Daily BriefsMost Read

Most Read: MMC Corp Bhd, Bukalapak, Mitsui Osk Lines, HMM Co., Ltd., Centuria Industrial REIT and more

In today’s briefing:

  • MMC Corp (MMC MK): This Is A Buy
  • Bukalapak (BUKA IJ): Fast Entry to IDX30, LQ45, IDX80; MSCI on Track for November
  • MSCI Japan Nov SAIR Preview: Pre-Positioning Begins as Potential Adds Rally & Deletes Drop
  • HMM, Another Massive CB Conversion (Share Dilution) Risk & Short Trading Opportunity
  • Centuria Industrial REIT – Past Deals Have Done Well, but This Deal Is Much Bigger

MMC Corp (MMC MK): This Is A Buy

By David Blennerhassett

On the 3 June, Seaport Terminal (Johore) Sdn Bhd, a wholly-owned entity of Tan Sri Syed Mokhtar Albukhary, announced an Offer for port operator and utility play MMC Corp Bhd (MMC MK) at RM2.00/share, a 70.94% premium to last close. Seaport Terminal owns 51.76% of MMC.  The Offer is being done via a selective capital reduction and repayment (SCR) exercise. 

On the 4 August RHB announced, on behalf MMC’s board, the SCR will be tabled to shareholders at a forthcoming EGM.

The circular was dispatched on the 8 September with the EGM scheduled for the 30 September. Payment under the offer is expected towards the end of December.

The independent adviser, Alliance Investment Bank, deemed the Offer not fair, but reasonable.

This still looks done. But this is trading wide, with a largish downward move on decent volume earlier this week. The key risk is how PNB will vote.

More below the fold.


Bukalapak (BUKA IJ): Fast Entry to IDX30, LQ45, IDX80; MSCI on Track for November

By Brian Freitas

Post market close on 22 September, the IDX announced that Bukalapak (BUKA IJ) would get Fast Entry to the IDX30, LQ45, IDX80, JII and JII70 Indexes. This follows a recently proposed change to the indices to allow for Fast Entry inclusions.

Pabrik Kertas Tjiwi Kimia (TKIM IJ) will be deleted from the IDX30, Summarecon Agung (SMRA IJ) will be deleted from the LQ45, Link Net (LINK IJ) will be deleted from the IDX80, AKR Corporindo (AKRA IJ) will be deleted from the JII and Ultrajaya Milk Industry & Trading (ULTJ IJ) will be deleted from the JII70 Index.

The changes will be effective from the open on 29 September.

We estimate that passive LQ45 trackers will need to buy 400.93m shares of Bukalapak (BUKA IJ) and sell 76m shares of Summarecon Agung (SMRA IJ). We estimate Bukalapak (BUKA IJ) will have a weight of 2.5% in the index and active funds will be buying the stock too so as not to stray too far from their benchmark.

The impact from the changes to the other indices should be much smaller since the assets tracking those indices are not material.

Bukalapak (BUKA IJ) is also a high probability inclusion to the MSCI Indonesia Index at the November SAIR and passive trackers are estimated to buy 1.93bn shares at the close on 30 November.


MSCI Japan Nov SAIR Preview: Pre-Positioning Begins as Potential Adds Rally & Deletes Drop

By Brian Freitas

MSCI is scheduled to announce the results of the November 2021 Semi Annual Index Review (SAIR) on 12 November (Asia time) with the changes implemented after the close of trading on 30 November.

The review period for price cut-off will run from 18-29 October.

Based on the closing prices from 22 September, we see 6 potential inclusions and 8 exclusions for the MSCI Japan Index. Potential inclusions are Mitsui Osk Lines (9104 JP), Taiyo Yuden (6976 JP), Baycurrent Consulting (6532 JP), Benefit One Inc (2412 JP), Rakus Co Ltd (3923 JP) and Open House (3288 JP), while the potential deletions are Yamada Denki (9831 JP), Thk Co Ltd (6481 JP), Hisamitsu Pharmaceutical Co (4530 JP), Pigeon Corp (7956 JP), Tohoku Electric Power Co (9506 JP), NSK Ltd (6471 JP), Nh Foods Ltd (2282 JP) and Acom Co Ltd (8572 JP).

The largest impact of the MSCI buying will be on Taiyo Yuden (6976 JP) with passive funds needing to buy over 9% of the real float of the stock.

Among the potential inclusions, only Taiyo Yuden (6976 JP) has more than 4 days of ADV to cover, while Pigeon Corp (7956 JP) and Yamada Denki (9831 JP) have over 6 days of shorts to cover among the potential deletions.

The short interest data also shows a large fund putting on shorts on the potential deletions over the last couple of weeks of trading.


HMM, Another Massive CB Conversion (Share Dilution) Risk & Short Trading Opportunity

By Sanghyun Park

Currently, the largest shareholder of HMM is Korea Development Bank (KDB). And KDB and KOBC (Korea Ocean Business Corporation) jointly exercise the management rights of HMM.

ShareholdersShareholdingLast filedShares
Korea Development Bank (KDB)24.96%2021-07-16101,199,297
Korea Ocean Business Corporation (KOBC)3.44%2018-07-0513,943,850
Bae Jae-hoon & 21 others0.04%2021-07-30155,469
ESOP0.26%2018-06-291,038,396
Korea Credit Guarantee Fund (KoDIT)6.05%2019-07-2424,527,807
NPS5.25%2021-06-2221,299,846
Source: DART

However, KDB Chairman (Lee Dong-geul) recently said at a press conference on the 4th anniversary of his inauguration that KOBC alone will run HMM from next year. Chairman Lee declined to comment on the specific method of realizing this, but did say that it would be desirable for KDB to sell the remaining stake in HMM in stages.

In fact, KDB’s complete exit is not surprising. This is because the role of the KDB itself is a state-run creditor bank, and it cannot be in charge of the management of private companies forever. On the other hand, KOBC’s primary purpose is to manage a nationalized company rather than a creditor. Therefore, it is inevitable for KOBC to become the largest shareholder of HMM in the near future.

But the question is how.

In this connection, the KDB chairman had a nuance that KOBC would become the largest shareholder first and KDB would then sell the remaining stake.


Centuria Industrial REIT – Past Deals Have Done Well, but This Deal Is Much Bigger

By Zhen Zhou, Toh

Centuria Industrial REIT (CIP AU) is looking to raise AUD300m to partially fund its acquisition of industrial assets.

In this note, we will take a brief look at the assets to be acquired, the impact of it, and share our thoughts on deal dynamics.

We have previously covered its December 2019 placement in:


Before it’s here, it’s on Smartkarma