In today’s briefing:
- SHIFT (3697) The Next – Potential Big Index Add
- ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion
- GAPack (468 HK): IFA Says “Reject”. But Mengniu Selling Down
- J&T Global Express (1519 HK): Global Index Inclusion Coming Up
- GA Pack (468 HK): Shandong Xinjufeng’s Offer on the Cusp of Being Declared Unconditional
- NIFTY NEXT50 Index Rebalance Preview: 7 Potential Changes in March
- Millennium & Copthorne Hotels (MCK NZ): City Dev’s Privatisation Offer
- SK Stocks’ Main Narrative: SK Telecom Exit & SK Inc Eyeing SK Square
- CATL (300750 CH): Index Inclusion Post H-Share Listing
- Timee US$280m Lockup Expiry – Scattered List of Financial Investors Coming Unlocked
SHIFT (3697) The Next – Potential Big Index Add
- Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them.
- Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
- There is an event coming up shortly which could trigger an imminent index inclusion. It’s worth a look.
ZTO Express (2057 HK): On Track for Double (Maybe Triple) Index Inclusion
- With improved liquidity, ZTO Express Cayman (2057 HK) could be added to the HSCEI INDEX early March and then to a global index a couple of weeks later.
- ZTO Express Cayman (2057 HK) is a lower probability inclusion to the Hang Seng Index (HSI INDEX) given the index committee discretion. Inclusion would further increase the impact.
- The stock has had a big drawdown recently and the potential index inclusion and passive demand provide a low-risk entry point into the stock, especially hedged with its peers.
GAPack (468 HK): IFA Says “Reject”. But Mengniu Selling Down
- Quite a lot of new news to digest – GAPack (468 HK)‘s IFA, not altogether surprisingly, concluded that shareholders should not accept the Offer – in bold, red caps.
- But more surprisingly, is the disclosure announcement that China Mengniu Dairy Co (2319 HK) has reduced its stake below 5%.
- Evidently Mengniu is keeping its options open to tender – or not – and not have to make public disclosures. Keep an eye out on CCASS movements.
J&T Global Express (1519 HK): Global Index Inclusion Coming Up
- J&T Global Express (1519 HK) listed in October 2023 and was added to one global index in June 2024 and to the HSCEI INDEX in September 2024.
- J&T Global Express (1519 HK) could be added to a global index in February and there will be a big passive buying impact. The company is also buying back stock.
- J&T Global Express (1519 HK) has underperformed its peers over the past year and the index inclusion could help in closing some of that gap.
GA Pack (468 HK): Shandong Xinjufeng’s Offer on the Cusp of Being Declared Unconditional
- Greatview Aseptic Packaging (468 HK)’s offer from Shandong Xinjufeng Technology Packaging (301296 CH) is HK$2.65 with a 50% minimum acceptance condition. The first closing date is 21 January.
- The Board has recommended that shareholders not accept. However, based on CCASS data, including acceptances, Shandong Xinjufeng’s shareholding was 46.41% of outstanding shares as of 17 January.
- Absent an unlikely competing offer, the offer is on the cusp of being declared unconditional. At the last close and 4 February payment, the gross/annualized spread is 3.1%/128%.
NIFTY NEXT50 Index Rebalance Preview: 7 Potential Changes in March
- With 10 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
- Estimated one-way turnover is 15.9% resulting in a one-way trade of INR 52bn (US$600m). All forecast changes, bar one, have over 1.5x ADV to trade from passive trackers.
- All the forecast deletes are F&O members while two adds are not. NSE Indices could revisit the index membership criteria especially given the launch of futures on the index.
Millennium & Copthorne Hotels (MCK NZ): City Dev’s Privatisation Offer
- Millennium & Copthorne Hotels (MCK NZ) (MCK), a Kiwi hotel chain, has announced that City Developments (CIT SP), its major shareholder, has made an Offer for shares not held.
- City Dev is offering NZ$2.25/share, a 25% premium to last close. City holds 75.86% and the offer is conditional on a 90% holding, including shares currently held.
- Reg approvals include OIA, which should be rubber-stamped. Very illiquid company.
SK Stocks’ Main Narrative: SK Telecom Exit & SK Inc Eyeing SK Square
- SK Inc plans to use SK Hynix as a dividend machine, boosting payouts to ₩3 trillion, and if it absorbs SK Square, it could pocket ₩600 billion—doubling SK Telecom’s dividends.
- SK Inc will likely use ₩5 trillion from the SK Telecom deal for a tender offer, boosting its stake in SK Square to 60-70% before merging to minimize dilution.
- The SK Telecom deal and potential SK Square tender offer could be the main narrative driving SK Group stocks this year, making SK Square a key momentum play.
CATL (300750 CH): Index Inclusion Post H-Share Listing
- Contemporary Amperex Technology (CATL) (300750 CH) has announced plans for an H-share listing with media reports indicating a raise of at least US$5bn. Shareholders have approved the issuance.
- CATL (300750 CH) was designated as a Chinese Military Company earlier this year by the U.S. Department of Defense but is still not on the NS-CMIC list.
- The CATL (300750 CH) H-shares should get Fast Entry to the global indices and iShares China Large-Cap (FXI US) ETF. Inclusion in the HSCEI and HSI will take longer.
Timee US$280m Lockup Expiry – Scattered List of Financial Investors Coming Unlocked
- Timee Inc (215A JP) listed in Japan on 26th July 2024 after raising US$300m. Its six-month lockup will expire on 21st Jan 2025.
- Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
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