In today’s briefing:
- HSCI Index Rebalance and Stock Connect: Potential Changes in September
- Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance
- ResApp (RAP AU): Low-End Pfizer Offer As Cough Trial Fails
- Shinko Shoji (8141) Buyback – Possibly An Interesting Development
- Meritz Securities: Another Major Treasury Shares Cancellation
- S&P/ASX Quiddity Leaderboard Sep 2022: Uniti Deletion & Many Other Changes for ASX 200 & 300
- Block Deal Sale of KEPCO Engineering & Construction Likely in 2H 2022
- SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release
- DTAC/True Merger: Administrative Court Ruling a Positive
- ResApp’s Confirmatory Study Fails, Resulting in Pfizer’s Lower A$0.146 Offer
HSCI Index Rebalance and Stock Connect: Potential Changes in September
- We see 28 potential inclusions to the HSCI in September, plus another 9 stocks that are close to the inclusion cutoff. Some stocks are already a part of Stock Connect.
- There could be 22 deletions from the index on market cap, liquidity and prolonged suspension. Most of the deletions would be moved to the ‘sell-only’ Southbound Stock Connect list.
- Some of the stocks that remain in the HSCI could move to the ‘sell-only’ Southbound Stock Connect list since their average market cap drops below HKD 5bn.
Toshiba (6502) Strong Vs Peers on No News Means Susceptible to Risk On Underperformance
- Toshiba Corp (6502 JP) sees its AGM next week with new directors and a possible privatisation process ongoing. But the AGM is a done deal and privatisation is not.
- The event-i-ness of Toshiba keeps it “supported” while its better-valued and higher-growth peers fall harder in the face of recent overall market weakness.
- Toshiba promised transparency on its privatisation process, and so far, it has delivered everything it promised. The next “transparency” likely comes in November.
ResApp (RAP AU): Low-End Pfizer Offer As Cough Trial Fails
- Disappointingly, the sensitivity and specificity of ResApp Health (RAP AU)‘s cough trial were significantly lower than its March pilot study.
- As such, the Scheme Consideration from Pfizer Inc (PFE US) will be A$0.146/share, which is still a 62.2% premium to the undisturbed price.
- Trading super wide to terms after short-term punters kicked out.
Shinko Shoji (8141) Buyback – Possibly An Interesting Development
- Smallcap semiconductor/component/design/assembly service trading house Shinko Shoji (8141 JP) has been buying back stock. It cancelled 20% of shares out last year. Today it buys back nearly 7%.
- The question is, who sells. What one might want to do may depend on who sells. And we will know that in 1-5 days.
- The stock itself trades at less than net current assets. The entire market cap and indeed equity is its funding of inventory and net receivables. It’s cheap.
Meritz Securities: Another Major Treasury Shares Cancellation
- In this insight, we discuss another 100 billion won worth of treasury shares cancellation just announced by Meritz Securities (008560 KS).
- This share cancellation could potentially offset the recent controversies surrounding the FSS investigating the Meritz Asset Management CEO John Lee.
- After the market close today, Meritz Securities announced that it plans to cancel 20.08 million treasury shares worth 100 billion won, representing 3% of outstanding shares.
S&P/ASX Quiddity Leaderboard Sep 2022: Uniti Deletion & Many Other Changes for ASX 200 & 300
- In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the September 2022 Rebalance.
- In addition to the Regular Rebalance changes, M&A events involving Uniti Group Ltd (UWL AU) and Link Administration (LNK AU)could also cause index changes during this quarter.
- The historical price and volume performance of high conviction ADDs/DELs and potential LONG-SHORT trade ideas involving these names are also discussed in this insight.
Block Deal Sale of KEPCO Engineering & Construction Likely in 2H 2022
- There has been increased speculation about a potential block deal sale of Kepco Engineering & Construction (052690 KS), driving its share price lower in the past several days.
- KEPCO owns a 65.77% stake in Kepco Engineering & Construction (052690 KS).
- We believe that there could be a further 10-20% downside risk for KEPCO E&C in the coming weeks.
SenseTime Lock-Up -Investment Blacklist Will Further Pressurize the Upcoming US$18bn Lock-Up Release
- SenseTime Group (STG) raised US$741m in its Hong Kong IPO in Dec 21. The IPO barely made it through and was priced at the bottom of its IPO price range.
- STG is a leading AI software company. STG was the largest AI software company in Asia in terms of 2020 revenue, as per Frost & Sullivan (F&S).
- In this note, we will talk about the lock-up dynamics and updates since our last note.
DTAC/True Merger: Administrative Court Ruling a Positive
- Press reports (here and here) suggest that Administrative Court has ruled out the request to suspend the DTAC/True merger and that the regulation which repeals NBTC’s veto rights is lawful.
- This development suggests that the NBTC will apply remedial conditions rather than block the merger. The timeline for the satisfaction of VTO conditions is from late June to early August.
- With the Court ruling increasing the probability of a successful merger, it is attractive to buy the current share price ratio of 9.698x vs the implied swap ratio of 10.221x.
ResApp’s Confirmatory Study Fails, Resulting in Pfizer’s Lower A$0.146 Offer
- Disappointingly, Resapp Health (RAP AU)‘s confirmatory data readout condition was not satisfied, resulting in Pfizer Inc (PFE US)’s lower unconfirmed data offer price of A$0.146 per share.
- The revised SID provides no obvious way for Pfizer to pull its offer. The still material premium to undisturbed price and open shareholder register suggests that the scheme will pass.
- The scheme meeting will be held in early to mid-August. At the last close of A$0.125, the gross spread to the unconfirmed data offer price of A$0.146 is 16.8%.
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