Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<p>In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. </p>
<p>However, this is only the calm before the storm.</p>
<p>In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.</p>
<p>Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. </p>

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. 

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<p><a href="https://www.smartkarma.com/entities/meiko-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:20004:1" rel="noopener"><strong>Meiko Electronics (6787 JP)</strong></a> is a Japanese designer and manufacturer of double-sided/multi-layer through-hole PCBs and slightly complex PCBs of other sorts, with factories in Japan, China, and Vietnam, and sales around the world. The products include PCBs for automotive (engine ECUs, lighting, safety, and ADAS), telecommunications (smartphones, base stations, SSDs), industrial and medical use (robots, FA, standard OA and medical equipment), and home appliances and video games. It will do everything for customers - from design to mounting/assembly and shipping.</p><p>It is not a really exciting or terribly glamorous business, but it gets 10% EBITDA margins on that unglamorous business. </p><p>The stock was listed on JASDAQ in 2000 but never bothered to make the jump to TSE.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/845/original/Screenshot+2021-03-08+at+9.54.17+PM.png?1615211670" class="editor-image img-responsive" data-smartkarma-image-id="192845"></figure></section><div class="content-highlight"><p>Today, <strong>Meiko</strong> announced that it had applied for such a reassignment in order to improve social creditworthiness, expand the investor base, and provide more financial flexibility.</p></div><p>This <em>may be</em> the first explicit application by a JASDAQ-listed stock in the new TSE1 Listing Criteria era and as a TOPIX pre-event trade, it is worth a look.</p>

Meiko Electronics (6787 JP) is a Japanese designer and manufacturer of double-sided/multi-layer through-hole PCBs and slightly complex PCBs of other sorts, with factories in Japan, China, and Vietnam, and sales around the world. The products include PCBs for automotive (engine ECUs, lighting, safety, and ADAS), telecommunications (smartphones, base stations, SSDs), industrial and medical use (robots, FA, standard OA and medical equipment), and home appliances and video games. It will do everything for customers - from design to mounting/assembly and shipping.It is not a really exciting or terribly glamorous business, but it gets 10% EBITDA margins on that unglamorous business. The stock was listed on JASDAQ in 2000 but never bothered to make the jump to TSE.Today, Meiko announced that it had applied for such a reassignment in order to improve social creditworthiness, expand the investor base, and provide more financial flexibility.This may be the first explicit application by a JASDAQ-listed stock in the new TSE1 Listing Criteria era and as a TOPIX pre-event trade, it is worth a look.

TOPIX Inclusion Pre-Event for Meiko Electronics (6787)

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/848/original/2020-04-21_07-03-22.png?1587420235" class="editor-image img-responsive" data-smartkarma-image-id="128848"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/851/original/2020-04-21_07-07-10.png?1587420481" class="editor-image img-responsive" data-smartkarma-image-id="128851"></figure><div class="content-caption">Source • Japan Analytics</div>
</div><p><strong>LATE ORDERS</strong> - All three of yesterday's results announcements were from <strong>Restaurants</strong> with February year-ends. These 'tail-enders' all swung into losses for the fourth quarter and did not make forecasts for the current year, which is becoming more the norm. The Sector as a whole still has a positive Results &amp; Revision Score supported by the <strong>Chinese</strong> and<strong> Take Out &amp; Delivery</strong> Peer Groups.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/128/853/original/2020-04-21_07-18-49.png?1587421152" class="editor-image img-responsive" data-smartkarma-image-id="128853"></figure><div class="content-caption">Source • Japan Analytics</div><p>In the <strong>DETAIL </strong>below, we shall briefly review Monday's ten revisions announcements.  The positive/neutral/negative balance was 3:1:6. Coating Machinery specialist <a href="https://www.smartkarma.com/entities/hirano-tecseed-co-kinzoku" target="_blank" data-smartkarma-citation="entities:11356:1" rel="noopener">Hirano Tecseed (6245 JP)</a> raised its dividend and now yields 4.2% while sporting a negative Enterprise Value (EV) of ¥-2.2b. </p>


Source • Japan Analytics
LATE ORDERS - All three of yesterday's results announcements were from Restaurants with February year-ends. These 'tail-enders' all swung into losses for the fourth quarter and did not make forecasts for the current year, which is becoming more the norm. The Sector as a whole still has a positive Results &amp; Revision Score supported by the Chinese and Take Out &amp; Delivery Peer Groups.Source • Japan AnalyticsIn the DETAIL below, we shall briefly review Monday's ten revisions announcements.  The positive/neutral/negative balance was 3:1:6. Coating Machinery specialist Hirano Tecseed (6245 JP) raised its dividend and now yields 4.2% while sporting a negative Enterprise Value (EV) of ¥-2.2b. 

🇯🇵 JAPAN • Revisions & Results 20th April - Take Aways and LI(Not)FULL

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.

Delta Electronics Thailand  / Event-Driven

<p><a href="https://www.smartkarma.com/entities/12688" target="_blank" data-smartkarma-citation="entities:12688:1">Delta Electronics (2308 TT)</a> (DEI) launched the conditional voluntary tender offer for <a href="https://www.smartkarma.com/entities/20912" target="_blank" data-smartkarma-citation="entities:20912:1">Delta Electronics Thai (DELTA TB)</a> (Delta), an electronics contract manufacturer, on 26 February 2019. The tender offer of THB71.00 cash per share values Delta at an EV of THB72 billion ($2.2 billion). </p><div class="content-highlight"><p>Delta and DEI have close links as they were both founded by billionaire Bruce Cheng. Consequently, the tender offer could be viewed as a mechanism for the Chen family to sell their stake to a “friendly” DEI. For minority shareholders, we believe that DEI’s tender offer is reasonable and it makes little sense for minority shareholders to hold on to their shares.</p></div>

Delta Electronics (2308 TT) (DEI) launched the conditional voluntary tender offer for Delta Electronics Thai (DELTA TB) (Delta), an electronics contract manufacturer, on 26 February 2019. The tender offer of THB71.00 cash per share values Delta at an EV of THB72 billion ($2.2 billion). Delta and DEI have close links as they were both founded by billionaire Bruce Cheng. Consequently, the tender offer could be viewed as a mechanism for the Chen family to sell their stake to a “friendly” DEI. For minority shareholders, we believe that DEI’s tender offer is reasonable and it makes little sense for minority shareholders to hold on to their shares.

Delta Electronics (DELTA TB): Little Option but to Accept the Tender Offer

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Our outlook remains neutral for global ex-U.S. markets while horizontal consolidation continues on the MSCI ACWI ex-U.S. index.  In today’s report we take a bottoms-up view on developed ex-U.S. equities, highlighting stocks that present attractive buy opportunities <em>within the <strong>Communications, Health Care, Manufacturing, Materials, Technology, Transportation, and Utilities </strong>Sectors</em></p>

Our outlook remains neutral for global ex-U.S. markets while horizontal consolidation continues on the MSCI ACWI ex-U.S. index.  In today’s report we take a bottoms-up view on developed ex-U.S. equities, highlighting stocks that present attractive buy opportunities within the Communications, Health Care, Manufacturing, Materials, Technology, Transportation, and Utilities Sectors

Bottoms-Up View on Developed Markets: Actionable Stocks, Part 2

Japan

Meiko Electronics Co., Ltd. designs, manufactures, and markets printed circuit boards.  The Company also produces populated boards, board testing devices, and multi-video processors.

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Meiko Electronics (6787 JP)

TOPIX Inclusion Trade Summary: Mar 2021

The March 2021 TOPIX Index Inclusion Event and Pre-Event Summary, with links to all the greatest hits. The model performed as expected. The best...

Janaghan Jeyakumar, CFA

TOPIX Inclusion Pre-Event for Meiko Electronics (6787)

Meiko is a well-known design and fabrication shop for PCBs and everything related with decend margins. JASDAQ listed for 20+yrs, Meiko has applied...

Travis Lundy

🇯🇵 JAPAN • Revisions & Results 20th April - Take Aways and LI(Not)FULL

LATE ORDERS - All three of yesterday's results announcements were from Restaurants with February year-ends. These 'tail-enders' all swung into...

Campbell Gunn

Delta Electronics (DELTA TB): Little Option but to Accept the Tender Offer

Delta Electronics (2308 TT) (DEI) launched the conditional voluntary tender offer for Delta Electronics Thai (DELTA TB) (Delta), an electronics...

Arun George

Bottoms-Up View on Developed Markets: Actionable Stocks, Part 2

Our outlook remains neutral for global ex-U.S. markets while horizontal consolidation continues on the MSCI ACWI ex-U.S. index. In today’s report...

Vermilion Research

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