Most Read

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

SET50 Index Rebalance: SAWAD Added; Buying at the Close Today

Srisawad Power 1979 (SAWAD TB) has been added to the SET50 INDEX following the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger.
Passive SET50 INDEX trackers will need to buy 9.7m shares (THB 534m; 1x ADV) of Srisawad Power 1979 (SAWAD TB) at the close of trading today.
There could be two more changes in June with relatively new listings, Thai Life Insurance (TLI TB) and Betagro (BTG TB), being added to the SET50 INDEX.

Adani Group: GQG Bets Big; MSCI Index Impacts

Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

Nikkei 225 Index Rebalance: Oriental Land, Renesas, JAL IN; Toyobo, Nippon LightMetal, Toho Zinc OUT

Oriental Land (4661), Renesas Electronics (6723) and Japan Airlines (9201) will replace Toyobo (3101), Nippon Light Metal (5703) and Toho Zinc (5707) in the Nikkei 225 (NKY INDEX).
Oriental Land (4661 JP) has been added at a post-split PAF of 1. This reduces the passive buying on the stock by around a third.
Passive trackers need to buy between 2.2-6.7 days of ADV on the adds while selling between 5-12 days of ADV on the deletes. There’s a big funding trade too.

SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal

The parent company of SHL Japan Ltd (4327 JP)‘s largest shareholder is buying out its main customer in Japan.
This is an LBO/MBO situation, and friends and family get it to 63% or so. A tiny sliver from others gets it over the hump.
Should get done easily, but the corporate governance here is not encouraging. Yes, a premium, but no explanation, and it’s a bit low.

IMM PE Lanches A Tender Offer on Hanssem

IMM private equity fund launched a tender offer on Hanssem Co Ltd (009240 KS) and its share price surged by 19.7% to reach 53,700 won today.
IMM is currently the largest shareholder in Hanssem with a 27.7% stake in the company. IMM’s stake in Hanssem will rise to about 36% if this tender offer is successful.
Hanssem’s share price still 2.4% below the tender offer price of 55,000 won. In the coming days, we believe the share price will reach closer to the tender offer price.

SBI Sumishin Net Bank IPO: The Investment Case

By Arun George

SBI Sumishin Net Bank (7163 JP), an online bank in Japan, has revived its listing plans to raise up to US$440 million (vs the 2022 target of US$1 billion).
Founded in 2007, SBI Sumishin Net Bank is owned 50% by SBI Holdings (8473 JP) and 50% by Sumitomo Mitsui Trust Holdings (8309 JP).
The investment case rests on market share gains, the rude health of the digital bank segment, the nascent BaaS segment turning profitable and ambitious medium-term goals.

Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN.

As expected, Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) IN, and Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) OUT.
The Nikkei implemented the “Tricky Twist” discussed. This lowers the total amount to buy on Oriental Land vs what many would have expected.
That’s “disappointing” BUT… the behavioural aspects here are really interesting, and the timetable for the event is worth thinking about.

Yashili (1230 HK): Mengniu Offer Imminent As Key Sale Concludes

Yashili International Holdings (1230 HK) has announced that the disposal of Dumex China to Danone SA (BN FP) has been completed.
This satisfies the second of three SPAs announced last May, leaving the sale of Danone’s 25% stake in Yashili to China Mengniu Dairy Co (2319 HK) outstanding.
This stake sale should conclude next week, to be followed by the launch of the Scheme later this month, early next.

Quiddity ASX Rebal Mar 23: Good Hit Rate, Some Short Buildup, Decent Impact

By Janaghan Jeyakumar, CFA

The index changes for the ASX Index family for the March 2023 Rebalance were announced after the close on Friday 3rd March 2023.
There will be one, two, and four changes for ASX 20, ASX 100, and ASX 200 indices, respectively. There will also be 12 ADDs and 9 DELs for ASX 300.
In this insight, we take a closer look at our expectations for index flows, short interest, and recent price performance of the names involved in the rebalance event.

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Mar 03

Most Read: Mineral Resources, Posco Chemical Co Ltd, China Vanke (H), Srisawad Power 1979, HKBN Ltd, SBI Sumishin Net Bank, Otsuka Holdings, Adani Total Gas, Osstem Implant and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
China Vanke (2202 HK): Placement & Index Flows
SET50 Index Rebalance: SAWAD Added; Buying at the Close Today
SBI Sumishin NetBank (7163 JP) Re-IPO Details, Fundamentals Tearsheet, Likely Index Treatment
HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
SBI Sumishin Net Bank Pre-IPO – Refiling Updates – Growth Picks Up
Otsuka Holdings – Family Co Selldown for ¥56bn – Take It Vs Peers
Adani Group: GQG Bets Big; MSCI Index Impacts
MBK & Unison Capital Trying to Take Osstem Implant Private: “Two Yards to Endzone”

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms

The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
We forecast one add/delete for the Secondary Battery Index and 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).

China Vanke (2202 HK): Placement & Index Flows

News reports indicate that China Vanke (H) (2202 HK) is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.
The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.
China Vanke (H) (2202 HK) trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.

SET50 Index Rebalance: SAWAD Added; Buying at the Close Today

Srisawad Power 1979 (SAWAD TB) has been added to the SET50 INDEX following the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger.
Passive SET50 INDEX trackers will need to buy 9.7m shares (THB 534m; 1x ADV) of Srisawad Power 1979 (SAWAD TB) at the close of trading today.
There could be two more changes in June with relatively new listings, Thai Life Insurance (TLI TB) and Betagro (BTG TB), being added to the SET50 INDEX.

SBI Sumishin NetBank (7163 JP) Re-IPO Details, Fundamentals Tearsheet, Likely Index Treatment

In February 2022, SBI Holdings (8473 JP) and Sumitomo Mitsui Trust Holdings (8309 JP) announced they would IPO SBI Sumishin Net Bank (7163 JP) but that got cancelled by Ukraine.
Yesterday, they announced they were going to try again. This time, with a reduced price and reduced aspirations. Given the way banks have performed in the last year… 👀
That changes – completely – the picture of index demand. But it also changes the fundamental picture.

HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer

Reportedly (Bloomberg) Hong Kong broadband play HKBN Ltd (1310 HK) has received a takeover offer from I Square’s HGC Global Communications.
HKBN’s shares were halted in the late afternoon trading session yesterday after gaining 11.6%. The reason stated for the suspension was “possible inside information“, not pursuant to the Takeovers Code.
Last May, Bloomberg reported that KKR, PAG, and Stonepeak – amongst others – were considering bids for HKBN. The market cap at the time was US$1.6bn versus US$934mn now.

SBI Sumishin Net Bank Pre-IPO – Refiling Updates – Growth Picks Up

SBI Sumishin Net Bank (SSNB) is now looking to raise around US$380m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about the updates from the latest filings.

Otsuka Holdings – Family Co Selldown for ¥56bn – Take It Vs Peers

Today after the close, one of the very large brokers in Japan (N_m_r_) has a block for sale of Otsuka Holdings (4578 JP).
It is only 2.4% of total shares out, and as such, it looks small. But it isn’t that small. The shareholder structure is crowded with non-Real World Float holders.
The discount offered is large compared to absolute and sector-relative volatility.

Adani Group: GQG Bets Big; MSCI Index Impacts

Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

MBK & Unison Capital Trying to Take Osstem Implant Private: “Two Yards to Endzone”

MBK Partners and Unison Capital are trying to take Osstem Implant (048260 KS) private. Currently, it is estimated that the MBK/Unison consortium has secured 88.7% stake in Osstem Implant.
In the case of companies listed in KOSDAQ, if you have a stake of 90% or more, the company can generally proceed with discussions on delisting with the exchange.
There is a high probability of delisting sometime in March/April under two different scenarios. The second scenario offers the remaining minority shareholders and arb traders potential for further alpha creation.

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Mar 02

Most Read: Sembcorp Marine, Japan Post Bank, Mineral Resources, Posco Chemical Co Ltd, Kansai Paint, China Vanke (H), HKBN Ltd, SBI Sumishin Net Bank, Srisawad Power 1979 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge
Japan Post Bank (7182 JP) ¥70bn ToSTNeT-3 Buyback
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows
China Vanke Placement – A Placement Was Expected, Unclear if It Was This One
China Vanke (2202 HK): Placement & Index Flows
HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
SBI Sumishin NetBank (7163 JP) Re-IPO Details, Fundamentals Tearsheet, Likely Index Treatment
SET50 Index Rebalance: SAWAD Added; Buying at the Close Today

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge

Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

Japan Post Bank (7182 JP) ¥70bn ToSTNeT-3 Buyback

As expected, Japan Post Bank (7182 JP) has announced their ToSTNeT-3 buyback of ¥70 billion on Day 1 of the potential TN-3 Buyback period.
Also as somewhat expected, investors and traders pushed up the stock price today after the news there would be a buyback, hoping to buy then sell, or short today’s close.
Japan Post Holdings (6178 JP) will offer shares. Others obviously will too. How this works and what you have to watch out for discussed below.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms

The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
We forecast one add/delete for the Secondary Battery Index and 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).

Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows

Today after the close, Kansai Paint (4613 JP) announced a passel of crossholders would sell 26.2mm shares in a Secondary Offer. They also announced a buyback.
The buyback, spending up to ¥12bn to buy back up to 8.2mm shares, starts after the Offering is delivered, and extends until 15 March 2024.
This offering reduces cross-holder “strategic holdings” by a third. This will impact FFW. Complicated index impacts will occur over time.

China Vanke Placement – A Placement Was Expected, Unclear if It Was This One

China Vanke aims to raise around US$500m in its H-share primary placement.
Vanke had recently stated that it aimed to raise around US$2bn via an A-share private placement, so a placement was expected for sure.
In this note, we will talk about the placement and run the deal through our ECM framework.

China Vanke (2202 HK): Placement & Index Flows

News reports indicate that China Vanke (H) (2202 HK) is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.
The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.
China Vanke (H) (2202 HK) trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.

HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer

Reportedly (Bloomberg) Hong Kong broadband play HKBN Ltd (1310 HK) has received a takeover offer from I Square’s HGC Global Communications.
HKBN’s shares were halted in the late afternoon trading session yesterday after gaining 11.6%. The reason stated for the suspension was “possible inside information“, not pursuant to the Takeovers Code.
Last May, Bloomberg reported that KKR, PAG, and Stonepeak – amongst others – were considering bids for HKBN. The market cap at the time was US$1.6bn versus US$934mn now.

SBI Sumishin NetBank (7163 JP) Re-IPO Details, Fundamentals Tearsheet, Likely Index Treatment

In February 2022, SBI Holdings (8473 JP) and Sumitomo Mitsui Trust Holdings (8309 JP) announced they would IPO SBI Sumishin Net Bank (7163 JP) but that got cancelled by Ukraine.
Yesterday, they announced they were going to try again. This time, with a reduced price and reduced aspirations. Given the way banks have performed in the last year… 👀
That changes – completely – the picture of index demand. But it also changes the fundamental picture.

SET50 Index Rebalance: SAWAD Added; Buying at the Close Today

Srisawad Power 1979 (SAWAD TB) has been added to the SET50 INDEX following the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger.
Passive SET50 INDEX trackers will need to buy 9.7m shares (THB 534m; 1x ADV) of Srisawad Power 1979 (SAWAD TB) at the close of trading today.
There could be two more changes in June with relatively new listings, Thai Life Insurance (TLI TB) and Betagro (BTG TB), being added to the SET50 INDEX.

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Mar 01

Most Read: Japan Post Bank, Kansai Paint, Ecopro BM Co Ltd, Appier Group, Astra International, WCP, Posco Chemical Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Bank (7182 JP) Announces Its Re-IPO – Big Offering, Complicated but Big Index Flows
Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback
Japan Post Bank (7182 JP): BIG Offering Supported by Buybacks & Passive Flow
Japan Post Bank (7182 JP) ¥70bn ToSTNeT-3 Buyback
Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows
Shorting Entry Point on Ecopro BM with KODEX Battery ETF Rebalancing on March 10
TOPIX Index Upweights: Final Predictions for The “The Big April Basket” 2023
Astra International (ASII IJ) – Rewarding Investors for an Extraordinary Year
End of Mandatory Lock-Up Periods for 35 Companies in Korea in March 2023
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms

Japan Post Bank (7182 JP) Announces Its Re-IPO – Big Offering, Complicated but Big Index Flows

Japan Post Bank (7182 JP) has announced the mooted offering by Japan Post Holdings (6178 JP) whereby they will sell 29% of the bank to go from 89% to 60%.
There are two buybacks – one pre offering and one after – which is an attempt to mitigate impact. This creates interesting but complicated strategy possibilities. Lots of details here.
Big picture, this is a Very Big Offering at ¥1.236trln at today’s close including greenshoe. 80/20 dom/international. A TOUGH sell. 1.089bn shares is 4x current float.

Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback

Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
Initial news of the deal broke last week, and we had a look in, Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang.
In this note, we talk about the deal structure and impact.

Japan Post Bank (7182 JP): BIG Offering Supported by Buybacks & Passive Flow

Japan Post Holdings (6178 JP) is looking to reduce its stake in Japan Post Bank (7182 JP) from 89% to 60%. That is over US$9bn at the last close.
The placement is supported by buybacks (ToSTNeT-3 and on-market) that will absorb some of the offering. Then there is the passive buying that will absorb a third of the offering.
One of the key short-term supports will be the exercise of the over-allotment of the Japan offering. But that will require persuading retail investors to buy into the offering.

Japan Post Bank (7182 JP) ¥70bn ToSTNeT-3 Buyback

As expected, Japan Post Bank (7182 JP) has announced their ToSTNeT-3 buyback of ¥70 billion on Day 1 of the potential TN-3 Buyback period.
Also as somewhat expected, investors and traders pushed up the stock price today after the news there would be a buyback, hoping to buy then sell, or short today’s close.
Japan Post Holdings (6178 JP) will offer shares. Others obviously will too. How this works and what you have to watch out for discussed below.

Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows

Today after the close, Kansai Paint (4613 JP) announced a passel of crossholders would sell 26.2mm shares in a Secondary Offer. They also announced a buyback.
The buyback, spending up to ¥12bn to buy back up to 8.2mm shares, starts after the Offering is delivered, and extends until 15 March 2024.
This offering reduces cross-holder “strategic holdings” by a third. This will impact FFW. Complicated index impacts will occur over time.

Shorting Entry Point on Ecopro BM with KODEX Battery ETF Rebalancing on March 10

By Sanghyun Park

Ecopro BM’s weight has expanded to 22%. Since the probability of receiving a 15% cap is virtually 100%, it will inevitably undergo a weight change of up to nearly 7%p.
If the ongoing rally subsides before March 10th and returns to the January DTV level, the price impact could surge up to 0.3-0.4x daily for three trading days.
This seems to be a sufficient level for a shorting entry point. It may be worth considering an outright short position on Ecopro BM or Long Short with SK Innovation.

TOPIX Index Upweights: Final Predictions for The “The Big April Basket” 2023

By Janaghan Jeyakumar, CFA

Some low liquidity stocks in the TOPIX Index carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will enjoy buying flows from passive trackers of TOPIX.
In this insight, we take a look at Quiddity’s final predictions for the names that are likely to see their Liquidity Factors removed in April 2023.

Astra International (ASII IJ) – Rewarding Investors for an Extraordinary Year

By Angus Mackintosh

Astra International’s results reflected its exposure to commodities, especially coal, through heavy equipment and mining through United Tractors (UNTR IJ) but most divisions booked growth as the economy recovered.
The company’s core auto and financing business made much more than half of its profits and also contributed to its growth with a slower performance from agri-business and construction.
Astra International (ASII IJ) announced a generous 85%-dividend payout to reward investors for its coal exposure in 2022, implying a 10% dividend yield. Valuations remain significantly below historical averages.

End of Mandatory Lock-Up Periods for 35 Companies in Korea in March 2023

We discuss end of the mandatory lock-up periods for 35 stocks in Korea in March 2023, among which 8 are in KOSPI and 27 are in KOSDAQ.
These 35 stocks on average could be subject to further selling pressures in March and could underperform relative to the market.
Among these 35 stocks, the top 5 market cap stocks include Nh Investment & Securities, WCP, Bionote, Jeio, and Dreamtech.

KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms

The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
We forecast one add/delete for the Secondary Battery Index and 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).

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Feb 28

Most Read: Japan Post Bank, Li Auto, Shanghai Fudan Microelectronics Group, Fujitec Co Ltd, Japan Post Holdings, Amvis Holdings Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Japan Post Bank (7182 JP) Announces Its Re-IPO – Big Offering, Complicated but Big Index Flows
Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback
HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng
STAR50 Index Rebalance: Five Changes as Adds Bigly Outperform Deletes
Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?
ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS
Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion
Japan Post Bank (7182 JP): BIG Offering Supported by Buybacks & Passive Flow

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Japan Post Bank (7182 JP) Announces Its Re-IPO – Big Offering, Complicated but Big Index Flows

Japan Post Bank (7182 JP) has announced the mooted offering by Japan Post Holdings (6178 JP) whereby they will sell 29% of the bank to go from 89% to 60%.
There are two buybacks – one pre offering and one after – which is an attempt to mitigate impact. This creates interesting but complicated strategy possibilities. Lots of details here.
Big picture, this is a Very Big Offering at ¥1.236trln at today’s close including greenshoe. 80/20 dom/international. A TOUGH sell. 1.089bn shares is 4x current float.

Japan Post Bank Placement – Deal Structure, past Deals, Index, Buyback

Japan Post Holdings (6178 JP) plans to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third.
Initial news of the deal broke last week, and we had a look in, Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang.
In this note, we talk about the deal structure and impact.

HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng

Weibo Corp (9898 HK) replaces Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 8.92% and will result in a one-way trade of HK$7,078m at the close on 10 March.
There will be big buying on Li Auto (2015 HK) and XPeng (9868 HK) due to a change in the index handling methodology for Dual Primary listings.

STAR50 Index Rebalance: Five Changes as Adds Bigly Outperform Deletes

The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in March.
One way turnover is estimated at 4.95% and will result in a one-way trade of CNY 4,413m. The estimated impact on the deletes is higher than that on the adds.
The inclusions have outperformed the deletions over multiple time periods. There will be pre-positions on the stocks and those could be unwound over the next week or two.

Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?

The Fujitec Co Ltd (6406 JP) EGM where activist Oasis Management wanted to spill the independent board members took place Friday.
Results were mixed, but generally a success for Oasis, with 9 of the 13 votes won. Preliminary analysis of “uncertain voter” split interesting, and “Glass Lewis Effect” stronger than expected.
The real shocker, however, was a footnote at the end of the announcement. This could (and should) have further repercussions.

ECM Weekly (26th Feb 2023) – Japan Post Bank/Holding, Amvis, Pertamina, Zeekr, Honasa, Fangzhou, TVS

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Pertamina Geothermal Energy‘s listing kicked of what is shaping up to be a busy 2023 for ASEAN IPOs
There were a few placements across the region but the biggest news was of Japan Post Bank (7182 JP)‘s planned selldown by Japan Post Holdings (6178 JP)

Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion

On Monday 20 February, nursing home, nursing and disability care services operator Amvis Holdings Inc (7071 JP) announced it would see a Secondary Offering of 10 million shares.
It also announced that it would move to TSE Prime on 14 March.
This increases Real World Float by quite a bit – about 40% – but it also leads to an end-April TOPIX Inclusion.

Japan Post Bank (7182 JP): BIG Offering Supported by Buybacks & Passive Flow

Japan Post Holdings (6178 JP) is looking to reduce its stake in Japan Post Bank (7182 JP) from 89% to 60%. That is over US$9bn at the last close.
The placement is supported by buybacks (ToSTNeT-3 and on-market) that will absorb some of the offering. Then there is the passive buying that will absorb a third of the offering.
One of the key short-term supports will be the exercise of the over-allotment of the Japan offering. But that will require persuading retail investors to buy into the offering.

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Feb 27

Most Read: Toshiba Corp, HSBC Holdings, Swire Pacific (B), Li Auto, XPeng, Shanghai Fudan Microelectronics Group, Kum Yang Co Ltd, Fujitec Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
STAR50 Index Rebalance: Five Changes as Adds Bigly Outperform Deletes
Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI
Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?
HSTECH Mar23 Index Review/Flows – Weibo IN, Ming Yuan Cloud OUT, BIGLY Flows on Li Auto & Xpeng
HSCEI Mar23 Index Review/Flows – Xpeng Added, China Feihe Deleted, Li Auto Sees A Bump Up

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target

In a surprise, the Hang Seng index committee has decided not to make any changes to the Hong Kong Hang Seng Index (HSI INDEX) at the March rebalance.
This further delays the timeline for the index to reach 80 constituents. The earliest we will reach the target now is June 2023 (a year later than targeted).
Despite no changes to the index constituents, capping and float changes will lead to a one-way turnover of 2.61% resulting in a one-way trade of HK$5.1bn.

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.

HSTECH Index Rebalance: Weibo Replaces Ming Yuan Cloud; Big Inflows on Li Auto & XPeng

Weibo Corp (9898 HK) replaces Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 8.92% and will result in a one-way trade of HK$7,078m at the close on 10 March.
There will be big buying on Li Auto (2015 HK) and XPeng (9868 HK) due to a change in the index handling methodology for Dual Primary listings.

HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.

STAR50 Index Rebalance: Five Changes as Adds Bigly Outperform Deletes

The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in March.
One way turnover is estimated at 4.95% and will result in a one-way trade of CNY 4,413m. The estimated impact on the deletes is higher than that on the adds.
The inclusions have outperformed the deletions over multiple time periods. There will be pre-positions on the stocks and those could be unwound over the next week or two.

Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI

The changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) were announced post market close on Friday.
Busy start to the coming week with the MSCI implementation at the close on 28 February and a few announcements to other indices later in the week.
There were outflows from Tracker Fund of Hong Kong Ltd (2800 HK) during the week taking the YTD outflows to over US$1bn.

Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?

The Fujitec Co Ltd (6406 JP) EGM where activist Oasis Management wanted to spill the independent board members took place Friday.
Results were mixed, but generally a success for Oasis, with 9 of the 13 votes won. Preliminary analysis of “uncertain voter” split interesting, and “Glass Lewis Effect” stronger than expected.
The real shocker, however, was a footnote at the end of the announcement. This could (and should) have further repercussions.

HSTECH Mar23 Index Review/Flows – Weibo IN, Ming Yuan Cloud OUT, BIGLY Flows on Li Auto & Xpeng

On Friday 24 February 2023, the Hang Seng Index Committee announced changes for the HSTECH Index – Weibo Corp (9898 HK) IN, Ming Yuan Cloud Group (909 HK) OUT.
Notably, the changes in FAF due to the new treatment for Dual Primary Companies means decent boosts in weight for XPeng (9868 HK) and Li Auto (2015 HK).
Of the three “major” indices, this one produces the most fun – US$900mm+ and 8.7% flow one-way. And the big flows are additive to the other indices.

HSCEI Mar23 Index Review/Flows – Xpeng Added, China Feihe Deleted, Li Auto Sees A Bump Up

HSCEI keeps its constituent count at 80 names, adds XPeng (9868 HK) and deletes China Feihe (6186 HK).
There are decent flows in this rebal, with Tencent (700 HK) and Alibaba Group (9988 HK) seeing selling, Meituan (3690 HK) seeing buying. Li Auto (2015 HK) sees FAF upweight.
Janaghan Jeyakumar, CFA had called the deletion of China Feihe, but had another name higher on the ADD list. 3.2% and HK$2.6bn one-way flow.

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Feb 26

Most Read: Ebos Group Ltd, PolyNovo Ltd, ABB India Ltd, DGB Financial Group, HSBC Holdings, Toshiba Corp, Alibaba Group, Swire Pacific (B), Amvis Holdings Inc, XPeng and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
KOSPI200 Index Rebalance Preview: Changes in April & June
HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target
Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs

MSCI announced the changes to the GIMI on Friday as part of the February QCIR. MSCI also announced a review of the free float of the Adani Group companies.
FTSE will announce the changes to the All-World and All-Cap indices after the close of trading on Friday, 17 February. The same day is the S&P/ASX review cutoff for March.
Yet another weekly outflow for the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) taking the YTD outflow to over US$2.5bn.

S&P/ASX Index Rebalance Preview: Review Period (Nearly) Complete

We currently see 1 change for the ASX20 Index, 2 changes for the ASX100 Index, 4 changes for the ASX200 Index, 10 adds/7 deletes for the ASX300 Index in March.
On average, the potential adds to each of the indices have outperformed the potential deletes with the largest outperformance for the ASX300 Index.
Shorts have continued to increase positions on the potential deletes while covering their positions on the potential adds. We expect there are large pre-positions on some of the stocks now.

NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover

ABB India Ltd (ABB IN), Adani Wilmar (AWLTD IN), Canara Bank (CBK IN), Page Industries (PAG IN) and Varun Beverages Ltd (VBL IN) will be added to the index.
Bandhan Bank Ltd (BANDHAN IN), Biocon Ltd (BIOS IN), Gland Pharma Ltd (GLAND IN), Mphasis Ltd (MPHL IN) and Paytm (PAYTM IN) will be deleted from the index.
Given the large drop in the stock prices of the Adani Group companies, capping changes will result in buying on all non-F&O stocks in the index.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target

In a surprise, the Hang Seng index committee has decided not to make any changes to the Hong Kong Hang Seng Index (HSI INDEX) at the March rebalance.
This further delays the timeline for the index to reach 80 constituents. The earliest we will reach the target now is June 2023 (a year later than targeted).
Despite no changes to the index constituents, capping and float changes will lead to a one-way turnover of 2.61% resulting in a one-way trade of HK$5.1bn.

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business

By Oshadhi Kumarasiri

Alibaba’s 3QFY23 results marginally topped consensus. With the share price dropping 0.65% cf. +0.35% for the index, both results and the price reaction were in line with our expectations.
Yesterday’s results confirm that Alibaba (ADR) (BABA US)’s core businesses, Taobao and Tmall are in trouble and cost-cutting elsewhere is insufficient to offset the short-term weakness.
Therefore, we do think that this is a good opportunity to profit on the short side with Alibaba shares having the potential to fall another 40-45% in the short term.

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.

Amvis Holdings (7071) – Large-Ish Offering, Large-Ish TOPIX Inclusion

On Monday 20 February, nursing home, nursing and disability care services operator Amvis Holdings Inc (7071 JP) announced it would see a Secondary Offering of 10 million shares.
It also announced that it would move to TSE Prime on 14 March.
This increases Real World Float by quite a bit – about 40% – but it also leads to an end-April TOPIX Inclusion.

HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.

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Feb 25

Most Read: Ebos Group Ltd, DGB Financial Group, Japan Post Bank, Techtronic Industries, DB Hitek Co., Ltd., Ihara Science, S&P 500 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
KOSPI200 Index Rebalance Preview: Changes in April & June
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Techtronic Industries (669 HK): JR Puts Down That Tool
Never-Seen Price Pattern Detected in a Split-Off Event Granting Appraisal Rights in Korea
Ihara Science (5999 JP) – Here Comes The Bumpitrage
Techtronic Industries (669 HK): Forensic Analysis Viewpoint
SPX Range Ahead of Next Leg Down
Techtronic Industries: Jehoshaphat Research’s Allegations and Our Assessment

Index Rebalance & ETF Flow Recap: MSCI, CSI500, XIN9I, DTAC/TRUE, Newcrest, Adani, Korea Spinoffs

MSCI announced the changes to the GIMI on Friday as part of the February QCIR. MSCI also announced a review of the free float of the Adani Group companies.
FTSE will announce the changes to the All-World and All-Cap indices after the close of trading on Friday, 17 February. The same day is the S&P/ASX review cutoff for March.
Yet another weekly outflow for the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) taking the YTD outflow to over US$2.5bn.

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Techtronic Industries (669 HK): JR Puts Down That Tool

Jehoshaphat Research (JR) argues the case that Techtronic Industries (669 HK) has been engaged in “snowballing” to maintain margin growth.
JR flags TTI is the only public company in the world (with over $1bn in revenues) exhibiting positive sequential gross margin change in every semi-annual period over ten years.
Short interest had been picking up ahead of the short sell report. Shares fell 19% before being suspended in the afternoon session.

Never-Seen Price Pattern Detected in a Split-Off Event Granting Appraisal Rights in Korea

By Sanghyun Park

A rather unusual price movement came out on February 20 for HLB. On the first trading day after the board of directors’ decision, the price reached the upper daily limit.
The short covering got to a temporarily excessive level in the process of securing appraisal rights should be the reason that led to the upper limit.
We should design a trading setup targeting excessive short covering-triggered price overheating in split-off events. At this point, the most likely candidate to pursue a split-off is DB Hitek.

Ihara Science (5999 JP) – Here Comes The Bumpitrage

By Shifara Samsudeen, ACMA, CGMA

In my first piece, Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement I noted that the price was too low. I expected activist efforts.
The price did not trade below the Tender Offer Price after it opened for trading. That was a sign this wasn’t going to go easy.
This morning I am made aware of a letter from one of the “active if not activist” shareholders saying the price is too low. Hint: It is.

Techtronic Industries (669 HK): Forensic Analysis Viewpoint

By Arun George

Jehoshaphat’s short report has alleged that Techtronic Industries (669 HK)/TTI has been inflating its profits dramatically for over a decade with manipulative accounting.
Our forensic analysis of the allegations suggests that some are credible red flags while others are essentially an exaggeration.
TTI’s response to Jehoshaphat is pitiful. Valuation is meaningless until management adopts more conservative accounting or compelling disprove the allegations.

SPX Range Ahead of Next Leg Down

By Thomas Schroeder

SPX 3,980 is where a mild bounce should unfold. 4,060 sell resistance then the set-up calls for a break below 3,980 to test lower targets.
This next leg down will cause more damage in EM/Asia and Europe. MACD on the verge of an ugly break below the “0” acceleration line.
US 10yr yield dip is a buy for a push above the 3.95% pivot resistance with new highs in store.

Techtronic Industries: Jehoshaphat Research’s Allegations and Our Assessment

Techtronic Industries (669 HK) was targeted by Jehoshaphat Research (JR) accusing that the company’s profits are inflated dramatically over a decade with manipulative accounting.
As per the report, routine expenses incurred have been booked under various asset accounts such as deferred development costs thereby showing ever increasing margins for a cyclical business.
We have assessed the merits of some of these claims using our forensic accounting framework and it appears that most of the claims are very difficult to refute.

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Feb 24

Most Read: DGB Financial Group, SATS, Japan Post Bank, Techtronic Industries, Star Entertainment Group, Alibaba Group, KT&G Corporation, Boustead Projects and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
SATS SP: S$800m Rights Issue to Fund WFS Acquisition
KOSPI200 Index Rebalance Preview: Changes in April & June
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Techtronic Industries (669 HK): JR Puts Down That Tool
Star Entertainment (SGR AU): A$800m Equity Raise to Buy Some Time
Alibaba (9988 HK): 3Q23, Growth Flat, But Margin Up, Buy
Oasis Management Invests in KT&G
Boustead Projects: Boustead Singapore Bumps. Still Underwhelming

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

SATS SP: S$800m Rights Issue to Fund WFS Acquisition

SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer

Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Techtronic Industries (669 HK): JR Puts Down That Tool

Jehoshaphat Research (JR) argues the case that Techtronic Industries (669 HK) has been engaged in “snowballing” to maintain margin growth.
JR flags TTI is the only public company in the world (with over $1bn in revenues) exhibiting positive sequential gross margin change in every semi-annual period over ten years.
Short interest had been picking up ahead of the short sell report. Shares fell 19% before being suspended in the afternoon session.

Star Entertainment (SGR AU): A$800m Equity Raise to Buy Some Time

Star Entertainment Group (SGR AU) is looking to raise A$685m via an ANREO of 3 shares in The Star for every 5 shares at a fixed price of A$1.2/share.
The A$1.2/share price is a 21.1% discount to the last close and a 14.3% discount to the Theoretical Ex-Rights Price (TERP) of A$1.4/share.
Short interest is near the highs and there is an index deletion pending. We’d look to buy the stock on a move lower, especially closer to index deletion.

Alibaba (9988 HK): 3Q23, Growth Flat, But Margin Up, Buy

By Ming Lu

Revenue grew by 2% YoY in 3Q22, as the decrease of online sales offset the increase of physical stores.
The operating margin began to improve, as the company cut sales and marketing expenses in minor businesses.
We believe the stock has an upside of 78% for March 2024 and the price target will be HK$170.

Oasis Management Invests in KT&G

It was reported on 22 February in numerous local Korean media that Oasis Management has invested about 1.5% stake in KT&G Corporation (033780 KS).
This investment in KT&G is reportedly Oasis Mgmt’s first investment in Korea. For now, Oasis Mgmt has not made any public announcement about its investment in KT&G.
With Oasis Mgmt investing 1.5% stake in KT&G, we believe it is increasingly likely that it could start its activist campaign on KT&G sometime in 2023.

Boustead Projects: Boustead Singapore Bumps. Still Underwhelming

On the 6 Feb, Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share.
The Offer price was low-balled. Taking into account net cash of S$154mn, this was being done cheaply. It needed to be bumped and shares traded up to S$0.99 in expectation.
BOCS has now bumped to S$0.95/share and declared terms final. Not a great outcome for minorities.

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Feb 23

Most Read: Sembcorp Marine, SATS, Japan Post Bank, DGB Financial Group, SK Telecom, Chicony Electronics, Origin Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge
Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!
SATS SP: S$800m Rights Issue to Fund WFS Acquisition
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
KOSPI200 Index Rebalance Preview: Changes in April & June
Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge

Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!

Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic.
It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.

SATS SP: S$800m Rights Issue to Fund WFS Acquisition

SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising

By Sanghyun Park

Looking at the recent pattern, SKT’s fast-rising is quite noticeable. Its foreign room rose to 12.08%. On the other hand, KT’s foreign room growth seems to be slowing somewhat.
SKT’s pace is fast. If the current pace continues, there will be even the possibility of inclusion with a full adjustment factor of 1.0, exceeding 25%, by the August review.
We should design a momentum trading setup targeting the point when SKT’s foreign room decline trend will be reflected into an MSCI re-inclusion momentum.

SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer

Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations

By Janaghan Jeyakumar, CFA

The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review.
Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday’s close (they weren’t going to change as of Friday).
In this insight, we take a look at Quiddity’s expectations for index flows resulting from these events.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms