Unlock Value
MSCI Korea Standard: May SAIR Results

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises

For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US).

Link Net (LINK IJ): Axiata To Vote On The 26 May. Timeline Intact

Axiata Group (AXIATA MK) has convened an EGM on the 26 May to vote on its proposed acquisition of Indonesian broadband play Link Net (LINK IJ).
The vote, which for all intent and purposes is a rubber stamp, is one of the SPA conditions to acquire 66.03% of LINK.
Trading at a gross/annualised spread of 7.1%/22.3%. Get involved here.

MicroStrategy (MSTR US): Money From Nothing Is Worth?

MicroStrategy Inc Cl A (MSTR US) is now trading at a ~26% discount to NAV as the bitcoin barbeque continues.
Bitcoin is down ~40% YTD. If it falls another 24%, this will trigger a margin call on one of its loans.
Should bitcoin decline to US$17.5k, MSTR’s crypto bet falls short of its debt obligation; debt that its software ops are not sufficiently profitable enough to service.

Tabcorp’s Demerger Approved Paving the Way to Unlock Value

Tabcorp Ltd (TAH AU)’s demerger to create two standalone companies listed on the ASX, The Lottery Corporation and New Tabcorp, was approved today.
Subject to the scheme approved by the Court, the Lottery Corporation will trade on a deferred settlement basis on 24 May and a normal settlement basis on 2 June.
Peer derating due to the market sell-off results in a lower SoTP valuation of A$5.62 per share, which is still a 13% upside to the last close.

MSCI Korea Standard: May SAIR Results

As expected, we have one addition, which is Hyundai Heavy Industries. But deletions are a bit surprising. The MSCI said that Korea has no deletion this time.
The MSCI decided to keep SK Telecom. However, even before the next IR, the possibility of special deletion due to foreign room exhaustion cannot be excluded.
The number of constituents in this SAIR increased by one more than the last IR, so Seegene and Green Cross got to stay in the Index.

Before it’s here, it’s on Smartkarma