Most Read

Tianqi Lithium (TL) is looking to raise up to US$1.5bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
TL was the largest producer of mined lithium globally in terms of output and ranked third in terms of revenue generated from lithium in 2020, according to Wood Mackenzie .
In this note, we look at the company’s past performance and the deal dynamics.

Thai Life Insurance IPO: The Bull Case

By Arun George

Thai Life Insurance (124744Z TB) has started to meet investors ahead of its $1 billion IPO. The roadshow will run till early July with a listing targeted later in July.
Thai Life is the third-largest life insurer in Thailand with a 12.9% market share as measured by gross premium income in 1Q22.
The key elements of the bull case rest on a strong brand, the largest agent network, return to APE growth, high persistency ratio and improving VONB margin.

Nexon Buyback May Signal End To Near-Term Relative Outperformance

Nexon (3659 JP) founder Kim Jung Ju tried to sell his holdco in 2019, didn’t, now shares are higher, but he passed suddenly in Q1. The stock popped.
Inheritance tax issues for the estate are complicated, but the buyback just executed might signal a “pause” for a while.
In the meantime, recent underperformance in terms of Peer-relative earnings forecasts suggests the stock could drift.

Thai Life Insurance: Offering Details & Index Entry Timeline

Thai Life Insurance (124744Z TB) is looking to raise US$1bn in its IPO by selling up to 2.207bn shares. This will value the company at around US$5.18bn.
Inclusion in the SET50 INDEX will depend on the float exceeding 20% and a rally that leads to its market cap exceeding 1% of the SET INDEX market cap.
Fast Entry to the MSCI Thailand and FTSE All-World indices is not likely. MSCI inclusion could take place at the November SAIR and FTSE inclusion at the December QIR.

Viva China: Perennially Inexpensive Li Ning Exposure

Viva China (8032 HK) trades at a large discount to its 10.6% holding in Li Ning (2331 HK).
Apart from its Li Ning exposure, Viva has a controlling stake in Bossini International Holdings (592 HK), a sports experience segment, and net cash.
The current NAV discount of ~46% is unlikely to meaningfully narrow near term given management’s reluctance to pay out a large dividend or undertake a corporate restructuring.

Before it’s here, it’s on Smartkarma

Jun 17

Most Read: SenseTime Group, Coronado Global Resources Inc, Link Administration, Sichuan Tianqi Lithium Industries, Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow
Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday
Link Admin: Dye & Durham’s Deal All But Dead
Tianqi Lithium A/H Listing – Back once Again, This Time with a More Compelling Industry Backdrop
ACCC’s Concerns Likely to End in a Link-DND Deal Bust

SenseTime (20 HK): Lock-Up Expiry Will Bring BIG Passive Flow

SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.

Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday

Changes to the S&P/ASX indices, FTSE All-World/All-Cap, VanEck Vectors Rare Earth/Strategic Metals (REMX US) and VanEck Vectors Junior Gold Miners (GDXJ US) will be implemented at the close tomorrow.
The stocks with passive inflows have outperformed the stocks with passive outflows over the last couple of months and post-announcement. There will be pre-positions on a lot of names.
Short interest has increased on nearly all the deletes from the S&P/ASX indices, while short interest movement on the stocks with passive inflows has been mixed.

Link Admin: Dye & Durham’s Deal All But Dead

This transaction is looking increasingly toast. The ACCC has outlined significant preliminary competition concerns with Dye & Durham’s (D&D) proposed acquisition of Link Administration (LNK AU).
Separately, Link’s subsidiary, Link Fund Solutions Limited, has been notified that an application for a “Group Litigation Order” has been filed in the English High Court.
Link has to exit PEXA for this transaction to proceed. But how badly do D&D want PEXA? Will they walk? Time to look at Link fundamentally, separate from D&D’s Offer.

Tianqi Lithium A/H Listing – Back once Again, This Time with a More Compelling Industry Backdrop

Tianqi Lithium (TL) is looking to raise up to US$1.5bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
TL was the largest producer of mined lithium globally in terms of output and ranked third in terms of revenue generated from lithium in 2020, according to Wood Mackenzie .
In this note, we look at the company’s past performance and the deal dynamics.

ACCC’s Concerns Likely to End in a Link-DND Deal Bust

By Arun George

The ACCC’s Statement of Issues noted “significant preliminary competition concerns” in relation to Dye & Durham/DND’s acquisition of Link Administration (LNK AU). The findings will be announced on 8 September.
There is no easy fix. We think that satisfying the ACCC requires a PEXA Group (PXA AU) stake disposal which could trigger a material adverse clause.
Link aims to proceed with the 13 July scheme meeting but this is a broken deal. While our SoTP suggests upside, there are no short-term positive catalysts.

Before it’s here, it’s on Smartkarma

Jun 16

Most Read: Whitehaven Coal, Bank Jago Tbk PT, Kito Corporation, Coronado Global Resources Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
LQ45 Index Rebalance Preview (July 2022): Candidates for Change
Kito (6409) – Now Sitting Pretty
Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday

Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements

Crown Resorts (CWN AU)‘s Second Court hearing is scheduled for 15 June and the stock is likely to stop trading at the close on that day.
Estimated passive tracker selling is 62m shares (A$809m; 31.2 days of ADV) of Crown Resorts (CWN AU) and that could open up some arb opportunities.
We expect Whitehaven Coal (WHC AU) will be added to the S&P/ASX 100 Index, while Coronado Global Resources Inc (CRN AU) could be added to the S&P/ASX 200 (AS51 INDEX).

FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments

Between tightening regulations to government and regulatory support for the market to geopolitical issues, there has been a lot of market volatility and investor focus on China.
Valuations of China focused indices are lower than those of other Developed and Emerging markets.
Investors can use the SGX FTSE China A50 Index futures and the SGX FTSE China H50 Index futures to get exposure to the onshore and offshore China market.

LQ45 Index Rebalance Preview (July 2022): Candidates for Change

The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 29 July.
Potential adds are Bank Jago Tbk PT (ARTO IJ), Adaro Minerals (ADMR IJ), Bumi Resources Minerals Tbk (BRMS IJ), Transcoal Pacific Tbk PT (TCPI IJ) and Mitratel (MTEL IJ).
Potential deletions are Pembangunan Perumahan (Persero) (PTPP IJ), Pabrik Kertas Tjiwi Kimia (TKIM IJ), Media Nusantara Citra (MNCN IJ), Gudang Garam (GGRM IJ) and Chandra Asri Petrochemical (TPIA IJ).

Kito (6409) – Now Sitting Pretty

Kito Corporation (6409 JP) is under offer by KKR unit Crosby, which announced a takeover in mid-May.
Anti-Trust and foreign review will take a few months, and so we wait. In the meantime, the shareholder register has changed significantly. This remains an interesting option.
And now, global market ructions offer arbitrageurs a meaningful opportunity.

Australia: S&P/ASX, FTSE, REMX, GDXJ Flows on Friday

Changes to the S&P/ASX indices, FTSE All-World/All-Cap, VanEck Vectors Rare Earth/Strategic Metals (REMX US) and VanEck Vectors Junior Gold Miners (GDXJ US) will be implemented at the close tomorrow.
The stocks with passive inflows have outperformed the stocks with passive outflows over the last couple of months and post-announcement. There will be pre-positions on a lot of names.
Short interest has increased on nearly all the deletes from the S&P/ASX indices, while short interest movement on the stocks with passive inflows has been mixed.

Before it’s here, it’s on Smartkarma

Jun 15

Most Read: Whitehaven Coal, Kakao Pay, Singtel, LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
Kakao Pay (377300 KS): Alipay Overhang and Potential MSCI Inclusion
Bharti Singtel Possible Selldown/Holdco Trade – Singtel Appears to Be Ready for Cashing in US$1-2bn
FTSE GEIS Korea: Rebalancing Week Trades

Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements

Crown Resorts (CWN AU)‘s Second Court hearing is scheduled for 15 June and the stock is likely to stop trading at the close on that day.
Estimated passive tracker selling is 62m shares (A$809m; 31.2 days of ADV) of Crown Resorts (CWN AU) and that could open up some arb opportunities.
We expect Whitehaven Coal (WHC AU) will be added to the S&P/ASX 100 Index, while Coronado Global Resources Inc (CRN AU) could be added to the S&P/ASX 200 (AS51 INDEX).

FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments

Between tightening regulations to government and regulatory support for the market to geopolitical issues, there has been a lot of market volatility and investor focus on China.
Valuations of China focused indices are lower than those of other Developed and Emerging markets.
Investors can use the SGX FTSE China A50 Index futures and the SGX FTSE China H50 Index futures to get exposure to the onshore and offshore China market.

Kakao Pay (377300 KS): Alipay Overhang and Potential MSCI Inclusion

Alipay’s sale of 5m shares in Kakao Pay (377300 KS) has caused the stock to slide below its IPO price. Foreign investors have sold while retail have bought last week.
Alipay still holds 34.7% of Kakao Pay (377300 KS) and this will be an overhang on the stock for some time.
Kakao Pay (377300 KS) will be added to the FTSE All-World Index at the close on Friday. MSCI inclusion will likely be at the May 2023 SAIR.

Bharti Singtel Possible Selldown/Holdco Trade – Singtel Appears to Be Ready for Cashing in US$1-2bn

Various recent media reports have indicated that Singtel aims to sell 2-4% of its stake in Bharti Airtel. Singtel has officially dismissed the reports as media speculation.
There have been subsequent reports in the Indian media about the founder, Sunil Mittal, looking to raise around US$2bn in debt, to finance an increase in his stake in Airtel.
In this note, we talk about the possible deal and its implications.

FTSE GEIS Korea: Rebalancing Week Trades

By Sanghyun Park

We typically estimate the size of the FTSE All Cap tracking fund to be around $600B. However, empirically, one-third of this was witnessed in Korean stocks during the rebalancing week.
Estimating each passive flow based on this, we should expect LG Energy to receive the most significant flow at 1.16x ADTV from this point until the closing of this Friday.
As for Kakao Pay, the FTSE announced an increase in the investability to 15.8% (due to Alipay’s block deals), offering a passive inflow of 0.36x ADTV.

Before it’s here, it’s on Smartkarma

Jun 14

Most Read: PetroChina, Frasers Hospitality Trust, Whitehaven Coal and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCEI Index Rebalance Preview: Four Sets of Changes from July to September
China’s Evolving EV Industry
Frasers Hospitality Trust Scheme Announced
FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments
Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements

HSCEI Index Rebalance Preview: Four Sets of Changes from July to September

Sunac China Holdings (1918 HK) is still suspended from trading and could be deleted from the index in July and replaced by SenseTime Group (20 HK) or PetroChina (857 HK).
SenseTime (20 HK) or PetroChina (857 HK), Great Wall (2333 HK) and Zhongsheng (881 HK) could replace Haidilao (6862 HK), CPIC (2601 HK) and Alibaba Health (241 HK) in September.
There will be buying on SenseTime Group (20 HK) from HSCEI INDEX and HSTECH INDEX trackers. But there is also a big lock-up expiry on 29 June.

China’s Evolving EV Industry

By Mio Kato

The EV market offers bright long term prospects supported by technological progress and government incentives, particularly in China.
In the short term, surging raw material costs and supply bottlenecks are significant risks and could take longer to resolve than many suspect.
We believe the high-end performance segment and low-end mini/city vehicle segments are most suitable for rapid EV penetration.

Frasers Hospitality Trust Scheme Announced

This morning, Frasers Hospitality Trust (FHT SP) announced a Scheme Implementation Deed was signed for the S-REIT’s privatisation by its current sponsors TCC Group Investments Limited and Frasers Property Limited.
The S$500mm borrowing mooted suggested S$0.69/unit; Scheme Consideration is S$0.70/unit in cash against the latest commissioned Adjusted NAV estimate of S$0.6519 (vs last NAV of S$0.6534/unit).
The deal comes at an all-time high price, slightly exceeding the end-2019 price on a dividend-adjusted basis. This should be done, but it is worth thinking about how.

FTSE China A50 and FTSE China H50 Indexes & Index Futures: Recent Developments

Between tightening regulations to government and regulatory support for the market to geopolitical issues, there has been a lot of market volatility and investor focus on China.
Valuations of China focused indices are lower than those of other Developed and Emerging markets.
Investors can use the SGX FTSE China A50 Index futures and the SGX FTSE China H50 Index futures to get exposure to the onshore and offshore China market.

Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements

Crown Resorts (CWN AU)‘s Second Court hearing is scheduled for 15 June and the stock is likely to stop trading at the close on that day.
Estimated passive tracker selling is 62m shares (A$809m; 31.2 days of ADV) of Crown Resorts (CWN AU) and that could open up some arb opportunities.
We expect Whitehaven Coal (WHC AU) will be added to the S&P/ASX 100 Index, while Coronado Global Resources Inc (CRN AU) could be added to the S&P/ASX 200 (AS51 INDEX).

Before it’s here, it’s on Smartkarma

Jun 13

Most Read: Bumi Resources Minerals Tbk, Lake Resources Nl, Toyo Construction, PetroChina, Orient Overseas International and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Junior Gold Miners Index Rebalance: Big Flows & Impact
MVIS Global Rare Earth/Strategic Metals Index Rebalance: CXO & LKE Added; AVZ Out
Toyo Construction – YFO Standstill Against TC Hostility
HSCEI Index Rebalance Preview: Four Sets of Changes from July to September
Index Rebalance & ETF Flow Recap: STAR50, S&P500, REMX, MVIS Vietnam, Atlas Arteria, OOIL

MVIS Global Junior Gold Miners Index Rebalance: Big Flows & Impact

Kinross Gold Corp (KGC US), Fresnillo PLC (FRES LN), Kingsgate Consolidated (KCN AU), Dakota Gold are adds; Merdeka Copper Gold Tbk PT (MDKA IJ) and PGM Gold Mining are deletes.
One way turnover is US$390m and there is a big impact on a lot of stocks due to addition, deletion and float changes. Implementation at the close on 17 June.
Bumi Resources Minerals Tbk (BRMS IJ) was added to the GDXJ in March and rallied over 30% in 4 days since announcement. Buying this time will be even larger.

MVIS Global Rare Earth/Strategic Metals Index Rebalance: CXO & LKE Added; AVZ Out

Core Lithium Ltd (CXO AU), Lake Resources Nl (LKE AU) and Piedmont Lithium ADR have been added to the MVIS Global Rare Earth/Strategic Metals Index. AVZ Minerals has been deleted.
Core Lithium Ltd (CXO AU) and Lake Resources Nl (LKE AU) are S&P/ASX 200 additions that will be also implemented at the close of trading on 17 June.
With only 4 trading days to implementation (Monday is a holiday), the stocks with significant days of ADV to trade could out(under)perform their peers and the market.

Toyo Construction – YFO Standstill Against TC Hostility

Three weeks ago, Yamauchi No 10 Family Office (YFO) announced its intentions to launch a Tender Offer by end-June. Toyo Construction (1890 JP) got upset and called YFO names.
TC announced a Poison Pill, they talked, TC accused YFO in the AGM Convocation of “extreme dishonesty.” They have since met again, and finally signed a long standstill agreement.
But the Poison Pill will be put to shareholders (ISS recommends against), and shareholders have to decide from the public documents whether they believe Toyo Construction.

HSCEI Index Rebalance Preview: Four Sets of Changes from July to September

Sunac China Holdings (1918 HK) is still suspended from trading and could be deleted from the index in July and replaced by SenseTime Group (20 HK) or PetroChina (857 HK).
SenseTime (20 HK) or PetroChina (857 HK), Great Wall (2333 HK) and Zhongsheng (881 HK) could replace Haidilao (6862 HK), CPIC (2601 HK) and Alibaba Health (241 HK) in September.
There will be buying on SenseTime Group (20 HK) from HSCEI INDEX and HSTECH INDEX trackers. But there is also a big lock-up expiry on 29 June.

Index Rebalance & ETF Flow Recap: STAR50, S&P500, REMX, MVIS Vietnam, Atlas Arteria, OOIL

Last week saw the rebalance implementation of the KOSPI2 INDEX, KOSDAQ 150, HSI INDEX, HSCEI INDEX, HSTECH INDEX, CSI 300 Index, STAR50 INDEX and the SSE family of indices.
The coming week has the rebalance implementation of the FTSE All-World/All-Cap, EPRA Nareit, FTSE China 50, FTSE China A50, FTSE TWSE Taiwan 50 and S&P/ASX indices.
Big inflows to the Yuanta/P-shares Taiwan Top 50 ETF (0050 TT) as we enter dividend season. The trade looks bigger than usual this year.

Before it’s here, it’s on Smartkarma

Jun 12

Most Read: Orient Overseas International, Lake Resources Nl, Kito Corporation, Vingroup Jsc, China Vast Industrial Urban Development and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

OOIL (316 HK): Peak Index Inclusion?
MVIS Global Rare Earth/Strategic Metals Index Rebalance: CXO & LKE Added; AVZ Out
Kito (6409) – Shareholder Register Quirks Evolving – Becoming More Arb-Y Less Friendly
MVIS Vietnam Index Rebalance: Two Adds, One Delete, Capping & Float Changes
China VAST (6166 HK): Jinmao’s Pre-Conditional Offer

OOIL (316 HK): Peak Index Inclusion?

Over the last 3 months, Orient Overseas International (316 HK) has been added to the FTSE All-World Index, MSCI Standard Index and Hong Kong Hang Seng Index (HSI INDEX).
The stock has outperformed its Asia peers and now trades at a higher valuation. Shorts have been building positions over the last couple of months.
Cumulative excess volume on the stock has been increasing. While a lot of positioning has likely been unwound, there could be more unwinding over the next few weeks.

MVIS Global Rare Earth/Strategic Metals Index Rebalance: CXO & LKE Added; AVZ Out

Core Lithium Ltd (CXO AU), Lake Resources Nl (LKE AU) and Piedmont Lithium ADR have been added to the MVIS Global Rare Earth/Strategic Metals Index. AVZ Minerals has been deleted.
Core Lithium Ltd (CXO AU) and Lake Resources Nl (LKE AU) are S&P/ASX 200 additions that will be also implemented at the close of trading on 17 June.
With only 4 trading days to implementation (Monday is a holiday), the stocks with significant days of ADV to trade could out(under)perform their peers and the market.

Kito (6409) – Shareholder Register Quirks Evolving – Becoming More Arb-Y Less Friendly

The Kito Corporation (6409 JP) take-private by KKR which is in process started with an interesting register. It has become interestinger.
One possibly-strategic “pure investment” holder has gone 10+%. A “friendly activist” has gone below. Another large friendly holder sold 4%. Volume since it achieved near-deal-price has been 24.7% of votes.
The register has likely become more arb-y and possibly strategic, and less friendly to Kito, but it is up to the holders to follow up. And there is a warning.

MVIS Vietnam Index Rebalance: Two Adds, One Delete, Capping & Float Changes

There are 2 additions and 1 deletion for the MVIS Vietnam Index at the upcoming rebalance at the close on 17 June. Plus capping and float changes.
The adds are Saigon – Hanoi Commercial (SHB VN) and Viet Nam Construction & Impo (VCG VN), while Tien Phong Securities (ORS VN) is the deletion.
The largest passive outflows are on Vingroup Jsc (VIC VN), Feng Tay Enterprise (9910 TT) and Eclat Textile Company (1476 TT).

China VAST (6166 HK): Jinmao’s Pre-Conditional Offer

Urban planner China Vast Industrial Urban Development (6166 HK) has received a pre-conditional Offer, by way of a Scheme, from China Jinmao Holdings (817 HK).
The cancellation price is HK$2.40/share, a ~30% premium to the undisturbed price. The Offer Price is final.
Pre-Conditions include approvals from SAMR, SASAC, and NDRC. These won’t be an issue as Jinamo is backed by SOE Sinochem.

Before it’s here, it’s on Smartkarma

Jun 11

Most Read: Orient Overseas International, ACM Research Shanghai Inc, Crown Resorts, HKEX, Tokyo Electron and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

OOIL (316 HK): Peak Index Inclusion?
STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
Crown Resorts: Regulatory Approvals Falling Into Place
Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)
Tokyo Electron (8035 JP): New Medium-Term Plan Vs. Reality

OOIL (316 HK): Peak Index Inclusion?

Over the last 3 months, Orient Overseas International (316 HK) has been added to the FTSE All-World Index, MSCI Standard Index and Hong Kong Hang Seng Index (HSI INDEX).
The stock has outperformed its Asia peers and now trades at a higher valuation. Shorts have been building positions over the last couple of months.
Cumulative excess volume on the stock has been increasing. While a lot of positioning has likely been unwound, there could be more unwinding over the next few weeks.

STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant

With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.

Crown Resorts: Regulatory Approvals Falling Into Place

Into the final straight. Victoria and NSW have signed off on Blackstone’s proposed acquisition of Crown Resorts (CWN AU).
Gaming regulatory approval from Western Australia remains outstanding, but this is done. Crown’s conduct in WA was no better – or worse – than it was in Victoria and NSW.
Trading super tight with potentially another month or so until payment.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (9 June 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$0.6bn, split (roughly) <US$0.1bn for Shanghai and US$0.5bn for Shenzhen.
The largest inflows were into Kuaishou Technology (1024 HK) and Wuxi Biologics (2269 HK). The largest outflows were in CNOOC Ltd (883 HK) and Tencent (700 HK).

Tokyo Electron (8035 JP): New Medium-Term Plan Vs. Reality

By Scott Foster

Tokyo Electron has announced a new Medium-term Plan that shows what the company could probably do if the next five years were as good as the last five years.
That seems unlikely. The plan ignores rising interest rates, the risk of recession, political risk, and the possibility of demand from South Korea, Taiwan and China maxing out.
It looks like FY Mar-23 guidance is intended to be conservative. That cannot be take for granted.

Before it’s here, it’s on Smartkarma

Jun 10

Most Read: ACM Research Shanghai Inc, Far East Hospitality Trust, Toshiba Corp, Net Protections, Orient Overseas International and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant
Fraser Hospitality Trust Halted – Privatisation Likely. Far East The Better Trade Here.
Toshiba – Push Me Pull Me
Net Protections Holding IPO Lock-Up – Small Expiry Now, Before 20% Is Released Later in the Year
OOIL (316 HK): Peak Index Inclusion?

STAR50 Index Rebalance Preview (Sep): Change Is the Only Constant

With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.

Fraser Hospitality Trust Halted – Privatisation Likely. Far East The Better Trade Here.

Frasers Hospitality Trust (FHT SP) has been the subject of media reports about possible “strategic options” or go-private interest since this spring. They responded on 8 April.
Today the shares were halted. We should expect news shortly. A Bloomberg article this morning suggested the promoters were seeking funding. Presumably, they will find it relatively quickly.
This could take a week rather than a day but given the run-up, one should also expect it a) to work and b) get done with small premium from here.

Toshiba – Push Me Pull Me

By Mio Kato

Aaaaand staying public is apparently an option again according to CEO Shimada’s interview with Bloomberg.
Shimada has also said that he wants any buyer to keep Toshiba whole limiting some of the levers a PE fund could potentially pull.
With the company’s EV/EBIT multiple of 13.7x now significantly above peers such as Hitachi’s 11.3x prospects for a hefty premium seem weak.

Net Protections Holding IPO Lock-Up – Small Expiry Now, Before 20% Is Released Later in the Year

Net Protections Holdings, a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.
As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
In this note, we will talk about the upcoming lock-up expiry on 12th Jun 2022.

OOIL (316 HK): Peak Index Inclusion?

Over the last 3 months, Orient Overseas International (316 HK) has been added to the FTSE All-World Index, MSCI Standard Index and Hong Kong Hang Seng Index (HSI INDEX).
The stock has outperformed its Asia peers and now trades at a higher valuation. Shorts have been building positions over the last couple of months.
Cumulative excess volume on the stock has been increasing. While a lot of positioning has likely been unwound, there could be more unwinding over the next few weeks.

Before it’s here, it’s on Smartkarma

Jun 09

Most Read: Kakao Pay, Gongniu Group Co Ltd, Mapletree North Asia Commercial Trust, Atlas Arteria, Tencent and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Kakao Pay’s MSCI August QIR Inclusion: Screening/Passive Flow Calculations
Stock Connect Changes & MSCI/FTSE Deletions on Friday
Last Minute MNACT Arb and Index Selling
Atlas Arteria Group (ALX AU): IFM Makes an Approach
Tencent/Netease: Smell of Common Prosperity in June Game Approval

Kakao Pay’s MSCI August QIR Inclusion: Screening/Passive Flow Calculations

By Sanghyun Park

Alipay’s stake sale raises another critical issue: Kakao Pay’s MSCI inclusion. Kakao Pay comfortably satisfies the full MC threshold but tightly exceeds the float MC hurdle.
As for the passive flow, we should see an inflow of 6.11x ADTV, equivalent to 1.48% of SO. It represents nearly 2M shares, close to ₩210B.
If we build up a position betting on Kakao Pay’s downward trend due to Alipay’s block deal risk, we should consider temporarily switching the position when this event is triggered.

Stock Connect Changes & MSCI/FTSE Deletions on Friday

Changes to the Northbound Stock Connect Buy and Sell list were announced yesterday with 35 SSE-listed stocks becoming sell-only, and 32 SZSE-listed stocks becoming sell-only.
This will result in the deletion of 45 stocks from the FTSE All-World, All-Cap and Micro-cap indices, while there will be 9 deletions from the MSCI Standard Index.
There are a few stocks with over 1 day of ADV to sell from passive trackers and these stocks could trade weaker than the market over the next few days.

Last Minute MNACT Arb and Index Selling

Today is the last day of trading for Mapletree North Asia Commercial Trust (MAGIC SP) also known as MNACT.
That means today is index deletion day for any number of global indices, even though MNACT is not in many of the major ones.
Payment will be S$1.949/unit plus a Clean-Up Distribution. There may be opportunities at the close. Strategy below.

Atlas Arteria Group (ALX AU): IFM Makes an Approach

IFM bought around 67.1m shares (7% of shares out) of Atlas Arteria (ALX AU) at A$8.1/share last evening taking its total holding to around 15% of shares outstanding.
IFM intends to request certain information that would help it assess whether it can submit a non-binding proposal to acquire all the shares in Atlas Arteria that it does not own.
With the indicative offer floor set at A$8.1/share, Atlas Arteria still trades cheaper than Transurban Group and offers a 14% premium to last close and even higher premiums to longer-term VWAPs.

Tencent/Netease: Smell of Common Prosperity in June Game Approval

By Ke Yan, CFA, FRM

China announced game approval last night for June batch, after a break in May.
We discussed in our previous note that China had resume game approval but at a slower pace.
Tencent and Netease continue to score zero in June domestic game approval.

Before it’s here, it’s on Smartkarma