In today’s briefing:
- About A Gajillion Yen of Index Flows At the Close
- Swire B Vs A – Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile
- Leapmotor IPO – Weak Demand but Concentrated Allocation
- SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits
- Bilibili (9626 HK): Implications of Dual Primary Listing
- Taiwan Cement Placement- Suffers from Weak Momentum but Deal Is Well Flagged and SI Has Been Growing
- Onewo Space-Tech IPO Trading – Weak but Relatively Better Demand
- FTSE China A50 Index Rebalance Preview: Tight Margins
- Leapmotor IPO: Trading Debut
- Onewo IPO: Trading Debut
About A Gajillion Yen of Index Flows At the Close
- Today is a day which happens twice a year in Japan.
- It is Day Before Divs Go Ex- Day. Which theoretically means a fair bit of buying.
- Nikkei 225 is pretty neutral. But there is a Nikkei 225 buy of Nidec Corp (6594 JP). TOPIX and other float market cap indices are a buy on the close.
Swire B Vs A – Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile
- The Swire buyback has been impressive. In 27 trading days they have bought back 26.8% of teh HK$4bn promised. In that period, participation has been aggressive.
- Swire has bought back As at a pace of 52% of pre-buyback one-year ADV. For Bs, it has been 105%. But Bs have dramatically underperformed As on “HK Re-opening” trades.
- Historically, when B/A gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%. I’d buy B vs A.
Leapmotor IPO – Weak Demand but Concentrated Allocation
- Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
- As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
- In this note, we will talk about the demand for the deal and other trading dynamics.
SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits
- SATS (SATS SP) has announced that it is buying Worldwide Flight Services (WFS) from an affiliate of Cerberus Capital Management at an Enterprise Value of €2.25bn (S$3.107bn).
- The cash consideration is €1.187bn (S$1.639bn) and will likely be financed by an equity fund raising. This could be a rights issue and could be combined with a private placement.
- Expect the stock to drop once it resumes trading. A significant drop from current levels could provide a buying opportunity as the rights issue could be backstopped.
Bilibili (9626 HK): Implications of Dual Primary Listing
- Earlier today, Bilibili (9626 HK) announced the voluntary conversion of its Secondary Listing on the HKEX (388 HK) to a Dual Primary Listing effective 3 October.
- Though the timing is tricky, this could result in the stock not being deleted from the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance.
- This could also lead to inflows at the December rebalance from Hang Seng China Enterprises Index (HSCEI INDEX) and Hang Seng Tech Index (HSTECH INDEX) trackers.
Taiwan Cement Placement- Suffers from Weak Momentum but Deal Is Well Flagged and SI Has Been Growing
- Taiwan Cement (1101 TT) is looking to raise US$437m from its GDS offering.
- The firm is offering 84m GDSs, or 420m common shares (1:5 conversion), at a 5.1-7.8% discount to its last close.
- While momentum hasn’t been the greatest, the deal is well flagged and short covering could support share price in the near term.
Onewo Space-Tech IPO Trading – Weak but Relatively Better Demand
- Onewo (2602 HK) (OST) raised around US$733m in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke Co Ltd (H) (2202 HK) .
- As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
- In this note, we will talk about the demand for the deal and other trading dynamics.
FTSE China A50 Index Rebalance Preview: Tight Margins
- Poly Real Estate Group Co., Ltd (600048 CH) sits at the edge of the inclusion zone for the FTSE China A50 Index (XIN9I INDEX) December rebalance.
- That inclusion could result in the deletion of any one of four stocks since they are all clustered within 0.7% of each other on full market cap.
- There are a few other stocks that are close to inclusion zone and a 5-10% rally in these stocks could result in more changes to the index in December.
Leapmotor IPO: Trading Debut
- Leapmotor (9863 HK) priced its H Share at HK$48.00 per share to raise net proceeds of HK$6,057.4 million (US$772 million). The H Share will start trading tomorrow.
- The H Shares of peers posted no first-day gains and are currently below the listing prices. Market sentiment on peers has remained weak since the release of the prospectus.
- Leapmotor, at best, should trade in line with median peer multiples. Leapmotor is fairly valued at the IPO price. We continue to remain on the sidelines.
Onewo IPO: Trading Debut
- Onewo (2602 HK) priced its H Share at HK$49.35 per share to raise net proceeds of HK$5.6 billion (US$713 million). The H Share will start trading tomorrow.
- Notwithstanding the industry headwinds, the H Shares of peers with financially sound parentco backgrounds are trading above the listing prices.
- Despite peer multiple derating, the IPO price remains attractive compared to peers with financially sound parentco backgrounds.
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