In today’s briefing:
- Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
- Partial Tender for Sabana Industrial REIT – Large Additional Player to the Activist Mix
- NIFTY50 Index Rebalance Preview: No Changes Likely in March
- KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?
- Five Most Aggressive Corporate Activists Moving the Korean Market: Align, KCGI, FCP, Truston, & LIFE
- YFO To Take the Fight To Toyo Construction’s Board
- KRX New Deal Index Rebalance Preview: Some Big Impact Names
- Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power
- Norwest Energy (NWE AU): The Board Perplexing Succumbs to MinRes’ Revised Offer
- China Internet Investment (810 HK): 98% Downside
Nikkei 225 Index Rebalance Preview (March): Potential Changes as Review Period Nears End
- The review period for the Nikkei 225 (NKY INDEX) March rebalance ends next week. We highlight the 3 potential inclusions and exclusions for the index.
- Lasertec Corp (6920), Oriental Land (4661) and Renesas Electronics (6723) remain our top inclusions, while Toyobo Co Ltd (3101), Nippon Light Metal (5703) and Toho Zinc (5707) could be deleted.
- Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 1x ADV on many index constituents.
Partial Tender for Sabana Industrial REIT – Large Additional Player to the Activist Mix
- On Friday, after the close, 5.4% owner of Sabana Industrial REIT (SSREIT SP) announced it had offered to buy another 10.0% in a Partial Offer at a recent high price.
- The Price of the Tender Offer at S$0.465/share matches a recent (and 7-year) high and a 0.88x multiple against June 2022 NAV of S$0.53/share.
- It’s a small deal (US$35mm) for a small REIT (US$350mm) but there’s an activist and an engaged not-quite sponsor, and this would make a third large unitholder in the mix.
NIFTY50 Index Rebalance Preview: No Changes Likely in March
- With only 5 trading days to go in the review period, we see no constituent changes to the NIFTY Index (NIFTY INDEX) at the March rebalance.
- Pidilite Industries (PIDI IN) is the highest ranked non-index constituent, but its free float market cap does not exceed 1.5x the free-float market cap of Bharat Petroleum Corp (BPCL IN).
- We do not expect LTIMindtree (LTIM IN) to be added to the index in March post the merger between Larsen & Toubro (LT IN) and Mindtree Ltd (MTCL IN).
KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?
- KLine is the cheapest of the three Japan majors in terms of forward consensus PER. And forward EPS ratios are improving as the company buys back shares.
- The CEO mentioned in December the possibility of additional shareholder return this fiscal year based on cashflow.
- In this insight, we look at what he knew then, and what he might know now, and the chances for an additional buyback (and how it might work).
Five Most Aggressive Corporate Activists Moving the Korean Market: Align, KCGI, FCP, Truston, & LIFE
- In this insight, we discuss the five most aggressive corporate activist firms that have been moving the Korean equity market in the past year.
- They include Align Partners Capital Management, KCGI, Flashlight Capital Partners, Truston, and LIFE Asset Management.
- Share prices of 15 companies that the corporate activist firms have invested in Korea are up on average 9.7% YTD, outperforming KOSPI which is up 7.1% in the same period.
YFO To Take the Fight To Toyo Construction’s Board
- YFO offered another Press Release yesterday. This one outlines what they see as Corporate Governance failures and offers a NEW POLICY.
- The Corporate Governance failures are indeed, failures. Toyo’s Board has failed to be transparent with shareholders, and in not at least addressing the takeover proposal, has failed its duties.
- NEW POLICY? Elect new independent directors “capable of improving the long-term corporate value and maximizing the interests of the general shareholders.” Soft war starts now.
KRX New Deal Index Rebalance Preview: Some Big Impact Names
- The review period for the March rebalance ends on 31 January, the changes will be announced towards end February and implemented at the close of trading on 9 March.
- We forecast one add/delete for the Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
- The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).
Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power
- OVERSEAS. Stocks Mixed as SPX -0.1% as NYSE Glitches on Open; MSFT Beats but Chip Giant Texas Instruments weak; DoJ calls for Google Ad Break up
- JAPAN. NKY Futs -0.4% vs Cash; USDJPY steady at 130.19; Japan Freezes – No Joke; Nikkei Survey shows public sentiment toward Nuclear Power improving; Nidec misses; Elliot tgts DNP
- DAILY NUGGET. Is Japan Stuck ? This is the view of outgoing BBC reporter. We disagree – changes are happening.
Norwest Energy (NWE AU): The Board Perplexing Succumbs to MinRes’ Revised Offer
- Mineral Resources (MIN AU) has revised its offer from 1 MinRes share for every 1,367 NWE shares to 1 MinRes share for every 1,300 NWE shares. The offer is unconditional.
- The Norwest Energy NL (NWE AU) Board now recommends the offer. Most of the value uplift is due to the 17.4% increase in MinRes’ share price since 15 December.
- MinRes’ revised off-market takeover offer is fair in comparison to Warrego Energy (WGO AU)’s bids and historical ranges. However, this is predicated on the MinRes maintaining its share price run.
China Internet Investment (810 HK): 98% Downside
- Bubble-Stock China Internet Investment Finance Holdings (810 HK) (CIIFH) was suspended on the 10 January pursuant to the Hong Kong Code on Takeovers and Mergers.
- It has now announced a possible voluntary conditional takeover. No price was mentioned and terms remain indeterminate.
- CIIFH, which invests primarily in listed Hong Kong securities, is trading at an eye-watering 59.5x NAV. 98% downside from here is conceivable.
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