Category

Event-Driven

Dec 27
0

Daily Brief Event-Driven: Toyo Construction (1890) Investors/Traders Beware and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toyo Construction (1890) Investors/Traders Beware
  • Takashimaya and H2O Cancel Tie-Up
  • XXXLutz Consortium/​Home24: Additional Acceptance Period

Toyo Construction (1890) Investors/Traders Beware

By Travis Lundy

  • On 13 December, Toyo Construction (1890 JP) suitor YFO issued a press release which was not to the liking of Toyo Construction. A day later, Toyo Construction offered its own.
  • YFO responded on the 21st, saying ToyoKen’s PR was inaccurate. Not quite a week after that, ToyoKen announced one tiny subsidiary(Tecos) would absorb another (portable toilet rental co Orient Ecology).
  • Synergies? None. Growth? None. Scale? Nope. Was this for some other reason investors need to worry about? Maybe.

Takashimaya and H2O Cancel Tie-Up

By Michael Causton

  • Takashimaya and H2O Retailing entered what felt like a forced engagement of convenience in 2008 when all their other competitors were busy merging.
  • Although discussions for a full merger were held, in truth, thea agreement was more about practical collaboration to create more efficiencies. 
  • With both firms now more secure and cross-shareholdings more problematic, they will sell off their equity in each other but continue to work on joint projects.

XXXLutz Consortium/​Home24: Additional Acceptance Period

By Jesus Rodriguez Aguilar

  • XXXLutz consortium secures 80.94% of home24 shares. The Additional Acceptance Period runs until 28 December. More shares will be tendered and delisting will eventually take place in 2023, in my view.
  • My updated fair value estimate is €7.44/share (average of DCF and comparables, as per the tables below), just 0.8% below the offer price, hence my TP remains unchanged at €7.50.
  • Gross spread is 0.93%. The risk of being stranded with a delisted stock encourages tendering at €7.50.

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Dec 26
0

Daily Brief Event-Driven: Merger Arb Mondays (26 Dec) – Nippon Steel Trading and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals
  • S&P/ASX All Technology Index: GICS Changes, Market Consultation & Potential Index Changes
  • Weekly Deals Digest (26 Dec) – JAFCO, Nippon Steel Trading, Conexio, Origin Energy, Warrego

Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals

By Arun George

S&P/ASX All Technology Index: GICS Changes, Market Consultation & Potential Index Changes

By Brian Freitas

  • Global Industry Classification Standard (GICS) structure updates will lead to changes to the S&P/ASX All Technology Index at the March rebalance.
  • To better reflect the GICS changes and reduce constituent turnover, S&P DJI has proposed changes to the index universe for constituent selection.
  • We expect there will be 4 deletions from the index in March, but that could increase to 10 if the changes are not adopted.

Weekly Deals Digest (26 Dec) – JAFCO, Nippon Steel Trading, Conexio, Origin Energy, Warrego

By Arun George

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Dec 25
0

Daily Brief Event-Driven: EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
  • Last Week in Event SPACE: Oz Minerals, Warrego, JAFCO, Swire Pac’s A&Bs, Korean Mandatory Offers
  • Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI
  • Estimating Fund Size Tracking KOSPI MID Cap Index

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

Last Week in Event SPACE: Oz Minerals, Warrego, JAFCO, Swire Pac’s A&Bs, Korean Mandatory Offers

By David Blennerhassett

  • For OZ Minerals (OZL AU),  look elsewhere unless you are VERY bullish copper. But if you are VERY bullish copper, buy copper options rather than the embedded option in OZL. 
  • Game on as Warrego Energy (WGO AU) shareholders weigh the pros and cons of Hancock’s all-cash Offer against Strike Energy (STX AU)‘s “superior” scrip proposal. 
  • Jafco Co Ltd (8595 JP) succumbed to greenmail and tried to boost the price to explain the exit they were going to give Murakami-san. It didn’t work. 

Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI

By Brian Freitas

Estimating Fund Size Tracking KOSPI MID Cap Index

By Sanghyun Park

  • About ₩3T trillion is presumed to flow from NPS to KOSPI MID. Then, ₩0.8T from local publicly raised funds should be sitting in KOSPI MID. Adding these two alone amounts ₩4T.
  • Of course, this is ACTIVE. In other words, they do not need to proceed with universe changes due to rebalancing at the same pace as ETFs.
  • Nevertheless, we should note that the domestic fund industry does not allow a large gap with BM. Hence, at least ₩4T of funds follow KOSPI MID quite tightly.

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Dec 23
0

Daily Brief Event-Driven: BHP & OZL Enter Scheme Implementation Deed – Timing and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • BHP & OZL Enter Scheme Implementation Deed – Timing, Risk, & Index Effects
  • Swire Now Buying Back B Shares Only
  • Nojima (7419) Launches Buyout of Conexio (9422)
  • JAFCO (8595 JP): Murakami Gets His Way with a JPY2,500 Tender Offer
  • Futu (FUTU US / 3588 HK): Dual Primary Listing, Stock Connect & Potential HSCI/HSTECH Inclusion
  • Conexio Corporation (9422 JP) JPY1,911 Tender Offer from Nojima
  • OZ Minerals (OZL AU)’s SID with BHP at A$28.25
  • Revised CGT/SST in Korea: Intense Selling Flow on T-1 Ex-Date Will Be Intact Until 2024
  • MergerTalk:Why Black Knight May Be As Safe As Houses Even If Regulators Stop Its Merger With ICE
  • EQD | HSI Index:-Chinese Equities Have Held up into Year End and We Revisit the December Call Ratio

BHP & OZL Enter Scheme Implementation Deed – Timing, Risk, & Index Effects

By Travis Lundy

  • This morning, BHP Group Ltd (BHP AU) and OZ Minerals Ltd (OZL AU) announced they had entered into a Scheme Implementation Deed at A$28.25/share (5wks after I said 3-6 weeks).
  • All terms are confirmed and there may be a fully-franked dividend up to A$1.75/share which would reduce terms to A$26.50. The OZL Directors unanimously recommend. 
  • Anti-Trust approvals are needed in Brazil & Vietnam, other standard conditions, and the OZL Scheme Meeting should be late March early April. I expect this is done.

Swire Now Buying Back B Shares Only

By Travis Lundy

  • In August this year, Swire Pacific started a buyback programme for up to HK$4.0 billion worth of their shares (Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK)).
  • The shares went up. And B briefly outperformed A, but since then, the B/A ratio has fallen and my impression was Swire may have been misinterpreting the buyback rules.
  • Swire had been buying both every day. But they’ve been Buying Bs but no As for the last ten days in a row. This begs a few questions.

Nojima (7419) Launches Buyout of Conexio (9422)

By Travis Lundy

  • Nojima Corp (7419 JP) is buying out Conexio Corp (9422 JP) majority owner Itochu Corp (8001 JP) along with minorities. At a 59% premium, it looks good. 
  • However, in terms of normalised EV/EBITDA or EV/FCF multiple, this is not expensive. 
  • And while the major seller/target and friendlies are oh so close, the register is more interesting than the yuho top 10 shareholder list suggests. 

JAFCO (8595 JP): Murakami Gets His Way with a JPY2,500 Tender Offer

By Arun George

  • Jafco Co Ltd (8595 JP) and Murakami have reached an agreement on a revised tender offer for 16.8 million shares (23.60% of outstanding shares) at JPY2,500 per share. 
  • The revised tender offer’s primary purpose remains to facilitate Murakami to tender his 19.53% shareholding at the expense of other shareholders and the misallocation of JPY42 billion (tender cost).
  • The justification for the transaction is weak as most of the benefits could have been achieved without it. This calls into question the Board’s ability to enhance value.

Futu (FUTU US / 3588 HK): Dual Primary Listing, Stock Connect & Potential HSCI/HSTECH Inclusion

By Brian Freitas

Conexio Corporation (9422 JP) JPY1,911 Tender Offer from Nojima

By Arun George

  • Conexio Corp (9422 JP) has recommended Nojima Corp (7419 JP)’s tender offer of JPY1,911 per share, an 59.1% premium to the undisturbed price (22 December).
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
  • The tender offer was set in motion due to Itochu Corp (8001 JP)’s desire to exit. Itochu tendering its 60.34% stake and an attractive offer, suggests a done deal. 

OZ Minerals (OZL AU)’s SID with BHP at A$28.25

By Arun George

  • OZ Minerals Ltd (OZL AU) has entered into a SID with BHP Group Ltd (BHP AU) at A$28.25 per share, a 49.3% premium to the undisturbed price (5 August).
  • The offer price is attractive. The key conditions are shareholder and regulatory (Brazil and Vietnam) approvals. The scheme meeting is in late March/early April 2023. 
  • The key risk is the rise in copper prices. At last close and for the end-April payment, the gross and annualised spread to the offer is 1.6% and 4.8%, respectively.

Revised CGT/SST in Korea: Intense Selling Flow on T-1 Ex-Date Will Be Intact Until 2024

By Sanghyun Park

  • The all-inclusive CGT will be implemented in 2025. The current partial capital gains tax will be maintained until 2024. And the STT will drop from 0.23% to 0.15% in 2024.
  • The critical cause of an arb opportunity on ex-date price correction+dividend yield has been the yearend selling flow on T-1 ex-date for the purpose of tax avoidance by majority shareholders.
  • So, from this year to 2024, we should keep an eye on this arbitrage opportunity, which will continue to arise.

MergerTalk:Why Black Knight May Be As Safe As Houses Even If Regulators Stop Its Merger With ICE

By Robert Sassoon

  • We think that a ~40% spread overstates the risk of this deal not moving to completion. 
  • The horizontal integration aspects of this transaction can be remedied, but this is a largely vertical merger transaction which regulators may struggle to prove will lead to monopolistic behavior.
  • Even if the  ICE merger is ultimately blocked,  BKI has other supporting factors that could drive upside – an attractive valuation and a potential revival of interest from other parties 

EQD | HSI Index:-Chinese Equities Have Held up into Year End and We Revisit the December Call Ratio

By Simon Harris

  • Chinese equities have continued to outperform versus other global markets
  • The HSI Index 200dma has proved to be a barrier to the upside
  • We evaluate the call ratio we suggested in November and recommend action

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Dec 22
0

Daily Brief Event-Driven: JAFCO (8595) Succumbs to Even Worse Greenmail – SPECTACULARLY BAD Governance and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • JAFCO (8595) Succumbs to Even Worse Greenmail – SPECTACULARLY BAD Governance
  • Appier (4180) – Down But Not Out; Shareholder Structure Still The Biggest Risk
  • Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium
  • ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium
  • Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel
  • Warrego Energy: Reinhart Disses Strike’s “Superior” Offer
  • Mandatory Offer Arrives in Korea: Detailed Rules & Trading Ramifications
  • Thailand SET 50 Dec 22 Rebal: Good Hit Rate, Successful Pre-Event Trade, Unwind Now
  • AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations
  • TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

JAFCO (8595) Succumbs to Even Worse Greenmail – SPECTACULARLY BAD Governance

By Travis Lundy

  • Jafco Co Ltd (8595 JP) was the target of activist Murakami-san in August 2022. They threatened a poison pill. Murakami-san sold, then bought to 19.5%. They negotiated. He won.
  • His result excluded others. The market did not take it well. Murakami-san rejected taking a 1% hit to original terms (vs reference NAV). JAFCO went back to the drawing board. 
  • Then submitted to greenmail at a higher price. The first buyback was agreed at ¥2,500 vs ¥2,651 NAV. The new one? ¥2,730-2,840 vs ¥2,513 NAV. Inexplicable – Spectacularly Bad Governance.

Appier (4180) – Down But Not Out; Shareholder Structure Still The Biggest Risk

By Travis Lundy

  • Appier Group (4180 JP) had been among our picks for TSE Prime promotion and we had recommended positioning for it. That worked. On 8 Dec they announced the promotion.
  • The company is now part of TSE Prime which means a TOPIX Inclusion at end-January and an upweight in April. More than 20% of TSE float to buy by end-April.
  • Share price performance has not kept pace with potential, and yesterday’s BOJ decision saw a flurry of volume selling (bailing). Pre-IPO holder overhang may be the biggest “risk” here.

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium

By Travis Lundy

  • Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) today announced they would buy out Nippon Steel & Sumikin Bussan (9810 JP), their steel-trading subsidiary. 
  • The shares trade near an all-time high, but Nippon Steel is paying an 87% premium. (Interestingly, the high end of the DCF ranges suggest a 280% premium)
  • On fundamentals, this could have been higher, but given the shareholder structure, I expect it is a done deal as-is. The Tender Offer should start in February 2023.

ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium

By Travis Lundy

  • ENEOS Holdings (5020 JP) and subsidiary JX Nippon Mining & Metals Corporation announced today it would buy out minorities in miner and refiner Tatsuta Elec Wire & Cable (5809 JP). 
  • The Tender Offer comes at a 74% premium for their 37% sub. 5% off a 2yr high, 10% off a 20-year high. This is likely to be a “done deal”. 
  • JX probably starts with ~55% in the bag out of the 66.7% minimum. But the tender doesn’t start for ~ 6 months. Separately, importantly, there is a precedent here.

Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

By Arun George

  • Nippon Steel & Sumikin Bussa (9810 JP) has recommended Nippon Steel Corporation (5401 JP)’s tender at JPY9,300 per share, an 87.5% premium to the undisturbed price and an all-time high.
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
  • Mitsui & Co Ltd (8031 JP) will retain its 19.93% stake and together with Nippon Steel account for 55.01% of outstanding shares. Tender starts in late-February subject to antitrust clearances.

Warrego Energy: Reinhart Disses Strike’s “Superior” Offer

By David Blennerhassett

  • After the Gina Reinhart-backed Hancock bumped its Offer for Warrego Energy (WGO AU) to A$0.28/share, in cash, Beach Energy (BPT AU) declined to match the revised Offer.  
  • With Hancock seemingly in the driver’s seat, Strike Energy (STX AU), with 19.9% of shares out, proposed a one-for-one scrip Offer, with an indicative price of A$0.335/share.
  • Hancock has responded that its Offer provides certainty, with cash, whereas Strike’s proposal does not. Now 15.84% of the register has come out in support of Hancock’s Offer.

Mandatory Offer Arrives in Korea: Detailed Rules & Trading Ramifications

By Sanghyun Park

  • The target is those who purchase 25% or more of the shares of a listed company and become the largest shareholder with management rights.
  • The minimum volume of a mandatory offer is [(50% of total shares + 1 share) – the management right purchase volume].
  • We will be exposed to pro-rata risk, so it will be essential to figure out the nature and propensity of the shareholder composition to estimate the tendering rate in advance.

Thailand SET 50 Dec 22 Rebal: Good Hit Rate, Successful Pre-Event Trade, Unwind Now

By Janaghan Jeyakumar, CFA

  • The index changes for the Thailand SET Index (SET INDEX) for the December 2022 Rebalance were announced yesterday (20th December 2022) after the close.
  • There will be four ADDs/DELs for the SET 50 index. 
  • In this insight, we take a closer look at our expectations for index flows and potential trading ideas.

AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations

By Brian Freitas

  • Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.
  • One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.
  • Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.

TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

By Sanghyun Park

  • The key to this rebalancing is the inclusion of WCP, which satisfies the requirements of minimum listing period and secondary battery sales amount.
  • As a hedge for the LONG WCP position, we can use Soulbrain and Solus Advanced, whose passive outflow is relatively high among those of a similar size to WCP.
  • Among large caps, we should pay attention to L&F, Posco Chemical, and Iljin Materials. However, we should be cautious about approaching them as an active trading target.

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Dec 21
0

Daily Brief Event-Driven: KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR
  • SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
  • Northbound Stock Connect Expansion: Potential Changes in 2023
  • Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO
  • S&P/​​​​​​​​ASX Quiddity Leaderboard Mar 23: Index Changes Galore
  • KOSPI 200 Rebalancing Early Preview: Few Names Stand Out
  • Fengxiang (9977 HK)’s Share Transfer to PAG Complete, Unconditional MGO
  • Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications
  • Selected European Holdcos and DLC: November/Mid-December‘22 Report

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR

By Travis Lundy

  • The Nikkei reported this AM that Kawasaki Kisen Kaisha (9107 JP) CEO was considering increasing shareholder returns this fiscal year. It already has a juicy div and a ¥100bn buyback.
  • The company announced its buyback, and an agreement by two holders of 39% to sell in a ToSTNeT-3 buy, then started buying in the market. Results are impactful.
  • The shares are up today on this news, though they gave some back after the BOJ news. The outlook for more share price impact is not bad. 

SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out

By Brian Freitas

Northbound Stock Connect Expansion: Potential Changes in 2023

By Brian Freitas

  • On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
  • For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
  • There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.

Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO

By David Blennerhassett

  • A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
  • PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions. 
  • This is done. The timing for approving the SPA was bang-on with my expectation.

S&P/​​​​​​​​ASX Quiddity Leaderboard Mar 23: Index Changes Galore

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the run up to the March 2023 Rebalance.
  • Pendal Group (PDL AU)‘s deletion is expected in early-January 2023 and this could trigger an intra-review addition to the ASX 200 index. 
  • I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance. 

KOSPI 200 Rebalancing Early Preview: Few Names Stand Out

By Sanghyun Park

  • One name is screened to newly join the index. That is Kum Yang (001570 KS). With a YTD performance of over 400%, it is currently in very safe territory.
  • Two constituents stand out as likely deletes at this point: Zinus (013890 KS) and Hwaseung Enterprise (241590 KS). The market cap gap with the next ones in line isn’t small.
  • Kum Yang’s passive impact is substantially low due to the recent surge in TV. But if it moves sideways and TV stabilizes downward, we should build preemptive flow trade setups. 

Fengxiang (9977 HK)’s Share Transfer to PAG Complete, Unconditional MGO

By Arun George

  • PAG completed the auction procedures for the acquisition of a 70.92% stake in Shandong Fengxiang (9977 HK). This will trigger an unconditional MGO at HK$1.5132 per H Share.
  • As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
  • The composite document is to be despatched on or before 28 December. At last close and for an end-of-January payment, the gross and annualised spread is 5.1% and 65.9%, respectively.

Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

By Sanghyun Park

  • The exercise price is the arithmetic average of weighted average prices for the past two months, the past month, and the past week from the day before the board resolution.  
  • Considering the governance structure of most local companies, a split-off will still be more likely to be preferred than a spin-off. Split-offs will emerge despite the mandate of appraisal rights.
  • We should look into staggering spread openings, with the pricing done on a two-month window, as a downward price revision will likely intensify toward the announcement with mandatory appraisal rights.

Selected European Holdcos and DLC: November/Mid-December‘22 Report

By Jesus Rodriguez Aguilar

  • Discounts to NAV of covered holdcos have showed a mixed performance during November and the first half of December, with the same number of spreads widening and tightening.
  • Discounts to NAV (31 October): C.F.Alba, 49.5%; GBL, 35.7%; Heineken Holding, 18%; Industrivärden C, 13.5%; Investor B, 15.5%; Porsche Automobile Holding 40.4%. The spread of Rio Tinto DLC widened to %.
  • Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: GBL, Rio Tinto (DLC), CF Alba (long position).

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Dec 20
0

Daily Brief Event-Driven: Fujitec (6406) Activism Levelling Up – A Board Spill to Come? and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Fujitec (6406) Activism Levelling Up – A Board Spill to Come?
  • Boss Zhipin (2076 HK | BZ US) HK Dual Primary Listing on 22 Dec – Index, Southbound, and SPECIAL
  • Southbound Stock Connect Expansion: Potential Adds in 2023
  • IPet Holdings (7339 JP) – Tender Offer Extended But No Biggie
  • Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion
  • Warrego (WGO AU): Strike Energy (STX AU) Strikes with a Revised Offer
  • SARIA/Devro: Agreed Offer
  • GoTo IPO Lockup Expiry Follow-Up – Has Corrected but Has Traded Relatively Little Volume

Fujitec (6406) Activism Levelling Up – A Board Spill to Come?

By Travis Lundy

Boss Zhipin (2076 HK | BZ US) HK Dual Primary Listing on 22 Dec – Index, Southbound, and SPECIAL

By Travis Lundy

  • Kanzhun (BZ US) a.k.a. has been listed in the US since about the same time as DiDi Global (DIDI US), and it had similar but minor tech issues pre-listing. 
  • On Friday 16 December, the company announced it would conduct a Listing by Introduction in Hong Kong under the ticker Zhipin (2076 HK), listing on 22 Dec. 
  • That creates an interesting launch supply/demand dynamic, likely HS Tech inclusion in March 2023, and then Southbound much later in 2023.

Southbound Stock Connect Expansion: Potential Adds in 2023

By Brian Freitas

  • Last evening, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
  • For Southbound Stock Connect, eligible foreign companies primary-listed in Hong Kong will become eligible. That could mean 5 additions to Stock Connect.
  • Additionally, Southbound access via Shanghai Stock Connect will be expanded to being it in alignment with Shenzhen Stock Connect. That could see 131 stocks added to Shanghai Stock Connect.

IPet Holdings (7339 JP) – Tender Offer Extended But No Biggie

By Travis Lundy

  • On 8 November, major Japanese life insurer Dai Ichi Life Insurance (8750 JP) announced it would buy out leading pet insurer ipet Holdings (7339 JP). Yes, you read that right.
  • Japanese listed VC/PE firm and incubator Dream Incubator Inc (4310 JP) owns 55% and agreed to tender. Tender success is dependent on getting 66.7%. 
  • Today the buyer extended for 10 days because it had received approval under Article 271-22 Para 1 of the Insurance Business Act, triggering a requirement to refile/extend.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion

By Janaghan Jeyakumar, CFA

Warrego (WGO AU): Strike Energy (STX AU) Strikes with a Revised Offer

By Arun George

  • Strike Energy (STX AU)’s revised off-market takeover is 1 STX share per Warrego Energy (WGO AU) share, a 29.0% premium to its previous offer and a 21.4% premium to Hancock’s offer.
  • Hancock has the war chest to comfortably outbid STX. However, the smart move for Hancock is to be disciplined on price and instead bid for the combined STX/WGO post-completion.
  • The Board’s view will be sent in Target’s statement to be despatched by 29 December. At the last close, the gross spread to STX’s offer is 6.3%. 

SARIA/Devro: Agreed Offer

By Jesus Rodriguez Aguilar

  • Saria agreed to acquire Devro for 316.1p/share in cash, for an implied equity value of £540.8 million and an implied EV of £667 million. This represents 9.6x EV/Fwd EBITDA, 65% premium.
  • The offer price seems fair: the multiple is close to Viscofan’s (market leader) and my fair value estimate is 305p (DCF based). A competing bid seems unlikely.
  • After the shares went ex-dividend, gross spread is 2.7%, but the estimated annual return is 3.6% (assuming settlement by 30 September 2023), which means there should be better opportunities elsewhere.

GoTo IPO Lockup Expiry Follow-Up – Has Corrected but Has Traded Relatively Little Volume

By Sumeet Singh

  • GoTo pre-IPO shareholders were released from the lockup on 1st Dec 2022, which led to a 47% slide in its share price.
  • We had written about the upcoming lockup expiry in our earlier note, GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO.
  • While the price appears to be settling down now, given the intra-day trading limits in Indonesia,  very little volumes have been transacted compared to the shares released from lockup.

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Dec 19
0

Daily Brief Event-Driven: Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance
  • MSCI Korea: An Early Assessment of February Index Review
  • Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro
  • KOSPI Size Index: Early Preview at One Fourth into Screening Period
  • Weekly Deals Digest (18 Dec) – Acotec, Yashili, Toshiba, Toyo, Genesis, Norwest, O2Micro, VinFast

Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Performance

By Brian Freitas

  • The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
  • Stocks with buy flows dropped 1.82% on average on Friday while the stocks with sell flows rose 1.03%. On a flow weighted basis, the numbers were -2.01% vs +1.09%.
  • Given the large volumes at auction and the large moves on stocks, we cannot rule out the possibility that a lot of pre-positions were unwound at the close on Friday.

MSCI Korea: An Early Assessment of February Index Review

By Sanghyun Park

  • MSCI’s quarterly comprehensive index review begins with the February review. QIR disappears, and all quarters are subject to the SAIR rules.
  • Currently, no constituents face deletion risk. On the other hand, we have three potential additions: Hanwha Aerospace (012450 KS), Meritz Financial Group (138040 KS), and Kakao Pay (377300 KS).
  • Meritz Financial will likely take Meritz Fire’s place through a Continuation. Kakao’s chances have increased significantly due to the recent price rise and the comprehensive index review.

Merger Arb Mondays (19 Dec) – Toyo, Genesis/St Barbara, Norwest, Nitro, Tyro, Elmo, Yashili, O2Micro

By Arun George

KOSPI Size Index: Early Preview at One Fourth into Screening Period

By Sanghyun Park

Weekly Deals Digest (18 Dec) – Acotec, Yashili, Toshiba, Toyo, Genesis, Norwest, O2Micro, VinFast

By Arun George

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Dec 18
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Daily Brief Event-Driven: Norwest Energy (NWE)’s Opportunistic Bid from Mineral Resources (MIN AU) and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Norwest Energy (NWE)’s Opportunistic Bid from Mineral Resources (MIN AU)
  • Celltrion Siblings Announced Dividends: Trading Based on Past Patterns
  • Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba
  • Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT
  • Kanzhun (BZ US/ 2076 HK): Dual Primary Listing & Potential HSTECH Inclusion
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
  • Elmo Software (ELO AU)’s Scheme Meeting on 30 January
  • O2Micro (OIIM US) Privatisation Vote on 31 January
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec
  • SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis

Norwest Energy (NWE)’s Opportunistic Bid from Mineral Resources (MIN AU)

By Arun George

  • Mineral Resources (MIN AU) has launched an all-scrip off-market takeover offer at 1 MIN share for every 1,367 Norwest Energy Nl (NWE AU) shares, a 33.3% premium to undisturbed price.
  • There is no minimum acceptance condition, and the offer is only subject to prescribed occurrences. The timing is opportunistic and motivated by recent Perth Basin consolidation activity. 
  • While the offer implies a premium to historical prices, the gross exchange ratio is unattractive. MIN’s key aim is privatisation, and a bump is likely required to achieve that goal.

Celltrion Siblings Announced Dividends: Trading Based on Past Patterns

By Sanghyun Park

  • The three Celltrion companies are showing the same pattern of boosting share prices towards the yearend T-1 ex-date. This isn’t unique to Celltrion, but the intensity is high for them.
  • Celltrion’s yearend dividend effect has an inverse correlation with the market’s overall performance. Fortunately, this year’s market-wide performance was the worst in the past five years.
  • For this year, the dividend yield isn’t bad either, swing on Dec 17 to T-1 ex-date or day trade on T-1 ex-date should provide juicy returns based on past patterns.

Last Week in Event SPACE: NTT Data, Origin Energy, Toyo Construction, Haidilao, Toshiba

By David Blennerhassett

Index Rebalance & ETF Flow Recap: S&P/ASX, HSCEI, HSTECH, Haidilao/Super Hi, CSI REIT

By Brian Freitas

Kanzhun (BZ US/ 2076 HK): Dual Primary Listing & Potential HSTECH Inclusion

By Brian Freitas

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

Elmo Software (ELO AU)’s Scheme Meeting on 30 January

By Arun George

  • The IE considers K1’s A$4.85 offer for Elmo Software (ELO AU) to be fair and reasonable as it is towards the high end of its valuation range of A$4.39-4.98.
  • K1 has received FIRB and US antitrust approval. The remaining key conditions are shareholders and court approval.
  • This is a done deal. At the last close price and for the 23 February 2023 payment, the gross and annualised spread is 1.9% and 10.9%, respectively.

O2Micro (OIIM US) Privatisation Vote on 31 January

By Arun George

  • O2Micro International (OIIM US)’s EGM to vote on the US$5.00 per ADS privatisation offer from FNOF Precious Honour Limited is on 31 January 2023.
  • Shareholders representing two-thirds of shares need to approve the deal. As rollover shareholders represent 16.92% of voting rights, 59.88% of disinterested shareholders must vote YES to meet the two-thirds threshold.
  • While peers have re-rated, the offer is attractive and there are no competing bids. At the last close, the gross spread to the offer is 11.6%.   

(Mostly) Asia-Pac Weekly Risk Arb Wrap: St Barbara/Genesis, Tyro, Yashili, Acotec, Okk Corp/Nidec

By David Blennerhassett

SK Inc: Chairman Chey’s Divorce Settlement Finalized + SoTP Valuation Analysis

By Douglas Kim

  • In early December, the divorce settlement between SK Group Chairman Chey Tae-Won and his former wife Roh So-Young was finalized after 6+ years of long proceedings.
  • The end of the divorce settlement means that there is now a greater probability of SK Inc materially cancelling some of its treasury shares in 2023. 
  • Our SoTP valuation of SK Inc suggests an implied valuation of 260,712 won per share, suggesting 28.1% upside from current levels.

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Dec 17
0

Daily Brief Event-Driven: Celltrion Group Companies – Sharp Increase in Dividends and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Celltrion Group Companies – Sharp Increase in Dividends

Celltrion Group Companies – Sharp Increase in Dividends

By Douglas Kim

  • Celltrion Inc, Celltrion Healthcare, and Celltrion Pharm all announced much higher dividend payments for this year as compared to last year. 
  • Based on the new dividend payments, the dividend yields are as follows: (Celltrion Inc – 4.2%, Celltrion Healthcare – 4.2%, and Celltrion Pharm – 5%). 
  • Merger of three companies is likely to have long-term positive impact on the their share prices. Although exact timing is uncertain, 2023 could be the year of this merger. 

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