In today’s briefing:
- CATL (300750 CH): Index Inclusion Post H-Share Listing
- HKBN (1310 HK): Just How Likely Is An I Squared Offer?
- Japan: Last Look at Potential Passive Selling in February
- NIFTY NEXT50 Index Rebalance Preview: Final List of Potential Changes in March
- S&P/NZX Index Rebalance Preview: Couple of Changes in March
- Nifty IT Index Rebalance Preview: Oracle Financial Services Could Replace L&T Tech
- Block Deal Sale of About 278 Billion Won of Samsung Electronics by Samsung Life and Samsung F&M
- Paragon REIT (PGNREIT SP)’s Privatisation Offer
- Furukawa (5715 JP) – Third Capital Policy Change in a Year Means Big Buyback
- HKBN (1310 HK): A Press Report Causes Trepidation
CATL (300750 CH): Index Inclusion Post H-Share Listing
- Contemporary Amperex Technology (CATL) (300750 CH) has announced plans for an H-share listing with media reports indicating a raise of at least US$5bn. Shareholders have approved the issuance.
- CATL (300750 CH) was designated as a Chinese Military Company earlier this year by the U.S. Department of Defense but is still not on the NS-CMIC list.
- The CATL (300750 CH) H-shares should get Fast Entry to the global indices and iShares China Large-Cap (FXI US) ETF. Inclusion in the HSCEI and HSI will take longer.
HKBN (1310 HK): Just How Likely Is An I Squared Offer?
- Two hours before China Mobile’s pre-conditional voluntary Offer announcement on the 2 December, HKBN Ltd (1310 HK) flagged a possible separate Offer from I Squared Asia-backed HGC Global Communication (HGC).
- No price was mentioned, although HKBN and I Squared “are in discussions on the terms of the proposal (including the price).” The media is reporting a HK$5-HK$6/share price range.
- Apart from anti-competition concerns via a HKBN/HGC tie-in; would HGC even get approval from the powers that be to proceed with a merger?
Japan: Last Look at Potential Passive Selling in February
- There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
- Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
- The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.
NIFTY NEXT50 Index Rebalance Preview: Final List of Potential Changes in March
- With the review period now complete, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
- Bajaj Housing Finance (BHF IN) and Swiggy (SWIGGY IN) are a hair’s breadth apart on market cap and only one of them could be added to the index.
- With quantitative criteria now being used to add stocks to the F&O segment, it is possible there is no change to the index methodology to limit inclusion to F&O members.
S&P/NZX Index Rebalance Preview: Couple of Changes in March
- There could be one constituent change each for the NZX10 Index and the NZX50 Index/ NZX50 Portfolio Index in March.
- The flows are limited but the impacts are huge, and the stocks could move ahead of the announcement of the changes.
- A2 Milk Co Ltd (ATM NZ) is a potential inclusion to the NZX10 Index, but the inflows will be completely overshadowed by the potential deletion from a global index.
Nifty IT Index Rebalance Preview: Oracle Financial Services Could Replace L&T Tech
- Oracle Financial Services (OFSS IN) could replace L&T Technology Services Limited (LTTS IN) in the Nifty IT Index (NSEIT INDEX) at the March rebalance.
- L&T Technology Services Limited (LTTS IN) will also be excluded from the F&O segment at the close on 27 March, so there could be some interesting dynamics at play.
- Passive trackers will need to trade between 0.5-0.6x ADV in the stock. The impact in terms of delivery volume increases to 1.6-2.2x.
Block Deal Sale of About 278 Billion Won of Samsung Electronics by Samsung Life and Samsung F&M
- Samsung Life Insurance (032830 KS) and Samsung Fire & Marine Insurance (000810 KS) plan to sell about 278 billion won of Samsung Electronics (005930 KS) in block deal sales.
- A total of 5 million shares of Samsung Electronics shares that are expected to be sold in this block deal sale represents 0.1% of Samsung Electronics’ outstanding shares.
- If Samsung Life Insurance is able to sell 4.256 million shares of Samsung Electronics for 236.4 billion won, this would represent 1.3% of Samsung Life Insurance’s market cap.
Paragon REIT (PGNREIT SP)’s Privatisation Offer
- Cuscaden Peak, the sponsor of Paragon REIT (PGNREIT SP) and 61.5% shareholder, has offered S$0.98/unit, in cash; or S$1.003/unit, a 7% premium to NAV, when including FY24’s S$0.0233/unit cash distribution.
- The Offer is by way of a Scheme. The Offer price has NOT been declared final. A switch option into a voluntary Offer is afforded should a competing Offer emerge.
- Looks pretty clean. Assuming mid-late May payment, pay up to S$0.97/share for a 4%/15% gross/annualised spread. It may trade tighter given the early distribution payment.
Furukawa (5715 JP) – Third Capital Policy Change in a Year Means Big Buyback
- In May 2023, Furukawa Co Ltd (5715 JP) decided it would review cross-holdings as part of its Actions to Implement Management Awareness of Capital Cost and Share Price.
- In February 2024, it announced a cross-holding reduction policy, and then accelerated it in May 2024. They’ve been selling. They did a small buyback too.
- Monday they announced a LARGE buyback (looks larger than it is) leaving future capital allocation policy better, but still wanting. The question is now the forward-forward bet.
HKBN (1310 HK): A Press Report Causes Trepidation
- HKBN Ltd (1310 HK) shares declined 4.4% after a Sing Tao Daily article claimed that the precondition satisfaction of China Mobile (941 HK)’s offer is at a stalemate.
- The mainland regulatory authorities have not provided any feedback on the approval process. The China Traditional Chinese Medicine (570 HK) deal break is cited as a cautionary tale.
- While the China TCM deal break taught us that no deal is safe, even an SOE-sponsored deal, the article’s concerns have little merit. This is a buy.
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