In today’s briefing:
- Sanrio (8136 JP): Global Index Inclusion in May
- CNI Semiconductor Chips Index Rebalance Preview: One Change in June
- Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion
- CSI All Share Semiconductor Index Rebalance Preview: Multiple Index Flows for Some Stocks
- CSI Medical Service Index Rebalance Preview: Five Potential Changes in June
- IDX30/LQ45/IDX80 Index Rebalance: Few Changes
- Shin-Etsu Chemical (4063) – OK Earnings, OK Forecast, But Ground-Breaking Buyback
- HEW: Put Inside The Trump Collar
- Bright Smart Securities (1428 HK): Ant’s Possible Unconditional MGO at HK$3.28
- Renesas 1Q25: Cheap Stock That’s Bottoming Out
Sanrio (8136 JP): Global Index Inclusion in May
- Sanrio (8136 JP)‘s stock price dropped following the placement announcement in November. Then there was a rally in the stock amid increased volatility.
- The placement resulted in an increase in free float and the move higher in the stock could lead to Sanrio (8136 JP) being added to a global index in May.
- There is positioning in the stock but a lot of that appears to have been taken off in the last month. The stock could move higher depending on global cues.
CNI Semiconductor Chips Index Rebalance Preview: One Change in June
- There could be one change for the CNI Semiconductor Chips Index with Nexchip Semiconductor (688249 CH) replacing Amlogic Shanghai (688099 CH) in June.
- Passive trackers are estimated to buy 1.4x ADV in Nexchip Semiconductor and sell 0.8x ADV in Amlogic Shanghai. There will be buying in Semiconductor Manufacturing International Corporation (SMIC) due to capping.
- The forecast add and delete have performed in line since the start of the year but there has been a move higher in the last few weeks.
Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion
- Swiggy (SWIGGY IN) listed in November 2024 and around 85% of the shares outstanding (US$7.6bn) will unlock on 13 May.
- Nearly 80% of the shares that unlock are held by pre-IPO PE/VC investors and they are 100% in the money in most cases. Expect the selldown to commence soon.
- Swiggy (SWIGGY IN) should be added to one global index in June, while inclusion in the other global index will require a small price increase or selling from PE/VC investors.
CSI All Share Semiconductor Index Rebalance Preview: Multiple Index Flows for Some Stocks
- The review period for the June rebalance of the CSI All Share Semiconductor Index ends 30 April. The changes should be announced on 30 May and implemented on 13 June.
- We forecast 4/5 adds and 8 deletes for the index with a one-way turnover of 2.4% and a round-trip trade of CNY 990m (US$136m).
- There are many forecast adds and deletes that will have same side flows from trackers of the CES China Semiconductor Chips Index and the CNI Semiconductor Chips Index.
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.
IDX30/LQ45/IDX80 Index Rebalance: Few Changes
- There is 1 constituent change for the IDX30 Index and 2 changes for the IDX80 Index to be implemented at the close on 30 April.
- The largest passive flows are expected in Bank Rakyat Indonesia, Bank Jago Tbk PT, Bank Mandiri Persero, Bank Tabungan Negara Persero, Adaro Energy and Bukalapak.com PT Tbk.
- There are only 4 days to implementation, so there could be relatively big moves on the changes to the IDX30 Index.
Shin-Etsu Chemical (4063) – OK Earnings, OK Forecast, But Ground-Breaking Buyback
- Shin Etsu Chemical (4063 JP) reported FY earnings to beat January guidance for all four major measures, just slightly. They only guide 1 quarter out, and Q1 is up year-on-year…
- …in revenues, but down in OP and NP. Note: OP and NP guidance is nearly identical to what they guided for Q1 last year on ¥585bn revenues (vs ¥610bn now)
- The BIG news here is a Very Large Buyback. The company has long has huge piles of cash. This buyback (~90% of annual profit) starts to make use of it.
HEW: Put Inside The Trump Collar
- The US policy caused market volatility over Easter, creating a ‘Trump Collar’ to pricing, but the global economy remains unaffected by the attacks and uncertainty.
- The upcoming week will see a heavy release of data, providing insights into current conditions.
- Key data highlights include US payrolls, the ISMs, and Euro inflation for April, while Q1 EA and US GDP are likely to be discounted by the market as outdated information.
Bright Smart Securities (1428 HK): Ant’s Possible Unconditional MGO at HK$3.28
- Bright Smart Securities And (1428 HK)‘s Chairman entered a SPA with Ant Holdco to sell his 50.55% stake at HK$3.28, a 7.5% premium to the last close.
- The SPA completion requires approval from both the NDRC and SFC. Unusually, Ant has the option of extending the long-stop date, reflecting a possibility of extra scrutiny by the regulators.
- Under Rule 26.1 of the Code, upon completion, Ant will be required to make an unconditional mandatory cash offer at HK$3.28. The MGO price is final and a knockout offer.
Renesas 1Q25: Cheap Stock That’s Bottoming Out
- Revenues are still declining by ~teens% YoY but margins shows signs of improvements as end-demand improves and utilization is low.
- Renesas doesn’t have an inventory problem and increasing revenues will lead to higher utilization and higher margins.
- As Renesas is showing signs of a bottom, the stock is very cheap, trading at -2 standard deviations or 11x 2025 EPS, 9x 2026 EPS.
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