Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

<ul>
<li>Today after the close, <a href="https://www.smartkarma.com/entities/kansai-paint-co-ltd" target="_blank" data-smartkarma-citation="entities:13340:1" rel="noopener">Kansai Paint (4613 JP)</a> announced a passel of crossholders would sell 26.2mm shares in a Secondary Offer. They also announced a buyback. </li>
<li>The buyback, spending up to ¥12bn to buy back up to 8.2mm shares, starts after the Offering is delivered, and extends until 15 March 2024.</li>
<li>This offering reduces cross-holder "strategic holdings" by a third. This will impact FFW. Complicated index impacts will occur over time.</li>
</ul>


Today after the close, Kansai Paint (4613 JP) announced a passel of crossholders would sell 26.2mm shares in a Secondary Offer. They also announced a buyback. 
The buyback, spending up to ¥12bn to buy back up to 8.2mm shares, starts after the Offering is delivered, and extends until 15 March 2024.
This offering reduces cross-holder "strategic holdings" by a third. This will impact FFW. Complicated index impacts will occur over time.


Kansai Paint (4613 JP) Secondary Offering & Buyback and All the Subsequent Flows

Event-Driven

<ul>
<li>The TOPIX Insurance Sector sees the worst net flows as a percentage of index weight among the 33 sectors in the April-June FFW Transition.</li>
<li>On a net basis, rebalance flows favour <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> vs <a href="https://www.smartkarma.com/entities/t-d-holdings-inc" target="_blank" data-smartkarma-citation="entities:3431:1" rel="noopener">T&amp;D Holdings (8795 JP)</a> (finishing a buyback) and <a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life Insurance (8750 JP)</a> (just finished).</li>
<li>JPI has underperformed both over the last three years despite growing BVPS by more. And earnings should be a blowout. </li>
</ul>


The TOPIX Insurance Sector sees the worst net flows as a percentage of index weight among the 33 sectors in the April-June FFW Transition.
On a net basis, rebalance flows favour Japan Post Insurance (7181 JP) vs T&amp;D Holdings (8795 JP) (finishing a buyback) and Dai Ichi Life Insurance (8750 JP) (just finished).
JPI has underperformed both over the last three years despite growing BVPS by more. And earnings should be a blowout. 


Topix FFW Transition - Insurance Sector a Big Net Sell

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Japan Post Holdings / Equity Capital Markets

<p>Japan Post Holdings’ listed subsidiary, Japan Post Insurance has suffered from a scandal involving improper sales practices and this has suppressed its multiple noticeably despite strong EPS growth. As sales activities start to normalise we believe the market is severely underestimating how small an improvement would be required here to drive very large increases in earnings.</p>

Japan Post Holdings’ listed subsidiary, Japan Post Insurance has suffered from a scandal involving improper sales practices and this has suppressed its multiple noticeably despite strong EPS growth. As sales activities start to normalise we believe the market is severely underestimating how small an improvement would be required here to drive very large increases in earnings.

Japan Post – Insurance Business Is Sandbagging Guidance

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> has seen a flurry of profit-taking in the past two weeks since it dramatically repurchased 30% of its shares outstanding in an overnight trade.</p><p>The shares now trade lower than they did the moment before the announcement. </p><p><a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life Insurance (8750 JP)</a> is probably JPI's closest listed peer, and it is up 8.8% in the same period. </p><p>I would say that the stock and its holders are conspiring against me but that is not how things work.</p><p><em>Lots of discussion below the fold - index treatment, overhang, PBR accretion, and more.</em></p>

Japan Post Insurance (7181 JP) has seen a flurry of profit-taking in the past two weeks since it dramatically repurchased 30% of its shares outstanding in an overnight trade.The shares now trade lower than they did the moment before the announcement. Dai Ichi Life Insurance (8750 JP) is probably JPI's closest listed peer, and it is up 8.8% in the same period. I would say that the stock and its holders are conspiring against me but that is not how things work.Lots of discussion below the fold - index treatment, overhang, PBR accretion, and more.

Japan Post Insurance - A Surprising Selloff But Still A Buy

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal. We also recap our earlier ideas and recommend exiting a position where there are gains and the price ratio is near a turning point.</p></div><div><p>These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.</p></div><div>
<p>These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.</p>
<p>Over the last couple of months, our pair trades have returned 2.54% on average.</p>
</div>

In this Insight, we look at Asian financial pairs that normally trade in a tight band versus each other and are now trading at levels that are close to an extreme, making it likely that there could be a short term reversal. We also recap our earlier ideas and recommend exiting a position where there are gains and the price ratio is near a turning point.These are all large cap financials that trade in excess of US$20m a day, so implementing the strategy should be possible using stock borrow or single stock futures.
These ideas are based purely off the stock price history and we recommend investors use a fundamental overlay to determine if the price action is reflective of changes in the sector that benefit one company at the expense of the other, or benefit one company more than the other.
Over the last couple of months, our pair trades have returned 2.54% on average.


Japan

T&D Holdings, Inc. is a holding company established through the merger of Taiyo Life Insurance, Daido Life Insurance, and T&D Financial Life Insurance. The Company manages life insurance operations for its subsidiaries.

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T&D Holdings (8795 JP)

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Topix FFW Transition - Insurance Sector a Big Net Sell

TOPIX FFW Rebalance disfavours the insurance sector as 1.55% of float is a net sell over three months. The intra-sector flows favor Japan Post...

Travis Lundy

Japan Post – Insurance Business Is Sandbagging Guidance

As Japan Post Insurance's sales activities start to normalise we believe the market is underestimating how small an improvement would be required...

Mio Kato

Japan Post Insurance - A Surprising Selloff But Still A Buy

Japan Post Insurance has bought back 29% of its shares and EPS, book value, and EEV accretion is immense, but the shares have underperformed rival...

Travis Lundy

Pair Trading Ideas - Asian Financials

We highlight potential trades among liquid large cap Asian financial stocks that are correlated and exhibit mean reversion. We recommend closing...

Brian Freitas

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