Most Read Archives | Page 63 of 91 | Smartkarma

• LG Chem’s deletion is almost a done deal. The pouch-type pack goes to LG Energy, and the cathode business is not big enough to beat L&F.
• Chunbo is an additive field that this index has not included so far. So, Chunbo will be added as a new addition rather than replacing someone else.
• SK IE Tech is quite tricky. The key is to see separator and elecfoil as the same field. If so, SK IET is likely to replace Iljin Materials.

• Yesterday, a Kyodo News article suggested SBI was “planning to take Shinsei private.”
• This morning, near-identically-worded replies were proffered, belatedly, and SBI appears to have moved its earnings release date to match Shinsei’s.
• It helps to remember Communications mandated by Exchange Rules are worded so that they are not technically or legally incorrect. Shareholder transparency and good governance is not the goal.

• Foreign shareholding in HDFC Limited (HDFC IN) has inched higher while moving a tad lower on HDFC Bank (HDFCB IN). Overall, no change in foreign room on the merged entity. 
• The merger could complete in Q1 2023 and there could be sizeable buying from MSCI trackers. There should be no change for FTSE trackers.
• The recently announced market consultation by NSE Indices should result in no buying/selling from passive trackers; there will be some additions to the NIFTY Index and Nifty Next 50 Index.

• EC Healthcare (2138 HK) expects to achieve a record-high sales volume of no less than HK$1.8 in H1FY23, representing a no less than 17% y/y increase.  
• The company is optimistic about its business development as the Hong Kong government’s pandemic policy stance is heading towards “normalization” and recently further relaxed quarantine arrangements for inbound travelers.
• With the economy reopening, the company is in a position to reap the benefit of M&A worth HK$641 million completed in FY22.  

• Copper is widely recognised to be in somewhat short supply, and EV/electrification would increase demand going forward (though slower Chinese homebuilding would soften it).
• A number of developments suggest a further squeeze in prices could be near and copper price strength along with AUD weakness makes an AUD-denominated OZL Takeover Price easier to raise.
• Short-Term positioning and longer-term supply constraints are currently battling for near-term import, but medium-term, there’s no escaping the imbalance. Looks like a buy now.

• In this insight, we discuss a pair trade between GS Holdings (078930 KS) (go long) and GS Retail (007070 KS) (go short).
• The main investment thesis of this pair trade is that investors will allocate greater portion of their capital to stocks with deep discount to their NAVs such as GS Holdings.
• As the household disposable income continues to get pressured, this will likely force the Korean households to reduce consumer spending, which is likely to negatively impact GS Retail.

• Nearly eleven months after Total Access Communication (DTAC TB) and True Corp Pcl (TRUE TB) first announced a merger, the NBTC, the Thai telecommunication regulator, has given the go-ahead.  
• This long-winded regulatory process hinged on whether the NBTC actually had the legal clout to halt the merger, which would create a duopoly with Advanced Info Service (ADVANC TB) 
• The transaction process should accelerate from here with an expected listing of the new entity by year-end. 

• In this insight, we provide a ranking system for targeting the bottom 5% of potential exclusion candidates in the upcoming MSCI Korea index rebalance in November.
• The ranking system is based on a combined weighted rankings based on MSCI weight, market cap, and ADTV.
• The six stocks that have received lowest weights include Meritz Financial Group, S 1 Corp, Amorepacific Group, CJ Corp, Green Cross Corp,  and LG Household & Health Care-Pref. 

• Jasmine International (JAS TB) is looking to sell its 99.8% interest in Triple T Broadband (TTTBB), and 19% stake in Jasmine Broadband  (JASIF TB) to Advanced Info Service (ADVANC TB).
• The sale required JASIF shareholder approval, but not all resolutions were approved at an EGM this week.
• This is a setback. However, the transaction remains on track.

• Just eight months into Russia’s Ukraine invasion, Japan Tobacco (2914 JP)’s share price has moved back above the pre-Ukraine invasion level suggesting that investors are over with Russia exposure fears.
• Based on the company’s guidance upgrade trend historically and YTD financial performance, we are expecting around ¥70bn upside to 2022 OP guidance in 3Q22.
• With earnings back on a growth trajectory, we are expecting a reversal of the 2017-21 share price to earnings trend to take Japan Tobacco shares over ¥3,500 in the short-term.

In our next Webinar, we welcome Analysts Chris Redl (SC Capital) and Sameer Taneja (Investics Research), who will be joined by Smartkarma CEO Raghav Kapoor in an exciting discussion on the EV landscape in China.

The webinar will be hosted on Friday, 21 October 2022, 11:00 SGT/HKT.

Chris Redl has over 20 years’ experience covering the global automotive industry both on the Sell-side (UBS & Morgan Stanley) and Buy-side (Och-Ziff). His current focus is on electric vehicle stocks & their supply chains, aiming is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well.

Sameer Taneja is the founder of Investics Research, a firm that engages in bottom-up sectoral research, fundamental research of publicly listed companies as well as forensic analysis. He started his career as a sell-side analyst in a stockbroking firm called B&K Securities (India) from 2004-07, covering the ferrous sector. From 2007-16 he worked as an investment analyst in a hedge fund called Kelusa Capital, covering the materials, utilities, construction & heavy machinery, and the auto sector. He continued to work on the buy-side from 2017-19 in a firm called Skale Investments (with similar sectoral coverage), before founding Investics Research in 2019.

Raghav is the co-founder and CEO of Smartkarma.

• LG Chem’s deletion is almost a done deal. The pouch-type pack goes to LG Energy, and the cathode business is not big enough to beat L&F.
• Chunbo is an additive field that this index has not included so far. So, Chunbo will be added as a new addition rather than replacing someone else.
• SK IE Tech is quite tricky. The key is to see separator and elecfoil as the same field. If so, SK IET is likely to replace Iljin Materials.

• Yesterday, a Kyodo News article suggested SBI was “planning to take Shinsei private.”
• This morning, near-identically-worded replies were proffered, belatedly, and SBI appears to have moved its earnings release date to match Shinsei’s.
• It helps to remember Communications mandated by Exchange Rules are worded so that they are not technically or legally incorrect. Shareholder transparency and good governance is not the goal.

• Foreign shareholding in HDFC Limited (HDFC IN) has inched higher while moving a tad lower on HDFC Bank (HDFCB IN). Overall, no change in foreign room on the merged entity. 
• The merger could complete in Q1 2023 and there could be sizeable buying from MSCI trackers. There should be no change for FTSE trackers.
• The recently announced market consultation by NSE Indices should result in no buying/selling from passive trackers; there will be some additions to the NIFTY Index and Nifty Next 50 Index.

• Tesla’s Q3 revenues missed by 2%, while GAAP EPS was in-line with consensus and adjusted EPS only beat by 5.4%. Tesla hasn’t seen numbers this weak since Q4 2020.
• The closely watched Autmotive gross margin (ex-ZEV credits) were much worse than expected at 26.8% versus consensus estimates of 27.5%. 
• On the earnings call, Musk said he would be buying Twitter. This will only add to the selling pressure from Tesla’s weak Q3 results throughout next week. 

• Electronics play and property developer EVOC Intelligent Technology Company Limited H (2308 HK)‘s Merger by Absorption was approved by H-class shareholders yesterday. 
• The vote was not a foregone conclusion – 7.05% of total H-shares voted against the deal.
• Today is the last day of trading in EVOC shares. Payment is expected on or before the 7 November. 

• EC Healthcare (2138 HK) expects to achieve a record-high sales volume of no less than HK$1.8 in H1FY23, representing a no less than 17% y/y increase.  
• The company is optimistic about its business development as the Hong Kong government’s pandemic policy stance is heading towards “normalization” and recently further relaxed quarantine arrangements for inbound travelers.
• With the economy reopening, the company is in a position to reap the benefit of M&A worth HK$641 million completed in FY22.  

• Blibli (1437710D IJ), a leading Indonesian e-commerce player, has launched an IDR8.2 trillion (US$530 million) Indonesian IPO. Bookbuilding is from 17 to 24 October.
• We have previously discussed the IPO in Blibli IPO: The Bull Case and Blibli IPO: The Bear Case.
• In this note, we compare Blibli vs its peers’ relevant businesses across monthly site visits, app downloads, social engagement, GTV, take rates and segmental margins.   

• October 18th we reduced our long basket (SPX, NKY, ASX, SX5E) and added back to our short basket (NDX, DAX, HSI, Taiwan, Kospi) for a final leg down/new lows.
• We recommend adding to our short group on upticks into Friday ahead of a harder swoon lower next week and into our cycle low date near October 30th.
• Our long basket is showing relative strength outside of the SPX and a key alignment we are monitoring to market the upcoming risk cycle low near Oct 30.

• The NBTC Board approved the merger by acknowledging by a vote of 3-2 the intention for True Corp Pcl (TRUE TB) and Total Access Communication (DTAC TB) to merge. 
• The NBTC issued several conditions on the mergers, such as price ceilings, service quality, innovation and spectrum-sharing with MVNOs. The implementation of the conditions will be monitored for five years.
• The VTOs will likely launch in 4Q22/1Q23. Play the merger approval by buying the share price ratio of 9.020x at an 11.8% discount to the implied swap ratio of 10.221x.

• A week after JIP gets preferred status and we had rumoured bid prices, we now have an article saying JIC/Bain is still in it, and a new article today.
• Today’s “new” article says JIP’s bid price is what the first leak suggested, which is below ¥6,000/share. Other articles suggest bidders are finding that securing financing is tough. 
• Investors should look at process and understand the difference between this one and most others. It matters. Some news is not news, other than telling you the dance has started.

• Nearing the end of the review period for the SZSE1000 Index, we estimate around 50 changes to the index. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• 5 of the potential adds could be added to the MSCI China Index in February and 34 of the potential adds could be added to the FTSE All-World/All-Cap in March.

• Blibli (1437710D IJ), a leading Indonesian e-commerce player, has launched an IDR8.2 trillion (US$530 million) Indonesian IPO. Bookbuilding is from 17 to 24 October.
• According to Frost & Sullivan, Blibli.com was No. 1 in the fresh food category and 1P consumer electronics in the B2C omnichannel among e-commerce players in Indonesia in 2021. 
• The key elements of the bull case rest on a large and growing addressable market, strong ecosystem, high order values, rising cohort spending and fast-paced growth. 

• Last Friday, small-cap logistics JREIT Mitsubishi Estate Logistics (3481 JP) (“MEL“) announced a follow-on equity offering to fund part of their recently-announced property acquisition. 
• The primary offer quantity is 51,000 units. In addition, there will also be an over-allotment quantity of 2,550 units. The total size of this offering could be roughly ¥23bn (~US$157mn). 
• Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

• Back on the 8 September, payment provider Tyro Payments (TYR AU) rejected a proposal from a Potentia-led consortium at A$1.27/share, by way of a Scheme. 
• Tyro has now announced it has received approaches from several parties, including Westpac (WBC AU). “None of these approaches are sufficiently definite … to warrant further disclosure at this time“.
• Shares are currently trading at A$1.59/share. Tyro recently raised its FY23 EBITDA guidance to A$28mn-34mn, up from A$23mn-29mn. 

• PT Global Digital Trade (1437710D IJ)  (BliBli) aims to raise up to US$530m in its Indonesian IPO.
• BliBli provides e-commerce services across Indonesia to both retail consumers and institutions
• In this note, we’ll talk about the positive aspects of the deal.

• Giant Biogene Holding (GBH HK)  aims to raise around US$500m in its Hong Kong IPO.
• GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
• We had looked at the company’s past performance in our previous notes. In this note, we’ll undertake a peer comparison.

• In this insight, we discuss a pair trade between LG Corp (003550 KS) (go long) and LG Electronics (066570 KS) (go short).
• LG Electronics is likely to have continued weakening results, due to rising interest rates on the household disposable income in major countries.
• Our base case valuation analysis of LG Corp suggests an implied price of 93,905 won per share, representing 19% upside from current levels.

• Back on the 9 June, Urban planner China Vast Industrial Urban Development (6166 HK)  received a pre-conditional Offer, by way of a Scheme, from China Jinmao Holdings (817 HK).
• The cancellation (and final) price is HK$2.40/share, a ~30% premium to the undisturbed price. Pre-Conditions include approvals from SAMR, SASAC, and NDRC. 
• Those pre-cons have now been satisfied. The Scheme Doc is currently expected to be dispatched on or before the 31 October. There may be some slippage. 

• There was a lot of confusion around how NSE Indices would handle the HDFC Limited (HDFC IN) / HDFC Bank (HDFCB IN) merger in its indices.
• The market consultation seeks to change the index methodology to bring it in line with other index providers. That will result in much lower turnover than the existing index methodology.
• Pidilite Industries (PIDI IN) is a high probability add to the NIFTY Index possibly in the first quarter of 2023. There will also be changes to Nifty Next 50 Index.

• The National Company Law Tribunal (NCLT) has ordered a meeting of HDFC Limited and HDFC Bank shareholders on 25 November to consider and approve the proposed Scheme of Amalgamation.
• Pidilite Industries (PIDI IN) is a high probability ad hoc inclusion to the NIFTY Index (NIFTY INDEX) with Tata Power (TPWR IN) a lower probability inclusion candidate.
• Tata Motors Ltd (TTMT IN) and Adani Enterprises (ADE IN) could be added to the SENSEX INDEX in December replacing HDFC Limited (HDFC IN) and Dr. Reddy’s Laboratories (DRRD IN).

In our next Webinar, we welcome Analysts Chris Redl (SC Capital) and Sameer Taneja (Investics Research), who will be joined by Smartkarma CEO Raghav Kapoor in an exciting discussion on the EV landscape in China.

The webinar will be hosted on Friday, 21 October 2022, 11:00 SGT/HKT.

Chris Redl has over 20 years’ experience covering the global automotive industry both on the Sell-side (UBS & Morgan Stanley) and Buy-side (Och-Ziff). His current focus is on electric vehicle stocks & their supply chains, aiming is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well.

Sameer Taneja is the founder of Investics Research, a firm that engages in bottom-up sectoral research, fundamental research of publicly listed companies as well as forensic analysis. He started his career as a sell-side analyst in a stockbroking firm called B&K Securities (India) from 2004-07, covering the ferrous sector. From 2007-16 he worked as an investment analyst in a hedge fund called Kelusa Capital, covering the materials, utilities, construction & heavy machinery, and the auto sector. He continued to work on the buy-side from 2017-19 in a firm called Skale Investments (with similar sectoral coverage), before founding Investics Research in 2019.

Raghav is the co-founder and CEO of Smartkarma.

• The review period for the MSCI November SAIR starts this week and will run till 31 October. We also near the end of the review period for many local indices.
• AIPL has announced a S&P BSE SENSEX Index market consultation while FTSE has announced the result of the FTSE TWSE Taiwan Dividend+ Index market consultation.
• There were big weekly inflows to ETFs that track China, Taiwan, Korea and Hong Kong equities.

• Ming Yuan Cloud Group (909 HK) listed in September 2020 and was included in major indices (MSCI, FTSE, HSTECH) over the next few months.
• The stock price slide over the last few months could lead to the deletion of the stock from the MSCI China Index and Hang Seng Tech Index (HSTECH INDEX). 
• Deletion and downward migration could result in an increase in the real float of the stock by 15% and add further downward pressure. Short interest has been increasing steadily.

• In January 2022, Recruit Holdings (6098 JP) launched a Tender Offer buyback to buy back shares from NTT Data, Hakuhodo, and TBS. 
• Today, Recruit announced another buyback of up to 42mm shares (2.57% of shares out) spending up to ¥150bn, to go from now until 14 March 2023 (5mos).
• This time the buyback should have better traction and market impact, but it is not overwhelming, and the impact will likely lessen at higher share prices.

• Blibli (1437710D IJ) is offering 17.77bn shares in its IPO at a price range of IDR 410-460/share. That could raise up to US$530m and value the company up to US$3.64bn.
• The stock will not get Fast Entry to the IDX30, LQ45, MSCI and FTSE indices, so no near-term support from passive buying.
• The stock could make it into the MSCI Small Cap Index in February and the FTSE All-World/All-Cap Index in June. Earliest inclusion in IDX30/IDX80/LQ45 indices could be in July.

• Shandong Fengxiang (9977 HK) is a company engaged in chicken breeding, slaughtering, and processing.
• Its controlling shareholder with 70.9% of shares out, via domestic shares,  was unable to meet its debts, and had been forced into a judicial auction to sell its holding.
• The auction has completed. This forced stake sale should trigger an MGO, one that is likely to be unconditional. Expect an official announcement shortly. 

• Hong Kong Chief Executive John Lee Ka-chiu will deliver his inaugural policy address on the 19 October, where he is expected to announce a number of “ground-breaking” measures.
• One such measure is non-residents who have owned property in Hong Kong for 3+ years may get their extra stamp duty refunded – if they take up permanent residency.
• Secondary home prices have declined  8% year-to-date, and are approaching a five-year low. Goldman Sachs expects home prices to decline 30% in 2023 from last year’s levels.  

• Mitsubishi Estate Logistics (3481 JP) (MEL) is looking to raise US$145m from its primary follow-on offering to acquire eight properties.
• The offering is a large one, resulting in a 10.2% dilution, and would represent 34 days of three month ADV.
• In this note, we will look at the deal dynamics, and run the deal through our framework.

• Thailand SET Index (SET INDEX) is a composite index which represents the price movement for all common stocks trading on the SET.
• SET50 and SET100 indices are calculated, respectively, from the stock prices of the top 50 and 100 listed companies on SET in terms of market capitalization and liquidity.
• In this insight, we take a look at the selection criteria and the historical price performance of past Rebalance Events.

• The number of FTSE TWSE Taiwan Dividend+ Index constituents will be increased from 30 to 50 in one step at the December rebalance.
• There are a few other changes to the index methodology, mainly around the cutoff ranks for inclusion/exclusion with a few additional constraints.
• We forecast 25 adds and 4 deletes to the index with one-way trade over US$2.2bn and big impact on many stocks due to inclusion, exclusion, capping and funding.

• The National Company Law Tribunal (NCLT) has ordered a meeting of HDFC Limited and HDFC Bank shareholders on 25 November to consider and approve the proposed Scheme of Amalgamation.
• Pidilite Industries (PIDI IN) is a high probability ad hoc inclusion to the NIFTY Index (NIFTY INDEX) with Tata Power (TPWR IN) a lower probability inclusion candidate.
• Tata Motors Ltd (TTMT IN) and Adani Enterprises (ADE IN) could be added to the SENSEX INDEX in December replacing HDFC Limited (HDFC IN) and Dr. Reddy’s Laboratories (DRRD IN).

• The review period for the MSCI November SAIR starts this week and will run till 31 October. We also near the end of the review period for many local indices.
• AIPL has announced a S&P BSE SENSEX Index market consultation while FTSE has announced the result of the FTSE TWSE Taiwan Dividend+ Index market consultation.
• There were big weekly inflows to ETFs that track China, Taiwan, Korea and Hong Kong equities.

• Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows. 
• It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
• As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required – an offer at the 1-year average price of HK$0.33 implies a 63% premium.

• On 12 July, cash-rich mining mini-conglomerate (mining, contracting, equipment, etc) United Tractors (UNTR IJ) announced a buyback discussed in United Tractors (UNTR IJ) Buyback – Sure to Be Impactful. 
• The buyback was to go for three months but three months later, it was extended or another three months. 
• Performance has been good. How much has been bought back. Tough to know, but we can make some pretty educated guesses.

• On 20th September 2022, FTSE Russell commenced a market consultation with a goal of increasing the constituent count of the FTSE TWSE Taiwan Dividend+ Index from 30 to 50.
• On 13th October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50.
• In this insight, we take a look at the updated Ground Rules and Quiddity’s expectations for index flows during the December 2022 Rebalance.

• Ming Yuan Cloud Group (909 HK) listed in September 2020 and was included in major indices (MSCI, FTSE, HSTECH) over the next few months.
• The stock price slide over the last few months could lead to the deletion of the stock from the MSCI China Index and Hang Seng Tech Index (HSTECH INDEX). 
• Deletion and downward migration could result in an increase in the real float of the stock by 15% and add further downward pressure. Short interest has been increasing steadily.

• A successful bidder (identity unknown at the time of writing) has emerged for Shandong Fengxiang (9977 HK) controlling shareholder’s 70.92% stake at the base bid price of RMB1,372.2 million.
• As the bidder will hold 30% or more of the voting rights, it will result in an MGO at RMB1.383 per share (HK$1.526 at the median BOC FX of 0.9056).  
• The transfer of the sale shares is subject to completion procedures. Our best guess is the offer completes end-January 2023. At the last close, the gross spread is 15.6%. 

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), Shandong Fengxiang (9977 HK), O2Micro International (OIIM US).
• Lowest spreads – Tyro Payments (TYR AU),OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), True Corp Pcl (TRUE TB), Cocoaland Holdings (COLA MK), China VAST.

• Long/Short basket trading on an equal weight using only six stocks for a 10% ceiling reversion with SungEel and Sebitchem would have delivered a daily yield of close to 2%.
• An outright position on SungEel and Sebitchem and the biggest mover, Ecopro BM, alone would have delivered a pretty juicy yield of 4.2%.
• The rebalancing of this ETF is an event that allows you to bet on highly predictable share price movements by forming a basket with a relatively small number of stocks.

• Nearing the end of the review period for the December rebalance of the CSI500 Index, we forecast 50 changes (the maximum permitted) at the close on 9 December.
• There is a big sector skew in the potential changes. We estimate a one-way turnover of 13.67% at the December rebalance leading to a one-way trade of CNY 7.53bn.
• The potential adds have outperformed over the last 6 months but have given up some of the gains recently as market turned volatile. Expect outperformance as the review period ends.

• Call was to buy our long group for a mid-October short covering rally. Lofty CPI means we retest lows (late October). Top today for dip, better sell territory next week.
• NKY was our top long bet in our long basket (NKY, ASX, Euro Stoxx 50 and SPX) with a call to reduce with ideal sell levels due next week.
• At SPX 3,700+ we are rolling back into our short group. Ideal low due in late October.

• Kyushu-Based food services business and restaurant operator Plenus Co Ltd (9945 JP) announced Friday that its main holder had announced a Tender Offer. The Board voted to support the effort.
• The Tender Offer is at ¥2,640/share, a 37.5% premium to last, and which is just higher than the highest closing price since listing.
• This looks like a deal easy to get done. Decent premium, well above book, lifetime high on a low vol stock, not an awful multiple, and founder+cross-holders have 50%.

• Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows. 
• It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
• As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required – an offer at the 1-year average price of HK$0.33 implies a 63% premium.

• As the recent share price volatility has grown, there have been significant changes in those on the borderline at the MSCI November SAIR.
• Additions: Hyundai Mipo Dockyard (010620), LOTTE Corp (004990),  and Ecopro (086520) & Deletions: Meritz Financial Group (138040), Amorepacific Group (002790), SK Chemicals (285130), and Green Cross (006280).
• We must wait on many names until the end, making the price impact more dramatic than usual, as the flow can be concentrated after the announcement.

• The review period for the MSCI November SAIR starts this week and will run till 31 October. We also near the end of the review period for many local indices.
• AIPL has announced a S&P BSE SENSEX Index market consultation while FTSE has announced the result of the FTSE TWSE Taiwan Dividend+ Index market consultation.
• There were big weekly inflows to ETFs that track China, Taiwan, Korea and Hong Kong equities.

• The Nikkei 225 closed the week +0.2% higher after sharp gains on Friday
• The Japanese yen dropped to a 32-year low on Thursday, trading at around 147.65 against the dollar, hitting its weakest point since August 1990
• Higher rates and weakening economic growth are proving a stern headwind for tech stocks; Yaskawa cut full year OP guidance

• In April, reportedly Renault (RNO FP) might sell Nissan (7201 JP) shares to support EV investments. We have news talks are coming to a head. The results won’t be pretty.
• The Nikkei says the JIP consortium is the “Preferred Bidder” for Toshiba Corp (6502 JP). That is a stalking horse. The proposed price of ¥2.5trn is also a stalking horse
• Reportedly the Widjaja Family may be looking to take Indonesian/Australian energy/met coal play Golden Energy & Resources (GER SP) private.

• In this insight, we highlight the pricing gap divergence of the major Korean holdcos and opcos amid market carnage.
• In general, more holdcos/quasi-holdcos have been outperforming the opcos in the past year, as compared to the previous years as more investors seek value-oriented, deep NAV discount stocks.
• We highlight 26 pair trades that involve Korean holdcos and opcos.

• On 20th September 2022, FTSE Russell commenced a market consultation with a goal of increasing the constituent count of the FTSE TWSE Taiwan Dividend+ Index from 30 to 50.
• On 13th October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50.
• In this insight, we take a look at the updated Ground Rules and Quiddity’s expectations for index flows during the December 2022 Rebalance.

• The number of FTSE TWSE Taiwan Dividend+ Index constituents will be increased from 30 to 50 in one step at the December rebalance.
• There are a few other changes to the index methodology, mainly around the cutoff ranks for inclusion/exclusion with a few additional constraints.
• We forecast 25 adds and 4 deletes to the index with one-way trade over US$2.2bn and big impact on many stocks due to inclusion, exclusion, capping and funding.

• Socionext (6526 JP) traded 15.1% higher than its IPO price on listing day. That gives it a market cap of JPY 141.4bn (US$963m).
• Socionext (6526 JP) will be added to the TPX INDEX in November and could be added to the MSCI SmallCap Index in February and the FTSE All-Cap Index in June.
• The close yesterday indicates there could be more buying behind while the TOPIX inclusion in November will be a source of short-term demand for the stock.

• Nearing the end of the review period, we expect there will be 18 changes to the SSE180 Index in December. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• We see 6 of the potential/close adds being added to the MSCI China Index in February and 8 of the potential/close adds being added to the FTSE All-World/All-Cap in March.

• We were Bearish on Fast Retailing, mainly due to valuation concerns against global peers. That view still stands.
• We expected cautious guidance reflecting a harsh macro environment. Fast surprised with bullish guidance. That could be a risk.
• We highlight the key slides from the results presentation and re-iterate our view that Fast should not trade at such a premium to its global peers

• GLP J-REIT (3281 JP) is looking to raise  around US$220m in its placement to acquire five assets, and increase its stake in a sixth one.
• We have covered a number of past deals by the company, almost all of which have done well.
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

• Garena has introduced nine major updates to “Free Fire” since June last-year but none of them has managed to turn around the game’s declining trend and regain the lost users.
• With Sea Ltd (SE US) no longer capable of funding Shopee’s growth, we are expecting e-commerce to start losing its top-line growth potential from 4Q22.
• Even though we are predicting a lot of downside to Sea Ltd over the medium term, an okayish Q3 could see shares bouncing back from the bottom.

• Hong Kong brokerage Kingston Financial (1031 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• Chu Yuet Wah is the largest shareholder with 74.6% of shares out.
• Shares are down 98% from the January 2018 peak. A chunky premium may be on the cards if a firm Offer unfolds. 

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
• The reference period for the trading data used for the index selection ends on 31st October 2022.
• At present, I see one change for SENSEX, three changes for BSE 100, and six changes for BSE 200. 

• TSMC says limited impact from U.S. China restrictions — We crosscheck the comments.
• TSMC guidance was strong and gives hope for 1H23 industry improvement. Looks cheap on a cycle-adjusted PE.
• Intel has outperformed TSMC shares despite the recent TSMC rebound.

• We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Oct 14th based on HKEx daily reports.
• In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Wuxi Biologics (2269 HK), Aia (1299 HK).
• In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Wuxi Biologics (2269 HK).

• Overnight, a few news outlets are running with the story that Toshiba Corp (6502 JP) has granted “preferred bidder” status to the Japan Industrial Partners (JIP)-led consortium bid.
• JIP had originally signed up with public-private fund JIC, forming one of the four bids (the other three being CVC, Bain, and Brookfield) but JIP and JIC split last month.
• “Preferred Bidder status” is just that. It’s not exclusive, but one can read between the lines. But the articles have interesting details, including the first trial ballon price leak.

• Socionext (6526 JP) traded 15.1% higher than its IPO price on listing day. That gives it a market cap of JPY 141.4bn (US$963m).
• Socionext (6526 JP) will be added to the TPX INDEX in November and could be added to the MSCI SmallCap Index in February and the FTSE All-Cap Index in June.
• The close yesterday indicates there could be more buying behind while the TOPIX inclusion in November will be a source of short-term demand for the stock.

• We were Bearish on Fast Retailing, mainly due to valuation concerns against global peers. That view still stands.
• We expected cautious guidance reflecting a harsh macro environment. Fast surprised with bullish guidance. That could be a risk.
• We highlight the key slides from the results presentation and re-iterate our view that Fast should not trade at such a premium to its global peers

• GLP J-REIT (3281 JP) is looking to raise  around US$220m in its placement to acquire five assets, and increase its stake in a sixth one.
• We have covered a number of past deals by the company, almost all of which have done well.
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

• The number of FTSE TWSE Taiwan Dividend+ Index constituents will be increased from 30 to 50 in one step at the December rebalance.
• There are a few other changes to the index methodology, mainly around the cutoff ranks for inclusion/exclusion with a few additional constraints.
• We forecast 25 adds and 4 deletes to the index with one-way trade over US$2.2bn and big impact on many stocks due to inclusion, exclusion, capping and funding.

• Reportedly Macau authorities are not satisfied with some concessionaire proposals from gaming firms and require them to increase investment into non-gaming facilities under a concession retendering process
• Preceding my comments on some of the gaming plays such as Melco International Development (200 HK) and Genting Bhd (GENT MK) are the current setup/unwind tables for Asia-Pacific Holdcos. 
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Lionheart Studio (426630 KS), a game development studio based in South Korea,  aims to raise around US$420m via its South Korean IPO.
• The company is majority owned by Kakao Games Corp (293490 KS), which after having recently hiked its stake, owned 54.94% of the company prior to listing.  
• We spoke about the company’s past performance and undertook a peer comparison in our previous note. In this note, we’ll talk about our earnings estimates and valuation.

• Elmo Software (ELO AU) confirmed takeover interest from several parties, including Accel-KKR. Elmo previously disclosed on 14 June that it had discussions on a non-binding offer at A$6.10 per share.
• The previous talks ended because the bidder (Accel-KKR) could not progress to a binding offer due to changing tech valuations. Elmo has materially underperformed ASX SaaS peers since 14 June.
• The current conditions suggest a higher risk that the talks will fizzle out. Despite today’s 28% pop, the shares remain undemanding compared to peer multiples providing support to the shares. 

• Cloud-Based solutions provider Elmo Software (ELO AU) has confirmed it has received multiple expressions of interest from various parties, including Accel-KKR.
• No agreement has been reached with any parties, no pricing mentioned, nor whether data room access has been afforded.
• Earlier this year ELMO held discussions with Accel-KKR in regard to a change of control proposal at $6.10/share. That figure is a stretch in this market. 

• The strength about Giant Biogene is that the founders have R&D background, which helps build trust. Meanwhile, the financial performance was good, with three years of consistent high margins.
• The sustainability of high-profit model will face pressure due to increasing competition. The establishment of long-term core competitiveness and second growth point is important. Complex related-party transaction is another concern.
• Giant Biogene is in an industry that has a large potential for future growth in valuation. Its valuation should be lower than that of Bloomage and Imeik.

• SBI Holdings (8473 JP)‘s unit SBI Regional Bank Holdings KK (SBI 地銀ホールディングス株式会社) today announced it had received FSA authorisation to turn the company into a Bank Holding Company.  
• There are some technicalities involved. SBI announced it would buy 2.5mm shares of Shinsei on-market to get to 50.05% by end-March 2023. This will disappoint some, but…
• I expect investors should continue to look at the big picture. Technicalities are technicalities. Strategy is strategy. The big picture is unchanged and there isn’t that much room to manoeuvre. 

• Overnight, a few news outlets are running with the story that Toshiba Corp (6502 JP) has granted “preferred bidder” status to the Japan Industrial Partners (JIP)-led consortium bid.
• JIP had originally signed up with public-private fund JIC, forming one of the four bids (the other three being CVC, Bain, and Brookfield) but JIP and JIC split last month.
• “Preferred Bidder status” is just that. It’s not exclusive, but one can read between the lines. But the articles have interesting details, including the first trial ballon price leak.

• With a week to the start of the review period, we forecast one inclusion and a lot more deletions for the MSCI Korea Index at the November SAIR.
• The impact from passive fund trading is pretty large on the potential and close deletes while the impact is a lot more muted on the sole potential add.
• There will be pre-positioning on most of the names already and part of that shows up in sharply higher short interest on a few stocks.

• Socionext (6526 JP) raised around US$463m in its Japan IPO. The IPO consisted of 100% secondary shares.
• Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation.  
• In this note we will talk about the trading dynamics.

• Socionext (6526 JP) traded 15.1% higher than its IPO price on listing day. That gives it a market cap of JPY 141.4bn (US$963m).
• Socionext (6526 JP) will be added to the TPX INDEX in November and could be added to the MSCI SmallCap Index in February and the FTSE All-Cap Index in June.
• The close yesterday indicates there could be more buying behind while the TOPIX inclusion in November will be a source of short-term demand for the stock.

• Today after the close, large-cap logistics JREIT GLP J-REIT (3281 JP) (“GLP”) announced a follow-on equity offering to fund part of their recently-announced property acquisition. 
• The primary offer quantity is 215,962 units. In addition, there will also be an over-allotment quantity of 5,809 units. The total size of this offering could be roughly ¥33bn (~US$227mn). 
• Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.

• With near-on nine-month having lapsed since True Corp Pcl (TRUE TB) and Total Access Communication (DTAC TB) submitted an amalgamation report, the NBTC may conclude/clarify a sweeping resolution today.
• That resolution, prompted by DTAC and True, is expected to establish the NBTC has no authority to consider approving or rejecting the merger, although remedial measures may be enforced.
• Further rumours abound as I type that the NBTC decision may be delayed another week. 

• Lionheart Studio (426630 KS), a game development studio based in South Korea,  aims to raise around US$420m via its South Korean IPO.
• The company is majority owned by Kakao Games Corp (293490 KS), which after having recently hiked its stake, owned 54.94% of the company prior to listing.  
• We spoke about the company’s past performance in our previous note. In this note, we’ll undertake a peer comparison.

• After one month from the September batch of Hong Kong Connect inclusion, we provide an analysis on the stock inclusion for 12 stocks. 
• We analysed the inclusion by performance post announcement, performance post inclusion, inflows and analyst coverage.
• We continued to observed outperformance post the HSCI announcement but not the actual inclusion despite the fact that southbound inflows has a significant impact on the trading volume. 

• Back on the 18 August, aviation engine repair play PTB Group (PTB AU) entered into a Scheme Implementation Deed with PAG Holding, at $1.595/share, a 40.5% premium to last close.
• The Scheme Booklet has now been lodged with ASIC. The Independent Expert reckons the Offer is fair and reasonable. 
• The Scheme Meeting will be held on the 16 November, as previously flagged in August’s SID, with an expected implementation on the 9 December. 

• We see 9 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR. There are a few stocks close to the cutoffs.
• Inclusion in the index will require passive trackers to buy 7-14 days of ADV on the stocks. That increases to 18-55 days of delivery volume.
• There appears to be significant pre-positioning on a lot of the potential adds and the shareholding pattern as of end September should provide a better picture.

• In April, a Bloomberg story said Renault SA (RNO FP) might sell shares in Nissan Motor (7201 JP) to support its investment in EVs. They might sell to Nissan, others.
• Renault shares popped hard, this two months after CEO Luca de Meo had said Renault might split, investing in and listing its EV business separately.  But since then? Crickets.
• Over the weekend, we have news talks are coming to a head. My feeling? The results won’t be pretty – a messy agreement which inspires nobody, but probably still works.

• SBI Holdings (8473 JP)‘s unit SBI Regional Bank Holdings KK (SBI 地銀ホールディングス株式会社) today announced it had received FSA authorisation to turn the company into a Bank Holding Company.  
• There are some technicalities involved. SBI announced it would buy 2.5mm shares of Shinsei on-market to get to 50.05% by end-March 2023. This will disappoint some, but…
• I expect investors should continue to look at the big picture. Technicalities are technicalities. Strategy is strategy. The big picture is unchanged and there isn’t that much room to manoeuvre. 

• 90% of the way through the review period of the Kospi 200 Index December rebalance, we see two potential changes to the index. There is another potential inclusion failing liquidity.
• This rebalance is expected to have the lowest turnover as compared to any of the Kospi 200 Index rebalances over the last few years. Partly lower markets, partly no IPOs.
• That said, passive trackers are estimated to need to trade over 10 days of ADV on one of the potential adds and both potential deletes.

• Nearing the end of the review period, we expect there will be 18 changes to the SSE180 Index in December. The first-order impact on the stocks is not large.
• Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
• We see 6 of the potential/close adds being added to the MSCI China Index in February and 8 of the potential/close adds being added to the FTSE All-World/All-Cap in March.

• Socionext (6526 JP) raised around US$463m in its Japan IPO. The IPO consisted of 100% secondary shares.
• Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation.  
• In this note we will talk about the trading dynamics.

• The KRX gives three heads-up types: WARNING (illegal trading), ADMINISTRATIVE (insolvency), & ATTENTION (inappropriate accounting). Those losing eligibility are ADMINISTRATIVE (KOSPI 200) and ADMINISTRATIVE + ATTENTION (KOSDAQ 150).
• Those designated as WARNING keep the eligibility for KOSPI 200/KOSDAQ 150 unless delisting is decided. We can find these heads-up designations on the KRX website, which is available in English.
• Osstem is currently an ATTENTION issue, so ineligible at this point. Knotus was designated as a WARNING issue in June and underwent a trade suspension. Nevertheless, it maintains eligibility.

• Back on the 26 April, church donor management tech play Pushpay Holdings (PPH NZ) announced “unsolicited, non-binding and conditional expressions of interest or approaches from third parties“. No price was mentioned. 
• Roughly a month later, BGH Capital and Sixth Street, both existing shareholders, entered into a cooperation agreement with respect to a potential transaction for Pushpay. Again, no price was provided. 
• Pushpay has now announced it has received a non-binding proposal. Word on the street this involves BGH. Still, no price was made public. A 30% premium to undisturbed is ~NZ$1.34/share.

• With a week to the start of the review period, we forecast one inclusion and a lot more deletions for the MSCI Korea Index at the November SAIR.
• The impact from passive fund trading is pretty large on the potential and close deletes while the impact is a lot more muted on the sole potential add.
• There will be pre-positioning on most of the names already and part of that shows up in sharply higher short interest on a few stocks.

• Overnight, a few news outlets are running with the story that Toshiba Corp (6502 JP) has granted “preferred bidder” status to the Japan Industrial Partners (JIP)-led consortium bid.
• JIP had originally signed up with public-private fund JIC, forming one of the four bids (the other three being CVC, Bain, and Brookfield) but JIP and JIC split last month.
• “Preferred Bidder status” is just that. It’s not exclusive, but one can read between the lines. But the articles have interesting details, including the first trial ballon price leak.