In today’s briefing:
- Quiddity Primer for HSTECH Rebalance Events
- Olam Group (OLG SP): Entering the Final Stages to Unlock Value
- Esso Thailand: Ignore Bangchak Corp’s Takeunder
- MSCI Korea: Potential Inclusions & Exclusions in February 2023 Highlighted by Locals
- KOSPI200 Index Rebalance: JB Financial (175330 KS) To Replace Meritz F&M (000060 KS)
- Quiddity Final Expectations for NIFTY Mar 23: Pidilite Could Be an Interesting Pre-Event Bet
- EQT/Va-Q-Tec: Generous Agreed Offer
- Hong Kong CEO & Director Dealings (20 Jan): Asymchem Labs, Honbridge, Flat Glass, Gushengtang
- EQD | KOSPI2 Index: Buy Calls/Call Spreads into CPI Release
Quiddity Primer for HSTECH Rebalance Events
- The Hang Seng Tech Index (HSTECH INDEX) represents the 30 largest technology companies listed in Hong Kong which have high business exposure to certain technology themes.
- This index was launched in 2020 and has gained significant passive tracking over the last two years.
- In this insight, we take a brief look at the selection criteria and the historical price performance of past Rebalance Events.
Olam Group (OLG SP): Entering the Final Stages to Unlock Value
- On 10 January, Olam Group (OLG SP) announced the potential IPO of Olam Agri through a dual primary listing in SGX ST and Saudi Arabia as early as 1H2023.
- The Olam Agri IPO could raise US$1 billion, according to press reports. Olam will seek shareholder approval at an EGM for the transaction.
- The IPO marks the final stages of the strategy to unlock value. Our SoTP valuation is S$1.85 per share, a 19% upside to the last close price of S$1.56.
Esso Thailand: Ignore Bangchak Corp’s Takeunder
- Back on the 11 January, refiner/retailer Bangchak Corporation (BCP TB)‘s board approved the purchase of a 65.99% stake in Esso Thailand (ESSO TB) from Exxon Mobil.
- The purchase price remains indeterminate (the indicative price is Bt8.84/share), based on a pricing adjustment mechanism as it relates to Esso’s financial accounts at the close of the stake purchase.
- Esso is down 17% since the announcement, and 37% from its recent (Oct-22) high. That seems excessive.
MSCI Korea: Potential Inclusions & Exclusions in February 2023 Highlighted by Locals
- We discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement (10 February) that are being highlighted by the locals.
- The potential candidates for inclusion in the MSCI Korea Index emphasized by locals in February 2023 include Kakao Pay and Hanwha Aerospace.
- The potential exclusion candidates in the MSCI Korea Index emphasized by locals include S-1 Corp, Celltrion Pharm, and Cheil Worldwide.
KOSPI200 Index Rebalance: JB Financial (175330 KS) To Replace Meritz F&M (000060 KS)
- Jb Financial Group (175330 KS) will replace Meritz Fire & Marine Insurance (000060 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 27 January.
- We estimate passive KOSPI2 INDEX trackers will need to buy 3.494m shares (KRW 36.34bn; 4.04 days of ADV) of Jb Financial Group (175330 KS) at the close on 27 January.
- DGB Financial Group (139130 KS) could be added to the KOSPI2 INDEX in April, replacing Meritz Securities (008560 KS) following its merger with Meritz Financial Group (138040 KS).
Quiddity Final Expectations for NIFTY Mar 23: Pidilite Could Be an Interesting Pre-Event Bet
- With roughly a week left in the reference period, we take a look at the potential ADDs/DELs for the NIFTY 50, 100, and 500 Indices for the March 2023 Rebalance.
- For NIFTY 50, Pidilite Industries (PIDI IN) is the highest-ranked Potential ADD while Bharat Petroleum Corp (BPCL IN) is the highest-ranked Potential DELETE according to our estimates.
- In this insight, we take a look at the recent price performance of names that can potentially be involved in index changes and our flow expectations.
EQT/Va-Q-Tec: Generous Agreed Offer
- The acceptance period for EQT’s €26/share offer (46% premium, 16.1x EV/23eEBITDA) runs until 16 February. Minimum acceptance is 62.5% (49.4% of the float). EQT intends to implement a domination agreement.
- The deal makes sense from a strategic standpoint, although there are potential antitrust issues. The price offered seems generous considering my fair-value estimate of €18.67 (DCF-based).
- Gross spread is 3.7% (8.6% estimated annual return assuming settlement by 30 June), which is okayish for a not so liquid stock in the European space. Long.
Hong Kong CEO & Director Dealings (20 Jan): Asymchem Labs, Honbridge, Flat Glass, Gushengtang
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- Stocks mentioned include Asymchem Laboratories (6821 HK), Honbridge Holdings (8137 HK), Flat Glass (6865 HK), and Gushengtang (2273 HK).
EQD | KOSPI2 Index: Buy Calls/Call Spreads into CPI Release
- Korean equities have recovered from the December sell-off but are still playing catch up versus other Asian indices over the last year
- We see the upcoming CPI release as an underpriced event in the vol space
- We consider some cheap derivative strategies on the upside to play the disinflation theme
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