In today’s briefing:
- De Grey Mining/Northern Star Resources: The Passive Flows
- IHI Corp (7013 JP): Global Index Inclusion in May
- Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares
- CSI Medical Service Index Rebalance Preview: Five Potential Changes in June
- StubWorld: GMO Internet (4784) Will Be Squeezy. Until It’s Not.
- A Tender Offer of 6.2% Stake in KC Tech by KC Co
- JAFCO (8595) Good Results, Higher Div, Buyback, More Plans; Not Quite There, But Maybe Will Be Later
- Evolution Mining (EVN AU): Global Index Inclusion in May as Gold Rallies
- Solactive Global Lithium Index Rebalance: Passive Flows Next Week
- Quiddity Leaderboard BSE/SENSEX Jun25: Pair Trade Delivers Strong Alpha; More Pair Trade Ideas
De Grey Mining/Northern Star Resources: The Passive Flows
- With De Grey Mining (DEG AU) shareholders approving the acquisition by Northern Star Resources (NST AU), we move to the phase of passive index flows.
- As expected, Generation Development Group (GDG AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 23 April to replace De Grey Mining (DEG AU).
- There will be passive inflows for Northern Star Resources (NST AU) from some local and global index trackers due to the increase in the number of shares outstanding.
IHI Corp (7013 JP): Global Index Inclusion in May
- IHI Corp (7013 JP) has had a monster rally over the last year with the stock price tripling over the period. That could now result in a global index inclusion.
- IHI Corp (7013 JP) has outperformed its peers over the last year but still trades cheaper than the average and median of its peers on quite a few valuation metrics.
- The appears to be a lot of positioning in the stock, but we see a similar pattern in its peers too. There could be some upside over the near term.
Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares
- With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.
- Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.
- Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.
CSI Medical Service Index Rebalance Preview: Five Potential Changes in June
- The review period ends on 30 April, the changes should be announced on 30 May and will be effective after the close of trading on 13 June.
- We forecast 5 potential changes for the index in June where there could be buying of 0.5-2x ADV in the adds and selling of between 0.7-3.8x ADV in the deletes.
- The forecast adds and deletes have performed in line over the last few months and there could be outperformance as we near the end of the review period and announcement.
StubWorld: GMO Internet (4784) Will Be Squeezy. Until It’s Not.
- Negligible float, 150x+ forward earnings – yes, investors can afford NOT to have GMO Internet (4784 JP) in their portfolio.
- Preceding my comments on the GMO group 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%.
A Tender Offer of 6.2% Stake in KC Tech by KC Co
- After the market close today, it was reported that KC Co (029460 KS) plans to conduct a tender offer 35 billion won worth of KC Tech (281820 KS) shares.
- KC Co plans to conduct a tender offer of 1.283 million shares (6.2% stake) of KC Tech shares for 20 days from 23 April to 12 May.
- The tender offer price for KC Tech is 27,100 won, which is 13.4% higher than the closing price on 22 April.
JAFCO (8595) Good Results, Higher Div, Buyback, More Plans; Not Quite There, But Maybe Will Be Later
- At noon today, Jafco Co Ltd (8595 JP) announced full year (to March 2025) results. Revenues were up 21.4% this year, OP +49.7%, and Net Income +27.8%.
- The company announced a ¥5bn buyback, and also announced a new dividend policy of 6% DOE or 50% payout ratio. As it is a markets business, there is no guidance.
- The stock popped significantly in the PM session, but the market zeitgeist is a tailwind. And there is supportive new news.
Evolution Mining (EVN AU): Global Index Inclusion in May as Gold Rallies
- Evolution Mining‘s stock price has moved higher over the last year as Gold has gone on a big run. The increased market cap should result in a global index inclusion.
- Evolution Mining (EVN AU) has performed in line with its peers over the last year and trades in line with the group on most valuation parameters.
- Positioning has jumped in Evolution Mining (EVN AU) and its peers over the last couple of months. The index inclusion could result in outperformance over the next few weeks.
Solactive Global Lithium Index Rebalance: Passive Flows Next Week
- Solactive has announced the review results for the Global Lithium Index. There are no constituent changes for the index but there will be capping changes for a few stocks.
- Estimated one-way turnover is 10.8% and will result in a round-trip trade of US$208m. There are some stocks with over 0.5x ADV to trade.
- The index has been in a secular downtrend over the last few years and there have been big redemptions from ETFs tracking the index.
Quiddity Leaderboard BSE/SENSEX Jun25: Pair Trade Delivers Strong Alpha; More Pair Trade Ideas
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, BSE 100, and BSE 200 indices in the June 2025 index rebal event.
- As things stand, there could be two index changes for the SENSEX index.
- There could be three ADDs/DELs for the BSE 100 index and eight ADDs/DELs for the BSE 200 index.
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