Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>You'd only want to be long <a href="https://www.smartkarma.com/entities/sun-corp" target="_blank" data-smartkarma-citation="entities:10803:1" rel="noopener">Sun Corp (6736 JP)</a> if you're very bullish <a href="https://www.smartkarma.com/entities/cellebrite-di-ltd" target="_blank" data-smartkarma-citation="entities:37102:1" rel="noopener">Cellebrite (CLBT US)</a>and some of the other businesses inside Sun Corp which aren't making money.</li>
<li>It's never ideal shorting rocket ships on the way up. Best to short on the way down. At some juncture, there will be a magnificent correction in <a href="https://www.smartkarma.com/entities/kioxia-holdings-corp" target="_blank" data-smartkarma-citation="entities:29243:1" rel="noopener">Kioxia (285A JP)</a>.</li>
<li>On balance, the optics in <a href="https://www.smartkarma.com/entities/ck-hutchison-holdings-ltd" target="_blank" data-smartkarma-citation="entities:132:1" rel="noopener">CK Hutchison Holdings (1 HK)</a> are looking attractive. </li>
</ul>


You'd only want to be long Sun Corp (6736 JP) if you're very bullish Cellebrite (CLBT US)and some of the other businesses inside Sun Corp which aren't making money.
It's never ideal shorting rocket ships on the way up. Best to short on the way down. At some juncture, there will be a magnificent correction in Kioxia (285A JP).
On balance, the optics in CK Hutchison Holdings (1 HK) are looking attractive. 


Last Week In Event SPACE: Sun Corp/Cellebrite, Kioxia, CK Hutchison, Toshiba/ROHM

Travis Lundy

Index Rebalance

<ul>
<li>The TOPIX Index - Japan's premier domestic equity index - will undergo a sea change in methodology at the end of this month, with ~760 names affected. </li>
<li>There will be roughly 35 or so ADDs, about 700 DELETEs (phased out over 8 quarters), and 40+ Liquidity Factor Removals. There will also be hundreds of FFW changes. </li>
<li>The likely ADDs have handily outperformed their peers over the past year, but some of that has been tech and idiosyncratic circumstances. There may still be trades to do.</li>
</ul>


The TOPIX Index - Japan's premier domestic equity index - will undergo a sea change in methodology at the end of this month, with ~760 names affected. 
There will be roughly 35 or so ADDs, about 700 DELETEs (phased out over 8 quarters), and 40+ Liquidity Factor Removals. There will also be hundreds of FFW changes. 
The likely ADDs have handily outperformed their peers over the past year, but some of that has been tech and idiosyncratic circumstances. There may still be trades to do.


[Quiddity Index] The TOPIX Change in Oct26 - Part V (Final Prep)

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Sun Corp (6736 JP): A deep-value holding company trading below the value of its 44% stake in NASDAQ-listed Cellebrite; positioned as a discounted proxy on the growth of digital forensics. </li>
<li>MegaChips (6875 JP): A fabless semiconductor firm with a legacy ASIC business but a hidden asset in its ¥160 billion SiTime stake; City Index Eleven to pressure value unlock</li>
<li>KeePer (6036 JP): A high-margin car detailing business with embedded optionality through its SOFT99 stake; activist entry by Misaki Capital ensures governance pressure.</li>
</ul>


Sun Corp (6736 JP): A deep-value holding company trading below the value of its 44% stake in NASDAQ-listed Cellebrite; positioned as a discounted proxy on the growth of digital forensics. 
MegaChips (6875 JP): A fabless semiconductor firm with a legacy ASIC business but a hidden asset in its ¥160 billion SiTime stake; City Index Eleven to pressure value unlock
KeePer (6036 JP): A high-margin car detailing business with embedded optionality through its SOFT99 stake; activist entry by Misaki Capital ensures governance pressure.


Japan Activist Briefs | Sun Corp, MegaChips, KeePer

<ul>
<li>
<a href="https://www.smartkarma.com/entities/tokyo-steel-mfg-co-ltd" target="_blank" data-smartkarma-citation="entities:16195:1" rel="noopener">Tokyo Steel (5423 JP)</a>'s cost are up, but Japan's still a net scrap exporter, with enough scrap to keep Japan scrap prices low enough to keep electric arc furnaces competitive.</li>
<li>I can't see FIRB stomping on the Kestrel  deal. Perhaps behavioural remedies, where possible, such that <a href="https://www.smartkarma.com/entities/yancoal-australia-ltd" target="_blank" data-smartkarma-citation="entities:4145:1" rel="noopener">Yancoal Australia (YAL AU)</a> doesn't divert the majority of the exports to China.</li>
<li>IDX has considerable work to do to address transparency, investability, and credibility. <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> and 64.7%-held <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> are both uninvestable.</li>
</ul>



Tokyo Steel (5423 JP)'s cost are up, but Japan's still a net scrap exporter, with enough scrap to keep Japan scrap prices low enough to keep electric arc furnaces competitive.
I can't see FIRB stomping on the Kestrel  deal. Perhaps behavioural remedies, where possible, such that Yancoal Australia (YAL AU) doesn't divert the majority of the exports to China.
IDX has considerable work to do to address transparency, investability, and credibility. Barito Pacific (BRPT IJ) and 64.7%-held Barito Renewables Energy (BREN IJ) are both uninvestable.


Last Week In Event SPACE: Tokyo Steel, Yancoal, Sun Corp/Cellebrite, Barito Pacific/Renewables

<ul>
<li>As with large, clean liquid deals in Asia-Pac, expect <a href="https://www.smartkarma.com/entities/hang-seng-bank-ltd" target="_blank" data-smartkarma-citation="entities:24:1" rel="noopener">Hang Seng (11 HK)</a>'s annualised spreads to widen (i.e. gross spread remains static) as investors hit their full quota early on. </li>
<li>The question is whether <a href="https://www.smartkarma.com/entities/soft99-corp" target="_blank" data-smartkarma-citation="entities:18486:1" rel="noopener">Soft99 (4464 JP)</a>'s MBO Bidco raises the price to  ¥3,200 saying "let's split the difference", and that would make some people happy. It's doubtful they will.</li>
<li>
<a href="https://www.smartkarma.com/entities/sihuan-pharmaceutical-hldgs" target="_blank" data-smartkarma-citation="entities:33:1" rel="noopener">Sihuan Pharmaceutical (460 HK)</a> has benefited a little from the HK$500mn buyback programme announced last October. But a HK$11bn run up in market cap YTD? This looks stretched to me.</li>
</ul>


As with large, clean liquid deals in Asia-Pac, expect Hang Seng (11 HK)'s annualised spreads to widen (i.e. gross spread remains static) as investors hit their full quota early on. 
The question is whether Soft99 (4464 JP)'s MBO Bidco raises the price to  ¥3,200 saying "let's split the difference", and that would make some people happy. It's doubtful they will.

Sihuan Pharmaceutical (460 HK) has benefited a little from the HK$500mn buyback programme announced last October. But a HK$11bn run up in market cap YTD? This looks stretched to me.


Last Week In Event SPACE: Hang Seng Bank, Soft99, Sihuan Pharma, Dongfeng Motor

Japan

SUN CORPORATION operates mainly Pachinko related business, information and communication business.  Pachinko related business includes developing, manufacturing and selling a system to control and monitor pachinko machine, and manage business operation.  Sun Corp. also manufactures Pachinko and household appliances and develops game software for family use.

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Sun Corp (6736 JP)

Last Week In Event SPACE: Sun Corp/Cellebrite, Kioxia, CK Hutchison, Toshiba/ROHM

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

[Quiddity Index] The TOPIX Change in Oct26 - Part V (Final Prep)

The TSE announcement for wholesale changes in the TOPIX Index is scheduled for Wednesday after the close. I expect 34-35 ADDs, ~700 DELETEs, and...

Travis Lundy

Japan Activist Briefs | Sun Corp, MegaChips, KeePer

Three overlooked Japanese mid-caps; Sun Corp, MegaChips, and KeePer, reflect a broader shift in Japan’s equity landscape as activists push balance...

Mark Chadwick

Last Week In Event SPACE: Tokyo Steel, Yancoal, Sun Corp/Cellebrite, Barito Pacific/Renewables

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Last Week In Event SPACE: Hang Seng Bank, Soft99, Sihuan Pharma, Dongfeng Motor

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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