In today’s briefing:
- KOSPI200 June Index Rebalance Preview: High Probability Adds/Deletes
- JD Health (6618 HK): Potential MSCI Upweight in February
- LG Energy IPO – Valuation
- China Mobile (941 HK) – Massive Buyback Announced on Eve of A-Share IPO
- STAR50 Index Rebalance Preview (March 2022): What Will The Index Committee Do?
KOSPI200 June Index Rebalance Preview: High Probability Adds/Deletes
- The review period for the June rebalance of the KOSPI2 INDEX ends 30 April. The KRX will announce the changes in May with implementation at the close on 9 June.
- LG Energy Solution (LGENERGY KS) could get Fast Entry to the KOSPI200 Index in March. Hyundai Engineering Co Ltd (HEC KS) needs a price jump to get Fast Entry.
- We see 6 potential changes to the KOSPI200 in June; most of these are high probability. The potential adds are already outperforming the potential deletes – there should be more.
JD Health (6618 HK): Potential MSCI Upweight in February
- JD Health (6618 HK) is currently included in the MSCI China Index at a FIF of 11%. That could increase to 35% at the February QIR.
- The increase in FIF to 35% will require passive MSCI trackers to buy around 6.4% of the real float of the stock at the close of trading on 28 February.
- The stock has dropped a lot and underperformed most of its peers. The index upweight could lead to outperformance in the short term and is worth a buy on dips.
LG Energy IPO – Valuation
- LG Energy is being benchmarked against CATL for its IPO valuation and we believe this is incorrect.
- CATL’s position within China’s supply chain and LFP technology should drive a significant premium against other North Asian peers in our view.
- If LG Energy were to simply be benchmarked against Samsung SDI it starts to look expensive and while a premium may be reasonable we do not consider it a given.
China Mobile (941 HK) – Massive Buyback Announced on Eve of A-Share IPO
- The China Mobile (600941 CH) A-Share IPO at RMB 57.58/share starts trading tomorrow on 5 January. I thought this premium disappointing, and the dividend overly attractive.
- At 800x over-subscribed, with substantial clawback, IPO allocations to mainland investors were limited. Cash should be back in investors’ hands and the yield is very attractive on A-shares and H-shares.
- Today, China Mobile (941 HK) announced it would start executing on its buyback mandate (10% of H-shares out (2.047bn shares). This is potentially enormous. And absolutely praise-worthy.
STAR50 Index Rebalance Preview (March 2022): What Will The Index Committee Do?
- The main question, for yet another rebalance, is whether the index committee chooses a 6 month minimum listing history or increases it to 12 months in line with the methodology.
- That decision will result in either 4 or 5 changes at the rebalance. The deletions remain the same, while there is only 1 inclusion common across both lists.
- There is a fair bit to trade on the potential inclusions and exclusions and we expect the inclusions to outperform the deletions over the next couple of months.
Before it’s here, it’s on Smartkarma
