Most Read

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.

Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback

Hitachi Ltd (6501 JP) results were salutary but noisy and the year to March 2023 is forecast similar (salutary but noisy). Service integration and growth to external customers is key.
Forecast growth in main businesses ex- to-be-sold listed subs is decent, but could be better.
A SEMI-Bigly buyback will help cushion any selling, but it has recently outrun Siemens on a like-for-like basis.

HSCI Index Rebalance and Stock Connect: Potential Changes in June and September

We see seven new listings as potential inclusions to the HSCI in June. One is already a part of Connect while five will be added to Southbound Stock Connect.
We see 19 potential changes to the HSCI in September. Seven of the deletions are on market cap, four on liquidity, and eight due to prolonged trading suspension.
Some of the potential deletions have large Southbound holdings and some of these could be trimmed over the next couple of months.

KOSDAQ150 Index Rebalance Preview: 14 Potential Changes in June

The review period for the June rebalance of the KOSDAQ 150 Index ended on Friday. We see 14 potential changes to the index – most are high probability.
The impact of passive trading is higher on the deletions than on the additions. Short interest on the potential adds is zero/negligible and a lot larger on the potential deletions.
Short interest on a couple of potential deletion exceeds the estimated passive selling, while there are others where short interest is three-quarters of the estimated passive selling.

JAPAN ACTIVISM: Silchester Goes After Shiga Bank

In early February 2022, Silchester International Investors (according to its website) sent letters to four low-ROE-earning Japanese regional banks proposing a new dividend policy.
The management and boards of each bank rejected the policy proposal though two of the four had upped their proposed dividend or changed policy prior, and two upped it afterwards.
While Bank of Kyoto (8369 JP) is the biggie, Shiga Bank (8366 JP) is another one with significant equity holdings.

Before it’s here, it’s on Smartkarma

May 02

Most Read: Bank of Kyoto, SD Biosensor, Kotak Mahindra Bank, Keppel Corp, Hitachi Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto
KOSPI200 Index Rebalance Preview (June): Review Period Ends as Reversion Kicks In
Index Rebalance & ETF Flow Recap: MSCI, S&P/ASX, STI, Sensex, Kotak Bank, SMM/KEP O&M, LIC
Last Week in Event SPACE: Sembcorp/Keppel, Razer, Hitachi Transport, Renesas, CNOOC
Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback

JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto

Silchester International Investors has owned Bank of Kyoto (8369 JP) for 16 years and is now the largest shareholder in the bank.
They have been dissatisfied, become vocal behind the scenes with their dissatisfaction, and BoK management disagrees so they will go to the mattresses. Gently.
This could get some investors excited, but it is unlikely to be a successful activist effort.

KOSPI200 Index Rebalance Preview (June): Review Period Ends as Reversion Kicks In

The review period for the June rebalance ended on Friday. The changes will be announced in around 3 weeks and will be effective after the close on 9 June.
We see 7 changes for the index with most of them being high probability. The potential adds have outperformed the potential deletions, but have given up some gains in April.
Short interest on some of the potential deletions has risen sharply over the last month and now almost equals the estimated passive selling.

Index Rebalance & ETF Flow Recap: MSCI, S&P/ASX, STI, Sensex, Kotak Bank, SMM/KEP O&M, LIC

Last Friday was the last day of the review period for the MSCI May SAIR, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX, KOSPI2 INDEX, KOSDAQ 150 Index and SENSEX INDEX.
We expect Yangzijiang Financial Holding (YZJFH SP) will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May.
ETFs focused on China, Taiwan and Hong Kong had inflows during the week while there were outflows on Korea focused ETFs.

Last Week in Event SPACE: Sembcorp/Keppel, Razer, Hitachi Transport, Renesas, CNOOC

By David Blennerhassett

Keppel (KEP SP) and Sembcorp (SMM SP) have announced the O&M business combination and it is a little more interesting than expected. It is a Very Big Desirable Order Book.
Razer Inc (1337 HK)was trading at a 8% gross spread to terms a day before the vote, on headcount test concerns. But it was even close.
KKR and Hitachi Ltd (6501 JP) have a deal to get KKR to buy Hitachi Transport System (9086 JP) in a VLBO (Very Leveraged BuyOut).

Hitachi Results, Special Gain on Asset Sale, and Semi-Bigly Buyback

Hitachi Ltd (6501 JP) results were salutary but noisy and the year to March 2023 is forecast similar (salutary but noisy). Service integration and growth to external customers is key.
Forecast growth in main businesses ex- to-be-sold listed subs is decent, but could be better.
A SEMI-Bigly buyback will help cushion any selling, but it has recently outrun Siemens on a like-for-like basis.

Before it’s here, it’s on Smartkarma

May 01

Most Read: CNOOC Ltd, Bank of Kyoto, Advantest Corp, SK IE Technology and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

CNOOC (883 HK) Surprises with Special Div
JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto
Advantest (6857 JP): Orders Unsustainable, Cyclical Risk High
Crypto Mining Industry Series: Let The Crypto Miners Rush Begin
KOSPI/KOSDAQ Lockup Releases: Kakao Pay, SKIET, Enchem, Dear U, 4by4, & Poongwon Precision

CNOOC (883 HK) Surprises with Special Div

CNOOC Ltd (883 HK) released fantastic, above-consensus earnings for Q1, which were minimally impacted (positively) by non-recurring profits.
The driver was higher gas production on much higher prices. At current price, the implied PER is 3.0x for 2022.
And the company also announced a Special Dividend of HK$1.18/share or 10.9% of yesterday’s share price.

JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto

Silchester International Investors has owned Bank of Kyoto (8369 JP) for 16 years and is now the largest shareholder in the bank.
They have been dissatisfied, become vocal behind the scenes with their dissatisfaction, and BoK management disagrees so they will go to the mattresses. Gently.
This could get some investors excited, but it is unlikely to be a successful activist effort.

Advantest (6857 JP): Orders Unsustainable, Cyclical Risk High

By Scott Foster

The recent surge in IC test equipment orders is unsustainable. Only service orders maintain a positive trend.
After peaking this fiscal year, sales and profits are likely to show double-digit declines. When earnings might hit bottom is not clear, but cyclical gearing is high.
Earnings could rebound in 2 or 3 years, but visibility is poor. Don’t forget that Advantest has dropped into the red three times in the past 20 years.

Crypto Mining Industry Series: Let The Crypto Miners Rush Begin

By Andrei Zakharov

Bitcoin mining is booming in the United States and we expect ~2.5 GW of new cumulative mining capacity will be added by crypto mining companies in the U.S. this year.
Today, Foundry USA is the biggest mining pool globally, and North America has been the clear beneficiary of China’s cryptocurrency ban in 2021.
We see a huge untapped opportunity for Bitcoin mining companies. We initiate Marathon Digital Holdings with Overweight and Cipher Mining and Riot Blockchain with Neutral.

KOSPI/KOSDAQ Lockup Releases: Kakao Pay, SKIET, Enchem, Dear U, 4by4, & Poongwon Precision

By Sanghyun Park

In the KOSPI, Kakao Pay and SK IET deserve our attention. Their prices are 20-25% above the offering prices, and the release size is 10x ADTV. Both are short-selling available.
On the KOSDAQ, Enchem, Dear U, 4by4, and Poongwon Precision are worth paying attention to. They will face a sizable release with the share prices sitting above their offering prices.
However, none of these KOSDAQ names are available for short-selling. So, we should consider underweighting existing positions rather than building up new positions.

Before it’s here, it’s on Smartkarma

Apr 30

Most Read: Hitachi Transport System, SPH REIT, Tata Motors DVR, Mapletree Commercial Trust, Bank of Kyoto and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO
SPH Scheme Elections In – SPH REIT Chain Offer Announced
SENSEX Index Rebalance Preview: Tata Motors Should Replace Dr. Reddy; Hindalco Is Close
MNACT/MCT Circulars Out – Still Probably Heads I Win Tails I Win – But It’s Complicated
JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto

Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO

KKR and Hitachi Ltd (6501 JP) have a deal to get KKR to buy Hitachi Transport System (9086 JP) in a VLBO (Very Leveraged BuyOut).
As somewhat expected, it is a “split price deal” where Hitachi will accept a lower price for its 40% stake than minorities will receive in a Tender Offer.
This is a big win for Hitachi Transport shareholders, but the Tender Offer likely won’t start until late September.

SPH Scheme Elections In – SPH REIT Chain Offer Announced

Singapore Press Holdings (SPH SP) 58% to 42% to take cash instead of cash + SPH REIT units.
That was to be expected, but it means Cuscaden owns 47+% of SPH REIT and needs to conduct a Conditional Chain Offer on SPH REIT at S$0.9372/unit.
That provides a put option under SPH REIT for holders/buyers as Singapore opens up.

SENSEX Index Rebalance Preview: Tata Motors Should Replace Dr. Reddy; Hindalco Is Close

Today is the last day of the review period for the June review of the S&P BSE SENSEX Index (SENSEX INDEX). Changes become effective at the close on 17 June.
We see Tata Motors Ltd (TTMT IN) and Tata Motors DVR (TTMT/A IN) replacing Dr. Reddy’s Laboratories (DRRD IN). Hindalco Industries (HNDL IN) is a close add on sector balance.
The impact on DRRD IN will be higher than on TTMT IN, in terms of days of ADV to trade and days of delivery volume that needs to change hands.

MNACT/MCT Circulars Out – Still Probably Heads I Win Tails I Win – But It’s Complicated

The Mapletree North Asia Commercial Trust (MAGIC SP) Scheme Doc and Mapletree Commercial Trust (MCT SP) Circular are both out this morning.
The IFA deems the deal FAIR and REASONABLE. This is not surprising. It was already going to be so with just the scrip, but with the cash bump it’s easier.
But the situation is complicated. And the complications have complications. The trade is still to be long MCT, and long MCT vs MNACT is an interesting idea.

JAPAN ACTIVISM: Silchester Goes After Bank of Kyoto

Silchester International Investors has owned Bank of Kyoto (8369 JP) for 16 years and is now the largest shareholder in the bank.
They have been dissatisfied, become vocal behind the scenes with their dissatisfaction, and BoK management disagrees so they will go to the mattresses. Gently.
This could get some investors excited, but it is unlikely to be a successful activist effort.

Before it’s here, it’s on Smartkarma

Apr 29

Most Read: Keppel Corp, Hitachi Transport System, Yangzijiang Financial Holding, Toyo Construction and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Keppel Restructuring – Forward Sum Of The Parts Makes KEP Look Cheap. And It Is… But…
Sembcorp Marine & Keppel O&M Combination: Details & Index Implications
Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO
Straits Times Index (STI) Rebalance Preview: YZJFH Is the Delete
ToyoKen (1890)- Infroneer Declines to Bid Up, YFO Now In Driver’s Seat – Now It’s A Range Trade

The Keppel Restructuring – Forward Sum Of The Parts Makes KEP Look Cheap. And It Is… But…

The Keppel O&M / SMM Combination and Keppel Rig Asset Restructure were announced today and the arithmetic is both tough and interesting. There’s a little magic here.
KEP shareholders receive SMM shares worth ~1/3 of today’s share price, and the rest is currently valued at well under Net Tangible Assets post-Restructuring/Transaction.
That suggests Keppel has upside, but one must think carefully about the exposures.

Sembcorp Marine & Keppel O&M Combination: Details & Index Implications

Keppel Corp and Sembcorp Marine have announced a proposed combination of Keppel O&M and Sembcorp Marine to create a global player in offshore renewables, new energy and cleaner O&M solutions.
Keppel Corp (KEP SP) and its shareholders will own 56% of the combined entity, while Sembcorp Marine (SMM SP) shareholders will own the other 44%.
Depending on the combined entity market cap, there could be selling from MSCI Standard and FTSE Straits Times Index (STI) (STI INDEX) trackers at the time of implementation.

Hitachi Transport System (9086) Shareholders Get the BIG Win in This VLBO

KKR and Hitachi Ltd (6501 JP) have a deal to get KKR to buy Hitachi Transport System (9086 JP) in a VLBO (Very Leveraged BuyOut).
As somewhat expected, it is a “split price deal” where Hitachi will accept a lower price for its 40% stake than minorities will receive in a Tender Offer.
This is a big win for Hitachi Transport shareholders, but the Tender Offer likely won’t start until late September.

Straits Times Index (STI) Rebalance Preview: YZJFH Is the Delete

Yangzijiang Financial Holding (YZJFH SP) started to trade on the SGX today following its spin-off from Yangzijiang Shipbuilding (YZJSGD SP). YZJFH’s last price was S$0.65/share.
The FTSE Straits Times Index (STI) (STI INDEX) currently has 31 members and the lowest ranked constituent by full market cap at the close today will be deleted.
At current prices, Yangzijiang Financial Holding (YZJFH) will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May. Comfortdelgro avoids deletion for now.

ToyoKen (1890)- Infroneer Declines to Bid Up, YFO Now In Driver’s Seat – Now It’s A Range Trade

Toyo Construction (1890 JP) today released a change to its Target Opinion Statement for Infroneer’s takeover bid at ¥770/share. It supports the tender itself, but withdraws its recommendation investors tender.
Infroneer refused to raise their price, so this effectively kills their bid (though they will extend). TC will engage with Yamauchi Family Office which has separately offered to bid ¥1,000/share.
The dynamics have now changed. This is a range trade, and will likely take time unless Infroneer says “I’ll sell at ¥1,000/share.”

Before it’s here, it’s on Smartkarma

Apr 28

Most Read: Sembcorp Marine, Keppel Corp, Life Insurance Corp of India (LIC), Renesas Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
Sembcorp Marine and the Keppel O&M Business Combination – Brighter Light at the End of the Tunnel
The Keppel Restructuring – Forward Sum Of The Parts Makes KEP Look Cheap. And It Is… But…
Life Insurance Corp of India (LIC) IPO: Lower Issue Size & Valuation; Index Inclusion Timeline
Renesas (6723 JP) – Salutary Q1, Strong Q2 Forecast, and a BIG Buyback

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities

20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.

Sembcorp Marine and the Keppel O&M Business Combination – Brighter Light at the End of the Tunnel

Keppel Corp and Sembcorp Marine have announced the O&M business combination and it is a little more interesting than expected. It is a Very Big Desirable Order Book.
Separately, there is the potential for more index inclusion flow based on the conclusion of the combination in Q4.
The light at the end of the tunnel used to be far away, and one was never sure if it wasn’t an oncoming train. It’s closer and clearer now.

The Keppel Restructuring – Forward Sum Of The Parts Makes KEP Look Cheap. And It Is… But…

The Keppel O&M / SMM Combination and Keppel Rig Asset Restructure were announced today and the arithmetic is both tough and interesting. There’s a little magic here.
KEP shareholders receive SMM shares worth ~1/3 of today’s share price, and the rest is currently valued at well under Net Tangible Assets post-Restructuring/Transaction.
That suggests Keppel has upside, but one must think carefully about the exposures.

Life Insurance Corp of India (LIC) IPO: Lower Issue Size & Valuation; Index Inclusion Timeline

Life Insurance Corp of India (LIC) (1248Z IN) filed its Red Herring Prospectus (RHP) with SEBI yesterday to raise between US$2.61bn and US$2.74bn selling 221.375m shares (3.5% of the company).
The stake sale will value Life Insurance Corp of India (LIC) (1248Z IN) at between US$74.4bn-78.3bn. This is 1.1x the Embedded Value and sharply lower than initial indications.
Fast Entry inclusion to the MSCI India index will be a close call, while inclusion to the FTSE All-World Index, NIFTY Index and SENSEX INDEX will take much longer.

Renesas (6723 JP) – Salutary Q1, Strong Q2 Forecast, and a BIG Buyback

About 9 days I ago I wrote Renesas (6723 JP) – On Top of Peer-Beating Growth, and Valuation… Watch for Buybacks. Today with Q1 earnings, they announced a ¥200bn buyback.
What appears to be a quite strong Q1 in automotive in both revenues and margins, and decent incremental margins, sees a stronger Q2 forecast (but less good incremental margins).
The Street is well behind guidance, and a buyback at the high end of potential guidance and coming earlier than expected is all to the good.

Before it’s here, it’s on Smartkarma

Apr 27

Most Read: Japan Post Insurance, Lake Resources Nl, Air New Zealand, Hitachi Transport System, Kotak Mahindra Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TOPIX April Rebalance – Two Days To Go
S&P/ASX Index Rebalance Preview: Potential Changes in May & June
NZ AIR Rights Almost Done – Discounted Vs Regional “Shut-In” Peers
Hitachi Transport (9086 JP) – Deciphering Takeover Price by Newspaper Article Language
Kotak Mahindra Bank (KMB IN): Foreign Room Increases; FTSE Inclusion in Sep Possible

TOPIX April Rebalance – Two Days To Go

There are two days to go until the TOPIX April-end rebalance.
On an average-weighted, sector-neutral basis, the “announcement to event” trade is -0.3% from 7 April to 25 April. The rest of the buy vs sell basket is doing worse.
There should be ¥740bn-ish to buy and sell (each) on Wednesday at the close. If you have trades to execute in Japan, the attached spreadsheet shows where there is opportunity.

S&P/ASX Index Rebalance Preview: Potential Changes in May & June

Seven Group Holdings (SVW AU) and Lake Resources Nl (LKE AU) could be added the S&P/ASX100 Index and S&P/ASX 200 respectively next week following the privatisation of Crown Resorts (CWN AU).
Then we have the Tabcorp Ltd (TAH AU) spinoff in May that will add to the changes at the regular rebalance in June for the indices.
Short interest has spiked on Lake Resources Nl (LKE AU) and Core Lithium Ltd (CXO AU) recently following the huge rally in the stocks.

NZ AIR Rights Almost Done – Discounted Vs Regional “Shut-In” Peers

The NZ Air Rights Trade is nearly done. Last day of trading is today.
The Rights were super cheap. They ran as NZ AIR ran a bit.
Now it is the time to trade NZ AIR Shares vs Peers.

Hitachi Transport (9086 JP) – Deciphering Takeover Price by Newspaper Article Language

Hitachi has been in the process of selling Hitachi Transport System (9086 JP). An article in the Nikkei Thursday last suggested a deal was imminent (both companies report 28 April).
Bloomberg carried an article this morning with more numbers and implied arithmetic. Then they revised the language in the article.
There is STILL room for different interpretations of likely deal price if one tries to parse all the info provided and match it with history. But we may be there.

Kotak Mahindra Bank (KMB IN): Foreign Room Increases; FTSE Inclusion in Sep Possible

Kotak Mahindra Bank (KMB IN) is not a part of the FTSE All-World Index since the foreign room was less 20% over the last couple of years.
Foreign room is 19.8% as of end March and small foreign selling is needed for Kotak Mahindra Bank to be added to the FTSE All-World Index at the September SAIR.
If added to the FTSE All-World Index, passive trackers will need to buy 38.2m shares (US$861m; 11.1 days ADV; 22 days delivery volume) of Kotak Mahindra Bank (KMB IN).

Before it’s here, it’s on Smartkarma

Apr 26

Most Read: Converge ICT Solutions, Nissan Motor, Japan Post Insurance, Razer Inc, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May 2022 Index Rebalance Preview: Changes from Week 1 in the Review Period
Renault (RNO FP) To Sell Nissan (7201 JP) Shares? Not Yet, and Not Yet Positive Nissan.
TOPIX April Rebalance – Two Days To Go
Razer (1337 HK): Trading Wide Ahead Of Court Meeting
SK Telecom/KT Corp LONG SHORT on the MSCI SAIR Event

MSCI May 2022 Index Rebalance Preview: Changes from Week 1 in the Review Period

We have completed days 1-5 in the review period for the MSCI May SAIR. We see 52 potential adds and 80 potential deletes with most changes in China.
The largest potential inclusions are Powerchip Semiconductor Manufacturing Corp, Tata Elxsi Ltd, Orient Overseas International, Walsin Lihwa, Jindal Steel & Power, Eva Airways, Pop Mart, Adani Power and China Airlines.
Converge ICT Solutions (CNVRG) is a potential inclusion following an increase in foreign room above 25% while SK Telecom (017670) is a potential deletion with foreign room dropping below 3.75%.

Renault (RNO FP) To Sell Nissan (7201 JP) Shares? Not Yet, and Not Yet Positive Nissan.

On Friday, a Bloomberg article suggested Renault SA (RNO FP) is considering selling some of its 43% stake in Nissan Motor (7201 JP) to help fund its efforts in EVs.
Sources were “people familiar with the matter.” Since 2018, Bloomberg and Les Echos have been the outlets which do “scoops” on the Renault/Nissan relationship, but they are not always right.
However, it raises some interesting questions and possibilities. And given the prices, it makes the decision somewhat uncomfortable for both.

TOPIX April Rebalance – Two Days To Go

There are two days to go until the TOPIX April-end rebalance.
On an average-weighted, sector-neutral basis, the “announcement to event” trade is -0.3% from 7 April to 25 April. The rest of the buy vs sell basket is doing worse.
There should be ¥740bn-ish to buy and sell (each) on Wednesday at the close. If you have trades to execute in Japan, the attached spreadsheet shows where there is opportunity.

Razer (1337 HK): Trading Wide Ahead Of Court Meeting

By David Blennerhassett

Razer Inc (1337 HK)‘s Court Meeting will be held tomorrow.
The highly anticipated abolishment of the headcount test will not become law ahead of the shareholder vote.
Trading at a gross spread of 8%, unchanged since the record date. That’s positive. Plus this Offer has proxy advisor support.

SK Telecom/KT Corp LONG SHORT on the MSCI SAIR Event

By Sanghyun Park

The MSCI has shown a pattern of determining the addition/deletion of Korean stocks based on the first or second trading day during the 10-day review period.
SKT’s foreign room ratio exceeded 3.5% for these two trading days. On the other hand, KT’s foreign room was below 15% on the 18th and 19th.
MSCI flow seems to be the only factor that will affect these two companies in the short term, and the probability that SKT will outperform KT this week is high.

Before it’s here, it’s on Smartkarma

Apr 25

Most Read: Bank Central Asia, Toyo Construction, Converge ICT Solutions, Nissan Motor, Allo Bank Indonesia Tbk PT and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45/IDX80 Index Rebalance: Float & Capping Changes
ToyoKen (1890) – YFO Proposes ¥1,000/Share So Now We Need Discussions
MSCI May 2022 Index Rebalance Preview: Changes from Week 1 in the Review Period
Renault (RNO FP) To Sell Nissan (7201 JP) Shares? Not Yet, and Not Yet Positive Nissan.
Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care

IDX30/LQ45/IDX80 Index Rebalance: Float & Capping Changes

Float and capping changes will require passive trackers to buy Bank Central Asia (BBCA IJ) and sell Bank Rakyat Indonesia Persero (BBRI IJ) at the close on 28 April.
There will be passive changes to other stocks too, though the impact will not be material on most of the stocks.
GoTo (GOTO IJ) could be added to the IDX30, LQ45 and IDX80 indices in May. With the oversubscription option nearly all used up, the stock should trade weak near-term.

ToyoKen (1890) – YFO Proposes ¥1,000/Share So Now We Need Discussions

Yamauchi No10 Family Office (YFO) Friday declared a fourth buyer in its group and reached 26.28% as of the 19th.
Toyo Construction revealed a back-and-forth between itself and YFO in which it was revealed It YFO had also proposed a Tender Offer at ¥1,000/Share subject to discussions and Board Agreement.
This, and YFO’s position make Infroneer’s ¥770/share Tender Offer somewhat untenable. Shares could become more volatile.

MSCI May 2022 Index Rebalance Preview: Changes from Week 1 in the Review Period

We have completed days 1-5 in the review period for the MSCI May SAIR. We see 52 potential adds and 80 potential deletes with most changes in China.
The largest potential inclusions are Powerchip Semiconductor Manufacturing Corp, Tata Elxsi Ltd, Orient Overseas International, Walsin Lihwa, Jindal Steel & Power, Eva Airways, Pop Mart, Adani Power and China Airlines.
Converge ICT Solutions (CNVRG) is a potential inclusion following an increase in foreign room above 25% while SK Telecom (017670) is a potential deletion with foreign room dropping below 3.75%.

Renault (RNO FP) To Sell Nissan (7201 JP) Shares? Not Yet, and Not Yet Positive Nissan.

On Friday, a Bloomberg article suggested Renault SA (RNO FP) is considering selling some of its 43% stake in Nissan Motor (7201 JP) to help fund its efforts in EVs.
Sources were “people familiar with the matter.” Since 2018, Bloomberg and Les Echos have been the outlets which do “scoops” on the Renault/Nissan relationship, but they are not always right.
However, it raises some interesting questions and possibilities. And given the prices, it makes the decision somewhat uncomfortable for both.

Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care

The review period for the price cutoff of the MSCI May SAIR commenced last week and will run through the coming week. MSCI normally chooses a day from week 1.
Yangzijiang Financial Holding Ltd (YZJFH) will list on 28 April and one stock will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May.
There were inflows to China and Taiwan focused ETFs, while there were outflows from Korea focused ETFs.

Before it’s here, it’s on Smartkarma

Apr 24

Most Read: Keppel Corp, S&P 500, Razer Inc, Allo Bank Indonesia Tbk PT, Guodian Technology & Environment Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
SPX Hard Close as Defensives Begin to Bend
Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting
Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care
Guodian Tech’s Offer Risk/Reward – Pre-Condition Satisfied

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities

20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.

SPX Hard Close as Defensives Begin to Bend

By Thomas Schroeder

SPX closing on Friday’s lows after an impulsive drop sets a more bearish tone for an undershoot barring an impressive recovery.
The undertone of the market shifted on Friday as defensive sectors took a hit. If this continues it would induce a broader market sell off (bigger breakdown).
Russell 2000 1,900 is the level to watch to lead a harder US cycle decline followed by NDX 13k dual lows. Cycle inflection timeline.

Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting

By Arun George

The amended Cayman Islands Act is yet to become law which increases the odds that the headcount test remains for Razer Inc (1337 HK)‘s court meeting on 26 April.
Since the despatch of the scheme document, the gross spread has narrowed to 7.6% (last close). Current deal probability implies an 80% chance of success.
The rising deal probability negatively skews the risk/reward profile. We are hesitant to be long this trade into a scheme meeting that is too close to call.

Index Rebalance & ETF Flow Recap: MSCI, STI, FTSE China 50, Ramsay Health Care

The review period for the price cutoff of the MSCI May SAIR commenced last week and will run through the coming week. MSCI normally chooses a day from week 1.
Yangzijiang Financial Holding Ltd (YZJFH) will list on 28 April and one stock will be deleted from the FTSE Straits Times Index (STI) (STI INDEX) at the close on 4 May.
There were inflows to China and Taiwan focused ETFs, while there were outflows from Korea focused ETFs.

Guodian Tech’s Offer Risk/Reward – Pre-Condition Satisfied

By Arun George

Guodian Technology & Environment Group (1296 HK)’s privatisation offer from China Energy is HK$1.08 per H share. The pre-condition was fulfilled on 22 April.
The key conditions for the delisting will be approval by at least 75% of independent H-shareholders (<10% of all independent H-shareholders rejection). There is no minimum acceptance condition.
At last close and for a mid-June effective date (composite document despatched by 29 April), the gross and annualised spread to the offer is 2.9% and 19.9%, respectively.

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