In today’s briefing:
- Large Potential S-REIT Flows in the Next Two Weeks
- Alibaba (9988 HK): Dual Primary Listing Implications
- IDX30/LQ45 Index Rebalance: Big Inflows on ARTO, BBRI, BBCA; Outflows on GOTO, TLKM, BMRI
- Genex: Atlassian’s Farquhar Makes An Offer
- Thai Life Insurance (TLI): Borderline SET50 Fast Entry
- Genex’s Offer of A$0.23 from Skip Capital Likely Won’t Cut It
- Hwa Hong Confirms No Competing Offers
- PKN Orlen/Lotos: Attractive Spread
- STOXX Europe Quiddity Leaderboard Sep 2022 (2.0): Ultra Electronics, Bavarian Nordic, Uniper, & More
Large Potential S-REIT Flows in the Next Two Weeks
- Given recent corporate events in S-REIT land, there could be some considerable money to be allocated to the sector near-term
- These flows come at a time when prices are down off highs and liquidity is low.
- There could be some price impact on certain types of S-REITs near-term.
Alibaba (9988 HK): Dual Primary Listing Implications
- Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
- The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
- Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.
IDX30/LQ45 Index Rebalance: Big Inflows on ARTO, BBRI, BBCA; Outflows on GOTO, TLKM, BMRI
- There are 3 changes each for the IDX30 Index and LQ45 Index and 11 changes for the IDX80 Index at the upcoming rebalance to be implemented on 29 July.
- There is passive inflow on Bank Jago Tbk PT (ARTO) due to index inclusion, and on Bank Rakyat Indonesia (BBRI) and Bank Central Asia (BBCA) due to capping changes.
- With only 4 days to implementation, there will be relatively big moves on stocks that have large flow/impact from passive fund trading.
Genex: Atlassian’s Farquhar Makes An Offer
- Renewable energy play Genex Power Ltd (GNX AU) has announced a non-binding indicative proposal from Atlassian’s Scott Farquhar and Stonepeak, by way of a Scheme, at A$0.23/share.
- That’s around a 64% premium. Farquhar holds a 19.9% stake.
- Farquhar, along with Atlassian co-founder Mike Cannon-Brookes, backed Genex capital raising in March last year.
Thai Life Insurance (TLI): Borderline SET50 Fast Entry
- Thai Life Insurance (TLI TB) raised over US$1bn in its IPO and has started trading on the SET today.
- At the last trade price of THB 16/share, Thai Life Insurance (TLI TB) is a borderline Fast Entry add to the Stock Exchange of Thailand SET 50 Index (SET50 INDEX).
- If Thai Life Insurance (TLI TB) is added to the index, Bangkok Life Assurance (BLA TB) is the most likely deletion.
Genex’s Offer of A$0.23 from Skip Capital Likely Won’t Cut It
- Genex Power Ltd (GNX AU) shares rose 44% on the back of an A$0.23 per share offer from Skip Capital and Stonepeak. Skip also increased its stake to 19.99%.
- At first glance, the offer looks generous in comparison to peer multiples and recent share prices. However, the offer is opportunistic partly due to Genex’s 500MW pipeline of projects.
- Benchmarking the precedent transaction multiples suggests that Genex’s existing portfolio is worth at least A$0.27 per share. The Board should engage for a higher price.
Hwa Hong Confirms No Competing Offers
- The Ong directors tried every trick in the book to derail the Hwa Hong Corp (HWAH SP) offer. The trump card was hiring Evercore to attract competing offers by 25 July.
- The Board confirmed today that there are no competing offers. This is a catalyst for shareholders sitting on the fence to accept the S$0.40 per share offer.
- The offer closes on 1 August. While meeting the 50%+ minimum acceptance condition will be a close-run, we think it will be met. The gross spread is 5.3%.
PKN Orlen/Lotos: Attractive Spread
- Shareholders of Polish refiner PKN Orlen approved the proposed takeover of smaller rival Grupa Lotos, bringing Poland closer to creating a national champion better able to compete against global players.
- This takeover has been planned for a long time and could not proceed until the EU gave the green light with a long list of remedies.
- Gross spread (as of 22 July) is 5.63%. Shares of Lotos will cease trading next week. Long 1 LTS PW/short 1.075 PKN PW.
STOXX Europe Quiddity Leaderboard Sep 2022 (2.0): Ultra Electronics, Bavarian Nordic, Uniper, & More
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the September 2022 Rebalance.
- Based on current rankings, there could be around 8 ADDs/DELs in the September 2022 Rebalance.
- Furthermore, Ultra Electronics Holdings (ULE LN) could get deleted at the end of this week triggering an intra-review addition to the STOXX Europe 600 Index.
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