Smartkarma Daily Briefs

In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

EQD | Nikkei Index Options Weekly – December 23 – 27

By John Ley

NKY looks to be playing catch-up with USD/JPY, rising 4.03% on the week and breaking out of recent range after not moving much in the first half of the month.
Implied volatility continues to slide lower with 1M implied vol down 2.5 points on the week.
Call volumes larger than Put volumes for the first time in a while on Fridays 1.80% price surge.

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Dec 30

Most Read: Samsung Engineering, Makino Milling Machine Co, Shin Kong Financial Holding, Tsuruha Holdings, Vesync, Nec Networks & System Integr, InnoScience Suzhou Technology, ESR Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea: Potential Relegations from K League 1
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Shin Kong/Taishin Merger – Proceeding Apace
Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done
Three Presidents in One Month in South Korea – What’s Next?
(Mostly) Asia-Pac M&A: Makino, Henlius, GAPack, Nec Networks, Suntec REIT, VCredit, Pentamaster
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?

In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done

Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60, a 33.3% premium to the last close price of HK$4.20. The offer is final.
While the offer is marginally above the IPO price, it is light compared to sell-side price targets, peer multiples and historical trading ranges.
Nevertheless, the scrip option, irrevocables and no disinterested shareholder holding a blocking stake facilitate the scheme vote. The offer could be completed by May.

Three Presidents in One Month in South Korea – What’s Next?

By Douglas Kim

The acting South Korean President Han Duck-Soo was impeached by the South Korea’s Parliament on 27 December. Choi Sang-Mok (finance minister) is now the new, acting President of South Korea.
There could be multiple impeachments of acting Presidents in the next several weeks which would be unprecedented and raise further concerns about the lack of political stability in South Korea.
Amid all this political uncertainty, Yoon Suk-Yeol’s approval rating has been improving sharply to more than 30%.

(Mostly) Asia-Pac M&A: Makino, Henlius, GAPack, Nec Networks, Suntec REIT, VCredit, Pentamaster

I tally 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Four new deals this week: Makino Milling Machine Co (6135 JP)‘s hostile Offer; VCredit Holdings Ltd (2003 HK)‘s takeunder; Vesync (2148 HK)‘s Scheme, and Pentamaster International (1665 HK)‘s Scheme.
Key updates/news took place on: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Nec Networks & System Integr (1973 JP), and Suntec REIT (SUN SP).

Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.

When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

We 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: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).

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Dec 30

Daily Brief Utilities: Shandong Hi-Speed New Energy G, Adani Green Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO
Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?
Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is

Shandong Hi-Speed New Energy (1250 HK): SPA Completed, Next Unconditional MGO

Shandong Hi-Speed Holdings Gro (412 HK) completed the acquisition of CITIC Securities 13.52% stake in Shandong Hi-Speed New Energy G (1250 HK) at HK$1.78 per share.
SPA completion triggers a mandatory unconditional offer at HK$1.78 per share. The composite document will be sent, and the offer will open by 28 January.
At the last close and for an early February payment, the gross and annualised spread of the offer is 2.9% and 30.2%, respectively.

Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is

Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing.

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Dec 30

Daily Brief Energy/Materials: Crude Oil, SGX Rubber Future TSR20 and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

[ETP 2024/52] WTI Recovers on China’s Stimulus Plans, Henry Hub Falls on Volatile Weather Forecasts
Supply Shortage Boost Likely Short Lived; Caution Prevails Around 2025 Outlook

[ETP 2024/52] WTI Recovers on China’s Stimulus Plans, Henry Hub Falls on Volatile Weather Forecasts

By Suhas Reddy

For the week ending 20/Dec, U.S. crude inventories fell by 4.2m barrels, beating expectations of a 0.7m barrel decrease. Distillate stocks fell more than expected, while gasoline inventories unexpectedly rose.
U.S. natural gas inventories fell by 93 Bcf for the week ending 20/Dec, missing analyst expectations of a 98 Bcf drawdown. Inventories are 4.9% above the 5-year seasonal average.
Chevron signed a 20-year deal with Energy Transfer for 2 million tonnes of LNG annually. Stifel lowered Schlumberger’s 12-month price target while maintaining a Buy rating.

Supply Shortage Boost Likely Short Lived; Caution Prevails Around 2025 Outlook

By Arusha Das

Possibility of short peak can result in short-lived shortage
Declining Chinese TSR inventory can lend demand support
Uncertainty around policies weighs upon the market confidence

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Dec 30

Daily Brief Consumer: Tsuruha Holdings, Vesync, Sumber Alfaria Trijaya Tbk Pt, Bloks Group and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
Vesync (2148 HK): Proposed Privatisation at HK$5.60 Fair and Reasonable
Sumber Alfaria Trijaya (AMRT IJ) – Primed for Profitable Growth in 2025
Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?

In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.

When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

Vesync (2148 HK): Proposed Privatisation at HK$5.60 Fair and Reasonable

By Osbert Tang, CFA

Vesync (2148 HK)‘s major shareholders proposed to privatise at HK$5.60, a 33.3% premium to the pre-suspension price. This is the same as we calculated using the 3-year average P/B.
At such a price, it will sit at 7.6x PER for FY25F, a level that it only touched briefly 3 times in the last two years.
This PER is at a 25-30% discount to the sector and justified by its smaller size and lesser diversification. All in all, the proposed price looks fair and reasonable.

Sumber Alfaria Trijaya (AMRT IJ) – Primed for Profitable Growth in 2025

By Angus Mackintosh

Sumber Alfaria Trijaya (Alfamart) looks well set for a strong finish to the year boosted by seasonal factors and a higher quarter for supplier rebates making it the peak quarter.
The company should be able to surpass its guidance for new store build-out in 2024, emphasising Alfamart and Alfamidi outlets, as it consolidates its Lawson rollout.
Alfamart saw strong growth from online sales through Alfagift at +45% YoY, with Alfamart members reaching 20m, with 65% shopping every week. Valuations remain attractive with strong growth in 2025.

Pre-IPO Bloks Group (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

The assembly character toy segment market size is not big and Bloks is already China’s largest player. So, there will be a day when the growth ceiling is reached.
Bloks’ business model is more similar to Pop Mart, rather than LEGO, but Bloks’ profitability is lagging behind both of them. The current high revenue growth may not be sustainable.
Pre-IPO valuation of Bloks reached RMB7.2 billion. Valuation of Bloks should be lower than Pop Mart. If Bloks’ valuation could reach the industry average after IPO, it is already good.

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Dec 30

Daily Brief TMT/Internet: InnoScience Suzhou Technology, Taiwan Semiconductor (TSMC) – ADR and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
TSMC (2330.TT; TSM.US): If Intel Was Split Up, What Impact Will It Have on the Foundry Industry?(II)
Taiwan Dual-Listings Monitor: TSMC Spread Decline from Near Historical Highs; ChipMOS Discount

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

TSMC (2330.TT; TSM.US): If Intel Was Split Up, What Impact Will It Have on the Foundry Industry?(II)

By Patrick Liao

Intel Corp (INTC US) established “Intel Foundry Services” in 2021, but it has not shown notable performance until now.
There is some pessimism regarding providing foundry services in the US.
Taiwan Semiconductor (TSMC) – ADR (TSM US) should provide foundry services to Intel Corp (INTC US) and potentially other common clients as well.

Taiwan Dual-Listings Monitor: TSMC Spread Decline from Near Historical Highs; ChipMOS Discount

By Vincent Fernando, CFA

TSMC: +21.1% Premium; Spread Has Fallen From Previous Short Levels, Remains Elevated
UMC: -0.3% Discount; Middle of the Historical Trading Range, Not Compelling
ChipMOS: -1.2% Discount; Wait for Deeper Discount Before Going Long

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Dec 30

Daily Brief Health Care: Shanghai Henlius Biotech and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports

Weekly Deals Digest (29 Dec) – Henlius, Vesync, SDHS New Energy, GA Pack, Makino, Malaysia Airports

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Malaysia Airports Holdings (MAHB MK).

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Dec 30

Daily Brief Financials: ESR Group , Korea Stock Exchange Kospi Index, NIFTY Index, Nikkei 225 and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium
EQD | Kospi Index Options Weekly – December 23 – 27
EQD / NSE NIFTY50 Vol Update / Stable Index Causes Risk-Premia Markdown.
EQD | Nikkei Index Options Weekly – December 23 – 27

Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium