Smartkarma Daily Briefs

7&I (3382 JP)‘s MBO is off. Itochu has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
Yangzijiang Shipbuilding (YZJSGD SP) is sucking wind as United States Trade Representative’s (USTR) office proposed a raft of fees and other shipping restrictions on Chinese vessels
Pentamaster International (1665 HK)‘s Scheme comfortably gets up after a wild week of trading.

[Trip.com (TCOM US, BUY, TP US$74) Review]: Steady Domestic Supports for Venturing in Overseas

By Eric Wen

TCOM reported C4Q24 revenue 5.4%/3.6% higher than our estimate/consensus, and non-GAAP operating profit 11.2%/6.2% higher than our estimate/consensus, supported by strong domestic travel rebound;
Even though C1Q25 margin guidance was soft due to commitment to overseas expansions and a couple of one-time events affecting outbound,
We keep the stock as BUY rating and keep TP at US$74/ADS.

Mercedes-Benz China Confirms Layoffs in a Changing and Challenging Market

By Caixin Global

Mercedes-Benz China confirmed Thursday that it is implementing business adjustments, including layoffs, to improve operational efficiency in a challenging and changing market.
The Chinese subsidiary of the German auto giant said restructuring and downsizing were unavoidable, but it pledged to comply with legal regulations and offer affected employees severance packages above market standards along with help finding alternative work.
While the company did not disclose which departments or what percentage of employees would be affected, sources told Caixin that Beijing Mercedes-Benz Sales Service Co.

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Mar 02

Most Read: Seven & I Holdings, Japan Post Bank, Cambricon Technologies Lt, Mesoblast Ltd, China Mobile, Seoul Guarantee Insurance, Aeon Delight, EcoPro Materials, AEON Mall and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed
China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away
ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week
China Mobile (941 HK) Pullback Offers a Tactical Re-Entry Opportunity
HEW: Tariffs Trumped Data
Seoul Guarantee Insurance IPO Bookbuilding Results Analysis
Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share
Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise
Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More

The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.

Japan Post Bank (7182 JP): Another BIG Offering of US$4bn Expected; Overhang Will Be Removed

Media reports indicate that Japan Post Holdings (6178 JP) could sell JPY 600bn (US$4.02bn) of Japan Post Bank (7182 JP) with the announcement coming as early as this week.
The selldown is driven by Japan Post Holdings (6178 JP) needing to reduce its holding in Japan Post Bank (7182 JP) to 50% or lower by March 2026.
Passive index trackers will buy around 11.4% of the offering at the time of settlement of the placement shares with the balance being bought in January 2026.

China A50 ETFs Rebalance Preview: China Rally Takes Cambricon Up, Up & Away

With the review cutoff done, there could be three changes for the iShares A50 China (2823 HK)/ CSOP China A50 (HKD) (2822 HK) ETFs in March.
Cambricon Technologies, Guotai Junan Securities and China United Network could replace Inner Mongolia Yili Industrial Group, CGN Power and Luzhou Laojiao in the ETFs.
Guotai Junan Securities (2611 HK) is expected to be added to the iShares China Large-Cap (FXI) (FXI US) in March, so there should be inflows for the A-shares and H-shares.

ASX200 Index AdHoc Rebalance Preview: Mesoblast (MSB) Could Replace Arcadium Lithium (LTM) Next Week

There could be ad hoc change for the S&P/ASX 200 (AS51 INDEX) prior to the announcement of the changes at the March rebalance.
Arcadium Lithium (LTM AU) could stop trading next week following the acquisition by Rio Tinto Ltd (RIO AU). The Royal Court of Jersey could sanction the scheme on 5 March.
Mesoblast (MSB AU) is a high probability inclusion to the index, followed by DigiCo Infrastructure REIT (DGT AU). The stock that misses out will be added at the regular rebalance.

China Mobile (941 HK) Pullback Offers a Tactical Re-Entry Opportunity

By Nico Rosti

In our last insight covering China Mobile (941 HK) we said the stock was overbought. It made a sharp pullback last week that may turn into a good BUY opportunity.
Support levels to buy range from 79.1 to 76.4, assuming this pullback is a buy-the-dip scenario, something we will discuss in this insight.
If the stock resumes its rally, the next WEEKLY profit targets will be between 82.64 and 84.4.

HEW: Tariffs Trumped Data

By Phil Rush

Resilience in Euro area price and wage inflation, ESI surveys, and hawkish comments in the latest meeting accounts were trumped by US events. Renewed tariff threats and soft US surveys led a dovish repricing for the Fed that also dominated for the ECB.
Next week has more top tier releases, starting with flash EA inflation for February where we are still a tenth above consensus at 2.4%. That won’t stop the ECB cutting, but should encourage restraint for April. US payrolls and tariffs are the other highlights.
Note: Smartkarma is now the sole distributor of our research, so clients will only receive all other research from Smartkarma (queries to [email protected]).

Seoul Guarantee Insurance IPO Bookbuilding Results Analysis

The majority of the investors placed orders at 26,000 won, which is the lower end of the IPO price range (26,000 won to 31,800 won).
SGIC held internal discussions to set the public offering price at 26,000 won. The final price (which is likely to be 26,000 won) will be revealed on 4 March.
Our updated base case valuation of SGIC is base case target price of 28,925 won per share. Given the lack of upside, we have a negative view of this deal.

Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share

Bowing before bureaucratic, governmental, societal, and perhaps finally shareholder pressure, Aeon Co Ltd (8267 JP) Friday announced it is rolling up two big subsidiaries.
Aeon Mall will be merged with Aeon in a share exchange and Aeon Delight (9787 JP) will be taken over via slightly long-dated Tender Offer which starts Monday.
This is probably the wrong price, but it isn’t egregiously wrong I expect. And it would be difficult to block. I expect it gets done easily.

Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise

It has been reported in the local media that EcoPro Materials (450080 KS) is seeking about 300 billion won in additional capital which represents about 5% of its market cap.
There could be concerns about dilution associated with this capital raise which could result in share price decline. The company is currently considering on issuing RCPS for this capital raise.
There could be additional concerns about potential dilution associated with this capital raise which could result in further share price decline for Ecopro Materials.

Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

On 28-Feb-25, the last day of their fiscal year, Aeon Co Ltd (8267 JP) signed a deal to acquire Aeon Delight via Tender Offer and Aeon Mall via scrip exchange.
For Aeon Mall, that means negotiation on the share exchange ratio over the next 5-6 weeks.
While I have an opinion on the fair ratio (explained below), I find “Guess The Ratio” trades fraught with bad governance outcomes. The 3-month average is often used.

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Mar 02

Daily Brief South Korea: Seoul Guarantee Insurance, EcoPro Materials and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Seoul Guarantee Insurance IPO Bookbuilding Results Analysis
Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise

Seoul Guarantee Insurance IPO Bookbuilding Results Analysis

The majority of the investors placed orders at 26,000 won, which is the lower end of the IPO price range (26,000 won to 31,800 won).
SGIC held internal discussions to set the public offering price at 26,000 won. The final price (which is likely to be 26,000 won) will be revealed on 4 March.
Our updated base case valuation of SGIC is base case target price of 28,925 won per share. Given the lack of upside, we have a negative view of this deal.

Ecopro Materials: Seeking 300 Billion Won in Additional Capital Raise

It has been reported in the local media that EcoPro Materials (450080 KS) is seeking about 300 billion won in additional capital which represents about 5% of its market cap.
There could be concerns about dilution associated with this capital raise which could result in share price decline. The company is currently considering on issuing RCPS for this capital raise.
There could be additional concerns about potential dilution associated with this capital raise which could result in further share price decline for Ecopro Materials.

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Mar 02

Daily Brief China: Alibaba Group Holding , Shenzhen Bluetrum Technology, Hang Seng China Enterprises Index, Shanghai Henlius Biotech , Trip.com, Hang Seng Index, Eva Airways and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Alibaba’s $53 Billion Bet on an AI and Cloud Expansion Windfall
STAR Chip Index Rebalance: Shenzhen Bluetrum (688332) Replaces JoulWatt (688141)
March Key Events in Asia-Pac: Tariffs, Rates, Earnings, and Indices in Focus
China Healthcare Weekly (Mar.2) – NewCo Model, Pfizer-Summit Deal, Henlius to Enter HK Stock Connect
[Trip.com (TCOM US, BUY, TP US$74) Review]: Steady Domestic Supports for Venturing in Overseas
Macro Vol Monthly – March: Weakness Could Continue into Mid-March
Monthly Air Cargo Tracker | January: Soft Demand, Low LFs | Ocean Growth > Air Growth (March 2025)

Alibaba’s $53 Billion Bet on an AI and Cloud Expansion Windfall

By Caixin Global

Alibaba Group Holding Ltd. is making a record-breaking bet on artificial intelligence (AI) and cloud computing, announcing on Monday that it will inject more than 380 billion yuan ($53 billion) into cloud and AI infrastructure over the next three years — more than its total capital expenditure over the past decade.
The Chinese tech giant said in a statement that the investment marks the largest private-sector commitment to cloud and AI hardware in China.
Since its 2014 initial public offering, Alibaba’s total capital expenditures from 2015 to 2024 have amounted to approximately 376 billion yuan.

STAR Chip Index Rebalance: Shenzhen Bluetrum (688332) Replaces JoulWatt (688141)

CSI announced the changes for the March rebalance after market close on 28 February and the changes will be effective after the close of trading on 14 March.
As expected, Shenzhen Bluetrum Technology (688332 CH) will be added to the index while JoulWatt Technology Co (688141 CH) will be deleted.
Shenzhen Bluetrum Technology (688332 CH) outperformed JoulWatt Technology Co (688141 CH) in the last quarter of 2024 and there has been a reversal of fortunes this calendar year.

March Key Events in Asia-Pac: Tariffs, Rates, Earnings, and Indices in Focus

By Gaudenz Schneider

Several US tariffs are expected in March, but their implementation remains uncertain and is part of ongoing negotiations.
Central banks in India, Japan, and the US will announce rate decisions in March, with India possibly cutting rates by 0.25%.
Major HK stocks are set to announce earnings in March, and index changes will occur in the S&P 500, Nifty 50, S&P/ASX 200, and HSCEI indices.

China Healthcare Weekly (Mar.2) – NewCo Model, Pfizer-Summit Deal, Henlius to Enter HK Stock Connect

By Xinyao (Criss) Wang

The NewCo model can be considered as an “intermediate state” for Chinese biotech companies when they hopes to enter overseas markets, rather than a real success in internationalization.
After the announcement of Pfizer-Summit cooperation, share price of Summit plunged. Pfizer is clearly the beneficiary. The possibility of Summit being acquired could be reduced, which make investors unhappy.
Shares of Henlius surged. Thanks to Lin Lijun’s dissenting vote, investors have the opportunity to profit at a higher price.Next goal is to be included in Hong Kong Stock Connect.

[Trip.com (TCOM US, BUY, TP US$74) Review]: Steady Domestic Supports for Venturing in Overseas

By Eric Wen

TCOM reported C4Q24 revenue 5.4%/3.6% higher than our estimate/consensus, and non-GAAP operating profit 11.2%/6.2% higher than our estimate/consensus, supported by strong domestic travel rebound;
Even though C1Q25 margin guidance was soft due to commitment to overseas expansions and a couple of one-time events affecting outbound,
We keep the stock as BUY rating and keep TP at US$74/ADS.

Macro Vol Monthly – March: Weakness Could Continue into Mid-March

By John Ley

Monthly deep-dive into price and vol metrics across Asian indexes as well as macro assets.
Provides an in-depth look at the current state of the markets as well as how volatility and price are likely to unfold for March.
HSI, Nifty, SP500, SPASX200 and Gold are all highlighted as having tradeable patterns in March.

Monthly Air Cargo Tracker | January: Soft Demand, Low LFs | Ocean Growth > Air Growth (March 2025)

By Daniel Hellberg

January air cargo activity moderated; timing of LNY holiday also made for tough comps
January Int’l air cargo tons at US gateways grew far less than inbound (ocean) TEUs
Data from Asian carriers & US gateways indicates low utilization, softening growth

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Mar 02

Daily Brief Japan: Aeon Delight, AEON Mall, Seven & I Holdings, Shibaura Electronics, Makino Milling Machine Co and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share
Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade
Last Week in Event SPACE: Seven & I, Yangzijiang Shipbuilding, Pentamaster Int’l, T’Way Holdings
(Mostly) Asia M&A, Feb 2025 Wrap: Domain, Proto, Shibaura, Paragon REIT, Mayne Pharma, PointsBet
Aeon Delight (9787 JP): Aeon’s (8267 JP) JPY5,400 Tender Offer
(Mostly) Asia-Pac M&A: PointsBet, Tonami, CIC/China Galaxy, SG Fleet, Silk Logistics, Jamco, Makino

Aeon Tender Offer for Aeon Delight (9787) At ¥5,400/Share

Bowing before bureaucratic, governmental, societal, and perhaps finally shareholder pressure, Aeon Co Ltd (8267 JP) Friday announced it is rolling up two big subsidiaries.
Aeon Mall will be merged with Aeon in a share exchange and Aeon Delight (9787 JP) will be taken over via slightly long-dated Tender Offer which starts Monday.
This is probably the wrong price, but it isn’t egregiously wrong I expect. And it would be difficult to block. I expect it gets done easily.

Aeon (8267) And Aeon Mall (8905) To Be a Guess The Ratio Trade

On 28-Feb-25, the last day of their fiscal year, Aeon Co Ltd (8267 JP) signed a deal to acquire Aeon Delight via Tender Offer and Aeon Mall via scrip exchange.
For Aeon Mall, that means negotiation on the share exchange ratio over the next 5-6 weeks.
While I have an opinion on the fair ratio (explained below), I find “Guess The Ratio” trades fraught with bad governance outcomes. The 3-month average is often used.

Last Week in Event SPACE: Seven & I, Yangzijiang Shipbuilding, Pentamaster Int’l, T’Way Holdings

7&I (3382 JP)‘s MBO is off. Itochu has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
Yangzijiang Shipbuilding (YZJSGD SP) is sucking wind as United States Trade Representative’s (USTR) office proposed a raft of fees and other shipping restrictions on Chinese vessels
Pentamaster International (1665 HK)‘s Scheme comfortably gets up after a wild week of trading.

(Mostly) Asia M&A, Feb 2025 Wrap: Domain, Proto, Shibaura, Paragon REIT, Mayne Pharma, PointsBet

For the month of February 2025, 14 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$5bn.
The average premium for the new transactions announced (or first discussed) in February was ~55%, with a year-to-date average also of 56%.
The average premiums for transactions in 2024 (129 transactions), (2023 (117), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) were 43%, 39%, 41%, 33%, 31%, and 31% .

Aeon Delight (9787 JP): Aeon’s (8267 JP) JPY5,400 Tender Offer

By Arun George

Aeon Delight (9787 JP) has recommended a tender offer from Aeon Co Ltd (8267 JP) at JPY5,400 per share, a 15.3% premium to the last close.
Despite the skinny premium, the offer is reasonable compared to historical trading ranges and peer multiples. The offer represents an all-time high.
The offer aligns with the midpoint of the special committee IFA’s DCF valuation range and is marginally below the Board’s requested price. The required minority acceptance rate is attainable.

(Mostly) Asia-Pac M&A: PointsBet, Tonami, CIC/China Galaxy, SG Fleet, Silk Logistics, Jamco, Makino