Category

Event-Driven

Daily Brief Event-Driven: Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped
  • A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea
  • Naspers (NPN) X Prosus (PRX): A Look Back at 2023, Regulatory Risk Back in Spotlight
  • Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns


Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

By Travis Lundy

  • Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
  • ¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
  • But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

By Sanghyun Park

  • The effective date, required by law to start six months post-promulgation, suggests implementation around July this year.
  • Enforcement decrees and regulations, under the Financial Services Commission’s purview, must be confirmed before the effective date (within six months post-promulgation). The announcement is likely in early to mid-March.
  • Expecting the amendment, there may be a pre-July surge in block deals as major shareholders expedite plans, creating assertive market activity in the first half with potential trading opportunities.

Naspers (NPN) X Prosus (PRX): A Look Back at 2023, Regulatory Risk Back in Spotlight

By Charlotte van Tiddens, CFA

  • Regulatory risks back in the spotlight, dampening decent year for both counters.
  • At the end of last year, China’s regulator released a proposal to introduce spending and time limits on gaming (22 Dec).
  • Tencent was down 12% on the day, Naspers and Prosus followed suit with more aggressive selling, sending both stocks down 17% for the half day of trading. 

Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

By Sumeet Singh

  • InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 25%+ stake will be released from lock-up tomorrow.
  • He had earlier stated his intention to pare down his stake. He has sold shares in Sep 2022, Feb 2023 and Aug 2023.
  • In this note, we will talk about the lockup dynamics and possible placement.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: TOPIX Inclusions: Who Is Ready (Jan 2024) and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • TOPIX Inclusions: Who Is Ready (Jan 2024)
  • T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
  • StubWorld: Wilmar’s All-Time High Implied Stub As Yihai Kerry Touches New Lows
  • Offshore China ETFs Rebalance Preview: Two Changes Expected in March
  • T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January
  • EQD | KOSPI 200 Readying for LONG Reversal


TOPIX Inclusions: Who Is Ready (Jan 2024)

By Janaghan Jeyakumar, CFA

  • Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
  • Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
  • There are couple of other pre-event names that we have been tracking for the past few months.

T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain

By Travis Lundy

  • In August when Bain announced that it would launch a Tender Offer for T&K Toka Co Ltd (4636 JP) I suggested in my first piece it was the wrong price. 
  • I suggested it needed another ¥1,000 added onto the price. If the ¥1,300 price Dalton initially indicated seemed low to T&K TOKA, another ¥100 doesn’t seem right.
  • It took time. Now it looks like a tender offer launch is imminent. The stock has traded through terms for almost 5 months, but not by a lot.

StubWorld: Wilmar’s All-Time High Implied Stub As Yihai Kerry Touches New Lows

By David Blennerhassett


Offshore China ETFs Rebalance Preview: Two Changes Expected in March

By Brian Freitas


T&K Toka (4636 JP): Decisions, Decisions as Tender Start Targeted for Mid-January

By Arun George

  • T&K Toka Co Ltd (4636 JP) notes that Bain expects to satisfy the pre-condition and launch the JPY1,400 tender offer by mid-January. 
  • The shares have, on average, traded 1.9% above the offer due to Dalton’s stakebuilding. Bain has three options – unchanged terms, allowing Dalton to roll over its shares, or bumping. 
  • Bain is likely to bump as satisfying the minimum acceptance condition is challenging. A revised offer price of around JPY1,500 is possible.  

EQD | KOSPI 200 Readying for LONG Reversal

By Nico Rosti

  • The KOSPI 200 INDEX is correcting after a long multi-week rally. Currently down for 2 weeks (to be confirmed this Friday at close), it’s becoming OVERSOLD.
  • There is a risk of a large slide during this week, so LONG trades should be taken with a careful, hedged approach, but the LONG reversal is pending…
  • The price area between 345 and 334 is where the index could stop its pullback and reverse.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns
  • March 2024 Nikkei 225 Rebal:  Socionext, Disco, and a Consumer Goods Stock, Still
  • Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
  • Hollysys (HOLI US): 8th Feb Shareholder Vote. Dazheng Fails The Sniff Test
  • Quiddity Leaderboard BSE/​​​​SENSEX Jun 24: Wipro SENSEX Deletion Possible
  • An Early Look at the Potential KOSPI200 Rebalance Candidates in June 2024
  • EQD | S&P/ASX200 Going Down… (Approaching Support to Go LONG)


Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns

By Sanghyun Park

  • In the past year, four KOSPI transfer listings showed similar patterns, with pre-listing price increases and substantial corrections in the first five trading days post-listing.
  • ChatGPTAmid a sideways market and a 54.2% YoY growth in the local ETF market last year, the impact of passive flow imbalances may have been more significant than before.
  • A key factor is the short-selling ban. Posco DX’s SSFs showed significant backwardation pre-KOSPI listing, concentrating proactive short positions, requiring caution in adjusting pre-listing short position costs.

March 2024 Nikkei 225 Rebal:  Socionext, Disco, and a Consumer Goods Stock, Still

By Travis Lundy

  • No changes in the rankings since last time. Socionext (6526), Disco (6146), and a Consumer Goods stock (Zozo (3092) top-ranked, Ryohin Keikaku (7453) a better choice) are ADDs.
  • The DELETEs are still Takara Holdings (2531), Pacific Metals (5541), Sumitomo Osaka Cement (5232) with a dark horse candidate in Hitachi Zosen (7004) to replace Takara.
  • There is the upweight to Nitori (9843) but now less funkiness with Fast Retailing (9983). But it will continue being an interesting Nikkei 225 influence (for years to come).

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

By Brian Freitas

  • At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
  • We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
  • The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.

Hollysys (HOLI US): 8th Feb Shareholder Vote. Dazheng Fails The Sniff Test

By David Blennerhassett

  • Hollysys Automation Technologies (HOLI US) has announced that an EGM is scheduled for February 8th to vote on the merger agreement with Ascendent Capital Partners. 
  • The Offer price remains at US$26.50/ADS. The shareholder approval required is simple majority. Regulatory approvals include NDRC, MoC and SAFE. Maybe a national security review.
  • And the Dazheng consortium? Apparently insufficient information as to its financing sources and consortium structure ruled it out. Separately, the SGM to spill the board has now been called off. 

Quiddity Leaderboard BSE/​​​​SENSEX Jun 24: Wipro SENSEX Deletion Possible

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the June 2024 index rebal event.
  • As things stand, there could be one index change for the SENSEX index. 
  • There could be four ADDs/DELs for the BSE 100 index and four ADDs/DELs for the BSE 200 index.

An Early Look at the Potential KOSPI200 Rebalance Candidates in June 2024

By Douglas Kim

  • We discuss the potential KOSPI200 rebalance candidates in June 2024. In the past several years, there have been a lot of alpha generating stocks arising from the KOSPI200 rebalances.
  • The following companies are likely candidates which could be included in KOSPI200 rebalance in June 2024, including Posco DX, Doosan Robotics, Hyosung Heavy Industries Corp, and DS Dansuk. 
  • For the potential exclusion candidates, we included 10 stocks that are in the bottom 5% market caps in KOSPI200.

EQD | S&P/ASX200 Going Down… (Approaching Support to Go LONG)

By Nico Rosti

  • The S&P/ASX 200 INDEX is oversold, currently down for 2 weeks (actually the second week down has just started), it has good chances to bounce this week.
  • The best set up would be: index closing the week down at the end of this week: GO LONG at Close (or at any high probability support level reached intra-week).
  • A reprise of the rally should last into the end of January (or longer).

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: A/H Premium Tracker (To 5 Jan 2024):  STAY Long Hs Vs As: A Premia Still Wide and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • A/H Premium Tracker (To 5 Jan 2024):  STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving
  • FXI Rebalance Preview: Two Potential Changes in March
  • Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical
  • LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves
  • Merger Arb Mondays (08 Jan) – Weiqiao Textile, IRC, Aoki Super, Hollysys, OreCorp, Tietto, Pact
  • HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought
  • Hollysys (HOLI US): Vote on 8 February as Hopes of a Rival Offer Fade
  • EQD | Tears and Despair for the Hang Seng Index May Not Be Over (Yet)
  • TDCX (TDCX US): Laurent Junique’s NBIO
  • Mainland Connect NORTHBOUND Flows (To 5 Jan 2024): Big Names Sold, Banks Bought


A/H Premium Tracker (To 5 Jan 2024):  STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving

By Travis Lundy

  • The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • SOUTHBOUND flows flat/light and NORTHBOUND flows a significant net buy, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 200+bp.
  • STILL time to go long Hs vs As for the new year. 52wk wide discounts were just last week. Wide A/H premia in renewables space look vulnerable.

FXI Rebalance Preview: Two Potential Changes in March

By Brian Freitas


Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical

By Travis Lundy

  • On Friday after the close, Inabata & Co (8098 JP) announced Sumitomo Chemical (4005 JP) would sell down a large stake in a ~$200mm secondary equity offering. 
  • Mizuho Bank’s Retirement Benefit Trust account sells down too. Sumitomo Chem will keep 10+% and other crossholders remain. 
  • This is “big” at 80 days of ADV with limited early index demand, but a 10% fall would make this cheap enough to buy vs Peers.

LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves

By Brian Freitas

  • The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
  • Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
  • The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

Merger Arb Mondays (08 Jan) – Weiqiao Textile, IRC, Aoki Super, Hollysys, OreCorp, Tietto, Pact

By Arun George


HK Connect SOUTHBOUND Flows (To 5 Jan 2024); High Div SOEs Still Strongly Bought

By Travis Lundy

  • SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis, still. Hs gave up some ground vs As in Week One.
  • SOUTHBOUND saw HK$14.4bn of net IN-flows in the 4-day week to 5 Jan 2024. Total flows were HK$96bn.
  • SOUTHBOUND start the year by buying ETFs, high-div SOEs like China Mobile and CNOOC, coal names, and sports/consumer names.

Hollysys (HOLI US): Vote on 8 February as Hopes of a Rival Offer Fade

By Arun George

  • Hollysys Automation Technologies (HOLI US) shareholders vote on Ascendent’s US$26.50 offer on 8 February. The special meeting will not be held as the 30% shareholding threshold is no longer satisfied.
  • The proxy statement shows that despite Dazheng Consoritum’s competing public campaign, it has withdrawn its court injunction and has struggled to provide proof of financing.
  • The proxy statement suggests that the special committee ran a fair process. While shareholders should approve Ascendent’s offer, the 0.2% gross spread indicates an unfavourable risk/reward profile.

EQD | Tears and Despair for the Hang Seng Index May Not Be Over (Yet)

By Nico Rosti

  • The HSI INDEX index closed December (barely) up, no rally, nullifying completely the MONTHLY time bar count pattern suggesting a LONG MONTHLY trade (the 1-bar reversal has already happened).
  • The index is approaching the Q3 support at 16449. A WEEKLY bounce is possible from that level, but we don’t know if the bounce can last more than 1 week.
  • If the index keeps going down this week, it could find support between 16500 and 16000. A longer correction could end in the 15800-15600 price area. Use tight stops.

TDCX (TDCX US): Laurent Junique’s NBIO

By David Blennerhassett

  • TDCX (TDCX US), a Singapore-headquartered digital customer experience (CX) provider, has announced a preliminary non-binding proposal from Laurent Junique, founder/CEO, and largest shareholder (98.3% of the voting power).
  • Junique is offering US$6.60/ADS, a 39% premium to the 30-day VWAP, but a 63% discount to its IPO price a little over two years ago. 
  • One issue dogging TDCX is the key man risk given Junique’s almost absolute control. Now he’s trying to take the company private on the cheap.

Mainland Connect NORTHBOUND Flows (To 5 Jan 2024): Big Names Sold, Banks Bought

By Travis Lundy

  • The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
  • Last week saw NORTHBOUND net SELL RMB 5.5bn of A-shares on lighter average activity. BIG net selling flows on the first day of the year for HK going north.
  • Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: (Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki, Kerry Express Thailand, JOYY, Tietto Mins, Pact Group
  • Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK
  • Last Week in Event SPACE: HS Holdings, Celltrion Pharm, NISA, PICC/PICC P&C


(Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki, Kerry Express Thailand, JOYY, Tietto Mins, Pact Group

By David Blennerhassett


Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

By Brian Freitas

  • Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
  • There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
  • Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.

Last Week in Event SPACE: HS Holdings, Celltrion Pharm, NISA, PICC/PICC P&C

By David Blennerhassett


💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: Aoki Super (9977) MBO at ¥3 and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
  • Kerry Express (KEX TB): Kerry Logistics (636 HK)’s In-Specie Triggers MTO
  • Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
  • StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows


Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)

By Travis Lundy

  • The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO. 
  • This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO. 
  • This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.

Kerry Express (KEX TB): Kerry Logistics (636 HK)’s In-Specie Triggers MTO

By David Blennerhassett


Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

By Arun George

  • Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January). 
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio. 
  • Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high. 

StubWorld: Hanmi Science’s Implied Stub Nearing All-Time Lows

By David Blennerhassett

  • A double dose of stubs this week as Hanmi Science (008930 KS) comes up “cheap” on my monitor.
  • Preceding my comments on Hanmi are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: Korea’s Short Selling Ban to Stay and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
  • New Year New NISA Accounts – It’s BIG, But Not so Big
  • PICC’s (1339 HK)’s Implied Stub Plumbs New Lows As Interest Rate Cuts Bite
  • Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?


Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

By Sanghyun Park

  • Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
  • Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
  • Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

New Year New NISA Accounts – It’s BIG, But Not so Big

By Travis Lundy

  • The Kishida administration put out a Doubling Asset-Based Income Plan in 2022. The goal? To get cash savings (corporate/individual) into growth assets and increase asset-based return contribution to income.
  • The goal included doubling the number of NISA accounts, and the amount invested in the next five years. On 1 January 2024, NEW NISA account contribution totals were trebled.
  • If accounts double, and contribution totals treble, and exemptions are now permanent, investment doubling is a quasi-certainty. The question is how it turns into income-producing assets. That’s MUCH tougher.

PICC’s (1339 HK)’s Implied Stub Plumbs New Lows As Interest Rate Cuts Bite

By David Blennerhassett


Quiddity Leaderboard for Hang Seng Index Mar 24: More Room Being Created for IT Names?

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in March 2024.
  • The index changes for the March 2024 index rebal will be announced on 16th February 2024.
  • While the Hang Seng Index selection process is highly subjective, we continue to believe that identifying eligible names and grouping them by conviction level could be a valuable exercise.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: Celltrion Pharm (068760 KS) Looks Frothy and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Celltrion Pharm (068760 KS) Looks Frothy
  • KRX New Deal Index Rebalance Preview: Changes with Flow & Impact
  • NIFTY NEXT50 Index Rebalance Preview: Potential Adds Skyrocketing
  • Avangrid (Iberdrola) Terminates Merger Agreement with PNM Resources


Celltrion Pharm (068760 KS) Looks Frothy

By David Blennerhassett


KRX New Deal Index Rebalance Preview: Changes with Flow & Impact

By Brian Freitas


NIFTY NEXT50 Index Rebalance Preview: Potential Adds Skyrocketing

By Brian Freitas

  • Nearing the end of the review period, we see 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
  • Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 26.9bn. There will be more than 1.5x ADV to sell on nearly all deletes.
  • The potential adds have outperformed the potential deletes by 35% over the last two months and some stocks are looking extremely frothy.

Avangrid (Iberdrola) Terminates Merger Agreement with PNM Resources

By Jesus Rodriguez Aguilar

  • Iberdrola SA (IBE SM)‘s U.S. subsidiary Avangrid (AGR US) terminated its $8.3 billion deal for PNM Resources (PNM US) as it could not New Mexico regulatory approval by 31 December 2023.
  • Iberdrola lost its patience but freed up €11.5 billion from that deal, together with €5.5 billion from assets sold to the Mexican Government. That’s a lot for inorganic growth. 
  • PNM, at 9.7x EV/Fwd EBITDA, is trading in line with comparables, thus on a multiples basis there should be limited downside to the share price.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: Allkem + Livent = Arcadium : Updated Expected Index Flows and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Allkem + Livent = Arcadium : Updated Expected Index Flows
  • HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
  • KRX’s Mandatory English Disclosure Debut: A Detailed Guide on Utilizing This Without Confusion
  • HS Holdings (8699) – New Year, New Issues So Lots of Value But Buyer Beware!
  • Quiddity Leaderboard T50/​​​100 Mar 24: Bizlink TDIV Deletion Very Close!
  • End of Mandatory Lock-Up Periods for 41 Companies in Korea in January 2024
  • NIFTY50 Index Rebalance Preview: One Change, Maybe Two, Low Probability of Three
  • Quiddity JPX-Nikkei 400 Rebal 2024: End-Dec 2023


Allkem + Livent = Arcadium : Updated Expected Index Flows

By Travis Lundy

  • Allkem Ltd (AKE AU) saw its last day of trading on 21 December. There was large volume at the close as one major index provider gave it the boot. 
  • Another delayed their treatment at the last minute, and eliminated a cross-flow.
  • But there is still a lot of net buy flow tomorrow (3 Jan) and the next day in the US. Perhaps more than I expected. 

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March

By Brian Freitas

  • We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
  • We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
  • There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

KRX’s Mandatory English Disclosure Debut: A Detailed Guide on Utilizing This Without Confusion

By Sanghyun Park

  • KRX’s lack of a standardized English translation platform may lead to non-standardized terminology and varying translation quality. KRX stresses cross-checking Korean and English disclosures due to potential errors. 
  • The 3-day lag between Korean and English disclosures poses timeliness challenges, requiring consistent cross-checking. Overall, the process for foreign investors using Korean market disclosure sites remains largely unchanged.
  • The common procedure should still be to first check disclosures using English titles, then convert to Korean for reading. If English disclosures exist, utilize them for cross-checking.

HS Holdings (8699) – New Year, New Issues So Lots of Value But Buyer Beware!

By Travis Lundy

  • Under the requirements of the Amended Mongolian Banking Law (Feb 2021), Khan Bank (KHAN MO) needed to IPO. It did, and HS Holdings (8699 JP)‘s stake fell to 49.77%. 
  • It was de-consolidated. They were locked up for 6mos. The look-through financials are easier now. The company has bought back stock and trades at <0.5x book.
  • But the Mongolian Banking Law required one more thing. All D-SIBs had to get all shareholders below 20% by 31 December 2023. It’s not clear that happened. 

Quiddity Leaderboard T50/​​​100 Mar 24: Bizlink TDIV Deletion Very Close!

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the March 2024 Index Rebalance.
  • As things stand, I see one change for the T50 index and one more change for the T100 index.
  • TDIV member Bizlink Holding (3665 TT) is very close to getting deleted from the T100 index and that could have significant TDIV flow implications too.

End of Mandatory Lock-Up Periods for 41 Companies in Korea in January 2024

By Douglas Kim

  • We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in January 2024, among which 4 are in KOSPI and 37 are in KOSDAQ.
  • These 41 stocks on average could be subject to further selling pressures in January and could underperform relative to the market.
  • Among these 41 stocks, top five market cap stocks include Posco International, Doosan Robotics, Rainbow Robotics, Qualitas Semiconductor, and PhilEnergy.

NIFTY50 Index Rebalance Preview: One Change, Maybe Two, Low Probability of Three

By Brian Freitas


Quiddity JPX-Nikkei 400 Rebal 2024: End-Dec 2023

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
  • A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
  • Below is a look at potential ADDs/DELs for the JPX-Nikkei 400 Index Rebal to come in August 2024 based on trading data as of end-December 2023.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars



Daily Brief Event-Driven: HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
  • Insiders Related Daisy Partners Sells About 270 Billion Won of Ecopro Co and Ecopro BM
  • NIFTY Bank Index Rebalance Preview: Canara Bank Could Replace Bandhan Bank
  • Pyridam Farma (PYFA IJ): Acquisition of Australian Contract Manufacturer to Add Long-Term Value
  • Selected European HoldCos and DLC: December’23 Report


HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time

By Brian Freitas

  • Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
  • With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion. 
  • Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

Insiders Related Daisy Partners Sells About 270 Billion Won of Ecopro Co and Ecopro BM

By Douglas Kim

  • On 29 December, Ecopro Group announced large selling of Ecopro Co Ltd (086520 KS) and Ecopro BM (247540 KS) by Daisy Partners worth 272 billion won in December.
  • Daisy Partners is a company 100% owned by Chairman of Ecopro Group Lee Dong-Chae and his family members.
  • Daisy Partners is likely to sell more shares in Ecopro Co and Ecopro BM in the next several years to increase the foundation’s capital to about 500 billion won.

NIFTY Bank Index Rebalance Preview: Canara Bank Could Replace Bandhan Bank

By Brian Freitas


Pyridam Farma (PYFA IJ): Acquisition of Australian Contract Manufacturer to Add Long-Term Value

By Tina Banerjee

  • Pyridam Farma (PYFA IJ) is acquiring Probiotec Ltd (PBP AU), a leading contract manufacturer and packer of prescription and OTC pharmaceuticals, complementary medicines, consumer health products, and FMCG.  
  • Under the terms of the scheme, Probiotec shareholders will receive cash consideration of A$3.00 per share. This implies an equity value of ~A$251M for Probiotec and enterprise value of ~A$326M.
  • The acquisition will add an attractive high-margin revenue stream to Pyridam. Through the acquisition of Probiotec, Pyridam will be capable to reach a wider market, thereby increasing its market share.

Selected European HoldCos and DLC: December’23 Report

By Jesus Rodriguez Aguilar

  • The discounts to NAV of covered holdcos have mainly widened during December. Discounts to NAV: C.F.Alba, 49.1% (vs. 47.1%); GBL, 36.6% (vs. 34.9%); Heineken Holding, 16.7% (vs. 14.5%);
  • Industrivärden C, 5.4% (vs.4.9%); Investor B, 13.5% (vs. 14.6%); Porsche Automobile Holding, 37.1% (vs. 39.9%).  The spread of Rio DLC widened to 24.2% (vs.17.2%).
  • What seems interesting: in holding trades, Porsche SE/vs. listed assets and the Rio DLC: long RIO LN/short RIO AU.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars