In today’s briefing:
- [Japan Event] Digital Garage (4819) Is The Wrong Price
- Potential Inclusion of SK Hynix ADR in NASDAQ 100 Index in December 2026
- Sharing What I Heard Directly from a KRX Index Official Today on Sector Change for KOSPI 200 Rebal
- Goodbaby (1086 HK): Founder’s Fair Offer
- [Quiddity Index] MV Junior Gold Miners Index Dec26: Vault-Genesis Deal Has Massive Passive Flows
- Northern Star (NST AU) Rejects Gold Fields (GFI SJ)’s Terms
- Ingenia Communities (INA AU) Mulls Warburg’s Third Proposal
- Merger Arb Mondays (28 Sep) – Kakaku, Sankei RE, Kadoya, Leopalace, Goodbaby, Z Fin, Yinson, Peet
- Hanwha Aerospace and Other Hanwha Affiliates Now Own 15.9% of KAI – Next Move?
- Northern Star (NST AU): Gold Fields Rejection Justified, Sweetened Bid Likely
[Japan Event] Digital Garage (4819) Is The Wrong Price
- Digital Garage (4819 JP) got very exciting when an activist got involved. The less so when that activist sold its shares to Resona Holdings (8308 JP) at a fat premium.
- DG lost its driver. Perhaps Resona is a longer-term catalyst but it’s unclear. Given they are down 60% so far, they may be looking for new blood. Hayashi-san is 66.
- Now Digital Garage’s big equity affiliate stake asset will turn into cash. This is real value. It has been but this deal will double (or more than double) BVPS.
Potential Inclusion of SK Hynix ADR in NASDAQ 100 Index in December 2026
- In this insight, I discuss the impact of the potential inclusion of SK Hynix (SKHY US) ADR in the NASDAQ 100 rebalance in December 2026.
- There are 17 other companies in the NASDAQ 100 Index which have lower market cap than SK Hynix’s ADR capitalization.
- I believe there is a high probability (80-90%+) of SK Hynix (SKHY US) ADR inclusion in the NASDAQ 100 Index in December 2026.
Sharing What I Heard Directly from a KRX Index Official Today on Sector Change for KOSPI 200 Rebal
- KRX says the new KRICS framework should stay fairly close to GICS, so using GICS as the base case is the best way to forecast sector mapping at this point.
- KRX simulations show the KRICS switch should not materially change the size of December KOSPI 200 adds and deletes, with existing market cap buffer rules absorbing most sector driven changes.
- Nonetheless, sector uncertainty makes cutoff calls harder, likely delaying KOSPI 200 pre positioning and flow signals until late October, when the new mapping is released.
Goodbaby (1086 HK): Founder’s Fair Offer
- Goodbaby International (1086 HK), a maker of juvenile products (strollers/pushchairs, child car seats), has announced an Offer, by way of a Scheme, from founder/chairman Song Zhenghuan.
- Song is Offering HK$1.50/share, a 38.9% premium to last close. And a 53.06% premium to the 10-day VWAP (possible news leakage?).
- The Offer price is final. Dividends will be netted. This transaction should be wrapped up in around four months, ahead of the 24th March 2027 long-stop.
[Quiddity Index] MV Junior Gold Miners Index Dec26: Vault-Genesis Deal Has Massive Passive Flows
- The MV Junior Gold Miners index tracks the performance of small-cap gold and silver mining companies listed around the world. Lots of AUM on the ETF means big impact sometimes.
- There will be no index changes for the December 2026 rebal event. However, we currently expect a one-way flow of US$43mm for December 2026 due to capping/re-capping.
- The Vault-Genesis deal is expected to complete before the December 2026 rebal. Vault faces over two months of ADV to sell and Genesis over a month to buy, both US$1bn+.
Northern Star (NST AU) Rejects Gold Fields (GFI SJ)’s Terms
- Northern Star Resources (NST AU) announced two major downgrades this year, hampered by old hardware, leading to a ~19% single-day share price fall on the second cut.
- NST made some concessions, mollifying activist Elliott (and the market). For now. I discussed this situation in Stay The Course As Northern Star (NST AU) Extends Olive Branch To Elliott.
- NST announced this morning that three days prior my note it received, and (has now) summarily rejected a cash/scrip Offer from Gold Fields (GFI SJ), or a A$27/share implied price.
Ingenia Communities (INA AU) Mulls Warburg’s Third Proposal
- Ingenia Communities (INA AU)‘s share price declined ~13% as shareholders didn’t take kindly to its 26th August cash/scrip Offer for real estate developer Peet Ltd (PPC AU).
- Warburg Pincus saw an opportunity, and pitched a A$4.75/share NBIO, by way of a Scheme, on the 7th September (rejected); then A$5.05/share on the 21st September (also rejected).
- A third NBIO, at A$5.25/share, was announced this morning. Ingenia is assessing terms. As with the two previous bids, Warburg’s Offer is conditional on terminating the Peet Scheme.
Merger Arb Mondays (28 Sep) – Kakaku, Sankei RE, Kadoya, Leopalace, Goodbaby, Z Fin, Yinson, Peet
- I summarise the latest spreads and newsflow for the merger arb situations covered across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, the Philippines, Thailand, and Chinese ADRs.
- Highest spreads: Skyworth (751 HK), OFX Group (OFX AU), Goodbaby International (1086 HK), Z Fin (1168 HK), Peet Ltd (PPC AU), Atlantic Lithium (A11 AU), Cleanaway Waste Management (CWY AU).
- Lowest spreads: Kadoya Sesame Mills (2612 JP), Leopalace21 Corp (8848 JP), Kakaku.com Inc (2371 JP), Accent Group (AX1 AU), Taiyo Holdings (4626 JP), Vault Minerals Ltd (VAU AU).
Hanwha Aerospace and Other Hanwha Affiliates Now Own 15.9% of KAI – Next Move?
- In the past several months, Hanwha Group companies purchased additional shares in Korea Aerospace Industries (KAI) so their combined stake is now 15.89%.
- Hanwha Aerospace owns 9.9% stake in KAI, followed by Hanwha Systems (4.98%), and Hanwha Aerospace USA (1.01%).
- I provide four main scenarios of the potential next moves by the Hanwha Group companies regarding Korea Aerospace Industries.
Northern Star (NST AU): Gold Fields Rejection Justified, Sweetened Bid Likely
- Northern Star Resources (NST AU) rejected Gold Fields Ltd (GFI SJ)‘s proposal (0.3125 shares plus A$7.25 cash, implied A$27.00, 22.1% premium). It cited undervaluation, scrip risk, opportunistic timing and onerous conditions.
- Elliott, the key activist, needs a higher offer. Its return would be modest; NST’s turnaround has barely started; Gold Fields keeps most synergies; and hard exclusivity shuts out rival bidders.
- Gold Fields will likely return at around A$28–30, with more cash and no hard exclusivity. Synergies and past deals support this, but the deal’s size acts as a constraint.
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