In today’s briefing:
- CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions
- Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons
- ChiNext/ChiNext 50 Index Rebalance: On Expected Lines as Adds Outperform Deletes
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (June 2023)
- Medtronic’s M&A, Tender Offer, and Taking Private of Eoflow
- MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Changes Afoot
- Yashili (1230 HK): Scheme Doc Out. 23 June Court Meeting
- Flow Trading Opportunities Brought by the AI Rally: KRX Semicon Rebalancing in September
- Yashili (1230 HK): Scheme Vote on 23 June
- End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2023
CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions
- There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 9 June.
- The inclusions will also be added to other indices over the next couple of weeks and there will be inflows from multiple index trackers.
- The adds have outperformed and with 9 trading days to implementation of the changes and the inclusions also being added to other indices, there could be further outperformance near-term.
Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons
- In mid-January this year, Mitsui & Co Ltd (8031 JP) announced it would buy out minorities in Relia Inc (4708 JP) (longtime known as Moshi Moshi), a BPO/RPA/AI services company.
- I said the deal was too cheap, with 44% upside to the midpoint of Target Advisor’s DCF fair value range. Investors needed to exercise their cowbell to get more.
- Since then, TOPIX has returned ~15%, A peer basket 16%, H2 was possibly kitchen-sinked, but no Mar-2024 forecasts were provided. The Tender starts tomorrow. Noise is still warranted.
ChiNext/ChiNext 50 Index Rebalance: On Expected Lines as Adds Outperform Deletes
- There will be 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 9 June.
- One-Way turnover for the Chinext Price Index is estimated at 3.17% while the one-way turnover for the ChiNext50 Index is 6.61%. The one-way trade across both indices is CNY 2.72bn.
- The adds have outperformed the deletes by a huge margin over the last 3 months and there could be profit taking into implementation.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (June 2023)
- The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
- The largest inflows will be on Meituan (3690 HK), JD.com (9618 HK), Zijin Mining (2899 HK), Baidu (9888 HK), Trip.com (9961 HK) and JD Logistics (2618 HK).
- The largest outflows will be on HSBC Holdings (5 HK), Li Auto (2015 HK), Kuaishou Technology (1024 HK), China Construction Bank H (939 HK) and NetEase (9999 HK).
Medtronic’s M&A, Tender Offer, and Taking Private of Eoflow
- In this insight, we provide the details of Medtronic’s M&A and tender offer for Eoflow.
- Currently, Eoflow is trading at 28,050 won which is 6.5% lower than the tender offer price of 30,000 won.
- Eoflow’s share price is currently comfortably below 30,000 won and we believe this deal has 95-98%+ probability of getting completed within the current M&A framework.
MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Changes Afoot
- The review period for the June rebalance ended on 31 May. Announcement of the changes will be made on 9 June with implementation at the close on 16 June.
- There could be 3 or 4 A-share additions due to their inclusion in Northbound Stock Connect. That in turn expands the index universe and could result in 2-3 deletions.
- If there are 4 adds and 2 deletes at the June rebalance, estimated one-way turnover at the rebalance will be 13.4% and will result in a one-way trade of US$81m.
Yashili (1230 HK): Scheme Doc Out. 23 June Court Meeting
- At long last, Yashili International Holdings (1230 HK) has dispatched the Scheme Document.
- The Court Meeting and EGM will be held on the 23 June. The IFA says the Offer is fair. At a ~160% premium to undisturbed, it certainly is.
- Assuming the transaction gets up, payment will occur on or before the 13 July.
Flow Trading Opportunities Brought by the AI Rally: KRX Semicon Rebalancing in September
- KRX Semicon has experienced a considerable increase in AUM due to the recent AI rally. Two ETFs tracking SEMICON have a combined AUM of ₩0.6T.
- The following five stocks are screened as potential additions: ITM Semiconductor, Hyundai Energy Solutions, TEMC, Fine Semitech, and AT Technology.
- While it may not be a major flow event, it still presents a trading opportunity worth considering, especially in September, which is relatively less eventful in terms of flows.
Yashili (1230 HK): Scheme Vote on 23 June
- The Yashili International Holdings (1230 HK) scheme document is out with the court meeting scheduled for 23 June. The IFA considers the HK$1.20 per share offer to be fair and reasonable.
- Key conditions include approval by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The shareholder with a blocking stake should be supportive.
- This is a done deal. At the last close and for the 13 July payment, the gross and annualised spread is 1.7% and 15.3%, respectively.
End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2023
- We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2023, among which 6 are in KOSPI and 39 are in KOSDAQ.
- These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
- Among these 45 stocks, the top five market cap stocks include Won Tech, Voronoi, Zinus, Bionote, and NanoTIM.
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