In today’s briefing:
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (June 2023)
- Medtronic’s M&A, Tender Offer, and Taking Private of Eoflow
- NIFTY NEXT 50 Index Market Consultation: Non-F&O Stocks Could Be Dropped
- Quiddity Leaderboard JPX-Nikkei 400: End-May 2023
- Challenger Technologies (CHLG SP): Loo Family/Dymon Asia’s Skinny Unconditional S$0.56 Offer
- Challenger Tech’s Derisory Unconditional Offer
- Peace Within the Board and Focus on Organic Growth
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (June 2023)
- The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- The largest inflows will be on Meituan (3690 HK), JD.com (9618 HK), Zijin Mining (2899 HK), Baidu (9888 HK), Trip.com (9961 HK) and JD Logistics (2618 HK).
- The largest outflows will be on HSBC Holdings (5 HK), Li Auto (2015 HK), Kuaishou Technology (1024 HK), China Construction Bank H (939 HK) and NetEase (9999 HK).
Medtronic’s M&A, Tender Offer, and Taking Private of Eoflow
- In this insight, we provide the details of Medtronic’s M&A and tender offer for Eoflow.
- Currently, Eoflow is trading at 28,050 won which is 6.5% lower than the tender offer price of 30,000 won.
- Eoflow’s share price is currently comfortably below 30,000 won and we believe this deal has 95-98%+ probability of getting completed within the current M&A framework.
NIFTY NEXT 50 Index Market Consultation: Non-F&O Stocks Could Be Dropped
- NSE Indices have started a market consultation on dropping stocks that are not a part of the Futures & Options segment from the Nifty Next 50 Index (NIFTYJR INDEX).
- This will be done in two phases with a weight reduction for non-F&O stocks in June and deletion from the index in September.
- That will result in 11 inclusions to the Nifty Next 50 Index (NIFTYJR INDEX) in September and bring in a lot of flow to the stocks.
Quiddity Leaderboard JPX-Nikkei 400: End-May 2023
- The JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted (capped) market-value-weighted index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to be announced in early August 2023 based on trading data as of end-May 2023.
Challenger Technologies (CHLG SP): Loo Family/Dymon Asia’s Skinny Unconditional S$0.56 Offer
- Challenger Technologies (CHLG SP) has disclosed a voluntary unconditional offer from Dymon Asia and the Loo Family at S$0.56 per share, a 1.8% premium to the undisturbed price (29 May).
- The little to no offer premium will leave minorities aggrieved. Hitting the 90% compulsory acquisition threshold implies a minority acceptance rate of 31.3%. The offer has not been declared final.
- The offer is set to follow the recent SGX voluntary unconditional offer playbook – a lowball offer followed by declaring the offer final after a cursory bump.
Challenger Tech’s Derisory Unconditional Offer
- Consumer electronics retailer Challenger Technologies (CHLG SP) has announced a voluntary unconditional cash offer of S$0.56/share. The Offer price has not been declared final.
- The Offeror is led by Dymon Asia Private Equity and Challenger’s CEO Loo Leong Thye, who collectively hold 54.37%.
- Including other Loo family members and additional irrevocables, there is a high probability Challenger breaches the public float at the conclusion of the offer and be suspended.
Peace Within the Board and Focus on Organic Growth
- The board’s renewal and the arrival of a new CEO (both should be a positive catalyst) are on track and will be completed in the coming weeks.
- Gone the takeover angle, Cellnex’s new strategy focuses on organic growth and deleveraging, aiming an investment grade rating and reducing net debt by end of FY2024 (already 5.6x net debt/2023e EBITDA).
- Cellnex trades at 15.3x EV/Fwd EBITDA, vs. 28.8x American Towers and 24.4x Inwit. TCI may still look for ways to increase the value of its investment.
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