Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.</li>
<li>Also like Q2, they announced a buyback - this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.</li>
<li>This creates interesting index flows over the next several months, and other trading cos have live buybacks too.</li>
</ul>



Mitsui &amp; Co Ltd (8031 JP) reported Q3 earnings Friday afternoon during the market session. Like at Q2, they upped their fiscal-year forecast to well above Street consensus.
Also like Q2, they announced a buyback - this one an extension in time, shares, and money on the one already in place, raising the total Core CashFlow Payout Ratio.
This creates interesting index flows over the next several months, and other trading cos have live buybacks too.


Mitsui & Co (8031) Q3 - Big Profit, New Bigger Buyback, Some Index Selling; and Competition

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

Kepco Engineering & Construction / Index Rebalance

<ul>
<li>Solactive has announced the constituent changes for the Global Uranium &amp; Nuclear Components Index. There are 6 adds and 5 deletes with implementation at the close on 31 January.</li>
<li>Estimated one-way turnover is in excess of 12% and will result in a one-way trade of US$207m. There are 11 stocks with estimated passive flows greater than 5x ADV.</li>
<li>Some of the inclusions have had BIG rallies over the last couple of months and there could be profit taking on those names in the next few days.</li>
</ul>


Solactive has announced the constituent changes for the Global Uranium &amp; Nuclear Components Index. There are 6 adds and 5 deletes with implementation at the close on 31 January.
Estimated one-way turnover is in excess of 12% and will result in a one-way trade of US$207m. There are 11 stocks with estimated passive flows greater than 5x ADV.
Some of the inclusions have had BIG rallies over the last couple of months and there could be profit taking on those names in the next few days.


Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes

Sumitomo Precision Products / Event-Driven

<ul>
<li>On Friday, <a href="https://www.smartkarma.com/entities/sumitomo-corp" target="_blank" data-smartkarma-citation="entities:5380:1" rel="noopener">Sumitomo Corp (8053 JP)</a> announced a bid for equity affiliate (they own 27+% but Nippon Steel 15%, top 2 is 40+%) <a href="https://www.smartkarma.com/entities/sumitomo-precision-products" target="_blank" data-smartkarma-citation="entities:5797:1" rel="noopener">Sumitomo Precision Products (6355 JP)</a>. </li>
<li>It's a one-year high and 4-year high price, and 8x average 10yr EV/EBITDA but 4.6x 2024e EBITDA from the Mid Term Plan. And way below a 10-year high. </li>
<li>This gets done if Retail agrees to the tender. If 50% put in, that should do it. So I expect this gets done.</li>
</ul>


On Friday, Sumitomo Corp (8053 JP) announced a bid for equity affiliate (they own 27+% but Nippon Steel 15%, top 2 is 40+%) Sumitomo Precision Products (6355 JP). 
It's a one-year high and 4-year high price, and 8x average 10yr EV/EBITDA but 4.6x 2024e EBITDA from the Mid Term Plan. And way below a 10-year high. 
This gets done if Retail agrees to the tender. If 50% put in, that should do it. So I expect this gets done.


Sumitomo Precision Products (6355) Buyout by Sumitomo Corp - Likely To Get Done

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui &amp; Co Ltd (8031 JP)</a> on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.</li>
<li>Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.</li>
<li>The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There's also a fair bit of index selling the next 6mos.</li>
</ul>



Mitsui &amp; Co Ltd (8031 JP) on 1 November reported its results for H1 2022. H1 Revenue +37.1%yoy, OP+27.2%yoy, NP+33.2%yoy to ¥539bn. Full-year NP forecast +22.5% to ¥980bn.
Mitsui raised its dividend forecast (previously scheduled to rise from ¥105/share to ¥120/share) to ¥130/share and announced a ¥140bn buyback, adding to the ¥100bn announced in May completed in September.
The first ¥58.6bn was done in a ToSTNeT-3 buyback. Now there is another ¥79.4bn to go. There's also a fair bit of index selling the next 6mos.


Mitsui & Co (8031) Buyback - Big Profit, Big Div, Big Buyback, Some Index Selling

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>We discuss a pair trade among the major Japanese trading companies. We propose going long on Marubeni Corp and going short on Itochu. </li>
<li>We believe Marubeni has one of the most attractive valuations among the five major Japanese trading companies in terms of ROE vs. P/B and Itochu is the least attractive.</li>
<li>We like Marubeni's strength in food and agri businesses. Itochu is more dependent on metals, minerals and energy sectors which tend to be more volatile. </li>
</ul>


We discuss a pair trade among the major Japanese trading companies. We propose going long on Marubeni Corp and going short on Itochu. 
We believe Marubeni has one of the most attractive valuations among the five major Japanese trading companies in terms of ROE vs. P/B and Itochu is the least attractive.
We like Marubeni's strength in food and agri businesses. Itochu is more dependent on metals, minerals and energy sectors which tend to be more volatile. 


A Pair Trade of Japanese General Trading Companies: Long Marubeni & Short Itochu

Japan

Sumitomo Corp is a general trading company.  The Company imports and exports a wide variety of goods such as metals, machinery, chemicals, fuel,food products, and textiles.  Sumitomo also operates real estate, construction, shipping, insurance, finance, and leasing businesses.

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Sumitomo Corp (8053 JP)

Mitsui & Co (8031) Q3 - Big Profit, New Bigger Buyback, Some Index Selling; and Competition

Mitsui had a great Q3, forecasting an even better Q4. It announced a new Buyback to pay out 100% of incremental Net Profit, 142% of incremental...

Travis Lundy

Solactive Global Uranium & Nuclear Components Index Rebalance: 6 Adds, 5 Deletes

There are 6 adds & 5 deletes for the Solactive Global Uranium & Nuclear Components Index tracked by the URA ETF. One-way turnover is in excess of...

Brian Freitas

Sumitomo Precision Products (6355) Buyout by Sumitomo Corp - Likely To Get Done

Sumitomo Corp has launched a takeover bid for Sumitomo Precision Products (6355). I expect they have half the votes they need in the bag, and the...

Travis Lundy

Mitsui & Co (8031) Buyback - Big Profit, Big Div, Big Buyback, Some Index Selling

Mitsui Corp last week announced strong results and upward guidance, especially in energy. Consensus says Mar-23 is the cycle peak. Higher div,...

Travis Lundy

A Pair Trade of Japanese General Trading Companies: Long Marubeni & Short Itochu

We discuss a pair trade among the major Japanese trading companies. We propose going long on Marubeni Corp and going short on Itochu.

Douglas Kim

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