Most Read

Alibaba Group (9988 HK) has filed a F-6EF Registration Statement to register an additional 1bn ADS. This will most likely be Softbank Group selling part (or all) of the stake.
There is a possibility that Softbank Group (9984 JP) is looking to use the stock as collateral for a financing trade and moving their holdings to a more liquid market.
If Softbank Group (9984 JP) sells some of their shares, there will be buying from MSCI and FTSE trackers. There will be minimal buying from HSI, HSCEI and HSTECH trackers.

MSCI Feb 2022 Index Rebalance: Day 1 Chosen Again

There are 17 adds and 8 deletes for the Asia Pacific region. Most of the changes were expected, but there are a few surprises.
China Resources Microelectronics-A (688396 CH), Grab (GRAB US) and Lufax Holdings (LU US) have been added, while Qinghai Salt Lake (000792 CH) and Pop Mart International (9992 HK) have not.
The last tranche of Sea‘s inclusion in the SIMSCI INDEX will take place at the QIR. With the inclusion of GRAB, there will be two foreign listings in the SIMSCI.

Toyota Industries Back To Covid Lows Vs. Toyota Motors

Toyota Industries (6201 JP)‘s implied stub and simple ratio with 8.5%-held Toyota Motor (7203 JP) has significantly bifurcated in the last 12 months.
Yet recent and forward earnings at the stub level indicate this dislocation is unjustified.
Toyota Industries is a set up at this current level.

Shimizu Corp Partial Offer for Nippon Road (1884 JP) May Get Interesting

Shimizu Corp (1803 JP) has held ~25% of Nippon Road (1884 JP) and has now announced a Partial Tender Offer to go to 50.1%. It’s a 20-year high, but…
… it’s the wrong price. And it has been. And a quasi-activist has built a 16% stake in recent years.
The question is whether this gets done. They only need to buy 25.25% out of the 75% they don’t own, but it’s a question.

LG Energy IN/LG Chem OUT: TIGER (WISE) Done on Feb 8 & KODEX (FnGuide) Under Progress Until Feb 22

For KODEX (FnGuide), the actual rebalancing trading must have begun yesterday, Feb 8, and runs until Feb 22, presumably at an equal daily weighting.
TIGER (WISE) announced that its implementation of LG Energy IN/LG Chem OUT was completed as of the end of yesterday.
As for the daily passive impact from KODEX until Feb 22, LG Energy is expected to receive an inflow of 0.03x DTV, whereas LG Chem’s outflow should be -0.10x ADTV.

Before it’s here, it’s on Smartkarma

Feb 09

Most Read: Alibaba Group, Softbank Group, LG Energy Solution, China Unicom Hong Kong and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9
Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
Softbank – Masayoshi Son’s Got Nothin’
Solactive Global Lithium Index (LIT): Earlier Implementation Expected for LG Energy & LG Chem
StubWorld: Unicom’s “Hs” Are Cheap

LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9

There is recently a growing view that the ETF operators (KODEX and TIGER) will conduct most of the rebalancing trading on February 9 to avoid excessive tracking errors.
LG Chem will face an outflow of ₩0.38T (0.8% of SO and 1.37x ADTV). LG Energy would be 0.36x ADTV and 0.31% of SO, assuming a DTV of 2M shares.
This is definitely a clear long/short setup opportunity: LG Energy LONG/LG Chem SHORT position. Alternatively, we can also consider approaching this event with Battery ETFs LONG/LG Chem Short setup.

Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact

Alibaba Group (9988 HK) has filed a F-6EF Registration Statement to register an additional 1bn ADS. This will most likely be Softbank Group selling part (or all) of the stake.
There is a possibility that Softbank Group (9984 JP) is looking to use the stock as collateral for a financing trade and moving their holdings to a more liquid market.
If Softbank Group (9984 JP) sells some of their shares, there will be buying from MSCI and FTSE trackers. There will be minimal buying from HSI, HSCEI and HSTECH trackers.

Softbank – Masayoshi Son’s Got Nothin’

It’s hard to believe but Softbank’s earnings briefing had even less of substance this time than usual, essentially amounting to an “innovative” unofficial roadshow for an Arm IPO.
The termination of the Arm-Nvidia deal was made official and there was the usual TED talk for retail investors on LTV, NAV and the brand-new concept of computer chips.
With portfolio performance since the start of this year as grim as expected there was little to cheer.

Solactive Global Lithium Index (LIT): Earlier Implementation Expected for LG Energy & LG Chem

As for LG Energy’s inclusion timing, Solactive made a rule change, presumably designed for LG Energy’s earlier entry on April 29.
Since LG Chem also has a battery-related business, LG Chem may remain in this index. However, the possibility should be low because its battery business is small in total sales.
LG Chem will experience an outflow of ₩250B (1.0x ADTV). And assuming that LG Energy receives 4.75%, a passive impact of 0.31x at a DTV of 1.5M shares is expected.

StubWorld: Unicom’s “Hs” Are Cheap

Despite the recent share price gain, China Unicom (762 HK) is inexpensive with respect to parent China United Network (600050 CH) – its pseudo domestic A-share twin – and to peers.
Preceding my comments on Unicom, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Before it’s here, it’s on Smartkarma

Feb 08

Most Read: LG Energy Solution, Toshiba Corp, Bapcor Ltd, China Mobile and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, HSI, NIFTY 50/100/BANK, ASX200, PCOMP, KRX New Deal
LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9
Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t
Bapcor (BAP AU): Potential Suitors Kicking Tyres
China Mobile (941 HK) Buyback Period Starts

Index Rebalance & ETF Flow Recap: MSCI, HSI, NIFTY 50/100/BANK, ASX200, PCOMP, KRX New Deal

The big event in the coming week is the MSCI Feb QIR announcement. Sydney Airport (SYD AU) will be deleted from indices after the close of trading on 9 February.
There are quite a few changes expected across the NIFTY Index (NIFTY INDEX), Nifty Bank Index (NSEBANK INDEX) and NIFTY100 Indices. The PCOMP INDEX rebalances on 11 February.
There were large inflows to Australia focused ETFs during the week, while Japan saw some pretty chunky outflows from a few ETFs.

LG Energy & LG Chem Passive Flow In/Out Estimations & Trading Considerations on February 9

There is recently a growing view that the ETF operators (KODEX and TIGER) will conduct most of the rebalancing trading on February 9 to avoid excessive tracking errors.
LG Chem will face an outflow of ₩0.38T (0.8% of SO and 1.37x ADTV). LG Energy would be 0.36x ADTV and 0.31% of SO, assuming a DTV of 2M shares.
This is definitely a clear long/short setup opportunity: LG Energy LONG/LG Chem SHORT position. Alternatively, we can also consider approaching this event with Battery ETFs LONG/LG Chem Short setup.

Toshiba – 16 Millionth New Plan Unlocks New Value! No Just Kidding It Didn’t

Another quarter, another Toshiba Medium Term Plan as activist investors keep sending management back to the drawing board until they come back with a privatisation.
Except there is still no sign of any significant appetite among buyers and no sign that they would be allowed to go through with it even if there was.
So Toshiba management shuffled a few deck chairs and the market yawned.

Bapcor (BAP AU): Potential Suitors Kicking Tyres

Automotive aftermarket parts provider Bapcor Ltd (BAP AU) has reportedly recently received two buyout proposals.
This follows the sudden departure of former CEO Darryl Abotomey in December.
Confirmation of these approaches may be clarified when 1H22 results are released on the 9 February.

China Mobile (941 HK) Buyback Period Starts

China Mobile (941 HK) announced an H-share buyback program which had as its upper limit the purchase of 37% of the H-share CCASS position.
After that, the SOE parent announced a plan to buy RMB shares in Shanghai.
The virtuous cycle of shareholder return starts today. Today is the first day China Mobile can start buying its H-shares.

Before it’s here, it’s on Smartkarma

Feb 07

Most Read: Mapletree Commercial Trust, Singapore Press Holdings, Ping An Insurance Group Co Of China, Shinsei Bank, Seibu Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Mapletree Commercial Trust – Heads I Win Tails I Win?
SPH Shareholders – A Good Deal For Waiting (After a Good Deal of Waiting)
Ping An A/H: At Parity Now; Position for Premium Expansion
2022 High Conviction – Shinsei Bank Update
Seibu Holdings – Asset Heavy To Asset Lighter if Not Fully Asset Light

Mapletree Commercial Trust – Heads I Win Tails I Win?

Then-Underperforming Mapletree Commercial Trust (MCT SP) and Mapletree North Asia Commercial Trust (MAGIC SP) announced a merger on the last day of 2021. Then it underperformed some more.
The price uplift for MAGIC unitholders was lost. FYQ3 Earnings announced in late January were good for both (better for MNACT), but MCT is still underperforming the sector.
That seems to set MCT buyers up for a Heads I Win Tails I Win scenario.

SPH Shareholders – A Good Deal For Waiting (After a Good Deal of Waiting)

The Combination Cuscaden – Keppel Scheme Offer Meetings for Singapore Press Holdings (SPH SP) shareholders should come imminently.
Time has passed and that should be worth something. Astute shareholders have likely already made their feelings known. Everyone should.
In the meantime, there is a good spread, with a put option on a portion of it, and the possibility of a little upside.

Ping An A/H: At Parity Now; Position for Premium Expansion

After trading at a 12% premium as recently as a month ago, Ping An Insurance Group Of China (601318 CH) is trading at parity to Ping An Insurance (2318 HK).
There is still some room left to reach the lower target on the A-share buyback. Once done, there could be more buying to reach the upper end of the target.
Northbound Stock Connect holdings on the A-shares have been increasing over the last few months, though there will be outflows from FTSE China A50 Index (XIN9I INDEX) trackers in March.

2022 High Conviction – Shinsei Bank Update

Shinsei Bank (8303 JP) is/was my High Conviction call for 2022.
SBI went to 47.77% in the Tender and is higher as Shinsei has bought back stock. Shinsei has more to go and could get funkier to buy back more.
8 February is the EGM to approve a new board and explicit SBI control. Delisting expectations will rise after that, but practically it will take time.

Seibu Holdings – Asset Heavy To Asset Lighter if Not Fully Asset Light

Seibu Holdings created a new Medium Term Management Plan in May 2021 including what it called Big, Hairy, Audacious Goals, or BHAGs.
That goal was to move a longtime asset-heavy business to an asset-light model by selling hotel and leisure assets, securitising others, and undergoing a Whole Business Restructuring.
Seibu Construction was sold in January and now it looks like 30 out of 40-odd Japan hotel and leisure facilities are nearly a done deal with a sale to GIC.

Before it’s here, it’s on Smartkarma

Feb 06

Most Read: Contec Co Ltd, Amazon.com Inc, Daehan Flour Mills, Goo Chemical, BHP Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Daifuku (6383) To Take Out Minorities in Subsidiary Contec (6639)
Amazon 4Q21: Don’t Call It a Comeback, We’ve Been Here (Investing) For Years
Korea Small Cap Gem #13: Daehan Flour Mills
Goo Chemical (4962 JP) MBO – Super Illiquid Kyoto-Based Specialty Chems Maker – A Done Deal
Last Week in Event SPACE: BHP, Bank Of East Asia, Sydney Airport, Boral

Daifuku (6383) To Take Out Minorities in Subsidiary Contec (6639)

Daifuku Co Ltd (6383 JP) today (4 Feb) announced it would take out TSE-2 industrial computing/IoT subsidiary Contec Co Ltd (6639 JP) in a tender offer at 55% premium.
That looks nice, and should have been expected at some point. But it is only half-generous.
The shareholder structure tells you how this is likely to end up.

Amazon 4Q21: Don’t Call It a Comeback, We’ve Been Here (Investing) For Years

By Aaron Gabin

Prime price increased, Covid expenses starting to moderate, margins set to rise.
Fulfillment buildout moderates, 1-day shipping can now launch more widely, share gains will ensue, revenue growth will reaccelerate.
We reiterate Amazon as our Top 2022 long idea. We think its worth $6,000.

Korea Small Cap Gem #13: Daehan Flour Mills

By Douglas Kim

Daehan Flour Mills is the 13th company in our Korea Small Cap Gems series.
Daehan Flour Mills is one of the largest companies in Korea engaged in the flour milling industry. It provides various types of flour in Korea.
Daehan Flour Mills, which is a deep value play, has just become very interesting since Lee Jong-Gak (honorary chairman and largest shareholder of the company), passed away on 3 February.

Goo Chemical (4962 JP) MBO – Super Illiquid Kyoto-Based Specialty Chems Maker – A Done Deal

This is a PE Fund-sponsored MBO of a small Kyoto-based specialty chemicals manufacturer.
It is far less liquid than the market cap would suggest, which tells you something about the very un-transparent shareholder register.
This is theoretically an “independent” deal with a majority-of-minority but it will get done at a slightly too low price because of huge friendly shareholder base.

Last Week in Event SPACE: BHP, Bank Of East Asia, Sydney Airport, Boral

If BHP Group (BHP AU) announces an off-market buyback, there will be demand to replace the shares bought back, re-based higher.
Bank of East Asia (23 HK)is trading cheap as Elliott throws in the towel.
The Sydney Airport (SYD AU) selldown could be larger than people expect, and it is a decent chance to put on the arb trade.

Before it’s here, it’s on Smartkarma

Feb 05

Most Read: Nongfu Spring, Monde Nissin Corp, Time Interconnect Technology, Mercari Inc, China Logistics Property Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues
PCOMP Index Rebalance: EMP, MONDE Could Pop; BLOOM, RRHI Could Drop
Time Interconnect (1729 HK): Possible Offer
Mercari – Don’t Panic Sell
CLPH (1589 HK): Composite Doc Out. Offer Now Open

HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues

The March rebalance should see the slow crawl toward 80 index members continue. We should get up to 68-70 members in March. Reaching 80 by June is unlikely.
High probability inclusions are Kuaishou Technology (1024 HK), Smoore International (6969 HK), Nongfu Spring (9633 HK), JD Health (6618 HK) and JD Logistics (2618 HK).
Currently, index turnover due to capping/float changes is low which will allow more stocks to be added to the index. Increase in the turnover will result in fewer changes.

PCOMP Index Rebalance: EMP, MONDE Could Pop; BLOOM, RRHI Could Drop

Emperador Inc (EMP PM) and Monde Nissin Corp (MONDE PM) will replace Bloomberry Resorts (BLOOM PM) and Robinsons Retail Holdings (RRHI PM) in the Philippines Stock Exchange PSEi Index (PCOMP).
There will be a lot to trade from passive funds. Implementation will take place at the close on 11 February – there are only 5 days to go.
Emperador Inc (EMP PM) has rallied over the last month while the deletions have traded lower. As re-opening plays, the passive selling could provide an opportunity to buy the deletes.

Time Interconnect (1729 HK): Possible Offer

Time Interconnect Technology (1729 HK) is currently suspended “pursuant to The Hong Kong Code on Takeovers and Mergers“.
Paul Lo, the chairman, recently increased his stake to ~75% of shares out. A large parcel of shares moved into CCASS late last month.
Paul Lo, if he is the Offeror, is unlikely to table an Offer price significantly higher than the last close, given the recent price increase. A take under is possible.

Mercari – Don’t Panic Sell

Mercari opened down 11.7% and has now recovered to be down “only” 8.5%.
While our impression of results yesterday was negative the intensity of the move is overdone in our view.
We still believe that momentum is likely to be muted for a while but the current price is not unattractive.

CLPH (1589 HK): Composite Doc Out. Offer Now Open

China Logistics Property Holdings (1589 HK)‘s Composite Document has now been despatched. The Offer is open for acceptance with a first close on the 25 February.
The Offer from JD.com is conditional on 50% acceptances, with 66.4% in the bag.
Done deal and trading through terms. The IFA considers the Offer is fair and reasonable.

Before it’s here, it’s on Smartkarma

Feb 04

Most Read: Nongfu Spring, Telix Pharmaceuticals, Mercari Inc, Microstrategy Inc Cl A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues
ASX200 Index Rebalance: Telix Pharma to Replace Sydney Airport
Mercari – Margin Miss Not Beat
S&P/ASX200: Sydney Airport OUT Telix Pharma IN, and Lots of SYD For Sale
Microstrategy’s Unsurprising Bitcoin Loss

HSI Index Rebalance Preview (March 2022): The Slow Crawl Continues

The March rebalance should see the slow crawl toward 80 index members continue. We should get up to 68-70 members in March. Reaching 80 by June is unlikely.
High probability inclusions are Kuaishou Technology (1024 HK), Smoore International (6969 HK), Nongfu Spring (9633 HK), JD Health (6618 HK) and JD Logistics (2618 HK).
Currently, index turnover due to capping/float changes is low which will allow more stocks to be added to the index. Increase in the turnover will result in fewer changes.

ASX200 Index Rebalance: Telix Pharma to Replace Sydney Airport

Sydney Airport (SYD AU) will be deleted from the S&P/ASX 200 (AS51 INDEX) after the close of trading on 9 February and Telix Pharmaceuticals (TLX AU) will be included.
There will be selling on Sydney Airport (SYD AU) from MSCI, FTSE and S&P/ASX trackers and there could be opportunities for arbs to buy below the offer price and tender.
The recent institutional placement, share purchase plan and promoter selldown could put a lid on Telix Pharmaceuticals (TLX AU)‘s stock price heading into the index inclusion.

Mercari – Margin Miss Not Beat

We got this wrong, expecting a beat on margins in spite of weak GMV, whereas Mercari actually fell into the red for the first time in six quarters.
The culprit is extremely aggressive promotional spend which looks to have hit all time highs in both Japan and the US.
The shift to an investment stance is not in and of itself a bad thing but the growth relative to the spend is disappointing so far.

S&P/ASX200: Sydney Airport OUT Telix Pharma IN, and Lots of SYD For Sale

The Sydney Airport ASX200 exclusion sets up with Telix Pharma replacing it, and two more likely changes – one each in ASX50 and ASX100.
Telix as an inclusion is a known known. The others are too.
Sydney Airport will end up seeing a LOT of stock for sale on 9 Feb at the close.

Microstrategy’s Unsurprising Bitcoin Loss

Microstrategy Inc(MSTR US) reported a net loss of $90mn or $8.43/share in the fourth quarter, missing consensus estimates for a profit of US$0.89/share.
The loss is predominantly due to the inclusion of impairment losses of US$146.6mn on its Bitcoin holdings, negating the $110.5mn in gross profit from the software ops.
MicroStrategy remains a bet on Bitcoin. Yet almost any alternate cryptocurrency security appears a better bet, if that is your bent.

Before it’s here, it’s on Smartkarma

Feb 03

Most Read: Mineral Resources, Sony Corp, LG Energy Solution, Askul Corp, Bank Of Baroda and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI Feb 2022 Index Rebalance Preview: And That’s A Wrap
Sony – Guidance Upgrade
KRX New Deal Index Rebalance Preview (March): More Flow for LG Energy
ASKUL (2678) – Large, Accretive, Not Enough for Prime So Look For More
NIFTY Bank Index Rebalance Preview: BOB Should Replace RBL Bank

MSCI Feb 2022 Index Rebalance Preview: And That’s A Wrap

Post the end of the review period, there are 19 potential adds for Asia and 9 potential deletes. High probability names include 16 adds and 8 deletes.
There are stocks that will have same way flow from the FTSE AW/AC trackers in March, while others could have same way flows from KOSPI200 or CSI300 trackers in June.
Potential additions that got beaten down over the last few weeks have started to recover and could remain supported going into announcement date on 10 February (Asia time).

Sony – Guidance Upgrade

Sony posted a strong quarter on the back of resilient margins in gaming and stellar performance in the pictures segment.
Guidance was raised to ¥1.2trn above the top of consensus at ¥1.185trn but results will likely be around ¥1.3trn, a little below the ¥1.37trn we called in early 2021.
Next year should see further growth and we expect firm performance going forward.

KRX New Deal Index Rebalance Preview (March): More Flow for LG Energy

The review period for the KRX New Deal indices ended on 31 January. The changes will be announced toward the end of February and implemented on 10 March.
We expect LG Energy Solution (373220 KS) to be included in the Battery and BBIG indices, while Kakao Pay (377300 KS) should be added to the Internet Index.
The largest selling is expected to be on Douzone Bizon (012510 KS) due to a potential downweight in the Internet index and a deletion from the BBIG index.

ASKUL (2678) – Large, Accretive, Not Enough for Prime So Look For More

Askul Corp (2678 JP) today announced a 4.9% buyback, likely via ToSTNeT-3, designed to lower the holding of parent Z Holdings (4689 JP), to meet TSE Prime Tradable Share criteria.
While 5.1% earnings accretive, it will not be enough, and the structure suggests despite significant excess cash, the next tranche won’t come immediately.
There is short-term strategy, and there is longer-term positioning. Both may work in this case.

NIFTY Bank Index Rebalance Preview: BOB Should Replace RBL Bank

The review period for the NSEBANK INDEX ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.
Based on the index methodology, we see Bank Of Baroda (BOB IN) replacing RBL Bank Ltd (RBK IN) in the index.
Passive trackers will need to buy 11 days of delivery volume on Bank Of Baroda (BOB IN) while selling 5 days of delivery volume on RBL Bank Ltd (RBK IN).

Before it’s here, it’s on Smartkarma

Feb 02

Most Read: Boral Ltd, Allied Telesis Holdings Kk, Arena Reit, SRF Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Boral’s 45% Capital Return – Resetting Forward Expectations
Allied Telesis (6835) – Small Cap Windfall
ASX200 Index Rebalance: Arena REIT to Replace Ausnet
S&P/ASX200 – Ausnet OUT, Arena REIT IN
NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March

Boral’s 45% Capital Return – Resetting Forward Expectations

Boral Ltd (BLD AU) today announced a special dividend and return of capital totalling $2.72/share. That is 46% of yesterday’s closing price.
This was not unexpected. Management had promised, media articles had proposed as much. Now it is coming through.
Despite an 11% jump in the forward ex-div price today, the stock is cheap on a FY23 basis.

Allied Telesis (6835) – Small Cap Windfall

Allied Telesis is a Japan-listed business with a long US history making networking equipment and solutions for corporate customers.
The company received a legal settlement today which is worth a fair bit to them.
The company had already had the best 12 months earnings history in years, while the stock is trading at long-time lows. This could get exciting.

ASX200 Index Rebalance: Arena REIT to Replace Ausnet

Ausnet Services (AST AU) will be deleted from the S&P/ASX 200 (AS51 INDEX) after the close of trading on 4 February and Arena Reit (ARF AU) will be included.
With this change announced, Telix Pharmaceuticals (TLX AU) is a high probability inclusion to the S&P/ASX 200 (AS51 INDEX) next week when Sydney Airport (SYD AU) will be deleted.
Arena Reit (ARF AU) has outperformed its peers over the last year and now trades at higher valuations. We would use price spikes on inclusion to rotate into its peers.

S&P/ASX200 – Ausnet OUT, Arena REIT IN

The S&P DJI Index team announced the replacement for Ausnet Services (AST AU) when it is deleted from the S&P/ASX200 Friday at the close: Arena Reit (ARF AU)
There are other changes to sub-indices which are not publicly announced but which should align with previous analysis
This insight provides estimates for the index events Friday and ways to play them.

NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March

The review period for the NIFTY 100 Index ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.
Potential inclusions are Zomato (ZOMATO IN), Mindtree Ltd (MTCL IN), SRF Ltd (SRF IN), Indian Railway Catering and Tourism (IRCTC IN) and Tata Power (TPWR IN).
Potential deletions are Yes Bank (YES IN), Indraprastha Gas (IGL IN), Jindal Steel & Power (JSP IN), Aurobindo Pharma (ARBP IN) and Hindustan Petroleum (HPCL IN).

Before it’s here, it’s on Smartkarma

Feb 01

Most Read: BHP Group, LG Energy Solution, Recruit Holdings, Bank of East Asia, Irongate Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

BHP Group – A Tale of Two Rebals? Maybe… But Maybe Not
Clearing up Misunderstandings About LG Energy K200 Fast Entry & Likely Deletion Stock
Recruit (6098) Buyback – Big, But Meh…
What Now For BEA After Elliott Walks?
Charter Hall (CHC AU)’s Offer for Irongate Group (IAP AU)

BHP Group – A Tale of Two Rebals? Maybe… But Maybe Not

The BHP Group index rebal on the S&P/ASX was bigger than most thought.
The BHP Group index rebal on the PLC line in the UK on the FTSE UK series, MSCI and FTSE Europe, and Stoxx indices was smaller than most expected.
But the funding and reverse funding excess volume tells a different story.

Clearing up Misunderstandings About LG Energy K200 Fast Entry & Likely Deletion Stock

LG Energy has the second-largest market cap on KOSPI. For Fast Entry to fail, the price must lose 90% of its current value. So, Fast Entry is a foregone conclusion.
The review period ends on February 21. The implementation date is March 11, and the announcement will likely be made public around February 24-25.
The stock with the lowest market cap from May to October last year will leave the Index. The victim is Dongwon F&B, beating Nexen Tire by a very narrow margin.

Recruit (6098) Buyback – Big, But Meh…

Recruit announced a buyback of up to 34 million shares in an own share tender offer to take place at a price below the current market price.
This kind of tender offer is almost always meant for Japanese corporate holders as it rarely makes sense for others to participate.
This is mildly EPS accretive, BVPS decretive, quite ROE accretive, but Recruit can’t really use this method for the rest of its cross-holdings.

What Now For BEA After Elliott Walks?

Bank of East Asia (23 HK) announced last Friday it intends to buy back 8.43% of shares out from Elliott Investment Management for HK$2.9bn ($373mn), paying HK$11.19/share.
The share buyback is expected to result in a 6% increase in the consolidated net asset value per share.
Conditions to the buyback appear straightforward. BEA is trading cheap at 0.3x P/B.

Charter Hall (CHC AU)’s Offer for Irongate Group (IAP AU)

Charter Hall (CHC AU) has come over the top to bid A$1.9/stapled security for Irongate Group (IAP AU). That’s 10.5% higher than the last bid from 360 Capital (TGP AU).
Charter Hall (CHC AU) have also signed an MOU with 360 Capital (TGP AU) that takes 360 Capital out of any bidding war.
At a 23.4% premium to pro forma NTA, we think the Irongate Group (IAP AU) Board will give the partnership due diligence access and the deal should complete.

Before it’s here, it’s on Smartkarma