In today’s briefing:
- Yancoal Australia Placement – Cleanup Sale by Glencore Now the Ball Is in Yankuang Court
- TOPIX July Rebalance: Flows at the Close Today
- SK Telecom: MSCI Deletion Should Provide Entry Point Vs KT Corp
- JPX-Nikkei 400 2022 Rebal: Final Pre-Event Phase Strategy Worked. What Next?
- Revised Rules on Short Selling Restriction in Korea: Effective 3Q This Year
- Australian Unity Office: Crushed as Aliro Walks, But Actively Seeking Situations
- MACA: Thiess’s Friendly Cash Offer
- Shin-Etsu Chemical (4063 JP) Salutary Earnings, Conservative Forecasts, and Another Buyback
- Manila Electric Block – Selldown by One of the Largest Shareholders
- PSMC Placement – Well Flagged and SI on the Rise, but Momentum Has Been Very Weak
Yancoal Australia Placement – Cleanup Sale by Glencore Now the Ball Is in Yankuang Court
- Glencore is looking to raise US$293m (A$422m) from selling its stake in Yancoal Australia (YAL AU). This would be a clean up sale.
- Glencore has been sitting on its stake for a while now, and the two have a JV in the Hunter Valley Operations, the latter which commenced in Jul 2017.
- The deal, while a large one to process at 135.6 days of three month ADV, represents just 5.6% of Yancoal Australia’s current mcap.
TOPIX July Rebalance: Flows at the Close Today
- FFW changes and Mercari Inc (4385 JP)‘s inclusion in the TOPIX will lead to a one-way turnover of 0.55% and one-way trade of JPY 443bn (US$3.23bn) at the close today.
- There is net buying in Consumer Discretionary, Financials and Communication Services stocks, while there will be net selling in Consumer Staples and Health Care stocks.
- The upweights have outperformed the downweights since announcement of the changes and there has not been a lot of excess volume traded in the last couple of weeks.
SK Telecom: MSCI Deletion Should Provide Entry Point Vs KT Corp
- SK Telecom (017670 KS) has continued to underperform KT Corp (030200 KS) even as foreign investors continue buying. Local institutions have been selling the stock.
- With foreign room currently at 1.68% and consistently below 3.75% recently, SK Telecom (017670 KS) should be deleted from the MSCI Korea Index at the August QIR.
- There will be more selling from FTSE trackers in September. With the SK Tel/KT Corp price ratio trading at the lows, the passive selling could provide a good entry point.
JPX-Nikkei 400 2022 Rebal: Final Pre-Event Phase Strategy Worked. What Next?
- In JPX-Nikkei 400 2022 Rebal: Final Predictions, I discussed Quiddity’s final predictions for Potential ADDs/DELs for the JPX-Nikkei Index August 2022 Annual Review.
- In that insight, I classified the potential ADDs/DELs by conviction levels and discussed why the high conviction ADDs and DELs deserved a higher weight than the other baskets.
- Since then, the LONG High Conviction ADDs – SHORT High conviction DELs Trade has outperformed the other LONG-SHORT combinations.
Revised Rules on Short Selling Restriction in Korea: Effective 3Q This Year
- If short-selling accounts for more than 30% of total daily trade volume, it will be newly designated as an overheated short-selling stock, resulting in a one-day short-selling ban.
- If the stock price falls by more than 5% on the day of the short-selling restriction, the restriction period is automatically extended by one more day.
- We should pay attention to a possible increase in the trading volume of single-stock futures (SSF) due to short-selling bans, which can result in a more significant basis distortion.
Australian Unity Office: Crushed as Aliro Walks, But Actively Seeking Situations
- Australian Unity Office Fund (AOF AU) was the subject of six successive bids by Starwood between 2018-2020 and a bid by Charter Hall (CHC AU) and Abacus Property (ABP AU).
- Large AOF shareholder Hume knocked back the ABP/CHC bid and Starwood never got to the final stages. But Aliro Group’s (CEO is ex-CHC) bid at A$2.45 got Hume’s support.
- Then on 25 July, Aliro walked. And the shares fell. From A$2.21 to A$1.80. Ouch.
MACA: Thiess’s Friendly Cash Offer
- MACA Ltd (MLD AU) recently announced a friendly off-market cash offer from fellow contractor Thiess, at A$1.025/share, a 28.1% premium to previous close.
- The Offer is subject to limited conditions, including FIRB , ACCC sign-off, no prescribed occurrences, no issue of convertible securities, derivatives, or other rights, and 90% minimum acceptances.
- The Offer has unanimous support from MACA’s board. Applications to FIRB and the ACCC have already been submitted. The announcement suggests MACA remains open to alternative approaches.
Shin-Etsu Chemical (4063 JP) Salutary Earnings, Conservative Forecasts, and Another Buyback
- Shin Etsu Chemical (4063 JP) reported Q1 earnings after the close on 27 July, and they blew the lights out. Higher margins and 10-year record high Q1 progression ratios.
- The company also announced guidance which was pretty healthy, but progression ratios suggest it is conservative.
- The company announced its second ¥100bn buyback in three months. This one lasts 6 months so impact will be lower, but it will have some impact.
Manila Electric Block – Selldown by One of the Largest Shareholders
- JG Summit Holdings (JGS PM) aims to raise around US$185m via selling 2.5% of Manila Electric Company (MER PM) (Meralco) via a block trade.
- This appears to be the first selldown by JG Summit and doesn’t appear to have been very well flagged either.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
PSMC Placement – Well Flagged and SI on the Rise, but Momentum Has Been Very Weak
- Powerchip Semiconductor Manufacturing Corp (6770 TT) (PSMC) is looking to raise US$420m via its GDS offering.
- The firm is offering 23.3m GDSs (350m common shares at a 1 GDS to 15 common shares ratio) at a 6-9% discount to last close.
- The deal is well flagged via both media reports and the company’s announcements. Short interest has been growing in tandem as well.
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