Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Yesterday, <a href="https://www.smartkarma.com/entities/mori-trust-sogo-reit-inc" target="_blank" data-smartkarma-citation="entities:8985:1" rel="noopener">Mori Trust Sogo Reit (8961 JP)</a> (MTR) and <a href="https://www.smartkarma.com/entities/mori-trust-hotel-reit-inc" target="_blank" data-smartkarma-citation="entities:23754:1" rel="noopener">Mori Trust Hotel Reit (3478 JP)</a> (MTH) announced a merger to be effective 1 March 2023. MTR will be the survivor.</li>
<li>The ratio is 1.00 : 0.92 MTR:MTH but MTR will conduct a 2:1 stock split on effective date to make it 1.00 : 1.84 to allow retail to continue holding.</li>
<li>This will effectively increase the size of MTR by 35%, and re-distributes earnings structure. There will be index consequences.</li>
</ul>


Yesterday, Mori Trust Sogo Reit (8961 JP) (MTR) and Mori Trust Hotel Reit (3478 JP) (MTH) announced a merger to be effective 1 March 2023. MTR will be the survivor.
The ratio is 1.00 : 0.92 MTR:MTH but MTR will conduct a 2:1 stock split on effective date to make it 1.00 : 1.84 to allow retail to continue holding.
This will effectively increase the size of MTR by 35%, and re-distributes earnings structure. There will be index consequences.


Mori Trust Sogo - Mori Trust Hotel REIT Merger

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Kenedix Residential Investment / Event-Driven

<ul>
<li>Today after the close, small-cap JREIT <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a> ("<strong>KDR</strong>") announced a follow-on equity offering to fund part of their recently-announced property acquisition. </li>
<li>The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,375 units. The total size of this offering could be roughly ¥9.4bn (~US$82mn). </li>
<li>Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.</li>
</ul>


Today after the close, small-cap JREIT Kenedix Residential Investment (3278 JP) ("KDR") announced a follow-on equity offering to fund part of their recently-announced property acquisition. 
The primary offer quantity is 47,500 units. In addition, there will also be an over-allotment quantity of 2,375 units. The total size of this offering could be roughly ¥9.4bn (~US$82mn). 
Below is a closer look at the details of this offering and the potential of this offering to trigger strong secondary market performance in the following weeks.


Kenedix Residential Investment (3278 JP): Could Outperform Peers in the Next Few Weeks

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/837/original/2019-01-18_11-35-42.png?1547778954" class="editor-image img-responsive" data-smartkarma-image-id="75837"></figure>
<p>Source: Japan Analytics</p>
</div>
<p><strong>RELATIVE PRICE SCORE</strong> - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. This insight updates our list of overbought and oversold companies, reviews the best and worst performing companies by RPS over the last two months and adds some specific comments on stocks on each category.</p>
<p><strong>RPS STATISTICS</strong> - The Company 'outlier' thresholds are set to "+4" for overbought and "-2" for oversold.  Currently, of the 3,686 listed companies for which monthly data is available, 91 companies are 'Overbought', and 120 are 'Oversold' - 2.5% and 3.2%, respectively of the total. For companies with a market capitalisation of over ¥100b, there are 35 'Overbought' and 24 'Oversold' companies. </p>
<p><strong>RPS 'TOPS'</strong> - In the last two years, 445 companies have achieved an RPS of '4' or more. 80% have seen their RPS fall to below '4' within the following two months. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 63% - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last two months have been <a href="https://www.smartkarma.com/entities/8225" target="_blank" data-smartkarma-citation="entities:8225:1">Descente (8114 JP)</a>,  <a href="https://www.smartkarma.com/entities/4908" target="_blank" data-smartkarma-citation="entities:4908:1">Ariake Japan (2815 JP)</a>, <a href="https://www.smartkarma.com/entities/15862" target="_blank" data-smartkarma-citation="entities:15862:1">Fancl (4921 JP)</a>, <a href="https://www.smartkarma.com/entities/13435" target="_blank" data-smartkarma-citation="entities:13435:1">Bandai Namco (7832 JP)</a>, <a href="https://www.smartkarma.com/entities/13475" target="_blank" data-smartkarma-citation="entities:13475:1">Don Quijote (7532 JP)</a>, and <a href="https://www.smartkarma.com/entities/1492" target="_blank" data-smartkarma-citation="entities:1492:1">Gmo Payment Gateway (3769 JP)</a>.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/838/original/2019-01-18_11-36-19.png?1547778995" class="editor-image img-responsive" data-smartkarma-image-id="75838"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/839/original/2019-01-18_11-37-01.png?1547779035" class="editor-image img-responsive" data-smartkarma-image-id="75839"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/840/original/2019-01-18_11-37-37.png?1547779070" class="editor-image img-responsive" data-smartkarma-image-id="75840"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/841/original/2019-01-18_11-38-07.png?1547779100" class="editor-image img-responsive" data-smartkarma-image-id="75841"></figure>
<div class="content-caption">
<p>Source: Japan Analytics</p>
</div>
<p><strong>RPS 'BOTTOMS'</strong> - 296 companies have seen their RPS fall to '-2' or below in the last two years. 58% have seen their RPS recover to above '-2' within three to six months. For larger capitalisation companies, the numbers are 72 companies and 67%. Some recent examples of positive RPS mean reversion in the last two months have been <a href="https://www.smartkarma.com/entities/22772" target="_blank" data-smartkarma-citation="entities:22772:1">LINE Corp (3938 JP)</a> - a 'contrarians only' selection in our last <a href="https://www.smartkarma.com/insights/japan-relative-price-score-update-overbought-and-oversold-companies" target="_blank" data-smartkarma-citation="insights:25849">Insight</a>, and <a href="https://www.smartkarma.com/entities/15457" target="_blank" data-smartkarma-citation="entities:15457:1">Tokyo Electric Power (9501 JP)</a>.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/842/original/2019-01-18_11-39-56.png?1547779218" class="editor-image img-responsive" data-smartkarma-image-id="75842"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/843/original/2019-01-18_11-42-06.png?1547779350" class="editor-image img-responsive" data-smartkarma-image-id="75843"></figure>
<div class="content-caption">Source: Japan Analytics</div>
<div class="content-highlight">
<p style="text-align: left;">In the <strong>DETAIL </strong>section below we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the largest two-month positive and negative changes in RPS.</p>
<p style="text-align: center;"><strong>NB - All data is as of January 17th close.</strong></p>
</div>



Source: Japan Analytics

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. This insight updates our list of overbought and oversold companies, reviews the best and worst performing companies by RPS over the last two months and adds some specific comments on stocks on each category.
RPS STATISTICS - The Company 'outlier' thresholds are set to "+4" for overbought and "-2" for oversold.  Currently, of the 3,686 listed companies for which monthly data is available, 91 companies are 'Overbought', and 120 are 'Oversold' - 2.5% and 3.2%, respectively of the total. For companies with a market capitalisation of over ¥100b, there are 35 'Overbought' and 24 'Oversold' companies. 
RPS 'TOPS' - In the last two years, 445 companies have achieved an RPS of '4' or more. 80% have seen their RPS fall to below '4' within the following two months. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 63% - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last two months have been Descente (8114 JP),  Ariake Japan (2815 JP), Fancl (4921 JP), Bandai Namco (7832 JP), Don Quijote (7532 JP), and Gmo Payment Gateway (3769 JP).





Source: Japan Analytics

RPS 'BOTTOMS' - 296 companies have seen their RPS fall to '-2' or below in the last two years. 58% have seen their RPS recover to above '-2' within three to six months. For larger capitalisation companies, the numbers are 72 companies and 67%. Some recent examples of positive RPS mean reversion in the last two months have been LINE Corp (3938 JP) - a 'contrarians only' selection in our last Insight, and Tokyo Electric Power (9501 JP).


Source: Japan Analytics

In the DETAIL section below we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the largest two-month positive and negative changes in RPS.
NB - All data is as of January 17th close.


Japan: Relative Price Scores - Overbought and Oversold Companies - Calling 'Tops' & 'Bottoms'

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

<p>Orix JREIT plans to raise US$135m/JPY15bn in order to acquire two properties. The company has been issuing equity to acquire new assets, every year for the past three years once in March and then again in the second half of the year.</p><p>We had covered the previous Mar-15 deal, <a href="https://www.smartkarma.com/insights/orix-jreit-8954-jp-another-placement-for-acquisition-will-be-dpu-accretive" target="_blank" data-smartkarma-citation="insights:513">Orix JREIT (8954 JP) - Another placement for acquisition; will be DPU accretive</a>, which went on to yield a 5% upside in the first month.</p><p>The deal scores a positive score on our framework as: company's previous deals have all…</p>

Orix JREIT plans to raise US$135m/JPY15bn in order to acquire two properties. The company has been issuing equity to acquire new assets, every year for the past three years once in March and then again in the second half of the year.We had covered the previous Mar-15 deal, Orix JREIT (8954 JP) - Another placement for acquisition; will be DPU accretive, which went on to yield a 5% upside in the first month.The deal scores a positive score on our framework as: company's previous deals have all…

Orix JREIT - Its that Time of the Year Again

Japan

MORI TRUST Sogo Reit, Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company mainly invests in office buildings in metropolitan area and local cities.

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Mori Trust Sogo Reit (8961 JP)

Mori Trust Sogo - Mori Trust Hotel REIT Merger

Mori Trust Sogo REIT and Mori Trust Hotel REIT have decided to merge. MTR will be the survivor. This should get done without issue. There will be...

Travis Lundy

Kenedix Residential Investment (3278 JP): Could Outperform Peers in the Next Few Weeks

Small-cap JREIT Kenedix Residential Investment announced a follow-on equity offering to fund part of their recently-announced property acquisition....

Janaghan Jeyakumar, CFA

Japan: Relative Price Scores - Overbought and Oversold Companies - Calling 'Tops' & 'Bottoms'

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the...

Campbell Gunn

Orix JREIT - Its that Time of the Year Again

Orix JREIT plans to raise US$135m/JPY15bn in order to acquire two properties. The company has been issuing equity to acquire new assets, every year...

Sumeet Singh

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