Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

In January I asked the question because it pertained to how the EGM might come out.After that, we saw a TOPIX inclusion for something close to 45,000,000 shares or nearly 10% of shares outstanding. The data we had suggested the outcome below.We could pro-forma the Pension Trusts and Investment Trusts, but the swing of 9.9% had to come from somewhere. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/215/067/original/Screenshot+2021-06-24+at+5.23.23+PM.png?1624526759" class="editor-image img-responsive" data-smartkarma-image-id="215067"></figure></section>And that was important because it meant we could figure out who had the voting rights for tomorrow's AGM. <div class="content-highlight">Today we know who sold. </div>And that may give you something of an idea of how the AGM might go (and as I noted back in January, Toshiba's management and board was likely to know that voting split a couple of months ahead of you). More below the fold.<hr>Recent insights into the Toshiba situation include the following:<ul>
<li><a href="https://www.smartkarma.com/insights/toshiba-the-king-is-dead-long-live-the-king" target="_blank" data-smartkarma-citation="insights:50309" rel="noopener">Toshiba - The King Is Dead, Long Live the King</a></li>
<li><a href="https://www.smartkarma.com/insights/how-much-of-toshiba-is-owned-by-activists" target="_blank" data-smartkarma-citation="insights:50462" rel="noopener">How Much of Toshiba Is Owned By "Activists"?</a> </li>
<li><a href="https://www.smartkarma.com/insights/toshiba-results-shareholder-return-possibly-big-impact-buyback-coming" target="_blank" data-smartkarma-citation="insights:51517" rel="noopener">Toshiba Results &amp; Shareholder Return - Possibly Big Impact Buyback Coming</a> </li>
<li><a href="https://www.smartkarma.com/insights/toshiba-shareholder-return-a-little-of-this-a-little-of-that-but-sticky-and-accretive" target="_blank" data-smartkarma-citation="insights:52637" rel="noopener">Toshiba Shareholder Return - A Little of This, A Little of That, But Sticky and Accretive</a> </li>
<li><a href="https://www.smartkarma.com/insights/toshiba-s-2020-agm-investigative-report-is-damning" target="_blank" data-smartkarma-citation="insights:52868" rel="noopener">Toshiba's 2020 AGM Investigative Report Is Damning</a> </li>
<li><a href="https://www.smartkarma.com/insights/with-directors-under-fire-toshiba-axes-two-may-need-another-egm" target="_blank" data-smartkarma-citation="insights:52998" rel="noopener">With Directors Under Fire, Toshiba Axes Two, May Need Another EGM</a></li>
</ul>

In January I asked the question because it pertained to how the EGM might come out.After that, we saw a TOPIX inclusion for something close to 45,000,000 shares or nearly 10% of shares outstanding. The data we had suggested the outcome below.We could pro-forma the Pension Trusts and Investment Trusts, but the swing of 9.9% had to come from somewhere. And that was important because it meant we could figure out who had the voting rights for tomorrow's AGM. Today we know who sold. And that may give you something of an idea of how the AGM might go (and as I noted back in January, Toshiba's management and board was likely to know that voting split a couple of months ahead of you). More below the fold.Recent insights into the Toshiba situation include the following:
Toshiba - The King Is Dead, Long Live the King
How Much of Toshiba Is Owned By "Activists"? 
Toshiba Results &amp; Shareholder Return - Possibly Big Impact Buyback Coming 
Toshiba Shareholder Return - A Little of This, A Little of That, But Sticky and Accretive 
Toshiba's 2020 AGM Investigative Report Is Damning 
With Directors Under Fire, Toshiba Axes Two, May Need Another EGM


How Much of Toshiba Is Owned By "Activists"? The Answer

Equity Analyst, Event-driven, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst, Event-driven

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. This affects both TSE-1 incumbents and new entrants (depending on the date of entry). Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. Last April, 71 constituents saw their liquidity factors removed causing an increase in their respective FFWs used for index calculation resulting in a TOPIX upweight.This situation opens up interesting opportunities for a basket trade. Below is a discussion regarding the key details of TSE's FFW Calculation Methodology and the candidate stocks which could potentially experience a change in the application of the liquidity factor (including some surprisingly big names).

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. For companies with "low liquidity" the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. This affects both TSE-1 incumbents and new entrants (depending on the date of entry). Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. Last April, 71 constituents saw their liquidity factors removed causing an increase in their respective FFWs used for index calculation resulting in a TOPIX upweight.This situation opens up interesting opportunities for a basket trade. Below is a discussion regarding the key details of TSE's FFW Calculation Methodology and the candidate stocks which could potentially experience a change in the application of the liquidity factor (including some surprisingly big names).   

TOPIX Index Upweights: The Big April Basket 2021

David Blennerhassett

<ul>
<li>Tactically, it isn't attractive owning <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba (6502 JP)</a> at 1% spread. Expect it to trade wider. There is still a fair bit of stock to come down the pipe.</li>
<li>Because of significant business overlap, <a href="https://www.smartkarma.com/entities/ck-infrastructure-holdings-l" target="_blank" data-smartkarma-citation="entities:163:1" rel="noopener">CK Infrastructure Holdings (1038 HK)</a> looks very similar to <a href="https://www.smartkarma.com/entities/power-assets-holdings-ltd" target="_blank" data-smartkarma-citation="entities:788:1" rel="noopener">Power Assets Holdings (6 HK)</a>. And CKI is coming up cheap on my monitor versus PAH.</li>
<li>There is less fundamental alpha to <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (5838 JP)</a> than before and more "just keep it because it is going up"-ness to the trade. </li>
</ul>


Tactically, it isn't attractive owning Toshiba (6502 JP) at 1% spread. Expect it to trade wider. There is still a fair bit of stock to come down the pipe.
Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH.
There is less fundamental alpha to Rakuten Bank (5838 JP) than before and more "just keep it because it is going up"-ness to the trade. 


Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int'l Sec

<ul>
<li>Last week on 20 Sep I published <a href="https://www.smartkarma.com/insights/toshiba-tender-offer-ends-today-upcoming-index-selldown-schedule" target="_blank" data-smartkarma-citation="insights:113337" rel="noopener">Toshiba Tender Offer Ends Today - Upcoming Index Selldown Schedule</a> and Sunday, <a href="https://www.smartkarma.com/insights/the-biggish-sep-2023-wednesday-thursday-trade-with-added-monday-friday-flavour" target="_blank" data-smartkarma-citation="insights:113623" rel="noopener">The Biggish Sep 2023 "Wednesday-Thursday Trade" With Added Monday/Friday Flavour</a>. </li>
<li>They were based on an expectation the TSE would announce the initial selldown for Sep-end as they normally would. Unbeknownst to me, on 22 Sep they announced end-Oct.</li>
<li>The initial TOPIX selldown is 30 Oct, not 28 Sep. This affects expected reverse funding today.</li>
</ul>


Last week on 20 Sep I published Toshiba Tender Offer Ends Today - Upcoming Index Selldown Schedule and Sunday, The Biggish Sep 2023 "Wednesday-Thursday Trade" With Added Monday/Friday Flavour. 
They were based on an expectation the TSE would announce the initial selldown for Sep-end as they normally would. Unbeknownst to me, on 22 Sep they announced end-Oct.
The initial TOPIX selldown is 30 Oct, not 28 Sep. This affects expected reverse funding today.


Updated TOPIX Selldown and Index Flows This Week - Initial TOPIX Selldown of Toshiba NEXT Month

<ul>
<li>I tally 49 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.</li>
<li>One new deals this week: <a href="https://www.smartkarma.com/entities/lansen-pharmaceutical-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:10835:1" rel="noopener">Lansen Pharmaceutical Holdings Co, Ltd. (503 HK)</a>'s Scheme.</li>
<li>Key updates took place for: <a href="https://www.smartkarma.com/entities/costa-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:22632:1" rel="noopener">Costa Group (CGC AU)</a>, <a href="https://www.smartkarma.com/entities/origin-energy-ltd" target="_blank" data-smartkarma-citation="entities:797:1" rel="noopener">Origin Energy (ORG AU)</a>, <a href="https://www.smartkarma.com/entities/healius-ltd-6d4d947d-ad32-4aea-b2d8-265f5768b55e" target="_blank" data-smartkarma-citation="entities:14208:1" rel="noopener">Healius (HLS AU)</a>, <a href="https://www.smartkarma.com/entities/symbio-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20292:1" rel="noopener">Symbio (SYM AU)</a>, <a href="https://www.smartkarma.com/entities/poly-culture-group-corp-h" target="_blank" data-smartkarma-citation="entities:4729:1" rel="noopener">Poly Culture (3636 HK)</a>, and <a href="https://www.smartkarma.com/entities/metro-pacific-investments-co" target="_blank" data-smartkarma-citation="entities:1054:1" rel="noopener">Metro Pacific Investments (MPI PM)</a>.</li>
</ul>


I tally 49 - mostly firm, mostly Asia-Pac - transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deals this week: Lansen Pharmaceutical Holdings Co, Ltd. (503 HK)'s Scheme.
Key updates took place for: Costa Group (CGC AU), Origin Energy (ORG AU), Healius (HLS AU), Symbio (SYM AU), Poly Culture (3636 HK), and Metro Pacific Investments (MPI PM).


(Mostly) Asia-Pac Weekly Risk Arb Wrap: Costa, Origin, Healius, Symbio, Poly Culture, Lansen, MPI

Japan

Toshiba Corporation manufactures and markets electrical and electronic products. The Company's products include digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), as well as social infrastructures such as power generators, medical equipment, and home appliances.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Toshiba Corp (6502 JP)

How Much of Toshiba Is Owned By "Activists"? The Answer

There has been a question of how much of Toshiba is owned by Active Foreign Investors. That is now largely answered. Their stake is down a quarter...

Travis Lundy

TOPIX Index Upweights: The Big April Basket 2021

TOPIX does an annual exercise to adjust Liquidity Factor. The time for trades around that is upon us. This insight looks at the best trade around...

Janaghan Jeyakumar, CFA

Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int'l Sec

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Updated TOPIX Selldown and Index Flows This Week - Initial TOPIX Selldown of Toshiba NEXT Month

I wrote 20 Sep on the initial TOPIX selldown. It turns out the TSE delayed it for a month. Perhaps "too short" lead time. Perhaps to mix with Oct...

Travis Lundy

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Costa, Origin, Healius, Symbio, Poly Culture, Lansen, MPI

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)