Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The flip-side of the <a href="https://www.smartkarma.com/insights/toho-takeout-of-rakutenchi-buying-a-real-estate-portfolio-at-a-50-premium-but-0-7x-nav" target="_blank" data-smartkarma-citation="insights:122135" rel="noopener">Toho Takeout of Rakutenchi - Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.</a> is the Hankyu-Hanshin deal to buy OS Corp (9637).</li>
<li>Tokyo-Based Toho buys out Kansai-based Hankyu-Hanshin's stake in Tokyo-based Rakutenchi. HH buys out Toho's stake in Kobe-based OS Corp. This is a "TOB Swap". HH owns 21.7% of Toho too.</li>
<li>Like Rakutenchi, it is being done at a PBR higher than 1, but a decent discount to NAV. But this one is horribly, horribly illiquid (1,000 shs/day) </li>
</ul>


The flip-side of the Toho Takeout of Rakutenchi - Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV. is the Hankyu-Hanshin deal to buy OS Corp (9637).
Tokyo-Based Toho buys out Kansai-based Hankyu-Hanshin's stake in Tokyo-based Rakutenchi. HH buys out Toho's stake in Kobe-based OS Corp. This is a "TOB Swap". HH owns 21.7% of Toho too.
Like Rakutenchi, it is being done at a PBR higher than 1, but a decent discount to NAV. But this one is horribly, horribly illiquid (1,000 shs/day) 


<ul>
<li>Yesterday, <a href="https://www.smartkarma.com/entities/tokyo-rakutenchi-co-ltd" target="_blank" data-smartkarma-citation="entities:2078:1" rel="noopener">Tokyo Rakutenchi (8842 JP)</a>'s #1 shareholder <a href="https://www.smartkarma.com/entities/toho-co-ltd" target="_blank" data-smartkarma-citation="entities:7806:1" rel="noopener">Toho Co Ltd (9602 JP)</a> agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.</li>
<li>The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.</li>
<li>The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR &gt;1.0, but Price/NAV of the takeover is 0.7x, without synergies included. </li>
</ul>


Yesterday, Tokyo Rakutenchi (8842 JP)'s #1 shareholder Toho Co Ltd (9602 JP) agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.
The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.
The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR &gt;1.0, but Price/NAV of the takeover is 0.7x, without synergies included. 


Toho Takeout of Rakutenchi - Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tokyo-rakutenchi-co-ltd" target="_blank" data-smartkarma-citation="entities:2078:1" rel="noopener">Tokyo Rakutenchi (8842 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/toho-co-ltd" target="_blank" data-smartkarma-citation="entities:7806:1" rel="noopener">Toho Co Ltd (9602 JP)</a>’s tender offer of JPY6,720 per share, a 51.5% premium to the undisturbed (6 December). </li>
<li>The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 24.29% ownership ratio.</li>
<li>Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high. </li>
</ul>



Tokyo Rakutenchi (8842 JP) has recommended Toho Co Ltd (9602 JP)’s tender offer of JPY6,720 per share, a 51.5% premium to the undisturbed (6 December). 
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 24.29% ownership ratio.
Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high. 


Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720

<ul>
<li>As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.</li>
<li>This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.</li>
<li>This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.</li>
</ul>


As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.
This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.


2022 JPX Nikkei 400 Rebal Update - Going the Right Way

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).</li>
<li>
<a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> at the September rebalance.</li>
</ul>


There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).

Oriental Land (4661 JP) is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the Nikkei 225 (NKY INDEX) at the September rebalance.


JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks

Japan

Hankyu Hanshin Holdings, Inc. is a passenger rail company serving the Kansai area.  The Company also provides passenger bus transportation and logistics services.  In addition, Hankyu Hanshin Holdings operates housing and urban development, athletic facilities, theaters, travel agents, hotels, and other leisure-related services.

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Hankyu Hanshin Holdings (9042 JP)

Hankyu Hanshin Takeout of OS Corp

TOTALLY ILLIQUID DEAL ALERT - This is the lowest foreign ownership stock in Japan that I've ever seen. Smallcap Tender Offer. Illiquid. 59% corps,...

Travis Lundy

Toho Takeout of Rakutenchi - Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.

Toho (9602) is taking out a real estate operations affiliate Tokyo Rakutenchi. It is doing so at 1.2x book but probably 0.7x NAV. And the Board...

Travis Lundy

Tokyo Rakutenchi (8842 JP): Toho’s Tender Offer at JPY6,720

The minimum acceptance condition requires a 30.2% minority acceptance rate. This acceptance rate is doable as the offer represents a ten-year high...

Arun George

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

JPX Nikkei 400 Index Rebalance: Some Biggish Impact Stocks

There are 36 adds & 34 deletes for the JPX Nikkei 400 Index at the August rebalance leading to an estimated one way turnover of 4.75% and a two-way...

Brian Freitas

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