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.

Event-Driven

Shinko Electric Industries / Event-Driven

<ul>
<li>At first glance, the <a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" rel="noopener">Shinko Electric Industries (6967 JP)</a> and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.</li>
<li>The aftermath of <a href="https://www.smartkarma.com/entities/china-traditional-chinese-medicine" target="_blank" data-smartkarma-citation="entities:351:1" rel="noopener">China Traditional Chinese Medicine (570 HK)</a> has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread. </li>
<li>Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.</li>
</ul>


At first glance, the Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
The aftermath of China Traditional Chinese Medicine (570 HK) has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread. 
Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.


Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Today after the close, <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> reported the results of their ¥800bn Tender Offer Buyback, originally intended to repurchase 290.12mm shares from cross-holders. </li>
<li>In the end, 343.83mm shares were tendered (53.71mm shares more than originally expected, worth about ¥150bn at Tender Price). That creates back-end "issues" which must be considered.</li>
<li>The resulting supply/demand profile is mixed, but on balance, I expect sees positive demand into the H1 earnings announcement. Watch for another buyback possibly announced then.</li>
</ul>


Today after the close, Toyota Motor (7203 JP) reported the results of their ¥800bn Tender Offer Buyback, originally intended to repurchase 290.12mm shares from cross-holders. 
In the end, 343.83mm shares were tendered (53.71mm shares more than originally expected, worth about ¥150bn at Tender Price). That creates back-end "issues" which must be considered.
The resulting supply/demand profile is mixed, but on balance, I expect sees positive demand into the H1 earnings announcement. Watch for another buyback possibly announced then.


Toyota Partial Offer Results - What Next?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric Industries (6967 JP)</a> pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The tender start has been delayed from late August to around late January 2025.</li>
<li>The delay was due to outstanding China SAMR and Vietnam regulatory approvals. The stretched timeline suggests that SAMR will likely conditionally approve the deal. </li>
<li>While <a href="https://www.smartkarma.com/entities/ibiden-co-ltd" target="_blank" data-smartkarma-citation="entities:16630:1" rel="noopener">Ibiden Co Ltd (4062 JP)</a>’s underperformance lowers the deal’s break price, timing, not break risk, remains the key concern. At the last close, the gross/annualised spread was 3.7%/7.5%. </li>
</ul>



Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The tender start has been delayed from late August to around late January 2025.
The delay was due to outstanding China SAMR and Vietnam regulatory approvals. The stretched timeline suggests that SAMR will likely conditionally approve the deal. 
While Ibiden Co Ltd (4062 JP)’s underperformance lowers the deal’s break price, timing, not break risk, remains the key concern. At the last close, the gross/annualised spread was 3.7%/7.5%. 


Shinko Electric (6967 JP): Tender Start Timelines Delayed

David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pt-barito-renewables-energy-tbk" target="_blank" data-smartkarma-citation="entities:40150:1" rel="noopener">Barito Renewables Energy (BREN IJ)</a> is down 19% in the past month. But still accounts for ~730% of parent <a href="https://www.smartkarma.com/entities/barito-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:8851:1" rel="noopener">Barito Pacific (BRPT IJ)</a>'s market cap. Still unsustainable.</li>
<li>Preceding my comments on the Barito complex AND the <a href="https://www.smartkarma.com/entities/kyocera-corp" target="_blank" data-smartkarma-citation="entities:753:1" rel="noopener">Kyocera Corp (6971 JP)</a> / <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> Holdco, are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation (sub/parent) &gt;20%.</li>
</ul>



Barito Renewables Energy (BREN IJ) is down 19% in the past month. But still accounts for ~730% of parent Barito Pacific (BRPT IJ)'s market cap. Still unsustainable.
Preceding my comments on the Barito complex AND the Kyocera Corp (6971 JP) / KDDI Corp (9433 JP) Holdco, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation (sub/parent) &gt;20%.


StubWorld: Barito Renewables Rolling Over - More To Come. Also Kyocera/KDDI

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>The review period for 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> September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.</li>
<li>
<a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. </li>
<li>Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.</li>
</ul>


The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.

Fast Retailing (9983 JP)'s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September. 
Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.


Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Japan

Kyocera Corporation manufacturers electronic equipment and components. The Company's products include telecommunication equipment, information equipment, optical equipment, ceramic products, semiconductor parts, chips, hybrid integrated circuits, thermal printheads, image sensors, liquid crystal displays, and connectors. Kyocera operates worldwide.

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Kyocera Corp (6971 JP)

Shinko Electric (6967 JP): A Casualty of the China TCM Deal Break

The aftermath of the China TCM deal break has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event...

Arun George

Toyota Partial Offer Results - What Next?

A discussion of the Toyota Tender Offer Results, what they mean for supply/demand dynamics near-term, when the current buyback could be completed,...

Travis Lundy

Shinko Electric (6967 JP): Tender Start Timelines Delayed

The stretched timeline suggests that SAMR will likely conditionally approve the deal. Timing, not break risk, remains the key concern. At the last...

Arun George

StubWorld: Barito Renewables Rolling Over - More To Come. Also Kyocera/KDDI

Barito Renewables is down 19% in the past month. Yet still accounts for ~730% of parent Barito Pacific's market cap. Still unsustainable. Plus...

David Blennerhassett

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

Review period ended yesterday. Fast Retailing's capping will result in a 0.9% drop in index weight. There could be 3 index changes with sector...

Brian Freitas

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