In today’s briefing:
- Toshiba – These Are The Days Of Our Lives
- HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows
- Bank of Kyoto – Trading the Holdco Range
- Tassal And Cooke In Salmon Stand-Off
- Two Nuclear ETFs Listed Today (KINDEX & HANARO): Passive Flow Outlook
- StubWorld: Prosus & Naspers Gain On Buyback Funded By Tencent Share Sale
- ETFs in Stock Connect: List Announced; Effective 4 July
- KRX Banks Index (KODEX ETF): September Rebalancing Preview
- NIFTY Quiddity Leaderboard Sep 2022: June Trades Successful; More to Come
- UnitedHealth/EMIS: Agreed Offer, Estimated Calendar, Spread
Toshiba – These Are The Days Of Our Lives
- At last year’s Toshiba AGM we had an elected director resign because the sitting chairman was rejected.
- This year we have another director resigning because two other directors weren’t rejected.
- Now all we are really waiting for in this drama is for Kurumatani’s hitherto unknown identical twin, separated at birth, to show up with a plot for revenge or something…
HSTECH Index Rebalance Preview (Sep): Free Float & Capping Changes To Drive Flows
- We do not expect any inclusions or exclusions for the Hang Seng Tech Index (HSTECH INDEX) at the September rebalance.
- Float and capping changes will lead to a one-way turnover of 6.5% and that will result in a one-way trade of HK$4,913m.
- SenseTime Group (20 HK) will have the largest buying flow due a potential increase in free float. The stock is also a potential inclusion to the HSCEI INDEX in September.
Bank of Kyoto – Trading the Holdco Range
- Bank of Kyoto has twice changed/improved its capital governance in the past six months.
- Silchester International Investors wants it to do more, asking for a small special dividend at tomorrow’s AGM. I don’t think it will get it.
- The holdco is now a better holdco trade than it was 6mos ago, and trading the range is the right way to look at it.
Tassal And Cooke In Salmon Stand-Off
- Tasmanian salmon producer Tassal (TGR AU) has rejected Canadian aquaculture play Cooke Inc’s $4.85/share offer – its third proposal and a 42.2% premium to the undisturbed price.
- Cooke commenced buying shares in Tassal around ten days ago and has built a 5.4% stake.
- Tassal considers the Offer does not reflect the fundamental value of the business and has determined not to engage with Cooke.
Two Nuclear ETFs Listed Today (KINDEX & HANARO): Passive Flow Outlook
- Nuclear power is a landmark policy that Korea’s current administration heavily pushes. In response, the local market has quickly launched nuclear thematic ETFs: KINDEX & HANARO, which got listed today.
- Nuclear power is likely to become the next big thing, AUM-wise, similar to the secondary battery-themed ETFs under the former administration.
- Since most of these nuclear stocks have significantly smaller market caps than those battery ones, the actual flow impact is likely to be more significant.
StubWorld: Prosus & Naspers Gain On Buyback Funded By Tencent Share Sale
- It’s been a long-time coming. Prosus (PRX NA) and parent Naspers (NPN SJ) will gradually sell down their stake in Tencent (700 HK) to fund a share purchase program.
- Preceding my comments on Prosus and Naspers, are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % of market capitalisation greater than 20%.
ETFs in Stock Connect: List Announced; Effective 4 July
- CSRC and SFC have approved the inclusion of eligible ETFs in Stock Connect and trading of the ETFs under Stock Connect would begin from 4 July.
- There are 4 ETFs included in Southbound Stock Connect, while there are 83 ETFs that have been included in Northbound Stock Connect.
- Under Stock Connect, only secondary trading is allowed in the ETFs with no creations or redemptions permitted. This will have implications for short-term and long-term repo on the HSI/HSCEI/HSTECH indices.
KRX Banks Index (KODEX ETF): September Rebalancing Preview
- The index targets the GICS Financials/Banks sector stocks: 12 stocks belong to this sector. Then nine of these are currently included in the KRX Banks.
- Compared to the last rebalancing, where we had Kakao Bank’s inclusion event, the impact size for the upcoming rebalancing will likely be significantly reduced.
- The last rebalancing showed that the directional correlation between passive flow and price movement was high. So, we can still consider a Long/Short Day Trade even with this impact size.
NIFTY Quiddity Leaderboard Sep 2022: June Trades Successful; More to Come
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50, 100, and 500 Indices for the September 2022 Rebalance.
- With only one month left in the reference period, most changes for the NIFTY 50 and NIFTY 100 Index seem to be high-conviction index changes.
- In addition, I have discussed some trading opportunities with interesting potential index flow dynamics.
UnitedHealth/EMIS: Agreed Offer, Estimated Calendar, Spread
- Giant UnitedHealth offers 1,925p, in cash (implied equity value of £1,243 million, implied EV of £1,185 million). This represents: 6.5x EV/Fwd Revenue, 20.4x EV/Fwd EBITDA and 31.7x Fwd PE (source: I/B/E/S).
- The offer is pitched above peer’s multiples, which coupled with a 49% premium, should be enough to convince any reluctant shareholder to tender.
- Gross spread is 2.9%, quite good for a highly likely deal in the European space (c. 16% estimated annual return assuming settlement takes place on 8 September).
Before it’s here, it’s on Smartkarma
