Smartkarma Daily Briefs

Cochin Shipyard Ltd (COCHIN IN) has secured a Rs. 450 crore order to build tugboats for Adani Ports & Special Economic Zone (ADSEZ IN) , signalling growth in India’s shipbuilding industry.
Dixon Technologies India Ltd (DIXON IN) is expanding beyond electronics manufacturing by entering the refrigerator market through a partnership with Cellecor Gadgets.
VA Tech Wabag (VATW IN) is making waves with a Rs. 700 crore wastewater treatment project in Zambia, highlighting its commitment to sustainable solutions and expansion across the African market.

Singapore Market Roundup (27-Dec-2024): OCBC raises Keppel DC REIT value.

By Singapore Market Roundup

OCBC Investment Research increases fair value for Keppel DC REIT thanks to improved portfolio diversity and performance.
DBS sticks with ‘buy’ recommendation for ComfortDelGro despite higher platform fees, citing CPF contribution costs.
Both recommendations reflect positive outlook for these companies in light of recent market changes.

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Dec 28

Daily Brief Event-Driven: Nidec Goes Hostile On Makino Milling at ¥11 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Nidec Goes Hostile On Makino Milling at ¥11,000/Share
What We’ve Got on Samsung Electronics’ Value-Up Disclosure
Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

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.

What We’ve Got on Samsung Electronics’ Value-Up Disclosure

Yesterday, the FSC pushed for value-up policies, but the real buzz was about Samsung Electronics hinting at rolling out its own value-up plan soon.
Samsung may raise its dividend payout from 50% to 60% and could issue a special dividend if semiconductor results improve or FCF exceeds expectations.
Samsung’s value-up disclosure may not cause short-term price action but could strengthen downside support. It may focus on dividends over buybacks, potentially boosting preferred stock.

Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

By Arun George

Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share, an 18.9% premium to the last close.
The offer is preconditioned on several regulatory approvals. It is scheduled to start on 4 April, even if the Board does not recommend it.
The Board has three options: engage to facilitate a friendly offer, find a white knight bidder and launch an ambitious MTM plan to thwart the offer.

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Dec 28

Daily Brief Equity Bottom-Up: The Beat Ideas- Adani Energy Solution: Riding the Electricity Wave and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

The Beat Ideas- Adani Energy Solution: Riding the Electricity Wave
The Beat Ideas: Strides Pharma~ A Growth Play Post OneSource Demerger
The US-China Trade War Is Likely to Split the Semiconductor Industry into Two Groups.
China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express
ChampionX Corporation: These Are The 6 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
China Logistics (Part 1): ZTO Has a Unit Economics Problem
Korea Small Cap Gem #31: Daesang – A Consistently Profitable F&B Company Run by the Lim Sisters
Eli Lilly’s Weight Loss Revolution: Is It Edging Out Novo Nordisk?
Enfusion Inc.: Leveraging Managed Services for Faster Monetization To Change The Game! – Major Drivers
Euronet Worldwide: Money Transfer Growth and Strategic Partnerships Driving Our Optimism! – Major Drivers

The Beat Ideas- Adani Energy Solution: Riding the Electricity Wave

Adani Transmission (ADANIT IN) is one of the largest private player in transmission.
The management has guided for 20% YOY revenue & EBITDA growth for long term
Alongside it is trying to diversify from transmission & distribution which are regulated by the government and entered in Smart Meters, Cooling Services etc.

The Beat Ideas: Strides Pharma~ A Growth Play Post OneSource Demerger

Strides Pharma achieved record growth in the US, launched high-ticket generics, and is spinning off OneSource CDMO with a projected valuation of $1.8-$2 billion by Q4FY25.
Deleveraging efforts, diversified revenue streams, and regulatory approvals position Strides for profitability recovery, with expected FY26 EBITDA of ₹1,000 crore, driving long-term growth.
Strides is evolving into a leaner, growth-focused entity with reduced debt, a strong US portfolio, and OneSource spin-off, offering ~25% upside from its current market valuation.

The US-China Trade War Is Likely to Split the Semiconductor Industry into Two Groups.

By Patrick Liao

The US-China trade war has shaped a new trend: Advanced and Matured Technologies led by Taiwan Semiconductor (TSMC) – ADR (TSM US) and Semiconductor Manufacturing International Corp (SMIC) (981 HK) respectively.
Notably, construction of semiconductor fabs in Singapore seems to be of lesser concern at the moment.
The emergence of AI offers new hope, not only for advanced semiconductor technology but also for lagging technologies.

China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express

Despite being breakeven just quarters ago, JD Logistics (2618 HK) has achieved profitability on par with global peers nearly 3x its size. Margin still has upside with further subsidiary integration;
JDL is still positioned to accelerate revenue by taking share from S.F. Holding (6936 HK) in untapped opportunities, including domestic B2C (Taobao/Tmall), cross-border B2C (Kuayue acquisition), and B2B;
JDL’s stock price rose 60%+ while it was our top pick for 2024. We reiterate the company as our TOP buy idea in the China logistics space for 2025;

ChampionX Corporation: These Are The 6 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers

ChampionX Corporation delivered a mixed set of results in the fourth quarter and full year 2023, revealing both strengths and challenges in its financial performance and market position.
The company reported fourth-quarter revenue of $944 million, which was slightly up sequentially but 4% lower year-over-year, reflecting the impacts of softer U.S. land drilling and completions activity.
However, the company’s adjusted EBITDA remained flat from the previous quarter at $198 million, marking a 10% increase over the prior year, driven by higher volumes, productivity, and cost management.

China Logistics (Part 1): ZTO Has a Unit Economics Problem

ZTO’s market share losses may accelerate as peers continue to cut prices. Worse yet, margins of its competitors are improving, which will sustain the war for a longer time;
ZTO has maintained profitability growth despite the price war, but we think this situation is unsustainable. Management will eventually need to sacrifice profitability or suffer accelerated share loss.
We now take a more bearish view on ZTO as we see no quick solution to the profit and market share balancing act.

Korea Small Cap Gem #31: Daesang – A Consistently Profitable F&B Company Run by the Lim Sisters

By Douglas Kim

Daesang is one of the leading F&B companies in Korea. It is especially well known for its sauces, kimchi, and miwon (MSG) food ingredients.
Daesang has relatively attractive valuation multiples. It is trading at P/E of 5.6x, P/B of 0.46x, and EV/EBIT of 6.4x in 2025. Daesang consistently generates positive net profit.
Daesang Holdings (084690 KS) is the largest shareholder of Daesang Corp with a 39.3% stake. Two sisters (Lim Sang-Min and Lim Se-Ryeong) are the two largest shareholders of Daesang Holdings.

Eli Lilly’s Weight Loss Revolution: Is It Edging Out Novo Nordisk?

In a pivotal moment for the weight-loss and anti-obesity market, Eli Lilly & Co. has solidified its leadership position following groundbreaking developments around its drug Zepbound.
Recently approved in the United States for treating sleep apnea in obese patients, Zepbound has set a historic precedent as the first drug targeting the underlying causes of this condition.
This development, coupled with robust sales and a promising pipeline, gives Eli Lilly a clear advantage over its primary competitor, Novo Nordisk, whose experimental drug CagriSema underperformed expectations.

Enfusion Inc.: Leveraging Managed Services for Faster Monetization To Change The Game! – Major Drivers

Enfusion, Inc., during its third-quarter 2024 earnings presentation, demonstrated robust progress in executing its strategic initiatives.
The company achieved a 15% year-over-year increase in revenue, reaching $51.2 million, with notable growth driven by its strategic focus on larger, up-market clients and geographical expansion.
Despite favorable revenue growth, the minor challenges faced included slower back book expansion, particularly in the Asia-Pacific (APAC) region, due to geopolitical uncertainties and economic conditions, which impacted organic growth.

Euronet Worldwide: Money Transfer Growth and Strategic Partnerships Driving Our Optimism! – Major Drivers

Euronet Worldwide has reported its third-quarter financial results for 2024, showing a record performance in key financial metrics.
The company achieved a revenue of $1.1 billion, with operating income standing at $182 million.
Adjusted EBITDA reached $226 million, and adjusted earnings per share (EPS) were reported at $3.03, marking an increase of 11% from the previous year.

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Dec 28

Daily Brief Macro: CX Daily: China Launches New Plan to Tackle Tuberculosis and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

CX Daily: China Launches New Plan to Tackle Tuberculosis

CX Daily: China Launches New Plan to Tackle Tuberculosis

By Caixin Global

Tuberculosis / In Depth: China launches new plan to tackle tuberculosis
China-Mexico /: Trump tariff hike on Mexico would hurt Chinese investments, experts say
The World Bank nudged up its China GDP growth forecast for this year to 4.9%, up from its June projection of 4.8%

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Dec 28

Daily Brief South Korea: Samsung Electronics Pref Shares, HD Hyundai , Daesang Corporation and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

What We’ve Got on Samsung Electronics’ Value-Up Disclosure
Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law
Korea Small Cap Gem #31: Daesang – A Consistently Profitable F&B Company Run by the Lim Sisters

What We’ve Got on Samsung Electronics’ Value-Up Disclosure

Yesterday, the FSC pushed for value-up policies, but the real buzz was about Samsung Electronics hinting at rolling out its own value-up plan soon.
Samsung may raise its dividend payout from 50% to 60% and could issue a special dividend if semiconductor results improve or FCF exceeds expectations.
Samsung’s value-up disclosure may not cause short-term price action but could strengthen downside support. It may focus on dividends over buybacks, potentially boosting preferred stock.

Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law

By Douglas Kim

Amid chaos in Korean politics (including impeachment of the Acting President Han Duck Soo), the FSC announced that the change in the procedure for quarterly dividends was passed into law.
The main change that has been made is that the the investors will know in advance how much they will receive in quarterly dividends.
Amid market turmoil, numerous high dividend paying stocks such as Hankook & Company, HD Hyundai, and KT Corp have been outperforming the market this year.

Korea Small Cap Gem #31: Daesang – A Consistently Profitable F&B Company Run by the Lim Sisters

By Douglas Kim

Daesang is one of the leading F&B companies in Korea. It is especially well known for its sauces, kimchi, and miwon (MSG) food ingredients.
Daesang has relatively attractive valuation multiples. It is trading at P/E of 5.6x, P/B of 0.46x, and EV/EBIT of 6.4x in 2025. Daesang consistently generates positive net profit.
Daesang Holdings (084690 KS) is the largest shareholder of Daesang Corp with a 39.3% stake. Two sisters (Lim Sang-Min and Lim Se-Ryeong) are the two largest shareholders of Daesang Holdings.

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Dec 28

Daily Brief United States: ChampionX , Installed Building Products, ProShares UltraPro S&P 500, Eli Lilly & Co, Euronet Worldwide, Watts Water Technologies A, Enfusion, Esab , Applied Industrial Tech, Aaon Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

ChampionX Corporation: These Are The 6 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
Installed Building Products (IBP): Can It Really Sustain Its Margins Amidst Market Fluctuations? – Major Drivers
Calendar Effects Trading Strategy: Combining TOY and Santa Rally Effects for Enhanced Returns
Eli Lilly’s Weight Loss Revolution: Is It Edging Out Novo Nordisk?
Euronet Worldwide: Money Transfer Growth and Strategic Partnerships Driving Our Optimism! – Major Drivers
Watts Water’s Smart Solutions Revolution: How Nexa is Solving Critical Industry Challenges! – Major Drivers
Enfusion Inc.: Leveraging Managed Services for Faster Monetization To Change The Game! – Major Drivers
ESAB Corporation: Geographic Expansion & Market Penetration & Other Major Drivers
Applied Industrial Technologies (AIT): Emerging Market Growth & Margin Expansion To Change The Game! – Major Drivers
AAON’s Explosive Expansion Strategy: Doubling Data Center Capacity To Achieve Unprecedented Growth! – Major Drivers

ChampionX Corporation: These Are The 6 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers

ChampionX Corporation delivered a mixed set of results in the fourth quarter and full year 2023, revealing both strengths and challenges in its financial performance and market position.
The company reported fourth-quarter revenue of $944 million, which was slightly up sequentially but 4% lower year-over-year, reflecting the impacts of softer U.S. land drilling and completions activity.
However, the company’s adjusted EBITDA remained flat from the previous quarter at $198 million, marking a 10% increase over the prior year, driven by higher volumes, productivity, and cost management.

Installed Building Products (IBP): Can It Really Sustain Its Margins Amidst Market Fluctuations? – Major Drivers

Installed Building Products Inc. (IBP) reported a strong third quarter for 2024, displaying record revenue and profitability driven by organic growth and strategic acquisitions.
The quarter’s earnings highlighted robust performance across residential and commercial segments, although some challenges persist.
On the positive side, IBP achieved a consolidated net revenue increase of 8% year-over-year, reaching $761 million.

Calendar Effects Trading Strategy: Combining TOY and Santa Rally Effects for Enhanced Returns

By William Mann

Calendar effects in equity markets have persisted despite widespread knowledge of their existence.
Combine the Turn-of-Year (TOY) effect with the Santa Rally phenomenon systematically
The trading approach historically generates 1.4-2.0% returns over a 7-day period, with a win rate of 75% since 2000.

Eli Lilly’s Weight Loss Revolution: Is It Edging Out Novo Nordisk?

In a pivotal moment for the weight-loss and anti-obesity market, Eli Lilly & Co. has solidified its leadership position following groundbreaking developments around its drug Zepbound.
Recently approved in the United States for treating sleep apnea in obese patients, Zepbound has set a historic precedent as the first drug targeting the underlying causes of this condition.
This development, coupled with robust sales and a promising pipeline, gives Eli Lilly a clear advantage over its primary competitor, Novo Nordisk, whose experimental drug CagriSema underperformed expectations.

Euronet Worldwide: Money Transfer Growth and Strategic Partnerships Driving Our Optimism! – Major Drivers

Euronet Worldwide has reported its third-quarter financial results for 2024, showing a record performance in key financial metrics.
The company achieved a revenue of $1.1 billion, with operating income standing at $182 million.
Adjusted EBITDA reached $226 million, and adjusted earnings per share (EPS) were reported at $3.03, marking an increase of 11% from the previous year.

Watts Water’s Smart Solutions Revolution: How Nexa is Solving Critical Industry Challenges! – Major Drivers

Watts Water Technologies, Inc. reported a mixed performance for the third quarter of 2024, with some regions and product lines experiencing growth, while others faced challenges.
The company’s results exceeded expectations in general, though organic sales were down 4% overall.
This was primarily due to strong growth in Asia-Pacific, Middle East, and Africa (APMEA) offset by declines in the Americas and Europe.

Enfusion Inc.: Leveraging Managed Services for Faster Monetization To Change The Game! – Major Drivers

Enfusion, Inc., during its third-quarter 2024 earnings presentation, demonstrated robust progress in executing its strategic initiatives.
The company achieved a 15% year-over-year increase in revenue, reaching $51.2 million, with notable growth driven by its strategic focus on larger, up-market clients and geographical expansion.
Despite favorable revenue growth, the minor challenges faced included slower back book expansion, particularly in the Asia-Pacific (APAC) region, due to geopolitical uncertainties and economic conditions, which impacted organic growth.

ESAB Corporation: Geographic Expansion & Market Penetration & Other Major Drivers

ESAB Corporation’s third quarter of 2024 depicts a nuanced picture of the company’s performance amid challenging market conditions.
The results highlight a blend of strategic decisions and market dynamics that, collectively, present a mixed outlook for potential investors.
On the positive side, ESAB posted record third-quarter margins and robust cash flow, setting adjusted EBITDA margins at an impressive 19.6%, marking a 130 basis point expansion.

Applied Industrial Technologies (AIT): Emerging Market Growth & Margin Expansion To Change The Game! – Major Drivers

Applied Industrial Technologies reported their fiscal 2025 first-quarter results, indicating a mixed performance amid ongoing economic uncertainties and strategic investments.
The company experienced a moderate decline in organic daily sales of 3% compared to the previous year, though this was somewhat offset by a robust September performance, surpassing initial expectations.
On the positive side, the company achieved a record first quarter for free cash flow generation, nearly doubling compared to the prior year, and maintained steady EBITDA performance, consistent with internal targets.

AAON’s Explosive Expansion Strategy: Doubling Data Center Capacity To Achieve Unprecedented Growth! – Major Drivers

AAON Inc. reported a solid third quarter for 2024, with a 4.9% year-over-year increase in total revenue reaching $327.3 million.
Diluted earnings per share rose by 8.6%, illustrating positive financial performance.
A notable highlight was the company’s performance in the data center market, where demand for its engineered, energy efficient products significantly increased.

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Dec 28

Daily Brief India: Adani Transmission, Strides Pharma Science and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

The Beat Ideas- Adani Energy Solution: Riding the Electricity Wave
The Beat Ideas: Strides Pharma~ A Growth Play Post OneSource Demerger

The Beat Ideas- Adani Energy Solution: Riding the Electricity Wave

Adani Transmission (ADANIT IN) is one of the largest private player in transmission.
The management has guided for 20% YOY revenue & EBITDA growth for long term
Alongside it is trying to diversify from transmission & distribution which are regulated by the government and entered in Smart Meters, Cooling Services etc.

The Beat Ideas: Strides Pharma~ A Growth Play Post OneSource Demerger

Strides Pharma achieved record growth in the US, launched high-ticket generics, and is spinning off OneSource CDMO with a projected valuation of $1.8-$2 billion by Q4FY25.
Deleveraging efforts, diversified revenue streams, and regulatory approvals position Strides for profitability recovery, with expected FY26 EBITDA of ₹1,000 crore, driving long-term growth.
Strides is evolving into a leaner, growth-focused entity with reduced debt, a strong US portfolio, and OneSource spin-off, offering ~25% upside from its current market valuation.

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Dec 28

Daily Brief China: JD Logistics , ZTO Express Cayman , Xiaomi Corp and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express
China Logistics (Part 1): ZTO Has a Unit Economics Problem
Xiaomi’s Smartphone Share Gain in Japan Is a Harbinger of Good Things to Come

China Logistics (Part 2): All JD Logistic Roads Lead Back to S.F. Express

Despite being breakeven just quarters ago, JD Logistics (2618 HK) has achieved profitability on par with global peers nearly 3x its size. Margin still has upside with further subsidiary integration;
JDL is still positioned to accelerate revenue by taking share from S.F. Holding (6936 HK) in untapped opportunities, including domestic B2C (Taobao/Tmall), cross-border B2C (Kuayue acquisition), and B2B;
JDL’s stock price rose 60%+ while it was our top pick for 2024. We reiterate the company as our TOP buy idea in the China logistics space for 2025;

China Logistics (Part 1): ZTO Has a Unit Economics Problem

ZTO’s market share losses may accelerate as peers continue to cut prices. Worse yet, margins of its competitors are improving, which will sustain the war for a longer time;
ZTO has maintained profitability growth despite the price war, but we think this situation is unsustainable. Management will eventually need to sacrifice profitability or suffer accelerated share loss.
We now take a more bearish view on ZTO as we see no quick solution to the profit and market share balancing act.

Xiaomi’s Smartphone Share Gain in Japan Is a Harbinger of Good Things to Come

Xiaomi’s Japan market share rose to ~7% in C2Q24 from the year prior, driven by carrier partnerships and brand recognition from SU7 media coverage and a product partnership with LEICA;
Upon examination, we found Xiaomi filled a product gap left by the smartphone exits of Kyocera and Fujitsu, for the carriers, which account for 90% of handset sales in Japan;
In our view, Xiaomi’s success in Japan marks a turning point in its global brand perception, signaling potential for further growth in other developed and high end developing markets.

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Dec 28

Daily Brief Japan: Makino Milling Machine Co, Nippon Shinyaku, Nidec Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000
Nippon Shinyaku (4516 JP): Unfavorable Patent Verdict; Company Vows to Fight Back
Nidec (6594 JP): Acquisition of Makino Milling Would Add Value

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.

Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

By Arun George

Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share, an 18.9% premium to the last close.
The offer is preconditioned on several regulatory approvals. It is scheduled to start on 4 April, even if the Board does not recommend it.
The Board has three options: engage to facilitate a friendly offer, find a white knight bidder and launch an ambitious MTM plan to thwart the offer.

Nippon Shinyaku (4516 JP): Unfavorable Patent Verdict; Company Vows to Fight Back

By Tina Banerjee

A US court found Nippon Shinyaku (4516 JP) guilty of patent infringement related to competitor Sarepta Therapeutics (SRPT US)‘s DMD drug Vyondys 53 and asked to pay $115M as compensation.
The jury verdict will have no bearing on Viltepso sales. Nippon Shinyaku disagreed with the verdict, and is considering all options including post jury motions and appeals.
An additional expense to the tune of $115M would surely be a huge drag on the profitability of the company which is already under pressure because of rising costs.

Nidec (6594 JP): Acquisition of Makino Milling Would Add Value

By Scott Foster

Nidec has announced its intention to acquire Makino Milling Machine (6135 JP) for ¥11,000 per share, a 42% premium over Thursday’s closing price.
The stock market liked the idea. Nidec’s share price rose 4% on Friday. Makino’s jumped 19%. The pice looks high, but at 17.7x Makino’s EPS guidance, it is not unreasonable.
The acquisition would be accretive to earnings and bring greater scale and competitiveness to Nidec’s machine tool business. It should support our Buy recommendation.

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Dec 28

Most Read: Sanrio, Kokusai Electric , LG CNS, Samsung Engineering, Makino Milling Machine Co, Shin Kong Financial Holding, Hyundai Motor , Samsung Electronics Pref Shares and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
Japan: Potential Passive Selling in February
LG CNS IPO: Limited Float Pushes Back Passive Buying
Korea: Potential Relegations from K League 1
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Shin Kong/Taishin Merger – Proceeding Apace
Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st
Our Best Calls in 2024: Review and Outlook for 2025
What We’ve Got on Samsung Electronics’ Value-Up Disclosure
Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

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.

Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st

Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.

Our Best Calls in 2024: Review and Outlook for 2025

By Osbert Tang, CFA

With a range of 34.5-68.1%, our five best calls in 2024 generated an average return of 54.1% YTD, outperforming the Hang Seng Index by 26.2pp.
China Communications Construction (1800 HK) and Dongfang Electric (1072 HK) are expected to sustain strengths into 2025 on market value management and pick-up in new orders.
Xinhua Winshare (811 HK), China Everbright Environment (257 HK), and SITC International (1308 HK) may hold their share price, but gains are unlikely to be as much as 2024.

What We’ve Got on Samsung Electronics’ Value-Up Disclosure