Most Read

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

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO

There were some review cutoffs last week as well as the implementation of the PCOMP INDEX, IDX 30 Index, LQ 45 Index and IDX 80 Index.
The big event in the coming week is the announcement of the MSCI February QCIR on Friday morning Asia time with implementation at the close of trading on 28 February.
Inflows to iShares Core MSCI Emerging Markets ETF (IEMG US) continue while IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) continues to see redemptions.

CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.

HYBE to Acquire a 39.8% Stake in SM Entertainment

On 10 February (prior to market open), Seoul Economic Daily reported that HYBE will conduct a tender offer of SM Entertainment shares taking over the controlling ownership of the company.
HYBE agreed to acquire a 14.8% stake from SM Entertainment’s founder Lee Soo-Man at 120,000 won per share, which represents a 21.8% premium to the closing price on 9 February.
HYBE is also conducting a tender offer to minority shareholders and it plans to acquire up to 25% additional shares at 120,000 won per share, representing 717 billion won.

Big Link REIT (823 HK) Rights Offering

After being halted this morning before the start of trade, post-close, Link REIT (823 HK) announced a fully-underwritten Rights Offering.
The Rights Offering intends to raise HK$18.8bn issuing 1 Right for every 5 Shares held, at a subscription price of HK$44.20, a 26% discount to TERP.
This will take an already under-levered REIT and add more capital to it. And there is going to be selling pressure at some point.

Sabana Industrial REIT – Offer Goes Live, Worth A Look

The Sabana Industrial REIT (SSREIT SP) 2022H2 dividend went ex- on 6 February 2023, setting the Offer to be lowered. The Offer by Volare was lowered. Docs out Friday night.
The S$0.465 Offer, adjusted for dividends (to be paid 27 March (cash or DRP units)), is now S$0.4504 per unit. The first close is 10 March 2023.
Sabana has underperformed a basket of slightly higher beta peers by 1+% since the day before the announcement. Watch pro-ration risk.

MSCI Korea Index Rebalance: Kakao Pay Included

MSCI announced its MSCI Korea index rebalance on 10 February. Kakao Pay (377300 KS) was the only company to be included in the MSCI Korea index.
There were also nine Korean companies included in MSCI Small Cap index including Osstem Implant, DearU, and ISC Co.
Hanwha Aerospace (012450 KS) and Ecopro Co Ltd (086520 KS) are higher probability potential candidates for inclusion in MSCI Korea Index rebalance in May.

KOSPI Size Index Migration: Names to Trade as We Are 30D Towards Effective

Amorepacific Group is more likely to remain in LargeCap due to its share price surge earlier this year. Instead, Hyundai Autoever will likely face a large→mid migration.
Of Small→Mid migrants. Sebang and Kum Yang deserve attention, as they will rank high in the Mid due to the rapid market cap growth over the past six months.
YTD performance seems to have a higher correlation with individual sector performance than causality with this event. So, there is still a circumstantial probability that justifies the trade.

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.

JGC (1963 JP) – A ToSTNeT Buyback Is NOT a ToSTNeT Buyback and Adjusted EV Vs Adjusted EBITDA Is OK.

Engineering & Construction firm Jgc Corp (1963 JP) on Friday announced 9M results. Full-Year forecasts were revised, with revenue lowered, but OP, RP, and NP unchanged.
The company then also announced a ToSTNeT-3 buyback of up to 4.77% of shares out for ¥20bn to be executed Monday 13 February pre-open. But details matter.
Four Important Takeaways: 1) sometimes a ToSTNeT-3 buyback is not a ToSTNeT-3 buyback, 2) that can be a good sign, and 3) sometimes Adjusted EV vs Adjusted EBITDA is OK.

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Feb 11

Most Read: Ebos Group Ltd, Adani Enterprises, Haw Par Corp, Samyang Foods, S.M.Entertainment Co, Standard Chartered, Renesas Electronics, Dai Nippon Printing, Link REIT and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Feb 2023 QCIR: Mostly In-Line; Couple of Surprises
Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case
Haw Par Corp Is Still Trading Cheap
Korea Spin-Offs: Details and KOSPI200 Index Impact
HYBE to Acquire a 39.8% Stake in SM Entertainment
Critical Details of Regulatory Filing for the SM Ent Tender Event
Standard Chartered: Has FAB Gone Cold Or Just Cooling Off?
Renesas – Good Results, Great Cashflow, Another Buyback, But Drift.
Dai Nippon Printing – Activism On Easy Street
Big Link REIT (823 HK) Rights Offering

MSCI Feb 2023 QCIR: Mostly In-Line; Couple of Surprises

MSCI has announced the changes for the February QCIR. For Asia Pacific, there are 20 adds and 14 deletes for the MSCI Standard Index with the most changes in China.
There are no surprises on the adds or deletes. However, there are a couple of stocks that are surprises on not being added to or deleted from the index.
The largest impact will be on Ebos Group Ltd (EBO NZ) – though there will be pre-positioning on the stock.

Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case

Shortly after the Hindenburg Report came out, MSCI said it was seeking feedback from clients. They got it, and last night announced they would conduct a special review.
They concluded some holders heretofore in the float might not be float. They announce results tonight. That can only be bad news for Adani Group companies.
We don’t know numbers yet, but passive inclusion was one reason why stocks skyrocketed. Few of the companies will be unaffected. Some could be heavily affected.

Haw Par Corp Is Still Trading Cheap

Last November I highlighted Haw Par Corp (HPAR SP)‘s multi-year trough levels on an implied stub valuation, and on an HPAR/UOB (UOB SP) ratio.
That trade has panned out well as the ratio steadily increased. But it remains below the 200 MDA.
A recovery in Tiger Balm sales is expected in Haw Par’s full-year results later this month. UOB’s financials, and UOL (UOL SP)‘s, are also due out this month.

Korea Spin-Offs: Details and KOSPI200 Index Impact

Hyundai Dept Store Co (069960 KS), Hyundai Greenfood (005440 KS) and Oci Co Ltd (010060 KS) will spin-off divisions and list them prior to the next rebalance in June.
The equity spin-offs will result in passive flows prior to the trading suspension as well as on relisting of the stocks post the spin-off.
We expect one change to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in April as one stock will be deleted due to low market cap following the spin-off.

HYBE to Acquire a 39.8% Stake in SM Entertainment

On 10 February (prior to market open), Seoul Economic Daily reported that HYBE will conduct a tender offer of SM Entertainment shares taking over the controlling ownership of the company.
HYBE agreed to acquire a 14.8% stake from SM Entertainment’s founder Lee Soo-Man at 120,000 won per share, which represents a 21.8% premium to the closing price on 9 February.
HYBE is also conducting a tender offer to minority shareholders and it plans to acquire up to 25% additional shares at 120,000 won per share, representing 717 billion won.

Critical Details of Regulatory Filing for the SM Ent Tender Event

There is no cancellation risk, regardless of where and how the ongoing proxy battle will be heading and unfolding. But there is a pro rata allocation risk, though.
Regarding tax, a tender event in Korea is treated as an over-the-counter trade. So transfer income tax is imposed.
SM provides shorting instruments necessary for arb trade, and the possibility of an arb opening coming out during tendering isn’t completely dead, given the uncertainties surrounding the current proxy battle.

Standard Chartered: Has FAB Gone Cold Or Just Cooling Off?

Back on the 5 January, First Abu Dhabi Bank (FAB DH) said it had considered a bid for Standard Chartered (STAN LN/2888 HK), but was no longer evaluating an Offer.
Such a statement kickstarts a six-month cooling-off period whereby FAB is restricted from reloading. This means all deal work must cease. Unless another bidder emerges or STAN’s board approves.
In a curious development, STAN’s shares popped ~11% yesterday, on no apparent news.

Renesas – Good Results, Great Cashflow, Another Buyback, But Drift.

Renesas Electronics (6723 JP) today reported full-year 2022 earnings with revenues 0.032% higher than the high end of guidance, which was better than consensus. OP was not as good.
They have guided Q1 only, with revenues up 0.2-4.6%, and non-GAAP GPM -3.9% to 54.5%, and OPM -6.6% to 32.5%. But they also announced a Tender Offer Buyback.
The buyback is smaller than I’d like, but the company has added cash despite last year’s tender offer and repaying bank borrowings. Lots to like here.

Dai Nippon Printing – Activism On Easy Street

Dai Nippon Printing’s announcement that it would double its RoE target in its next MTP was a pleasant surprise.
Together with saucy hints that future buybacks could be the biggest in its history this has propelled the stock to a post-2007 high.
We think Elliott has found an easy win here and consider this likely to end as a standout success for activism in Japan.

Big Link REIT (823 HK) Rights Offering

After being halted this morning before the start of trade, post-close, Link REIT (823 HK) announced a fully-underwritten Rights Offering.
The Rights Offering intends to raise HK$18.8bn issuing 1 Right for every 5 Shares held, at a subscription price of HK$44.20, a 26% discount to TERP.
This will take an already under-levered REIT and add more capital to it. And there is going to be selling pressure at some point.

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Feb 10

Most Read: Toshiba Corp, Ebos Group Ltd, Adani Enterprises, Haw Par Corp, CATL (A), Samyang Foods, Samsung Sds and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
Toshiba (6502) – Whoop! There It Is!
MSCI Feb 2023 QCIR: Mostly In-Line; Couple of Surprises
Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case
Toshiba – The Nikkei Finally Speaks
Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part
Haw Par Corp Is Still Trading Cheap
CATL GDR Listing Early Look – Past Deals Have Done Well. Valuations Somewhat Justifiable
Korea Spin-Offs: Details and KOSPI200 Index Impact
Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun

MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies

In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.

Toshiba (6502) – Whoop! There It Is!

As mentioned yesterday here and more clearly by Mio Kato in Toshiba – Good News?, the Nikkei was strangely silent over the fact that loan details were agreed.
The Nikkei comes out with a surprise article this morning saying they hear the Commitment Letter has been handed over. It also says the “Final Bid” is “about ¥2trln.”
Toshiba shares quickly reacted badly quickly. The article deserves parsing and I try to clarify the arguments.

MSCI Feb 2023 QCIR: Mostly In-Line; Couple of Surprises

MSCI has announced the changes for the February QCIR. For Asia Pacific, there are 20 adds and 14 deletes for the MSCI Standard Index with the most changes in China.
There are no surprises on the adds or deletes. However, there are a couple of stocks that are surprises on not being added to or deleted from the index.
The largest impact will be on Ebos Group Ltd (EBO NZ) – though there will be pre-positioning on the stock.

Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case

Shortly after the Hindenburg Report came out, MSCI said it was seeking feedback from clients. They got it, and last night announced they would conduct a special review.
They concluded some holders heretofore in the float might not be float. They announce results tonight. That can only be bad news for Adani Group companies.
We don’t know numbers yet, but passive inclusion was one reason why stocks skyrocketed. Few of the companies will be unaffected. Some could be heavily affected.

Toshiba – The Nikkei Finally Speaks

The Nikkei was out this morning with its belated take on JIP securing financing.
The article was nevertheless rather negative in its tone causing Toshiba to drop as much as 3.6% before recovering most of those losses.
We aren’t entirely sure it should have but Toshiba Tec does pique our interest.

Toshiba (6502 JP): Formal Offer Lodged, Now for the Hard Part

The Nikkei reports that Japan Industrial Partners (JIP), the preferred bidder, has finally secured financing and submitted a final offer to Toshiba Corp (6502 JP)’s Board.
Nikkei notes that JIP expects to spend about JPY2 trillion on the acquisition suggesting an offer price around JPY4,750 per share, -4% below the undisturbed price of JPY4,957.60 (21 April).
The hard part now is getting the Board to accept the unremarkable offer and the banks’ conditions. If the Board succumbs, the next challenge is to get shareholders to accept.

Haw Par Corp Is Still Trading Cheap

Last November I highlighted Haw Par Corp (HPAR SP)‘s multi-year trough levels on an implied stub valuation, and on an HPAR/UOB (UOB SP) ratio.
That trade has panned out well as the ratio steadily increased. But it remains below the 200 MDA.
A recovery in Tiger Balm sales is expected in Haw Par’s full-year results later this month. UOB’s financials, and UOL (UOL SP)‘s, are also due out this month.

CATL GDR Listing Early Look – Past Deals Have Done Well. Valuations Somewhat Justifiable

By Clarence Chu

CATL (A) (300750 CH) is looking to raise up to US$6bn in its upcoming Swiss GDR listing. Bookrunners on the deal are CICC, China Securities, Goldman Sachs, and UBS.
The relatively large listing comes after the firm has been undertaking a series of capital raisings, since it’s A-share debut back in Jun 2018, to fund its expansion.
In this note, we discuss GDR timelines, and the firm’s recent financial performance/valuations.

Korea Spin-Offs: Details and KOSPI200 Index Impact

Hyundai Dept Store Co (069960 KS), Hyundai Greenfood (005440 KS) and Oci Co Ltd (010060 KS) will spin-off divisions and list them prior to the next rebalance in June.
The equity spin-offs will result in passive flows prior to the trading suspension as well as on relisting of the stocks post the spin-off.
We expect one change to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in April as one stock will be deleted due to low market cap following the spin-off.

Discussing the Timing of the Samsung SDS Block Deal by Lee Seo-Hyun

The term of Lee’s trust contract with Hana Bank is from February 2nd to April 28th, and the volume is 1.95% of SO, the total remaining quantity owned by Lee.
The price movement on the day the previous block deals by the Lee family were executed was substantial. Of particular note is that SDS showed the most significant price impact.
We should focus on the possibility that a block deal will come to the market much earlier, as SDS is in short-term overbought territory from a valuation perspective.

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Feb 09

Most Read: Toshiba Corp, Adani Enterprises, Srisawad Power 1979, CELSYS, Samyang Foods, China Unicom Hong Kong, AGC Inc, Ihara Science and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks
Toshiba – Good News?
MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies
DTAC/TRUE Merger: Index Flows & Potential SET50 Replacement
Toshiba (6502) – Whoop! There It Is!
TOPIX Inclusions: Who Is Ready (Feb 2023)
KOSPI 200 Ad-Hoc Change: Hyundai Greenfood Out & Samyang Foods Fresh Buy-In on April 10
China Telcos: Send In The Clouds
AGC (5201 JP) – A Big Buyback
Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.

Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks

On 31 January, the expected “deadline” for a bank loan agreement with the JIP Consortium bidding for Toshiba, we got news that commitment confirmation would be extended to 3 February.
Every other time we got a deadline extension, we got an article. On 3-6 Feb, we got no article, suggesting we were close. Today, a Bloomberg article says terms agreed.
That gets us over the biggest hump. Now we have to look at possible next steps and timing.

Toshiba – Good News?

So JIP appears to have finally secured funding for its tortured Toshiba bid.
The market is reacting positively and we think this is reasonable but the real question is whether Toshiba management will be amenable to the new terms of JIP’s deal.
In our view, there are certain quirks regarding recent news flow which point to a potential answer to that question.

MSCI Acts Quickly: Unmitigated Bad News for Adani Group Companies

In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.

DTAC/TRUE Merger: Index Flows & Potential SET50 Replacement

The Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) joint shareholder meeting is in two weeks and amalgamation could be completed in the next month or two.
We forecast inflows to the NewCo from MSCI trackers while there will be no flows from FTSE All-World/All-Cap and Stock Exchange of Thailand SET 50 Index (SET50 INDEX) trackers.
Srisawad Power 1979 (SAWAD TB) is currently comfortably in the lead to be added to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in an ad hoc rebalance.

Toshiba (6502) – Whoop! There It Is!

As mentioned yesterday here and more clearly by Mio Kato in Toshiba – Good News?, the Nikkei was strangely silent over the fact that loan details were agreed.
The Nikkei comes out with a surprise article this morning saying they hear the Commitment Letter has been handed over. It also says the “Final Bid” is “about ¥2trln.”
Toshiba shares quickly reacted badly quickly. The article deserves parsing and I try to clarify the arguments.

TOPIX Inclusions: Who Is Ready (Feb 2023)

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.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Jan 2023)
Our top pick from the last insight CELSYS (3663 JP) (previously known as Artspark) has gained ~14% in roughly a month.

KOSPI 200 Ad-Hoc Change: Hyundai Greenfood Out & Samyang Foods Fresh Buy-In on April 10

From a trading perspective, we should pay attention to the KOSPI 200 corporate actions in Hyundai Department Group’s demerger events, as both companies are KOSPI 200 constituents.
Hyundai Green Food’s surviving company won’t beat the cutoff, resulting in a KOSPI 200 constituent change on April 10. Samyang Foods will be a new addition.
Even the size of KOSPI 200 ETFs that will likely go into mechanical trading on April 10 will cause a significant price impact from a day trading perspective.

China Telcos: Send In The Clouds

The rapid adoption of cloud computing has led to China boasting the world’s second-largest cloud computing market.
This migration to the cloud is in lock-step with global customer needs: scale, greater efficiency, and availability; together with a reduction in capex and infrastructure complexity.
The big three PRC telcos are firmly in the mix, with each announcing 100%+ growth in revenue for their cloud businesses in 1H22. Expect that trend to continue.

AGC (5201 JP) – A Big Buyback

AGC Inc (5201 JP) today announced Q4 earnings where revenues were great, OP was slightly disappointing, and Net Profits were awful because of significant impairments.
The company, however, announced a large buyback – its first in 5 years and equivalent to all the buybacks in the previous five years.
The buyback should have impact on what is an interesting name with broad institutional ownership and not overwhelming liquidity.

Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement.

Ihara Science (5999 JP) announced an MBO by the chairman.
It’s at an all-time high, but it is not especially attractive. The register is also really interesting.
This is a smallcap but i would not be surprised to see a bumpitrage effort. In fact, I’d be surprised if we didn’t.

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Feb 08

Most Read: Korea Stock Exchange Kospi 200 Index, Toshiba Corp, Delta Electronics Thai, Omni Bridgeway, Nintendo, Srisawad Power 1979, Iwasaki Electric, Boustead Projects, Nissan Motor and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea: Upcoming Changes to Dividend Rules & Implications
Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks
Delta Electronics (DELTA TB / 2308 TT): Waiting for a Reversal
Quiddity Leaderboard-S&P/ASX Mar 23: Time to Be Bullish ASX 200 & 300 Potential ADDs
Nintendo (7974) | Game Over for Switch
DTAC/TRUE Merger: Index Flows & Potential SET50 Replacement
Carlyle 86% Premium ¥4460 TOB on Iwasaki Elec – Probably Light, and Interesting Shareholder Register
Boustead Projects’ Underwhelming Unconditional Offer
Nissan’s Renault Led Selldown Very Early Look – US$4.3bn Prolonged Overhang or Lack Thereof
Toshiba – Good News?

Korea: Upcoming Changes to Dividend Rules & Implications

On 31 January, Korea’s Financial Services Commission (FSC) and the Ministry of Justice announced plans to improve rules regarding dividends to bring them in line with international standards.
Companies will be able to decide the dividend amount prior to the record dates for quarterly dividends, while the ex-date of the final dividend will be post the AGM.
This was one of the issues highlighted by MSCI for Korea’s upgrade from EM to DM. There are also implications for the KOSPI200 futures basis and futures rolls.

Toshiba (6502) – Funding Definitely Probably Now Secured – Next Steps and Risks

On 31 January, the expected “deadline” for a bank loan agreement with the JIP Consortium bidding for Toshiba, we got news that commitment confirmation would be extended to 3 February.
Every other time we got a deadline extension, we got an article. On 3-6 Feb, we got no article, suggesting we were close. Today, a Bloomberg article says terms agreed.
That gets us over the biggest hump. Now we have to look at possible next steps and timing.

Delta Electronics (DELTA TB / 2308 TT): Waiting for a Reversal

Delta Electronics Thai (DELTA TB) is now the largest stock in Thailand by market cap. The recent SET50 INDEX inclusion has set the stock on fire.
The Delta Electronics Thai (DELTA TB) / Delta Electronics (2308 TT) spread is very wide now, but still well within the historical highs.
We’d put on a placeholder position and monitor the spread for an entry once there is a clearer indication of a reversal in the spread.

Quiddity Leaderboard-S&P/ASX Mar 23: Time to Be Bullish ASX 200 & 300 Potential ADDs

In this insight, we take a look at the potential index changes for S&P ASX 20, 50, 100, 200, 300 in the run up to the March 2023 Rebalance.
There could be one change for ASX 20 and one change for ASX 100 while ASX 200 could see four ADDs/DELs.
For ASX 300, there could be 15 ADDs and 12 DELs in the March 2023 Rebalance including some high impact names based on days-to-trade.

Nintendo (7974) | Game Over for Switch

By Mark Chadwick

Nintendo reported operating profit of 190b yen (-8% YoY), falling far short of Street expectations
The Nintendo Switch is now a six-year old console and demand is exhausted. A normalization of chip/supply chain issues benefits the newer PS5
Our thesis is that the hardware cycle has peaked and that the share price will head lower in tandem with the dwindling top line

DTAC/TRUE Merger: Index Flows & Potential SET50 Replacement

The Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) joint shareholder meeting is in two weeks and amalgamation could be completed in the next month or two.
We forecast inflows to the NewCo from MSCI trackers while there will be no flows from FTSE All-World/All-Cap and Stock Exchange of Thailand SET 50 Index (SET50 INDEX) trackers.
Srisawad Power 1979 (SAWAD TB) is currently comfortably in the lead to be added to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in an ad hoc rebalance.

Carlyle 86% Premium ¥4460 TOB on Iwasaki Elec – Probably Light, and Interesting Shareholder Register

Carlyle has agreed to do an MBO on Iwasaki Electric (6924 JP) where the existing CEO who is 65yrs old will take a 0.5% stake.
As a purveyor of specialist industrial lighting, including transition to LED lighting for public space use, the company’s place in the ecosystem is not undesirable. But it isn’t hugely profitable.
This smallcap takeout at an 86% premium is probably still too light. And the Shareholder Structure is interesting.

Boustead Projects’ Underwhelming Unconditional Offer

Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, has announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share. The price is not final.
BOCS currently holds 54.87% in BOCJ. FF Wong, a shareholder in BOCS, holds a further 19.28%; therefore 74.16% is held by parties acting in concert.
It is the intention of BOCS to delist BOCJ. This should trade tight. This should be bumped. The Offer price is wrong.

Nissan’s Renault Led Selldown Very Early Look – US$4.3bn Prolonged Overhang or Lack Thereof

With Nissan (7201 JP) and Renault coming to a new arrangement regarding their working relationship, Renault will be left with a US$4.3bn Nissan stake that it will look to sell eventually.
The selldown will probably take a long while to materialize.
In this note, we talk about the announcement and take a very early look at the possible selldown.

Toshiba – Good News?

So JIP appears to have finally secured funding for its tortured Toshiba bid.
The market is reacting positively and we think this is reasonable but the real question is whether Toshiba management will be amenable to the new terms of JIP’s deal.
In our view, there are certain quirks regarding recent news flow which point to a potential answer to that question.

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Feb 07

Most Read: Kakao Pay, Jiangxi Special Electric Motor A, Bangkok Bank Public, Newcrest Mining, Korea Stock Exchange Kospi 200 Index, Jeju Air, Omni Bridgeway, Iwasaki Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO
CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform
Newmont’s Indicative Offer for Newcrest Mining (NCM AU)
BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit
Newmont Proposes Taking Newcrest Back Into The Fold
Korea: Upcoming Changes to Dividend Rules & Implications
Korea NPS Reportedly Finalized Additional 50 KOSPI Stocks in Its BM for Direct Management
Quiddity Leaderboard-S&P/ASX Mar 23: Time to Be Bullish ASX 200 & 300 Potential ADDs
Newcrest Mining (NCM AU): Newmont’s Light All-Scrip Offer
Iwasaki Electric (6924 JP): JPY4,460 MBO Tender Offer from Carlyle

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO

There were some review cutoffs last week as well as the implementation of the PCOMP INDEX, IDX 30 Index, LQ 45 Index and IDX 80 Index.
The big event in the coming week is the announcement of the MSCI February QCIR on Friday morning Asia time with implementation at the close of trading on 28 February.
Inflows to iShares Core MSCI Emerging Markets ETF (IEMG US) continue while IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) continues to see redemptions.

CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.

Newmont’s Indicative Offer for Newcrest Mining (NCM AU)

Newmont Mining (NEM US) has made an indicative, non-binding and conditional proposal to acquire Newcrest Mining (NCM AU). The exchange ratio is 0.38 Newmont shares for each Newcrest share.
At Newmont Mining (NEM US)‘s last close, this values Newcrest Mining (NCM AU) at A$27.4/share and at an equity value of A$17.3bn, a 22% premium to the last close.
Newmont Mining (NEM US) intends to list CDIs on the ASX following the acquisition and that will have implications for changes in the S&P/ASX family of indices.

BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit

Bangkok Bank (BBL TB) has outperformed Kasikornbank PCL (KBANK TB) by 33% over the last 11 months and the price ratio is nearing the high end of the historical range.
The number of NVDRs issued on Bangkok Bank Public (BBL TB) have continued to increase while decreasing on Kasikornbank PCL (KBANK TB).
Bangkok Bank Public (BBL TB) now trades at a higher forward PE as compared to Kasikornbank PCL (KBANK TB) and the gap in price to book has narrowed significantly.

Newmont Proposes Taking Newcrest Back Into The Fold

Newmont Mining (NEM US), the world’s largest gold miner, has pitched a non-binding, all-scrip proposal for Newcrest Mining (NCM AU), Australia’s largest listed gold company.
The proposal offers 0.38 Newmont shares for every Newcrest share, or an indicative Offer price of A$27.16/share, a 21% premium to last close. An earlier proposal from Newmont was rejected.
The proposal is subject to a raft of conditions, including granting of exclusivity to Newmont, due diligence, Newmont shareholder approval, and regulatory approvals, including FIRB.

Korea: Upcoming Changes to Dividend Rules & Implications

On 31 January, Korea’s Financial Services Commission (FSC) and the Ministry of Justice announced plans to improve rules regarding dividends to bring them in line with international standards.
Companies will be able to decide the dividend amount prior to the record dates for quarterly dividends, while the ex-date of the final dividend will be post the AGM.
This was one of the issues highlighted by MSCI for Korea’s upgrade from EM to DM. There are also implications for the KOSPI200 futures basis and futures rolls.

Korea NPS Reportedly Finalized Additional 50 KOSPI Stocks in Its BM for Direct Management

NPS said it would add 50 KOSPI stocks to KOSPI 200 for direct management. However, the key was when this would be implemented and which ones would be included.
SBS, one of Korea’s major networks, exclusively reported that NPS finalized the constituent stocks of the NPS-KR250 and started rebalancing trading on the 50 additional KOSPI stocks from January.
Hence, tracing and identifying who these additional 50 KOSPI stocks are is becoming the hottest topic in Korea’s local market at this point.

Quiddity Leaderboard-S&P/ASX Mar 23: Time to Be Bullish ASX 200 & 300 Potential ADDs

In this insight, we take a look at the potential index changes for S&P ASX 20, 50, 100, 200, 300 in the run up to the March 2023 Rebalance.
There could be one change for ASX 20 and one change for ASX 100 while ASX 200 could see four ADDs/DELs.
For ASX 300, there could be 15 ADDs and 12 DELs in the March 2023 Rebalance including some high impact names based on days-to-trade.

Newcrest Mining (NCM AU): Newmont’s Light All-Scrip Offer

Newcrest Mining (NCM AU) confirmed a non-binding indicative privatisation proposal from Newmont Mining (NEM US) at 0.380 Newmont shares per Newcrest share.
The offer values Newcrest at a discount to Tier 1 gold producer EV/Resource multiples. Also, the offer carries the volatility risk around Newmont shares and FX rates.
The offer underscores Newcrest’s value and helps the Board seek better terms. There is a possibility of a counterbid from other Tier 1 producers such as Barrick Gold (GOLD US).

Iwasaki Electric (6924 JP): JPY4,460 MBO Tender Offer from Carlyle

Iwasaki Electric (6924 JP) has recommended an MBO tender offer, sponsored by Carlyle Group Inc (CG US), of JPY4,460 per share, an 86.1% premium to the undisturbed price (6 February).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
The tender offer is attractive and represents a ten-year share price high. This suggests a done deal. The tender offer period is from 7 February to 22 March.

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Feb 06

Most Read: Kakao Pay, Jiangxi Special Electric Motor A, Halcyon Agri, Newcrest Mining, Mitsui & Co Ltd, Yashili International Holdings, Pertamina Geothermal, Adani Enterprises, Bangkok Bank Public, Hesai Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO
CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform
Halcyon Agri: MGO Triggered. Currency Translation Cuts Offer Price
Newmont’s Indicative Offer for Newcrest Mining (NCM AU)
Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition
Merger Arb Mondays (6 Feb) – Yashili, Kingston, Origin, Pushpay, Halcyon, O2Micro, Techno Associe
Pertamina Geothermal IPO: Valuation Insights
Last Week in SPACE: Adani Group, Bendigo/Bank of Queensland, Renault/Nissan, Keisei/Oriental Land
BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit
Hesai Group IPO – Thoughts on Valuation

Index Rebalance & ETF Flow Recap: MSCI, ASX, STAR50, China 50, NIFTY100, SMM SP, Pertamina Geo IPO

There were some review cutoffs last week as well as the implementation of the PCOMP INDEX, IDX 30 Index, LQ 45 Index and IDX 80 Index.
The big event in the coming week is the announcement of the MSCI February QCIR on Friday morning Asia time with implementation at the close of trading on 28 February.
Inflows to iShares Core MSCI Emerging Markets ETF (IEMG US) continue while IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) continues to see redemptions.

CSI500 Index Rebalance Preview: Potential Adds Continuing to Outperform

Three quarters of the way through the review period for the June rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 June.
There is a big sector skew in the potential changes. We estimate a one-way turnover of 11.47% at the June rebalance resulting in a one-way trade of CNY 10.11bn.
The potential adds have outperformed the potential deletes and the CSI500 Index over the last few weeks. There could be more outperformance till nearer the end of the review period.

Halcyon Agri: MGO Triggered. Currency Translation Cuts Offer Price

As expected, all conditions to the Sinochem/China Hainan Rubber (601118 CH) SPA have now been satisfied, triggering a mandatory Offer for Halcyon Agri (HACL SP), conditional on a 50% tendering.
Hainan Rubber holds 36%. Sinochem has provided an undertaking notto tender its remaining 29.2% stake. Hainan needs 14% out of 34.8% available – or ~40% to tender.
The takeaway disappointment is the Offer Price of S$0.413/share, down from S$0.435 at the time of the initial announcement last November, due to SGD weakness.

Newmont’s Indicative Offer for Newcrest Mining (NCM AU)

Newmont Mining (NEM US) has made an indicative, non-binding and conditional proposal to acquire Newcrest Mining (NCM AU). The exchange ratio is 0.38 Newmont shares for each Newcrest share.
At Newmont Mining (NEM US)‘s last close, this values Newcrest Mining (NCM AU) at A$27.4/share and at an equity value of A$17.3bn, a 22% premium to the last close.
Newmont Mining (NEM US) intends to list CDIs on the ASX following the acquisition and that will have implications for changes in the S&P/ASX family of indices.

Mitsui & Co (8031) Q3 – Big Profit, New Bigger Buyback, Some Index Selling; and Competition

Mitsui & Co Ltd (8031 JP) reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.
Also like Q2, they announced a buyback – this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.
This creates interesting index flows over the next several months, and other trading cos have live buybacks too.

Merger Arb Mondays (6 Feb) – Yashili, Kingston, Origin, Pushpay, Halcyon, O2Micro, Techno Associe

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Origin Energy (ORG AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Toyo Construction (1890 JP).
Lowest spreads – Essential Metals (ESS AU), Tyro Payments (TYR AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Kanematsu Electronics (8096 JP), Elmo Software (ELO AU).

Pertamina Geothermal IPO: Valuation Insights

Pertamina Geothermal (0125738D IJ)/PGE, a subsidiary of PT Pertamina (Persero) (PERT IJ), is seeking to raise up to US$600 million at a narrowed price range of IDR875-880 per share.
We previously discussed the IPO in Pertamina Geothermal IPO: The Investment Case.
PGE is attractively valued at the IPO price range. We would participate. Books will be closed on 10 February and the shares will start trading on 24 February.

Last Week in SPACE: Adani Group, Bendigo/Bank of Queensland, Renault/Nissan, Keisei/Oriental Land

Stay away from Adani Enterprises (ADE IN). It has wrapped itself in a cloak of nationalistic righteous indignation. Do not buy the dip. Or even a larger one.
The timing of a Bendigo And Adelaide Bank (BEN AU) and Bank Of Queensland (BOQ AU) merger makes a lot of sense right now.
This Renault SA (RNO FP) / Nissan Motor (7201 JP)‘s press release and “agreement”, as-is, is a Nothingburger.

BBL/KBANK: Huge Outperformance as BBL Nears NVDR Limit

Bangkok Bank (BBL TB) has outperformed Kasikornbank PCL (KBANK TB) by 33% over the last 11 months and the price ratio is nearing the high end of the historical range.
The number of NVDRs issued on Bangkok Bank Public (BBL TB) have continued to increase while decreasing on Kasikornbank PCL (KBANK TB).
Bangkok Bank Public (BBL TB) now trades at a higher forward PE as compared to Kasikornbank PCL (KBANK TB) and the gap in price to book has narrowed significantly.

Hesai Group IPO – Thoughts on Valuation

Hesai Group (HSAI US) is looking to raise around US$170m in its upcoming US IPO.
HSAI is a manufacturer of three-dimensional light detection and ranging (Lidar) solutions. It has shipped over 103,000 Lidar units from 2017 to the end of 2022.
We have looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we will talk about valuations.

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Feb 05

Most Read: Surya Esa Perkasa, Douzone Bizon, Baycurrent Consulting, SenseTime Group, UnionBank of the Philippines, Biocon Ltd, Halcyon Agri, Korea Stock Exchange Kospi 200 Index, Hesai Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45/IDX80 Index Rebalance: 4 Days to Implementation
KRX New Deal Index Rebalance Preview: Some Big Impact Names
MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC
NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping
Halcyon Agri (HACL SP): Conditions Precedent Fulfilled, MGO at S$0.413
Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective
Hesai Group IPO: The Bull Case
HESAI Group IPO Preview

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

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

KRX New Deal Index Rebalance Preview: Some Big Impact Names

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

MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends

The review period for the February Quarterly Comprehensive Index Review (QCIR) of the MSCI indices ended yesterday. There will be a number of changes in the Asia Pacific region.
Most of the inclusions are in China and the country weight in the MSCI Emerging Markets Index should increase leading to outflows from other markets.
On average, the potential adds have outperformed the potential deletes over the last few weeks. At a glance, pre-positioning appears to be lighter than in the past.

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

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

PCOMP Index Rebalance: DMC, UBP to Replace MEG, RLC

As forecast, DMCI Holdings (DMC) and UnionBank of the Philippines (UBP) will replace Megaworld Corp (MEG) and Robinsons Land Co (RLC) at the close on 3 February.
The PSE is using float higher than 20% for San Miguel (SMC PM), Emperador (EMP PM) and AC Energy Corp (ACEN) – there will be passive buying on the stocks.
Historically, the inclusions have outperformed the exclusions and there has been a big move in the stocks the day after announcement. Square off existing pre-positions by mid-week.

NIFTY100 Index Rebalance Preview: Big Impact & Could Increase Due to Capping

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

Halcyon Agri (HACL SP): Conditions Precedent Fulfilled, MGO at S$0.413

The conditions precedent for China Hainan Rubber Industry (601118 CH) to acquire 36.00% of Halcyon Agri (HACL SP)’s outstanding shares from Sinochem International Corporation A (600500 CH) at US$0.315 is fulfilled.
This will trigger an MGO at US$0.315 or S$0.413. On the assumption that the offer document is despatched by 17 February, the earliest close of the offer is 17 March.
The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate. We think that this is achievable as the offer is attractive.

Official Changes in Korea FSC’s Dividend Rules: Ramifications from a Trading Perspective

The new rules allow investors to decide whether to hold the stock until the dividend record date after knowing the dividend amount in advance.
The new rules will be applied starting with the annual dividends for this fiscal year. We will know this year’s yearend dividend amount before deciding whether to receive it.
From a trading perspective, the yearend dividend arb targeting ex-date mispricing will no longer be effective, which will likely change the swing trading strategy at the beginning of the year.

Hesai Group IPO: The Bull Case

Hesai Group (HSAI US) has launched a Nasdaq IPO to raise up to US$171 million at an indicative price range of US$17-19 per ADS.
Hesai is a global leader in LiDAR technology for autonomous driving and ADAS. In the ADAS market, Hesai is the global leader in terms of shipment volume in 2022.
The key elements of the bull case rest on a solid competitive positioning, large addressable markets, high growth and a strong balance sheet.

HESAI Group IPO Preview

Hesai Group (HSAI US) is getting ready to complete its IPO in the next several weeks in the United States, planning to raise as much as $171 million.
The ADAS penetration rate in China is expected to surge from 4.6% in 2022 to 11.2% in 2024 and 87.9% in 2030.
The company is a leading maker of laser-based LiDAR sensors in China. The company’s major customers in the ADAS segment include Li Auto, Jidu, and Lotus.

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Feb 04

Most Read: Sembcorp Marine, Baycurrent Consulting, Techno Associe, Nissin Electric, Pertamina Geothermal, Dentium, Hesai Group, Pushpay Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sembcorp Marine & Keppel O&M: STI Inclusion Possibility & Other Index Flow
MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
Sumitomo Elec Buys Out Sub Techno Associé) At ¥1,695/Share – Insulting Explanation. Deserves More.
Sumitomo Electric Buys Out Sub Nissin Electric (6641) At ¥1,700/Share – ATH But Still Too Low
Pertamina Geothermal Energy IPO: Offering Details & Index Inclusion
Dentium: An Undervalued Corporate Activist Target + Likely Inclusion Candidate for KOSPI 200 in 2023
Hesai Group Pre-IPO – Peer Comparison – Not Really the Largest, Globally or Locally
Pertamina Geothermal IPO: The Investment Case
Pertamina Geothermal Energy IPO – Thoughts on Valuation
Pushpay Holdings: 3rd March Scheme Meeting. IA Says Fair

Sembcorp Marine & Keppel O&M: STI Inclusion Possibility & Other Index Flow

The Sembcorp Marine (SMM) EGM is scheduled for 16 February. If approved by shareholders, the Asset Co transaction and completion of the KOM restructuring will be done by 28 February.
We expect no market trade from FTSE trackers, buying from MSCI trackers, while there is a question mark over treatment in the FTSE Straits Times Index (STI) (STI INDEX).
There could be selling in Sembcorp Marine (SMM SP) from active Keppel Corp (KEP SP) shareholders and that could have a bigger impact on the stock.

MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends

The review period for the February Quarterly Comprehensive Index Review (QCIR) of the MSCI indices ended yesterday. There will be a number of changes in the Asia Pacific region.
Most of the inclusions are in China and the country weight in the MSCI Emerging Markets Index should increase leading to outflows from other markets.
On average, the potential adds have outperformed the potential deletes over the last few weeks. At a glance, pre-positioning appears to be lighter than in the past.

Sumitomo Elec Buys Out Sub Techno Associé) At ¥1,695/Share – Insulting Explanation. Deserves More.

Sumitomo Electric Industries (5802 JP) is taking over to subs through tender offers. Both are light. Both this one for Techno Associe (8249 JP) and the one for Nissin Electric.
Both deals are light -slightly offensive, but in different ways. The Board decisions are more offensive than the actual prices, but it’s Sumi Elec buying, so those are offensive too.
There’s a history here. Sumi Elec went to 51% at an offensively low price (EV/EBITDA below zero) in 2019. But this is probably a done deal anyway.

Sumitomo Electric Buys Out Sub Nissin Electric (6641) At ¥1,700/Share – ATH But Still Too Low

Sumitomo Electric Industries (5802 JP) has announced a takeover of two of its subsidiaries today. The larger one is Nissin Electric (6641 JP).
This deal, done for governance purposes, hits an all-time high price. But, like others, it ignores synergies in pricing, has an inadequate premium, and process is just bad.
But given the shareholder structure, this is highly likely to sail through un-molested.

Pertamina Geothermal Energy IPO: Offering Details & Index Inclusion

Pertamina Geothermal (0125738D IJ) is offering 10.35bn shares in its IPO at a price range of IDR 820-945/share to raise between US$567-653m and valuing the company between US$2.27-2.61bn.
The stock will not get fast entry to the MSCI, FTSE or local Indonesia indices (IDX30 Index/ LQ45 Index/ IDX80 Index).
The stock should be added to MSCI Small Cap in May and to the FTSE All-Cap in September bringing in some passive flow.

Dentium: An Undervalued Corporate Activist Target + Likely Inclusion Candidate for KOSPI 200 in 2023

We believe Dentium is an attractive stock to own right now. It has an excellent combination of strong growth in sales and profits and discounted valuations.
Driven by its strong share price appreciation in the past year, Dentium now has become a strong candidate for a potential inclusion in KOSPI 200 index in 2023.
There is a growing probability that Dentium could be targeted by corporate activists to pressure the company to cancel treasury shares and provide higher dividends.

Hesai Group Pre-IPO – Peer Comparison – Not Really the Largest, Globally or Locally

Hesai Group (HSAI US) is looking to raise at least US$100m in its upcoming US IPO.
HSAI is a manufacturer of three-dimensional light detection and ranging (Lidar) solutions. It has shipped over 103,000 Lidar units from 2017 to the end of 2022.
In this note, we will undertake a peer comparison with domestic and US-listed peers.

Pertamina Geothermal IPO: The Investment Case

Pertamina Geothermal (0125738D IJ)/PGE, a subsidiary of PT Pertamina (Persero) (PERT IJ), is seeking to raise up to US$657 million at a price range of IDR820-945 per share.
PGE is the largest geothermal concession holder in Indonesia, in terms of capacity installed, according to Wood Mackenzie.
The investment case rest on steady growth, high margins, strong cash generation, manageable leverage, ambitious growth plans and attractive dividend payout.

Pertamina Geothermal Energy IPO – Thoughts on Valuation

Pertamina Geothermal Energy (PGE) is looking to raise around US$650m in its upcoming Indonesia IPO. PGE is an Indonesian state owned power producer which utilizes geothermal energy to produce electricity.
PGE currently manages 13 Geothermal Working Areas with a total capacity of 1,877 MW, of which 672 MW is owned by it, while 1,205 MW is via joint operations.
We have looked at the company’s performance in our previous note. In this note, we talk about valuations.

Pushpay Holdings: 3rd March Scheme Meeting. IA Says Fair

Back on the 28 October, church donor management play Pushpay Holdings (PPH NZ/PPH AU) announced a Scheme with BGH/Sixth Street at NZ$1.34/share, a 30.1% premium to undisturbed.
The Scheme Booklet is now out. The shareholder meeting will take place on the 3 March. The independent advisor concluded the Offer price is within its valuation range.
Assuming 11 April payment, this is trading at a gross/annualised spread of 3.0%/18.0%.

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Feb 03

Most Read: Sembcorp Marine, Baycurrent Consulting, Oriental Land, Keisei Electric Railway Co, Hong Kong Hang Seng Index, Nissin Electric, Dentium Co Ltd, Bank Of Queensland, Pertamina Geothermal and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sembcorp Marine & Keppel O&M: STI Inclusion Possibility & Other Index Flow
MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends
Oriental Land (4661) As Nikkei 225 Candidate – What Is Float? What Is “The Tricky Twist”?
Sumitomo Electric Buys Out Sub Nissin Electric (6641) At ¥1,700/Share – ATH But Still Too Low
Keisei Electric: Needs Activists to Push the Market
Quiddity Primer: The Ongoing Evolution of the Hang Seng Index
Nissin Electric (6641 JP): JPY1,700 Tender Offer from Sumitomo Electric
Dentium: An Undervalued Corporate Activist Target + Likely Inclusion Candidate for KOSPI 200 in 2023
Bendigo Adelaide Bank & Bank of Queensland’s Rumoured Merger
Pertamina Geothermal Energy IPO – Somewhat like an Energy Explorer. Somewhat like a Power Producer

Sembcorp Marine & Keppel O&M: STI Inclusion Possibility & Other Index Flow

The Sembcorp Marine (SMM) EGM is scheduled for 16 February. If approved by shareholders, the Asset Co transaction and completion of the KOM restructuring will be done by 28 February.
We expect no market trade from FTSE trackers, buying from MSCI trackers, while there is a question mark over treatment in the FTSE Straits Times Index (STI) (STI INDEX).
There could be selling in Sembcorp Marine (SMM SP) from active Keppel Corp (KEP SP) shareholders and that could have a bigger impact on the stock.

MSCI Feb 2023 QCIR Preview: Potential Changes as Review Period Ends

The review period for the February Quarterly Comprehensive Index Review (QCIR) of the MSCI indices ended yesterday. There will be a number of changes in the Asia Pacific region.
Most of the inclusions are in China and the country weight in the MSCI Emerging Markets Index should increase leading to outflows from other markets.
On average, the potential adds have outperformed the potential deletes over the last few weeks. At a glance, pre-positioning appears to be lighter than in the past.

Oriental Land (4661) As Nikkei 225 Candidate – What Is Float? What Is “The Tricky Twist”?

As discussed in Nikkei 225 March Review – Quiddity Leaderboard (Jan 2023) (and earlier versions), Oriental Land (4661 JP) is a candidate to join the Nikkei 225 in March 2023.
As of early January, it was the top-ranked impact name with 11.8 days of ADV to buy, and if it underperformed the Nikkei from there, there’d be more to buy.
With the data collection period now complete, it is top-ranked, still. And it is still ~10-12 days to buy. Understanding shareholder structure, however, is key. So I dive in.

Sumitomo Electric Buys Out Sub Nissin Electric (6641) At ¥1,700/Share – ATH But Still Too Low

Sumitomo Electric Industries (5802 JP) has announced a takeover of two of its subsidiaries today. The larger one is Nissin Electric (6641 JP).
This deal, done for governance purposes, hits an all-time high price. But, like others, it ignores synergies in pricing, has an inadequate premium, and process is just bad.
But given the shareholder structure, this is highly likely to sail through un-molested.

Keisei Electric: Needs Activists to Push the Market

By Oshadhi Kumarasiri

We think there’s something fundamentally wrong with Keisei Electric Railway Co (9009 JP)’s current valuation.
Its core business with an estimated fair value of ¥720bn, currently has an implied valuation of negative ¥942bn (stub value).
If investors can convince the management to dispose its stake in Oriental Land (4661 JP), we think there’s more than a 200% upside to Keisei Electric’s valuation.

Quiddity Primer: The Ongoing Evolution of the Hang Seng Index

The Hang Seng Index (HSI INDEX) is a blue-chip index that represents the performance of the large cap stocks listed in the Hong Kong Stock Exchange.
The index is undergoing some significant composition changes and the index provider currently uses a highly subjective constituent selection process which is quite challenging to decode.
In this insight, we take a look at Quiddity’s approach to solving this Hang Seng constituent selection puzzle and the historical performance of past rebalance events.

Nissin Electric (6641 JP): JPY1,700 Tender Offer from Sumitomo Electric

Nissin Electric (6641 JP) has recommended Sumitomo Electric Industries (5802 JP)’s tender offer of JPY1,700 per share, an 22.7% premium to the undisturbed price (2 February).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
The tender offer is attractive in comparison to peer multiples and historical price ranges. Excluding the offeror, there are no substantial shareholders. This suggests a done deal.

Dentium: An Undervalued Corporate Activist Target + Likely Inclusion Candidate for KOSPI 200 in 2023

We believe Dentium is an attractive stock to own right now. It has an excellent combination of strong growth in sales and profits and discounted valuations.
Driven by its strong share price appreciation in the past year, Dentium now has become a strong candidate for a potential inclusion in KOSPI 200 index in 2023.
There is a growing probability that Dentium could be targeted by corporate activists to pressure the company to cancel treasury shares and provide higher dividends.

Bendigo Adelaide Bank & Bank of Queensland’s Rumoured Merger

The Aussie local press is discussing renewed merger talks for Bendigo And Adelaide Bank (BEN AU) and Bank Of Queensland (BOQ AU).
Talks of a merger are not new. And we have been here before when BOQ twice made overtures to Bendigo in 2007, but was rejected.
The swift removal of BOQ’s CEO, a lifetime high ratio – BEN/BOQ – and ANZ (ANZ AU)‘s tilt for Suncorp Bank – suggests a merger makes a lot of sense.

Pertamina Geothermal Energy IPO – Somewhat like an Energy Explorer. Somewhat like a Power Producer