Daily BriefsMost Read

Most Read: China Merchants Energy A, Piotech, Golden Eagle Retail, Rakuten, Canon Inc, Taiwan Semiconductor (TSMC) – ADR, Anhui Conch Cement, Relia Inc, Cambricon Technologies Corp and more

In today’s briefing:

  • CSI300 Index Rebalance: 9 Changes as Discretion Used
  • CSI500 Index Rebalance: Adds Starting to Outperform
  • CES China Semiconductor Chips Index Rebalance: Six Changes in June
  • Golden Eagle (3308 HK): Wang Family Delisting Offer
  • Rakuten (4755) – TSE Neglects Its Ad Hoc Powers – Less Bigly Index But Biglier Non-Index
  • Assessing the Canon Buyback and Follow-On Performance
  • Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’
  • StubWorld: China Conch Trades Cheap. As Does Anhui
  • Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons
  • CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions

CSI300 Index Rebalance: 9 Changes as Discretion Used

By Brian Freitas

  • There are 9 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 June.
  • While nearly all the changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used discretion.
  • The Energy sector is the biggest gainer in terms of index spots, while the Consumer Discretionary and Health Care sectors lose two index spots each.

CSI500 Index Rebalance: Adds Starting to Outperform

By Brian Freitas

  • There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 9 June.
  • One way turnover at the rebalance is estimated at 9.45% leading to a one-way trade of CNY 5.93bn. The IT and Industrials sectors gain the most index spots.
  • 8 adds to the CSI 500 Index are deletes from the CSI 300 Index while 3 deletes from the CSI 500 Index are adds to the CSI 300 Index.

CES China Semiconductor Chips Index Rebalance: Six Changes in June

By Brian Freitas

  • There are 6 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 9 June.
  • All the inclusions are also additions to the CSI 500 Index and the passive flows will come from multiple trackers.
  • The adds have outperformed the deletes over the last couple of weeks and there could be further outperformance over the next two weeks.

Golden Eagle (3308 HK): Wang Family Delisting Offer

By David Blennerhassett

  • PRC department store play Golden Eagle (3308 HK) has announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close. The price is final.
  • The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable. 
  • Apart from shareholder approval, there are no key regulatory approvals to be obtained. 

Rakuten (4755) – TSE Neglects Its Ad Hoc Powers – Less Bigly Index But Biglier Non-Index

By Travis Lundy

  • The index announcements regarding the the changes to indices following the Rakuten (4755 JP) offering have been a bit weird. 
  • Some of that may have to do with timing. Some is just weird
  • The result is that there is less to buy this week than I previously expected, and the buying gets dragged out longer.

Assessing the Canon Buyback and Follow-On Performance

By Travis Lundy

  • 10 days ago Canon Inc (7751 JP) announced its 18th ¥50bn buyback in 15yrs. They have a pattern, both in execution and outperformance. 
  • Historically, they are reasonably aggressive. It may pay to observe market data to see when they are done. It may also pay to look at peer outperformance cycles. 
  • Here I look at both – buyback cycle performance and cycle outperformance. Good so far, and now I see a tactical trade but it’s not overwhelming.

Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’

By Vincent Fernando, CFA

  • The semiconductor stock rally in the U.S. caused by Nvidia’s monster results and guidance last week has caused multiple ADR premiums to surge to near all-time highs.
  • TSMC and UMC’s ADR premiums don’t appear sustainable given their trading history.
  • Telecom CHT wasn’t affected by the Nvidia rally and now has one of the lowest ADR discounts in its history.

StubWorld: China Conch Trades Cheap. As Does Anhui

By David Blennerhassett

  • The China Conch Venture Holdings (586 HK) / Anhui Conch Cement (600585 CH) ratio is at an all-time low. The implied stub is re-testing its all-time low.
  • Preceding my comments on China Conch/Anhui are the current setup/unwind tables for Asia-Pacific Holdcos. 
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Relia (4708 JP) Tender Offer Launches – STILL at the Wrong Price for the Wrong Reasons

By Travis Lundy

  • 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. 

CNI Semiconductor Chips Index Rebalance: Multiple Inflows for the Inclusions

By Brian Freitas

  • 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.

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