In today’s briefing:
- HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2025
- Kaonavi (4435 JP) – Small HR Software Co Gets 121% Premium LBO from Carlyle
- NIFTY MIDCAP150 Index Rebalance Preview: 15 Potential Changes in March
- CATL IPO Listing in Hong Kong Preview
- 3D Launches Partial Tender Offer on Hankyu Hanshin REIT (8977)
- JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep
- Samsung Life’s Official Move to Make Fire a Subsidiary: A Value-Up Play for Samsung’s Big Three
- Macquarie/Renewi: Agreed Offer
- Quiddity Leaderboard F100/F250 Mar25: High-Impact Intra-Review Additions Possible
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
- There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
- Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.
TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2025
- The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
- For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
- Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2025.
Kaonavi (4435 JP) – Small HR Software Co Gets 121% Premium LBO from Carlyle
- Another Japanese smallcap takeover at a huge premium. Must be a day ending in “y.” It is a thing recently.
- Interestingly, this is NOT an MBO. It is an LBO. Carlyle is buying out Kaonavi Inc (4435 JP) at ¥4,380/share which is 19x book and 89x EBIT. Nice price.
- I expect this gets done easily because the co-CEO with 28.7% and Recruit with 20.6% are putting in. There’s another easy 9.7%. One more holder and this is done.
NIFTY MIDCAP150 Index Rebalance Preview: 15 Potential Changes in March
- With the review period now complete, there could be 15 changes for the NIFTY Midcap 150 Index at the March rebalance.
- Estimated one-way turnover is 8.3% resulting in a one-way trade of INR 7.65bn (US$88m). With over US$40bn tracking the index actively, the impact on the stocks will be much larger.
- The outright adds have outperformed the forecast deletes over the last 6 months, but there has been underperformance this calendar year.
CATL IPO Listing in Hong Kong Preview
- Contemporary Amperex Technology (CATL) is getting ready to complete its IPO on the Hong Kong exchange. CATL is expected to raise at least US$5 billion.
- CATL maintained its 36.8% share in the global EV battery market in 2023 and January to November 2024. CATL has excellent fundamentals and improving profit margins.
- Major risk factors include additional tariffs by the US, recent addition to Pentagon’s blacklist, declining sales in 2024, and lower government subsidies for EVs globally.
3D Launches Partial Tender Offer on Hankyu Hanshin REIT (8977)
- For the second time in 3 weeks, 3D Investment Partners has launched, unannounced, a Partial Tender Offer for pure investment purposes, for a 10-15% stake in a REIT.
- Last time it was NTT UD REIT Investment Corporation (8956 JP). This time it is Hankyu Hanshin REIT, Inc. (8977 JP).
- The trade last time was to sell NTT UD on the pop and replace with peers. That has worked. The trade is probably the same here.
JX Advanced Metals (5016 JP) IPO: TPX Add in April; Global Idx: One in August; One in March or Sep
- JX Advanced Metals (5016 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 19 March.
- At the indicative IPO price of JPY 862/share, JX Advanced Metals (5016 JP) will be valued at JPY 800bn (US$5.25bn).
- The stock should be added to the TOPIX INDEX at the close on 28 April while timing of inclusion in global indices will depend on domestic/overseas allocations and price moves.
Samsung Life’s Official Move to Make Fire a Subsidiary: A Value-Up Play for Samsung’s Big Three
- The FSS will review the subsidiary approval, with final approval expected from the FSC by early April. Market signals suggest a near-100% chance of Samsung Life getting the green light.
- Samsung’s moves post-Lee Jae-yong’s Feb 3rd ruling signal a major pivot, setting up aggressive value-up plays across Samsung Life, Samsung Electronics, and Samsung C&T.
- Shoring up Samsung Life’s finances triggers a domino effect, positioning Samsung Electronics and Samsung C&T to follow with their own shareholder-friendly moves.
Macquarie/Renewi: Agreed Offer
- Macquarie’s Bid for Renewi: Macquarie-led consortium offers 870p per share, valuing Renewi at £707 million, a 57% premium to the pre-offer price, with the deal structured as a scheme of arrangement.
- Regulatory and Shareholder Support: 21.1% of Renewi shareholders, including major investors and directors, have given irrevocable undertakings to support the deal, pending approvals from EU, Belgian, and Chinese regulators.
- Investment Outlook: At 853p, the gross spread is 2.0%, with an annualized return of ~5.5% if completed by Q2 2025. Market implies a 94.3% probability of success (break price 554p).
Quiddity Leaderboard F100/F250 Mar25: High-Impact Intra-Review Additions Possible
- In this insight, we take a look at the potential index changes for the F100 and F250 indices in the run-up to the March 2025 index rebal event.
- We see up to three M&A-related intra-review changes in the next few months.
- Our latest estimates suggest there could be one regular change for the F100 index and at least two changes for the F250 index during the March 2025 rebalance.
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