Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Last May I proposed a model for thinking about the appropriate discount of <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> vs its giant equity portfolio and small operations. It was a sell.</li>
<li>In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed. </li>
<li>Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here's the hedging model.</li>
</ul>


Last May I proposed a model for thinking about the appropriate discount of Bank of Kyoto (8369 JP) vs its giant equity portfolio and small operations. It was a sell.
In December, the bank changed its shareholder return ratio, which indicated less value destruction, and tighter appropriate discount. The shares rallied and discount narrowed. 
Now the Shares Adjusted for Banking Ops Valuation have seen the discount to After-Tax Equity Portfolio Valuation widen sharply in the past 10 days. So here's the hedging model.


Bank of Kyoto (8369) - A Complicated Risk Model Clarified

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a> is/was my High Conviction call for 2022. </li>
<li>SBI went to 47.77% in the Tender and is higher as Shinsei has bought back stock. Shinsei has more to go and could get funkier to buy back more.</li>
<li>8 February is the EGM to approve a new board and explicit SBI control. Delisting expectations will rise after that, but practically it will take time.</li>
</ul>



Shinsei Bank (8303 JP) is/was my High Conviction call for 2022. 
SBI went to 47.77% in the Tender and is higher as Shinsei has bought back stock. Shinsei has more to go and could get funkier to buy back more.
8 February is the EGM to approve a new board and explicit SBI control. Delisting expectations will rise after that, but practically it will take time.


2022 High Conviction - Shinsei Bank Update

<ul>
<li>Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced. </li>
<li>This will end up being a BIG TOPIX inclusion in May or June. </li>
<li>And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).</li>
</ul>


Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced. 
This will end up being a BIG TOPIX inclusion in May or June. 
And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).


Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

David Blennerhassett

NTT (Nippon Telegraph & Telephone) / Event-Driven

NTT (Nippon Telegraph & Telephone) (9432 JP)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (9432 JP)</a> sees a US$1bn selldown of shares on 29 December, due to a weird quirk in the way TOPIX and JPX Nikkei 400 are constructed and managed.</li>
<li>China's State Administration for Market Supervision is reviewing <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer (1337 HK)</a>'s privatisation as a simple case. With the key regulatory pre-condition all but satisfied, the Scheme timeline will significantly shorten. </li>
<li>The trade is to be long the back end of <a href="https://www.smartkarma.com/entities/shinsei-bank-ltd" target="_blank" data-smartkarma-citation="entities:16897:1" rel="noopener">Shinsei Bank (8303 JP)</a>'s Tender Offer. BUY Shinsei Bank shares - outright, and vs large Japanese banks with higher PBRs. </li>
</ul>



NTT (9432 JP) sees a US$1bn selldown of shares on 29 December, due to a weird quirk in the way TOPIX and JPX Nikkei 400 are constructed and managed.
China's State Administration for Market Supervision is reviewing Razer (1337 HK)'s privatisation as a simple case. With the key regulatory pre-condition all but satisfied, the Scheme timeline will significantly shorten. 
The trade is to be long the back end of Shinsei Bank (8303 JP)'s Tender Offer. BUY Shinsei Bank shares - outright, and vs large Japanese banks with higher PBRs. 


Last Week in Event SPACE: NTT, Razer, Shinsei Bank, Evergrande, Bank of Kyoto, Nippon Express

<ul>
<li>In late May 2021 I wrote <a href="https://www.smartkarma.com/insights/bank-of-kyoto-8369-a-deeply-discounted-holdco-which-will-likely-not-monetize" target="_blank" data-smartkarma-citation="insights:52111" rel="noopener">Bank of Kyoto (8369) - A Deeply Discounted Holdco Which Will Likely Not Monetize</a>. I discussed valuation and appropriate portfolio and business discounting methodologies.</li>
<li>I followed up in <a href="https://www.smartkarma.com/insights/bank-of-kyoto-8369-cheaper-now" target="_blank" rel="noopener">July</a> suggesting it might be a buy at the bottom of the recent discount range, but that the model required External Pressure to get BIG gains.</li>
<li>Yesterday, 21 months after the current Mid-Term Management Plan upped target payout ratio from 25% to 30%, <a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> raised target payout ratio to 50%.</li>
</ul>


In late May 2021 I wrote Bank of Kyoto (8369) - A Deeply Discounted Holdco Which Will Likely Not Monetize. I discussed valuation and appropriate portfolio and business discounting methodologies.
I followed up in July suggesting it might be a buy at the bottom of the recent discount range, but that the model required External Pressure to get BIG gains.
Yesterday, 21 months after the current Mid-Term Management Plan upped target payout ratio from 25% to 30%, Bank of Kyoto (8369 JP) raised target payout ratio to 50%.


Bank of Kyoto (8369 JP) Raises Payout Ratio - But It's a Complicated Risk Model

Japan

The Bank of Kyoto, Ltd. is a regional bank in Kyoto.  The Bank provides banking services including deposits, savings, loans, foreign exchange transactions, and securities investments.  The Bank of Kyoto also provides financial services such as letter of credit, leasing, loans, and credit cards.

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Bank of Kyoto (8369 JP)

Bank of Kyoto (8369) - A Complicated Risk Model Clarified

The Bank of Kyoto (8369) model is clarified so dynamic hedging ratios depend on regional bank PBRs. The model suggests it's at the cheap end of its...

Travis Lundy

2022 High Conviction - Shinsei Bank Update

Shinsei is buying back stock and the EGM to install SBI's management is Tuesday 8 February. Watch for more delisting talk after. There is buyback...

Travis Lundy

Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

Mercari (4385 JP) announced Friday it applied for TSE Prime transfer. I expect a TOPIX inclusion end-May or end-June. The change in FFW method...

Travis Lundy

Last Week in Event SPACE: NTT, Razer, Shinsei Bank, Evergrande, Bank of Kyoto, Nippon Express

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

Bank of Kyoto (8369 JP) Raises Payout Ratio - But It's a Complicated Risk Model

Bank of Kyoto announced an increase in payout ratio from 30% to 50%. That's good. The shares popped. Economically, they popped the right amount; it...

Travis Lundy

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