In today’s briefing:
- Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
- Prosus/Naspers – Operation Ouroboros Commences, And It’s Big (Discount, Flows, Index Impact)
- Last Leg of TOPIX and JPNK400 FFW Rebal – ¥780bn One-Way Flow Wednesday
- FTSE GEIS Sep 2022 Index Rebalance Preview: Japan
- Link Admin: Dye & Durham’s Cuts Bid Price
- A Guide to Thematic Equity ETFs in Korea for Uncrowded Flow Trading Opportunities
- Link’s Lower Offer of A$4.30 from DND Fails to Excite
- Tassal Is in the Crosshairs of a Suitor
- Tencent (700 HK): Impact of Prosus Selling & Passive Inflows
- S&P BSE Quiddity Leaderboard Dec 2022: LIC, Shriram Finance, Tata Motors, Dr Reddy’s, & More
Prosus, Tencent, JD.com – Good Intentions but Questionable Timing
- Today Prosus announced that it will begin an open-ended share repurchase programme of Prosus and Naspers shares which will be funded by on-market sale of Tencent shares.
- Prosus also announced that it has sold its entire shareholding in JD.com, to raise US$3.67bn, on-market in Jun 2022.
- In this note, we talk about the implication and timing of today’s announcements.
Prosus/Naspers – Operation Ouroboros Commences, And It’s Big (Discount, Flows, Index Impact)
- I wanted to write this insight over the weekend but could not finish it, but now there is new news to warrant it.
- Today, Prosus (PRX NA) announced it had sold the 131,873,028 JD.com Inc. (9618 HK) shares it received in the Tencent (700 HK) distribution. This is as expected. Proceeds were US$3.67bn.
- Also announced this morning is “the beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares.” The details are the key to everything.
Last Leg of TOPIX and JPNK400 FFW Rebal – ¥780bn One-Way Flow Wednesday
- The last of the three-leg rebalance for TOPIX and JPNK400 index weights takes place Wednesday 29 June at the close. This one is a bit larger than expected in April.
- There were a large number of cancellations of shares by TSE Prime members in May which ups the predicted value to be traded.
- Interestingly, because lots of names have seen share cancellations and FFW drops, the average passive ownership of TSE Float (not other providers’ float) has gone up significantly through this process.
FTSE GEIS Sep 2022 Index Rebalance Preview: Japan
- The FTSE Russell September 2022 SAIR will use closing prices from 30 June to calculate the market cap cut-offs to determine the inclusions and exclusions for the All-World/All-Cap indices.
- We see 1 add for the All-World Index and 5 for the All-Cap Index. We see 3 stocks moving from All-Cap to All-World and 5 stocks moving the other way.
- There are other stocks that are close adds, upweights, downweights and deletes and price moves over the next few days will determine their status.
Link Admin: Dye & Durham’s Cuts Bid Price
- Dye & Durham (D&D) has reduced its Offer price for Link Administration (LNK AU) to $4.30/share, down from $5.50/share.
- The revised offer followed the Australian Competition and Consumer Commission’s concerns that D&D’s acquisition of Link would lead to dominance in Australia’s conveyancing market.
- To facilitate the new Offer, D&D said it is considering providing an undertaking to ACCC – presumably, but not stated, being the sale of its GlobalX business.
A Guide to Thematic Equity ETFs in Korea for Uncrowded Flow Trading Opportunities
- Korea’s local ETF market has experienced explosive growth in recent years. Over the past year, total ETF net assets have increased by 42%.
- As a result, the flow impact they have on the market is growing significantly. So, we are now in great need to thoroughly investigates the local equity ETF market.
- Hence, this post looks at the thematic ETFs, which are still somewhat overlooked by the market, thus providing uncrowded flow trading opportunities.
Link’s Lower Offer of A$4.30 from DND Fails to Excite
- Dye & Durham/DND has proposed to lower its offer from A$5.50 to A$4.30 per share. The Link Administration (LNK AU) Board will provide shareholders with an update next week.
- DND’s justification for a lower offer based on the potential undertaking to the ACCC and the current state of the financial markets smacks of opportunism.
- The proposed lower bid offers no premium to our valuation range or the undisturbed price. The Board should reject the lower offer and instead reignite interest from past suitors.
Tassal Is in the Crosshairs of a Suitor
- Glenn Bruce Cooke has acquired a 5.40% stake in Tassal (TGR AU) at an average price of A$3.58. The shares rose 3.1% to close at a 1-year high of A$3.97.
- Mr Cooke has shown previous interest in Tassal and its key competitor, Huon Aquaculture (HUO AU). Huon was ultimately acquired by JBS SA (JBSS3 BZ) in November 2021.
- Tassal is a better business than Huon due to more stable operations and higher margins. Benchmarking to the Huon transaction multiples implies a floor offer price of A$4.65 per share.
Tencent (700 HK): Impact of Prosus Selling & Passive Inflows
- Prosus (PRX NA)/ Naspers (NPN SJ) hold 28.78% of Tencent (700 HK) and will be selling Tencent stock to fund their own buyback due to the large discount to NAV.
- At 3-5% of Tencent (700 HK)‘s ADV, the selling will last from 9-15 years, though could take much longer (or not complete) if Prosus/Naspers’ discount to NAV shrinks considerably.
- Passive trackers will buy only around 12-14% of the incremental stock and this will lead to a big overhang on Tencent (700 HK) in the near future.
S&P BSE Quiddity Leaderboard Dec 2022: LIC, Shriram Finance, Tata Motors, Dr Reddy’s, & More
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices for the December 2022 Rebalance.
- Life Insurance Corp of India (LICI IN) will be added to BSE 200 and BSE 500 at the end of this week. Below are more details on this.
- In addition, I have discussed some trading opportunities with interesting potential index flow dynamics.
Before it’s here, it’s on Smartkarma
