In today’s briefing:
- MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
- Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
- Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months
- Hitachi Construction Machinery Deal To Change “Parent” – There’s Not Much There There
- Money Forward (3934) – Solid, Not Spectacular
MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
- With a day to go to the start of the review period, we see 14 inclusions and 6 deletions for Asia. Most of the adds are in China and Korea.
- There are quite a few adds that will require passive trackers to buy more than 5 days of ADV. Some of the stocks have rallied strongly year to date.
- We expect large buying on SK Square (402340 KS), JD Health (6618 HK) and Sea Ltd (SE US) at the February QIR due to an increase in the FIF.
Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
- Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
- The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
- Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn’t own as much NPH one week ago.
Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months
- Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced.
- This will end up being a BIG TOPIX inclusion in May or June.
- And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).
Hitachi Construction Machinery Deal To Change “Parent” – There’s Not Much There There
- On Thursday we saw news of a Hitachi sale of half its stake in HCM. Friday the stock traded down hard. Friday night saw news that underwhelmed further.
- The deal is big, but it is basically a deal to get Hitachi out as parent. There is no Capital Alliance and there is no Strategic Alliance yet.
- There simply is not much there, there yet. And the stock is less liquid than it looks, and that won’t get better any time soon.
Money Forward (3934) – Solid, Not Spectacular
- Money Forward reported full year results post close on Friday. The stock will react negatively…probably.
- The stock is down 45% from its 52-week high, along with most high growth SaaS stocks
- The fundamentals, earnings and growth remain intact, but valuations are unlikely to recover as excess liquidity drains out of the market. One for patient LT investors
Before it’s here, it’s on Smartkarma
