This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. [Japan M&A/Activism] Toyota RE Deal for Toyota Inds (6201) Part II: Trading Through, Buns at Dawn
- When Toyota Fudosan came out with their Tender Offer announcement, I wrote [Japan M&A] Toyota RE Deal for Toyota Inds (6201) Part I; Offensive Process, Light Deal, Bun Fight?
- I intended to write a Part II to address the valuation arguments in the TICO and Bidder docs. I didn’t bother, but worked on other aspects.
- Elliott released a letter on the 18th, and yesterday AM released a 50+ page presentation. It’s compelling. The math is similar to mine above. More new news last night. Fun!
2. Muyuan Foods (2714 HK): US$1.6bn Offering at a Big Discount to A-Shares
- Muyuan Foodstuff Co Ltd A (002714 CH) could raise up to HK$12.3bn (US$1.575bn) in its Muyuan Foods (MUYUAN HK) listing if the Overallotment Option is exercised.
- Exactly half the base offering is allocated to cornerstone investors; those shares are locked up for 6 months. That eliminates the already small possibility of early inclusion to global indexes.
- Muyuan Foods (MUYUAN HK) should be added to Southbound Stock Connect from the open of trading on 6 March following the end of the Price Stabilisation period.
3. Breaking Down Hynix’s Latest Treasury Share Cancellation and ADR Filings, Step by Step
- Hynix is likely dropping treasury-stock ADRs; despite regulatory flexibility, burning shares now then reissuing for ADR would be counterintuitive.
- The move isn’t just optics — Hynix is avoiding ~25% tax on treasury sales by favoring new-share issuance after a big stock run-up.
- With treasury shares bought at KRW 80–90k, tax is real. ADR likely alive via new issuance, as local desks read and after-hours moves confirm.
4. Merger Arb Mondays (26 Jan) – Toyota Ind, Raksul, Mamezo, Skyworth, IJM, ENN, Australian Strategic
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Skyworth Group Limited (751 HK), Ijm Corp Bhd (IJM MK), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Australian Strategic Materials (ASM AU), Webjet Group (WJL AU).
- Lowest spreads: Bright Smart Securities (1428 HK), Raksul Inc (4384 JP), Mamezo (202A JP), Hisamitsu Pharmaceutical Co (4530 JP), Toyota Industries (6201 JP), BioDlink International (1875 HK).
5. Busy Ming (1768 HK): Not so Busy on the Index Inclusions
- Busy Ming Group (1768 HK) is looking to raise up to HK$4.22bn (US$541m) in its IPO, valuing the company at HK$50.7bn (US$6.5bn).
- The large allocation to cornerstone investors reduces free-float market cap and could delay inclusion in global indices. Inclusion in one global index could take place in September at the earliest.
- Busy Ming Group (1768 HK) should be added to the HSCI in June and subsequently added to Southbound Stock Connect.
6. Eastroc Beverage (9980 HK): Index Inclusion Timeline for US$1.5bn Offering
- Eastroc Beverage Group (605499 CH) could raise up to HK$11.7bn (US$1.5bn) in its Eastroc Beverage Group (9980 HK) listing if the Overallotment Option is exercised.
- Half the base offering is allocated to cornerstone investors; those shares are locked up for 6 months. That eliminates the already small possibility of early inclusion to global indexes.
- Eastroc Beverage Group (9980 HK) should be added to Southbound Stock Connect from the open of trading on 2 March following the end of the Price Stabilisation period.
7. [Japan M&A/Activism] Murakami Group Jump into Sankei REIT (2972) Complicating Things
- Friday after the close, City Index Eleventh announced that it and joint holders held 7.36% of Sankei Real Estate (2972 JP) which is currently undergoing a Tender Offer.
- I had said at the beginning this might need a bump. Units opened just above terms on Day 1, stayed at or around. Now they are trading 7% through.
- Murakami group likely controls the outcome here. That could mean a bump. It could mean buying into the bidco as a silent partner. Think of what you’d rather own.
8. Intel on Government KOSDAQ Stimulus: KRW 17tn Annually Via Broker IMA Accounts for 3 Years
- NPS allocation hike to KOSDAQ is dead, so the government’s pivoting to Plan B: push anchor capital via broker IMA accounts and issuance-note products to fix the retail-heavy market.
- The government plans to channel ~KRW 17tn/year from broker IMA accounts into KOSDAQ, creating a sticky three-year flow worth ~7% of market cap, far above retail net buying.
- This is the most aggressive KOSDAQ flow play yet, anchoring sentiment and setting up a near-term uptrend, though weak earnings cap upside. Policy-backed cash makes today’s rip stickier.
9. Samsung Likely to Drop Shareholder Return Update Tomorrow: 1P Spread Pivot
- Looks like a replay of last October’s playbook—family block deal prepped, shares dumped fast, and Samsung likely to drop a value-up–style shareholder return update tomorrow.
- Samsung’s KRW 2.5tn buyback finished ~3 months early, signaling a pre-positioning move ahead of a fresh shareholder return rollout, possibly as soon as tomorrow.
- Best-Case 100% special dividend for 1P spread unlikely; expect a hybrid of conditional dividend plus buybacks. Still enough to pivot near-29% 1P discount. So we need a tactical approach tomorrow.
10. Skyworth (751 HK)’s Spin-Off & CSRC’s (Possible) Stricter Rules
- Back on the 20th January, Skyworth Group Limited (751 HK) announced an inter-conditional Scheme and concurrent listing of 70%-held Skyworth Photovoltaic on the HKEx, by way of introduction.
- I discussed the deal in Skyworth (751 HK): Delisting/Spin-Off Terms Are Fair. Get Involved. Terms appeared fair. Just a question on how best to hedge the transaction.
- On the afternoon of the 23rd Jan, media reports surfaced that CSRC will (reportedly) tighten rules for firms to list in Hong Kong. Nothing definitive, but still worth a discussion.
