Most Read

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

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

Jun 08

KOSPI200 Index Rebalance: Float Changes, Flows & Trades

There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.

ETFs in Stock Connect: Criteria & Potential Southbound Inclusions

On 27 May, the SFC and CSRC announced that they had agreed in principle to the inclusion of Exchange Traded Funds by mainland and Hong Kong exchanges in Stock Connect.
We currently see 6 ETF being eligible for inclusion in Southbound Connect and another couple that could be included at a subsequent review.
Increased mainland participation in the ETF market could lead to sustained premium/discount on the ETFs and this will be transmitted to index futures and affect pricing of short-term/long-term repo.

Kakao Pay Placement – Discount Is Enticing, That’s It

Alipay aims to raise around US$386m via selling around 3.3% of outstanding shares of Kakao Pay.
The stock more than doubled on listing, providing one of the best first day returns in 2021. However, its performance since then hasn’t been all that great.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

HSI, HSCEI, HSTECH: June Rebalance Flows Post Capping

The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
The largest inflows will be on JD.com Inc. (9618 HK), Tencent (700 HK), Baidu (9888 HK), SMIC (981 HK), Orient Overseas (316 HK), Zhongsheng Group (881 HK), Lenovo (992 HK).
The largest outflows will be on Meituan (3690 HK), Alibaba (9988 HK), ASM Pacific (522 HK), Kuaishou (1024 HK), AIA (1299 HK), China Construction Bank (939 HK), HKEX (388 HK).

Kakao Pay: Block Deal Sale by Alipay (Big Overhang on Future Sales)

By Douglas Kim

After the market close today, Kakao Pay (377300 KS) announced that there will be a block deal sale of the company’s shares (5 million) by Alipay Singapore Holdings.
Alipay is the second largest shareholder of Kakao Pay with a 38.52% stake. After the block deal sale, there will be continued overhang on the remaining shares held by Alipay.
We continue to have a NEGATIVE view on Kakao Pay and we also have a negative view on this block deal sale as well.

Before it’s here, it’s on Smartkarma

Jun 07

Most Read: Block, Keurig Dr Pepper Inc, Kyokuto Kaihatsu Kogyo Co, Toshiba Corp, KakaoBank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes
S&P500 Index Rebalance: One-Way Trade of US$30bn
Kyokuto Kaihatsu (7226 JP) Buyback – It’s Kinda Big, But There May Be More Behind
Toshiba – Surprise, Surprise, More Drama
KOSPI200 Index Rebalance: Float Changes, Flows & Trades

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes

There is one set of changes to the S&P/ASX 50, one deletion for the S&P/ASX 100, and four adds/ five deletes for the S&P/ASX 200 (AS51 INDEX).
Passive trackers will need to trade between 2-6 days of ADV on nearly all stocks. Short interest spikes in a few names indicate pre-positioning for the passive flow.
Core Lithium Ltd (CXO AU) is a potential inclusion to the MVIS Global Rare Earth/Strategic Metals Index in June and that could add to the passive inflows on the stock.

S&P500 Index Rebalance: One-Way Trade of US$30bn

There are quite a few changes for stocks across the S&P 500 (SPX INDEX), MidCap 400 Index and SmallCap 600 Index that will result in a one-way trade of US$30bn.
There are adds/deletes that have over 5 days of ADV to trade from passive funds, plus many stocks that have over +/-1 day of ADV from other changes.
The largest impact of passive buying will be on Keurig Dr Pepper Inc (KDP US), On Semiconductor (ON US) and VICI Properties Inc (VICI US).

Kyokuto Kaihatsu (7226 JP) Buyback – It’s Kinda Big, But There May Be More Behind

Kyokuto Kaihatsu Kogyo Co (7226 JP) has always been cash-rich. Recently there are better noises. Sold real estate. New Mid-Term Plan. Raised the payout ratio to 50%. Slowly selling crossholdings.
But it isn’t fast enough, and activist Strategic Capital this spring announced a flurry of AGM agenda items to extract value for shareholders.
The company today announced a buyback – additive, but there is a lot to look at here. Shareholder structure is key. And forward cash-flows tell you more buybacks could come.

Toshiba – Surprise, Surprise, More Drama

The days since Toshiba’s last briefing session have been eventful with METI expressing concern about foreign investor control and a split emerging in the board over director nominations.
These developments create significant risk of activist-friendly director candidates being vetoed in our view.
Toshiba stock has been trading in line with Hitachi’s strong performance of late despite being more expensive and thus risk has increased.

KOSPI200 Index Rebalance: Float Changes, Flows & Trades

There are 7 adds and 7 deletes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) rebalance to be implemented at the close on 9 June.
There are also a bunch of stocks that will have changes applied to their free float. There were announced last week and are much less tracked.
The flows and impact on some of the float change names are significant and pre-positioning and passive flows could move the stocks over the next few days.

Before it’s here, it’s on Smartkarma

Jun 06

Most Read: Block, New World Development, Keurig Dr Pepper Inc, Mercari Inc, Tsingtao Brewery Co Ltd H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes
Index Rebalance & ETF Flow Recap: NKY, CSI300, SSE, REMX, ASX, SET50, CH50/A50, EPRA, Mercari, GOTO
S&P500 Index Rebalance: One-Way Trade of US$30bn
Mercari (4385 JP) | Time to Flee
ECM Weekly (5th June 2022) – Tsingtao, Woodside, Digital Tel, CALB, Scivita

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes

There is one set of changes to the S&P/ASX 50, one deletion for the S&P/ASX 100, and four adds/ five deletes for the S&P/ASX 200 (AS51 INDEX).
Passive trackers will need to trade between 2-6 days of ADV on nearly all stocks. Short interest spikes in a few names indicate pre-positioning for the passive flow.
Core Lithium Ltd (CXO AU) is a potential inclusion to the MVIS Global Rare Earth/Strategic Metals Index in June and that could add to the passive inflows on the stock.

Index Rebalance & ETF Flow Recap: NKY, CSI300, SSE, REMX, ASX, SET50, CH50/A50, EPRA, Mercari, GOTO

Last week was a busy one with the TPX INDEX rebalance, the MSCI rebalance and announcements of changes to the FTSE China A50/50, EPRA, FTSE Taiwan 50 and S&P/ASX indices.
The coming week has the implementation of KOSPI2 INDEX, KOSDQ150 INDEX, HSI INDEX, HSCEI INDEX, HSTECH INDEX, SHSZ300 INDEX, STAR50 INDEX, SSE50 INDEX rebalances and the announcement of REMX changes.
There were inflows to Korea, Japan, Hong Kong and Australia focused ETFs during the week, while there were outflows from China and India focused ETFs.

S&P500 Index Rebalance: One-Way Trade of US$30bn

There are quite a few changes for stocks across the S&P 500 (SPX INDEX), MidCap 400 Index and SmallCap 600 Index that will result in a one-way trade of US$30bn.
There are adds/deletes that have over 5 days of ADV to trade from passive funds, plus many stocks that have over +/-1 day of ADV from other changes.
The largest impact of passive buying will be on Keurig Dr Pepper Inc (KDP US), On Semiconductor (ON US) and VICI Properties Inc (VICI US).

Mercari (4385 JP) | Time to Flee

By Mark Chadwick

Topix inclusion could generate some solid domestic passive buying interest, but we think the fundamentals remain Bearish
Mercari’s GMV growth in Japan is slowing sharply. We see higher promotional costs impacting margins as competition with PayPay Flea market heats up
We think that street estimates are too high and we don’t see a reason why the stock should be trading at substantial premium to Z Holdings

ECM Weekly (5th June 2022) – Tsingtao, Woodside, Digital Tel, CALB, Scivita

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
IPO volumes remain subdued across the region, although a number of deals are said to be looking to launch soon.
Placements stole the limelight this week with Tsingtao, Woodside and Digital Tel Infra all managing to do well.

Before it’s here, it’s on Smartkarma

Jun 05

Most Read: Block, Apple, VICI Properties Inc, Celltrion Inc, Cocoaland Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes
RiverPark Large Growth Fund Q1 2022 Letter
S&P500, S&PMid400, and S&PSmall600 Index Changes for June 2022 – More Interesting Than Usual
FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT
Cocoaland (COLA MK): F&N Scheme At RM1.50/Share

S&P/ASX Index Rebalance (June 2022): Mostly Expected, Some Surprises & Short Interest Spikes

There is one set of changes to the S&P/ASX 50, one deletion for the S&P/ASX 100, and four adds/ five deletes for the S&P/ASX 200 (AS51 INDEX).
Passive trackers will need to trade between 2-6 days of ADV on nearly all stocks. Short interest spikes in a few names indicate pre-positioning for the passive flow.
Core Lithium Ltd (CXO AU) is a potential inclusion to the MVIS Global Rare Earth/Strategic Metals Index in June and that could add to the passive inflows on the stock.

RiverPark Large Growth Fund Q1 2022 Letter

By Fund Newsletters

Founded in 2006 by Morty Schaja and Mitch Rubin, RiverPark manages research-driven, focused strategies in equities, fixed income and venture capital.
Over this year’s first three months, the RiverPark Large Growth Fund (the “Fund”) lost 19.6%.
Rather than follow the market’s so-called “de-risking” strategy, we “leaned in” to our higher growth positions (in some cases materially) at what we believe to be generationally attractive prices.
While we are deeply disappointed by our recent losses, we believe thatwe are currently invested in an exceptional risk-reward portfolio and look forward to strongabsolute and relative returns in the quarters to come.

S&P500, S&PMid400, and S&PSmall600 Index Changes for June 2022 – More Interesting Than Usual

On 3 June 2022, the S&P DJI Global Index team announced changes to the S&P500, S&P Midcap 400, and S&P SmallCap 600 indices (and a number of other smaller indices).
VICI Properties (VICI) will replace Cerner (CERN) in S&P500 at close of 7 June. Keurig DrPepper and ON Semiconductor will replace UnderArmour and IPG Photonics at close 17 June.
This set of rebalances is particularly interesting in terms of non-offsetting flows, unlike many rebals which are just a game of musical shares between the three top indices.

FnGuide Top 10 Rebalancing: How We Trade Shinhan IN/Celltrion OUT

By Sanghyun Park

With the screening period over (May 3-31), Shinhan IN/Celltrion OUT is virtually a foregone conclusion.
We should consider an individually-hedged approach, instead of a plain long/short, with a tightly moving-together peer, preferably on a single-day trading window.
I suggest using KB Financial and Celltrion Healthcare as hedges of LONG & SHORT for Shinhan and Celltrion, respectively.

Cocoaland (COLA MK): F&N Scheme At RM1.50/Share

Fraser & Neave Holdings (FNH MK) is proposing to privatise 27.66%-held Cocoaland Holdings (COLA MK) at RM1.50/share by way of a Scheme.
The Offer price is a 26.1% premium to last close. Leverage Success, the largest shareholder with 40.65% stake has given an irrevocable undertaking to vote for the Scheme.
The board of Cocoaland has until the 17 June to respond.

Before it’s here, it’s on Smartkarma

Jun 04

Most Read: Toshiba Corp, GoTo, Kito Corporation, Xiamen International Port H, KakaoBank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba – Key Takeaway Is Toshiba Tec’s Attractiveness
GoTo Index Inclusion: Fast Entry to IDX30, LQ45, IDX80 Confirmed; BIG Buying Next Week
Kito (6409) Shareholder Register Getting Interestinger
Xiamen Port (3378 HK)’s Pre-Conditional Offer
KOSPI 200 Official Announcement: Float Rate Changes (11 Up & 5 Down)

Toshiba – Key Takeaway Is Toshiba Tec’s Attractiveness

Toshiba provided an update today on its management policy and the status of discussions with potential investors.
The management targets unveiled looked plausible but rather optimistic while the only real new information on the potential privatisation was that 8 bids had been submitted.
In the end the most interesting takeaway for us was that Toshiba Tec would play a key role in Toshiba’s data business.

GoTo Index Inclusion: Fast Entry to IDX30, LQ45, IDX80 Confirmed; BIG Buying Next Week

The IDX has announced that GoTo (GOTO IJ) will be included in the IDX30, LQ45 and IDX80 indices at a float of 66.4% at the close on 7 June.
Waskita Karya (Persero) (WSKT IJ) will be deleted from the IDX30 and LQ45 indices, while Buyung Poetra Sembada PT (HOKI IJ) will be deleted from the IDX80 index.
Passive trackers need to buy around 12.78% of the real float on GoTo (GOTO IJ). Add the impact from open ended funds and that could move up to 20%.

Kito (6409) Shareholder Register Getting Interestinger

In mid-May 2022, Kito Corporation (6409 JP) announced KKR would launch a Tender Offer to buy out the company at a big premium. I warned about the register.
Two large shareholders were there prior to the bid – one “engagement-style” activist and one private company in a similar industry. Both had a 9+% holding visible.
Both have now lifted their stakes above 10% post-announcement, at a small spread to terms. This makes things more interesting.

Xiamen Port (3378 HK)’s Pre-Conditional Offer

SOE terminal operator Xiamen International Port (3378 HK) has announced a pre-conditional Offer from Xiamen Port Holding, a Fujian SASAC-controlled entity.
The Offer price is HK$2.25 per H-share, a 55% premium to last close. The Offer price will NOT be increased. The final dividend will be added to the cancellation price.
Pre-Conditions include approvals from NDRC, MoC, SAFE, and CSRC. There is no tendering condition. This deal mirrors Guodian Technology (1296 HK), BCL (2868 HK), and Jin Jiang Capital (2006 HK).

KOSPI 200 Official Announcement: Float Rate Changes (11 Up & 5 Down)

By Sanghyun Park

The KRX officially announced the float rate changes of the KOSPI 200 constituents at this June rebalancing: 11 increases and 5 decreases.
Kakao Bank has the most significant change of 43%p, followed by Krafton and Woori Financial. NH Investment and HD Infracore will suffer a drop of 9%p.
As for passive flow x ADTV, Kakao Bank leads the pack at 2.95x, followed by Kakao Pay (1.15x). NH Investment and Korea Gas will face a noticeable outflow.

Before it’s here, it’s on Smartkarma

Jun 03

Most Read: Henderson Land Development, Toshiba Corp, SPH REIT, LOTTE Reit Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact
Toshiba (6502) – Now We Have the First Rounds Bids In, And We Wait, But It’s Top of Range
Toshiba – Key Takeaway Is Toshiba Tec’s Attractiveness
SPH REIT Offer Goes Unconditional – The Option Now and Index Impacts To Come
FTSE EPRA Nareit Asia – June 2022 Rebalance – BIG Impact on BIG Names

FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact

Samty Residential Investment and LOTTE Reit are inclusions while Hang Lung Properties, Henderson Land Development and New World Development are deletions for the FTSE EPRA Nareit Developed Asia Index.
There is a large impact on all stocks, but the flow is much higher on the deletions and the stocks could drop and underperform their peers.
Ichigo Inc (2337 JP) is a surprise non-inclusion and could trade lower today providing an opportunity to buy the stock while waiting for a late inclusion announcement.

Toshiba (6502) – Now We Have the First Rounds Bids In, And We Wait, But It’s Top of Range

Since Toshiba reported lacklustre earnings and guidance, there has been a steady flow of articles in the press about the privatisation process going on behind the scenes.
On 25 March, Toshiba let it be known a privatisation process would start. On 31 March, Bain gave notice it would participate. Toshiba has been in talks since 21 April
First round bids were due 30 May, and 10 total submissions were made, with 8 privatisation proposals proffered. Now we wait…

Toshiba – Key Takeaway Is Toshiba Tec’s Attractiveness

Toshiba provided an update today on its management policy and the status of discussions with potential investors.
The management targets unveiled looked plausible but rather optimistic while the only real new information on the potential privatisation was that 8 bids had been submitted.
In the end the most interesting takeaway for us was that Toshiba Tec would play a key role in Toshiba’s data business.

SPH REIT Offer Goes Unconditional – The Option Now and Index Impacts To Come

Yesterday, it appears that a large holder of SPH REIT (SPHREIT SP) accepted the Cuscaden Chain Offer for the REIT.
This morning just after midnight, the Cuscaden consortium announced that the Chain Offer had become Unconditional.
This makes the 4-week option unconditional, and it means index impacts to come.

FTSE EPRA Nareit Asia – June 2022 Rebalance – BIG Impact on BIG Names

FTSE Russell announced a total of 6 adds and 6 deletes in the FTSE EPRA Nareit Developed Market Series, with the largest number of changes in Asia.
Samty Residential Investment (3459 JP) and LOTTE Reit Co Ltd (330590 KS) are added; Henderson Land Development (12 HK), Hang Lung Properties (101 HK), and New World Development (17 HK) deleted.
The impact on all the names is large. This is worth looking at.

Before it’s here, it’s on Smartkarma

Jun 02

Most Read: Renesas Electronics, Woodside Petroleum, Henderson Land Development, Core Lithium Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance Preview: Market Consultation & Potential Changes
BHP Woodside Placement – Here Comes the Block, Will Be Tricky Trading over the Next Few Days
Woodside Block – Medium Bigly, Well-Prepared, and More To Come
FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Stocks Plunge as Cutoff Passes

Nikkei 225 Index Rebalance Preview: Market Consultation & Potential Changes

The Nikkei 225 (NKY INDEX) market consultation released last week could lead to some tweaks to the index methodology and the stock selection process. Nothing really material enough though.
Potential index inclusions in September are Renesas Electronics, Oriental Land and Pan Pacific International Holdings, while Toyobo Co Ltd, Nippon Light Metal and Oki Electric Industry are potential index deletions.
Passive Nikkei 225 trackers will need to buy between 4-9% of the real float on the high/ medium probability names, while they need to buy between 2.5-14 days of ADV.

BHP Woodside Placement – Here Comes the Block, Will Be Tricky Trading over the Next Few Days

BHP shareholders received US$18bn worth of Woodside petroleum shares on 1st Jun 2022, post the completion of the merger.
As a part of the distribution, some shares belonging to ineligible and other small shareholders are being sold by the sales agent, JPM, in a US$823m block.
In this note, we will look at the possible deal dynamics and run the deal through our ECM framework.

Woodside Block – Medium Bigly, Well-Prepared, and More To Come

The Australian Financial Review’s “Street Talk” column says the Woodside Petroleum (WPL AU) (new ticker is WDS AU) block is out.
Bookbuild is at $28.65 to $30.19 a share with is a 0% to 5.1% discount to the close (stock was up 1.44% today).
The size of the trade is apparently 38 million shares. If you have been in the Woodside/Santos trade, I would take the deal, tactically.

FTSE EPRA Nareit Index Rebalance: Two Adds & Three Deletes with Large Impact

Samty Residential Investment and LOTTE Reit are inclusions while Hang Lung Properties, Henderson Land Development and New World Development are deletions for the FTSE EPRA Nareit Developed Asia Index.
There is a large impact on all stocks, but the flow is much higher on the deletions and the stocks could drop and underperform their peers.
Ichigo Inc (2337 JP) is a surprise non-inclusion and could trade lower today providing an opportunity to buy the stock while waiting for a late inclusion announcement.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Stocks Plunge as Cutoff Passes

Close to the 85% inclusion threshold, Core Lithium Ltd could be added to the MVIS Global Rare Earth/Strategic Metals Index in June. Lake Resources Nl (LKE AU) is also close.
Australian Strategic Materials (ASM AU) is very close to the 98% deletion threshold. Even if it is not deleted, there will be passive selling due to capping changes.
Yesterday was the cutoff date for the June review, so today’s steep fall in prices will not affect the ranking of the potential changes.

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