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Feb 01
0

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

By | 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

By Travis Lundy

  • 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

By Sanghyun Park

  • 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…

By Travis Lundy

  • 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?

By David Blennerhassett

  • 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)

By Brian Freitas

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Jan 31
0

Most Read: BHP Group, LG Energy Solution, Wilmar International, Recruit Holdings, Indian Oil Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • BHP Group – A Tale of Two Rebals? Maybe… But Maybe Not
  • Index Rebalance & ETF Flow Recap: MSCI, China A50, HSCI, IDX30/LQ45, HSTECH, URA, LG Energy
  • Last Week in Event SPACE: China Mobile, Wilmar, BHP, Link Net, Hollysys, GJ Steel, Guodian Tech, ASX
  • Recruit Buyback: An Attempt to Rescue Falling Share Price; Seems Like a Good Short
  • NIFTY50 Index Rebalance Preview: Two Potential Changes in March

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

By Travis Lundy

  • 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. 

Index Rebalance & ETF Flow Recap: MSCI, China A50, HSCI, IDX30/LQ45, HSTECH, URA, LG Energy

By Brian Freitas

Last Week in Event SPACE: China Mobile, Wilmar, BHP, Link Net, Hollysys, GJ Steel, Guodian Tech, ASX

By David Blennerhassett

  • The parent company of China Mobile (941 HK) has announced a plan to increase its holding. This is better than a poke in the eye with a sharp stick. 
  • Wilmar International (WIL SP) is inexpensive, even for a cross-border, possibly-difficult-to-short subsidiary, Holdco situation. 
  • The BHP LN vs BHP AU unification should cause US$40bn of rebalance trading across the major indices. Other indices will simply roll their exposure from PLC to Limited without trading. 

Recruit Buyback: An Attempt to Rescue Falling Share Price; Seems Like a Good Short

By Shifara Samsudeen, ACMA, CGMA

  • Recruit has announced a share buy-back on Friday of 34.0m shares (2.06% of outstanding shares) for JPY155.8bn, implying JPY4,581 per share.
  • Recruit’s shares closed at JPY5,090 per share at the end of Thursday’s close, and following the announcement, shares moved up to JPY5,305 a piece, gaining 4.2%.
  • We think Recruit’s shares will be a good Short over the next few days.

NIFTY50 Index Rebalance Preview: Two Potential Changes in March

By Brian Freitas

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Jan 29
0

Most Read: LG Energy Solution, Softbank Group, SenseTime Group, Samsung SDI, LG Chem Ltd and more

By | Daily Briefs, Most Read

In today’s briefing:

  • LG Energy Solution (373220 KS) IPO: Index (Fast) Entry & Lock-Up Expiry Summary
  • Softbank – Hmmmmm…
  • Hang Seng TECH Index Rebalance Preview (March 2022): SenseTime Could Be Added with HUGE Impact
  • KODEX Battery ETF Rebalancing Cycle Changed to Quarterly: Preview for March Rebalancing
  • LG Chem: Still Cheap After LG Energy’s Big Debut

LG Energy Solution (373220 KS) IPO: Index (Fast) Entry & Lock-Up Expiry Summary

By Brian Freitas

  • LG Energy Solution (373220 KS) listed today and closed 68.3% above its IPO price to become the second largest stock in Korea with a full market cap of US$98.22bn.
  • The stock will be added to a bunch of indices via Fast and Regular entry over the next few months. There will be liquidity squeezes on a few of them.
  • LG Energy Solution (373220 KS) will become short sell eligible on 11 March after its inclusion in the Kospi 200 Index. That and lock-up expiry is something to watch for.

Softbank – Hmmmmm…

By Mio Kato

  • Marcelo Claure is reportedly out, joining Katsunori Sago and Michael Ronen, Robert Townsend, Chad Fentress and Ziad Ojakli, Gary Ginsberg and Yuko Kawamoto. 
  • This is the highest profile resignation at Softbank since Nikesh Arora and continues the pattern of people reportedly in disputes with Rajeev Misra leaving the company. 
  • So does that 50% holdco discount offer any comfort here???

Hang Seng TECH Index Rebalance Preview (March 2022): SenseTime Could Be Added with HUGE Impact

By Brian Freitas

KODEX Battery ETF Rebalancing Cycle Changed to Quarterly: Preview for March Rebalancing

By Sanghyun Park

  • The rebalancing cycle of the KODEX Secondary Battery ETF was changed from semi-annual to quarterly. Also, the rebalancing trading takes place for three trading days instead of one trading day.
  • This passive impact will be different from the previous rebalancing. LG Energy and SK Innovation will likely experience a significant passive outflow. Then, most small-cap constituents will receive an inflow. 
  • Among the top weighting stocks, Samsung SDI and SKIET deserve attention. Sangsin Energy, E&D, and TSI will face exclusion, while C&I, Sang-A Frontec, and Enchem will likely join the ETF.

LG Chem: Still Cheap After LG Energy’s Big Debut

By David Blennerhassett

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Jan 28
0

Most Read: LG Energy Solution, Sony Corp, Softbank Group, Seek Ltd, Beijing Jingneng Clean Energy and more

By | Daily Briefs, Most Read

In today’s briefing:

  • LG Energy Solution (373220 KS) IPO: Index (Fast) Entry & Lock-Up Expiry Summary
  • Sony – Great Opportunity
  • Softbank – Hmmmmm…
  • S&P/​ASX Indices: Quiddity Leaderboard for March 2022 Rebalance
  • Beijing Jingneng (579 HK): Trading Cheap As Possible Offer Reload Looms

LG Energy Solution (373220 KS) IPO: Index (Fast) Entry & Lock-Up Expiry Summary

By Brian Freitas

  • LG Energy Solution (373220 KS) listed today and closed 68.3% above its IPO price to become the second largest stock in Korea with a full market cap of US$98.22bn.
  • The stock will be added to a bunch of indices via Fast and Regular entry over the next few months. There will be liquidity squeezes on a few of them.
  • LG Energy Solution (373220 KS) will become short sell eligible on 11 March after its inclusion in the Kospi 200 Index. That and lock-up expiry is something to watch for.

Sony – Great Opportunity

By Mio Kato

  • Following its 12.8% fall last Wednesday Sony is now getting hit for 7.7% today thanks to Jay Powell. 
  • This is an excellent opportunity to resize positions in our view as the long-term outlook remains excellent. 
  • We had been worried about potential volatility due to the name becoming consensus but since that has been realised we are back to being uber bulls here.

Softbank – Hmmmmm…

By Mio Kato

  • Marcelo Claure is reportedly out, joining Katsunori Sago and Michael Ronen, Robert Townsend, Chad Fentress and Ziad Ojakli, Gary Ginsberg and Yuko Kawamoto. 
  • This is the highest profile resignation at Softbank since Nikesh Arora and continues the pattern of people reportedly in disputes with Rajeev Misra leaving the company. 
  • So does that 50% holdco discount offer any comfort here???

S&P/​ASX Indices: Quiddity Leaderboard for March 2022 Rebalance

By Janaghan Jeyakumar, CFA

  • The S&P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies. 
  • In March 2022, Index rebalance events will take place for the S&P/ASX capitalization-weighted indices including ASX 300, ASX 200, ASX 100, ASX 50, and ASX 20. 
  • In this insight, we take a look at the leading candidates who could become Adds/Deletes during the March 2022 Rebalance and other potential intra-quarterly changes.

Beijing Jingneng (579 HK): Trading Cheap As Possible Offer Reload Looms

By David Blennerhassett

  • Beijing Jingneng Clean Energy (579 HK), whose privatisation unceremoniously failed last year, is inexpensive versus its peer basket. 
  • The 12-month moratorium restricting Beijing Energy Holding from relaunching an Offer expires on the 1 March.
  • The key reason for privatisation remains. A new Offer should be structured such that no tendering condition is present.

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Jan 27
0

Most Read: Sumber Alfaria Trijaya Tbk Pt, LG Energy Solution, Alligator Energy, BHP Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • IDX30/LQ45 Index Rebalance: BIG Impact Changes in Limited Time
  • LG Energy Solution IPO: First Day Trading Strategy Amid Market Turmoil
  • LG Energy IPO Trading – Allocations, Index, and Updates
  • Solactive Global Uranium & Nuclear Components Index Rebalance: Most Adds in Oz
  • S&P/ASX Indices: Quiddity Primer

IDX30/LQ45 Index Rebalance: BIG Impact Changes in Limited Time

By Brian Freitas

LG Energy Solution IPO: First Day Trading Strategy Amid Market Turmoil

By Douglas Kim

  • In this insight, we discuss the first day trading strategy of LG Energy Solution amid market turmoil.
  • Due to the recent risk-off sentiment, the prudent course of action would be to take a more moderate upside view on how much LG Energy Solution’s stock price could overshoot.
  • Our base case valuation for LG Energy Solution (373220 KS) remains 424,093 won per share, which is 41% higher than the IPO price of 300,000 won.

LG Energy IPO Trading – Allocations, Index, and Updates

By Zhen Zhou, Toh

  • LG Energy Solution (373220 KS) (LGES) raised US$10.8bn in its South Korea IPO, after pricing at the top-end of  the IPO price range .
  • LGES is the EV battery unit of LG Chem and it was spun off in December last year. The company is a major supplier to customers including Tesla and GM.
  • LGES will be included into MSCI and KOSPI. But MSCI’s fast entry could likely be scheduled with February’s quarterly review which will be effective only on 1st of March.

Solactive Global Uranium & Nuclear Components Index Rebalance: Most Adds in Oz

By Brian Freitas

  • Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index. There are 8 adds and 1 delete with implementation at the close on 4 February.
  • Prior to the rebalance, BHP Billiton (BLT LN) will be deleted at the close on 28 January following Unification with BHP Group (BHP AU).
  • The flows on the stocks are small, but there is a big impact on the inclusions in Australia. Global X Uranium ETF (URA US) will buy around 5.5% of float.

S&P/ASX Indices: Quiddity Primer

By Janaghan Jeyakumar, CFA

  • The S&P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies. 
  • In this insight, we take a brief look at the constituent selection methodology for the capitalization-weighted indices which include ASX 300, ASX 200, ASX 100, ASX 50, and ASX 20. 
  • There is also a discussion on the historical price performance of Index Rebalance Events in the run up to the Inclusion Event and in the Post-Inclusion Phase.

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Jan 26
0

Most Read: SenseTime Group, Sumber Alfaria Trijaya Tbk Pt, LG Energy Solution, LG Chem Ltd and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
  • IDX30/LQ45 Index Rebalance: BIG Impact Changes in Limited Time
  • LG Energy IPO Trading – Allocations, Index, and Updates
  • LG Energy Solution IPO: First Day Trading Strategy Amid Market Turmoil
  • LG Chem Passive Outflow Summary

HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included

By Brian Freitas

  • The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.
  • SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.
  • Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.

IDX30/LQ45 Index Rebalance: BIG Impact Changes in Limited Time

By Brian Freitas

LG Energy IPO Trading – Allocations, Index, and Updates

By Zhen Zhou, Toh

  • LG Energy Solution (373220 KS) (LGES) raised US$10.8bn in its South Korea IPO, after pricing at the top-end of  the IPO price range .
  • LGES is the EV battery unit of LG Chem and it was spun off in December last year. The company is a major supplier to customers including Tesla and GM.
  • LGES will be included into MSCI and KOSPI. But MSCI’s fast entry could likely be scheduled with February’s quarterly review which will be effective only on 1st of March.

LG Energy Solution IPO: First Day Trading Strategy Amid Market Turmoil

By Douglas Kim

  • In this insight, we discuss the first day trading strategy of LG Energy Solution amid market turmoil.
  • Due to the recent risk-off sentiment, the prudent course of action would be to take a more moderate upside view on how much LG Energy Solution’s stock price could overshoot.
  • Our base case valuation for LG Energy Solution (373220 KS) remains 424,093 won per share, which is 41% higher than the IPO price of 300,000 won.

LG Chem Passive Outflow Summary

By Sanghyun Park

  • The LG Energy listing will likely distort the overall market flow. One is replacement trading with LG Chem in the local battery ETFs.
  • One sure thing is that KODEX and TIGER will do this replacement trading. And these ETF operators will reportedly conduct it for three trading days from February 9-11.
  • LG Chem has recently undergone a significant share price correction, this amount of passive outflow is highly likely to directly impact share price movement during the 3-day rebalancing trading window.

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Jan 25
0

Most Read: BHP Group, LG Energy Solution, SenseTime Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • BHP Unification: Index Changes and Flows
  • BHP Unification A Done Deal – Now for the BIG FLOWS
  • LG Energy Solution (373220 KS) IPO: Allocations and Lock-Ups
  • HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
  • LG Energy Post-Listing Flow Tracking by Date: Passive Inflows & Lockup Release Outflows

BHP Unification: Index Changes and Flows

By Brian Freitas

BHP Unification A Done Deal – Now for the BIG FLOWS

By Travis Lundy

  • The various Shareholder and Scheme Meetings overwhelmingly supported unification of BHP Group and Limited on Thursday. The deal is done. Now for the BIG FLOWS.
  • There should be US$40bn (two way) of index-related flows on Friday across the major indices, half in funding/reverse-funding flows. Replacements are mostly decided.
  • This insight looks at the expected breakdown of flows per index, the replacements, and provides a spreadsheet for all the flows. 

LG Energy Solution (373220 KS) IPO: Allocations and Lock-Ups

By Brian Freitas

  • ESOP marginally undersubscribed, retail investors were allocated 25.8% of the IPO while institutions got 55%. Post IPO, LG Chem Ltd (051910 KS) owns 81.84% of LG Energy Solution (373220 KS). 
  • Around 58% of the institutional allocation is subject to voluntary lockups. For Fast Entry, MSCI will use a FIF of 9%, while FTSE will use an investability weight of 4.16%.
  • LG Energy Solution (373220 KS) needs to rally 84% by the close on 27 January to get FTSE Fast Entry. MSCI Standard and KOSPI200 index inclusions are a near certainty.

HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included

By Brian Freitas

  • The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.
  • SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.
  • Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.

LG Energy Post-Listing Flow Tracking by Date: Passive Inflows & Lockup Release Outflows

By Sanghyun Park

  • The KOSPI inclusion will be officially implemented on January 28. As a result, local active funds benchmarking the KOSPI will compete to buy LG Energy on the listing date.
  • Passive Inflow appears one week after listing, particularly MSCI and KODEX/TIGER battery ETFs. The KODEX/TIGER rebalancing effective date is virtually confirmed on February 10, meaning rebalancing trading on February 9.
  • Another two weeks later, the KOSPI 200 and KRX BBIG rebalancing await us. Combined with KRX BBIG, there will be a passive inflow of about 0.5% of SO.

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Jan 24
0

Most Read: BHP Group, Meritz Fire & Marine Insurance, Bank Of Ningbo Co Ltd A, China Mobile and more

By | Daily Briefs, Most Read

In today’s briefing:

  • BHP Unification A Done Deal – Now for the BIG FLOWS
  • BHP Unification: Index Changes and Flows
  • MSCI Feb 2022 Index Rebalance Preview: Potential Changes from Days 1-4
  • FTSE China A50 Index Rebalance Preview (March 2022): Adds, Deletes & FOL Changes
  • China Mobile Parent Ups The Ante – Announces Share Increase Plan

BHP Unification A Done Deal – Now for the BIG FLOWS

By Travis Lundy

  • The various Shareholder and Scheme Meetings overwhelmingly supported unification of BHP Group and Limited on Thursday. The deal is done. Now for the BIG FLOWS.
  • There should be US$40bn (two way) of index-related flows on Friday across the major indices, half in funding/reverse-funding flows. Replacements are mostly decided.
  • This insight looks at the expected breakdown of flows per index, the replacements, and provides a spreadsheet for all the flows. 

BHP Unification: Index Changes and Flows

By Brian Freitas

MSCI Feb 2022 Index Rebalance Preview: Potential Changes from Days 1-4

By Brian Freitas

  • With 4 trading days complete in the review period, we see 15 potential inclusions and 8 potential deletions at the February QIR. There are few new names in the list.
  • Some stocks will have same way flow from the FTSE AW/AC trackers in June, while others could have same way flows from KOSPI200 or CSI300 trackers in June.
  • JD Health (6618 HK) has been moving up over the last couple of weeks, SK Square (402340 KS) has been holding, while Sea Ltd (SE US) has sold off.

FTSE China A50 Index Rebalance Preview (March 2022): Adds, Deletes & FOL Changes

By Brian Freitas

  • We see three potential changes at the March rebalance. One is a high probability change while the other two are close to the cutoff ranks.
  • Then there will be changes to the investability weight of the stocks following the Ground Rule change that will cap stocks at their Foreign Ownership Limits.
  • The combined impact of all changes at the rebalance will result in a one-way turnover estimated at 17.55% and will result in a one-way trade of CNY 9,744m.

China Mobile Parent Ups The Ante – Announces Share Increase Plan

By Travis Lundy

  • The parent company of China Mobile (941 HK) has announced a plan to increase its holding. This is not surprising given the contents of the RMB Share Issue Circular.
  • If they spend the midpoint of the RMB 3.0-5.0bn plan at a 20+% premium to current price, it is 8% of the RMB Share float. 
  • The H-share buyback program is eligible to start after 8 Feb deadline for RMB Share greenshoe allocation. The stock is HK$51. Anything under HK$70/share is accretive vs the IPO.

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Jan 21
0

Most Read: BHP Group, HomeCo Daily Needs REIT, Hitachi Transport System, KakaoBank and more

By | Daily Briefs, Most Read

In today’s briefing:

  • BHP Unification – Trading and Spread Update
  • HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)
  • Kakao Bank Six-Month Lock-Up – Over US$2.5bn Stock Release Will Only Add to the Recent Rout
  • Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities
  • KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS

BHP Unification – Trading and Spread Update

By Travis Lundy

  • The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
  • An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
  • All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)

By Brian Freitas

Kakao Bank Six-Month Lock-Up – Over US$2.5bn Stock Release Will Only Add to the Recent Rout

By Sumeet Singh

  • Kakao Bank’s six month IPO lock-up will end on 6th Feb 2022. 
  • It will result in freeing up another US$2.5bn+ worth of shares held by a number of pre-IPO and local IPO investors.
  • In this note, we will talk about the upcoming lock-up expiry.

Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities

By Travis Lundy

  • Hitachi is, as the media fuss suggests, in the last stages of its re-formation after ridding itself of nearly two-dozen listed subs over the last decade-plus.
  • Hitachi Transport System (9086) is the last major sub/affiliate without a new home. Hitachi owns just under 40%. SG Holdings (9143 JP) owns just under 10%. Both want to sell.
  • It is not clear HTS wants to be taken private, but there could be an interesting financial engineering solution to suit the sellers. 

KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS

By Sanghyun Park

  • For Kakao Bank, the 6M IPO lockup (2.79%) will hit the market. Also, the possibility that the 4.48% stake held by Anchor/TPG will hit the market should be left open.
  • In Krafton’s case, Tencent is the most notable player, owning 13.56%. It recently suggested a reduction in overseas holdings. So, some of this 13.56% stake should appear in the market.
  • The 4.84% stake held by Premier Superior is available after February 14. Samsung Electronics and Samsung SDS shares by the Samsung family are also likely to take place in February.

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Jan 20
0

Most Read: One REIT, Citic Securities (H), Sony Corp, Hyundai Engineering Co Ltd, HomeCo Daily Needs REIT and more

By | Daily Briefs, Most Read

In today’s briefing:

  • FTSE EPRA Nareit Developed Asia Preview: A Few More Inclusions
  • The Citic Securities Rights Offering – Dilution Against Timing
  • Sony – Microsoft’s Activision Blizzard Acquisition Shakes Things Up
  • Hyundai Engineering IPO – Eco-Friendlier However Parent Has Traded Down Since Our Last Note
  • HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)

FTSE EPRA Nareit Developed Asia Preview: A Few More Inclusions

By Brian Freitas

The Citic Securities Rights Offering – Dilution Against Timing

By Travis Lundy

  • Citic Securities has launched a Rights Offering for H Shares and A Shares. The price is basically the same, which means a very big discount for A holders.
  • The timing is different, and the H share Rights Issue process is drawn out past Chinese New Year. This may affect takeup rates and bullishness.
  • The difference in capital approach between Dual H/A-share listed SOEs like Citic Securities and like China Mobile is stark. The dichotomy may expand. 

Sony – Microsoft’s Activision Blizzard Acquisition Shakes Things Up

By Mio Kato

  • Microsoft has agreed to acquire Activision Blizzard for $95 per share (+45.3% vs. undisturbed) which values the company at $68.7bn in EV. 
  • ATVI had been under pressure since the middle of last year facing various sexual harassment allegations, but CEO Bobby Kotick will not be replaced. 
  • Like with ZeniMax this deal features a demanding valuation for a number of IPs which have seen better days… but there is Call of Duty…

Hyundai Engineering IPO – Eco-Friendlier However Parent Has Traded Down Since Our Last Note

By Clarence Chu

  • Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its Korea IPO.
  • There have been a number of news reports since our last note regarding the firm securing projects with an eco-friendly tilt, which could garner investor interest.
  • Despite its recent share price correction, were HEC to list at our fair value estimate, were one to short the holdco, there exists a 2-12% return potential. 

HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)

By Brian Freitas

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