Event-Driven

There are 15 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 9 December.
While most of the deletions are in line with forecasts, there are a few differences on the inclusions as the index committee has used its discretion to overlook some names.
The Industrials, Materials and Utilities sectors gain index spots at the expense of Health Care, Financials, Consumer Staples and Consumer Discretionary.

STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week

The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in December.
All changes are in line with our forecasts and there appears to be some pre-positioning over the last week as the deletes have sold off hard.
One-Way turnover is estimated at 5.34% and will result in a one-way trade of CNY 3,766m. The estimated impact on the deletes is higher than that on the adds.

Index Rebalance & ETF Flow Recap: NKY, FTSE AW/CH50/TW50/Div+, Sensex, KLCI, SET50, HSTECH, Huarong

There were a lot of review cutoffs last Monday and a lot of announcements for China indexes post market close on Friday.
The coming week has announcements for the FTSE country indices as well as implementation for the MSCI indices and the Hang Seng family of indexes.
Big inflows to MSCI Korea, iShares MSCI ACWI ETF (ACWI US) and iShares MSCI Emerging Markets (EMXC US); outflows for Tracker Fund of Hong Kong Ltd (2800 HK).

SSE50 Index Rebalance: In Line with Forecasts; Trades Performing Well

There are 5 changes for the SSE50 Index that will be implemented at the close on 9 December. Passive selling on a few deletions is pretty large.
We estimate a one-way turnover of 4.07% at the December rebalance leading to a one-way trade of CNY 3.36bn. Index arb activity could add to the impact on the stocks.
The adds have dropped over the last few months while the deletes have moved higher. There could be a reversion of that trend till implementation of the changes.

JAFCO (8595) Yields to Murakami Greenmail – Big Asset Sale, Big Buyback

Jafco Co Ltd (8595 JP) has long been known as a “cheap” listed “venture fund” because of its additional large (for it) holding in Nomura Research Institute Ltd (4307 JP).
Well-Known Japanese activist Yoshiaki MURAKAMI and his related companies bought a stake. JAFCO responded with a “Policy” (poison pill). Murakami-san ducked and dodged then bought more. Now the exit.
JAFCO will sell its Nomura Research shares in a Secondary Offering, and conduct a large buyback via tender offer. Like other Murakami exits, this one is not designed for you.

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

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

Socionext (6526 JP) TOPIX Inclusion – Great Performer Deserves Profit-Taking

Socionext (6526 JP) was offered in a range of ¥3,480-3,650, oversubscribed, IPOed at ¥3,650 and closed ¥4200 on Day 1. We can assume that was the “right price.”
Since then, while peers are up 19.8% in the 6 weeks since then, Socionext is up 66%. This year’s biggest Japan IPO has been a big winner.
The TOPIX inclusion is on Tuesday at the close. Beware, you don’t know who is in the stock and who is not.

Last Week in Event SPACE: Meituan, Link Admin/Pexa, DTAC/True, Medley

You could imagine people covering their short in Meituan (3690 HK) now. The Hang Seng sell flow on 4 January 2023 is insignificant. But there will be more overhang later.
If you buy Link Administration (LNK AU) outright, you are buying a package of three potential future takeout targets.
It’s not certain the scrip terms will continue as stated in the DTAC /True merger, but if they change at all, that would almost certainly require a new shareholder meeting.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Chip Eng Seng, Mori Trust, Pendal/Pendal, DTAC/True

There are 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed on Smartkarma: the Tangs’ Offer for Chip Eng Seng (CHIP SP); and the Mori Trust Sogo Reit (8961 JP)/Mori Trust Sogo Reit (8961 JP) merger.
Key updates took place for: Pendal Group (PDL AU)/Perpetual Ltd (PPT AU), Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB), and Lifestyle International Holdings (1212 HK).

Hong Kong CEO & Director Dealings (25 Nov): JL Mag Rare Earth, Joinn Laboratories, Hopefluent

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
These insights may flag those companies where shares have been pledged. Stocks mentioned include JL Mag Rare Earth (6680 HK), Joinn Laboratories (6127 HK), and Hopefluent Group (733 HK).

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Nov 26

Daily Brief Event-Driven: Chip Eng Seng: Low-Balled MBO At $0.72/Share and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Chip Eng Seng: Low-Balled MBO At $0.72/Share
Trading Considerations on the OCI Demerger
OCI Spin-Off: Trade Opportunities Post Relisting, Valuations, & Impact on KOSPI 200
Shanghai/Shenzhen Southbound Connect: Weekly Moves (25 November 2022)
Shanghai/Shenzhen Northbound Connect: Weekly Moves (25 November 2022)

Chip Eng Seng: Low-Balled MBO At $0.72/Share

Conglomerate Chip Eng Seng Corp (CHIP SP) (CES) has announced a voluntary Offer of S$0.72/share from a Tang family-owned entity. The price is a 1.4% premium to last close.
The Tang’s hold 38.23% and the Offer is conditional on a 50% acceptance condition.
The Offer price is a 27.3% discount to CES’ NAV as of 30 June 2022 – no such mention in the announcement. The Offer price has not been declared final.

Trading Considerations on the OCI Demerger

Value accretion by unlocking the voting eligibility of treasury shares won’t happen as the company holds no treasury share.
But KOSPI 200 passive flows will pose a noteworthy trading point. PASSIVE’s selling outflow will be about 700-800K shares, 1.6x ADTV.
Market cap imbalance, primarily driven by the tender offer dynamic and the split ratio that is excessively focused on Holdco, will likely exacerbate Holdco → Opco migration after re-listing.

OCI Spin-Off: Trade Opportunities Post Relisting, Valuations, & Impact on KOSPI 200

After the spin-off and relisting of holdco/opco shares, we believe that there is a greater probability of OCI Co (opco) shares outperforming OCI Holdings (holdco).
However, the degree of outperformance of OCI Co vs OCI Holdings is not likely to be similar to other recent spin-offs such as F&F Co and F&F Holdings.
We have a long-term bullish view of OCI over the next one to two years. It is trading at P/E of 3.1x and P/B of 0.6x based 2022 earnings estimates.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (25 November 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the net inflow over the past week was ~HK$0.67bn, split (+HK$0.1bn) for Shanghai and (+HK$0.57bn) for Shenzhen.
The largest inflows were in Tencent (700 HK) and Tracker Fund of Hong Kong Ltd (2800 HK). The largest outflows were in Meituan (3690 HK) and Li Ning (2331 HK).

Shanghai/Shenzhen Northbound Connect: Weekly Moves (25 November 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow over the past week was ~US$0.83bn, split between Shanghai (+US$1.16bn) and Shenzhen (-US$0.32bn).
The largest inflows were into Kweichow Moutai (600519 CH) and Shenzhen Mindray Bio-Medical (300760 CH). The largest outflows were in Yunnan Energy New Material (002812 CH) and BYD (002594 CH).

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Nov 25

Daily Brief Event-Driven: Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings
Adani Enterprises – A Record Follow-On Public Offering May Be in the Works
Straits Times Index Quiddity Leaderboard Mar 23: SMM Index Treatment Clearer Under New Terms
Korea Zinc: Treasury Shares Swap with LG Chem & Hanwha Corp + Treasury Share Sale
EQD | TSMC (TSM US): Buffet Is Betting on Long Term Upside – We Look at the Options Market for Ideas
Chip Eng Seng (CHIP SP)’s S$0.72 VGO from the Tangs
Lygend (2245 HK) IPO: No Index Inclusions Expected
MergerTalk:Why Broadcom’s Pursuit of VMware Will Fare Better Than Nvidia’s Doomed Bid For ARM

Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings

Days after the Tencent (700 HK) announcement about its planned distribution of the bulk of the Meituan (3690 HK) shares it owns, the Hang Seng Index team clarified index treatment.
It will be treated in HS Indices as a “listed non-cash distribution” for Tencent. There is theoretically wiggle room on the Meituan side, but it appears it will follow JD.com.
That means Meituan selling on 4 January at the close, limbo for two months, then Meituan buying. Full model below.

Adani Enterprises – A Record Follow-On Public Offering May Be in the Works

Adani Enterprises (ADE IN) (“ADL”) on Tuesday announced a Board Meeting for Friday to consider capital raising options. Multiple media sources suggest a record Indian Follow-on Public Offering of INR200bn.
The company has bid for/bought multiple assets recently, and proposed investments plan of up to US$150bn in 10yrs in renewables, cement, airports, healthcare to aim at a US$1trln valuation.
This will get complicated, interesting, and is not necessarily going to come out well.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Index Treatment Clearer Under New Terms

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
The Sembcorp Marine (SMM SP) – Keppel Corp (KEP SP) deal terms were revised recently and our latest expectation is for SMM to become an STI member in March 2023.
At present, SATS (SATS SP) and Keppel DC REIT (KDCREIT SP) are the lowest-ranked STI members – one of which could get removed due to SMM’s addition in March 2023.

Korea Zinc: Treasury Shares Swap with LG Chem & Hanwha Corp + Treasury Share Sale

On 23 November, Korea Zinc announced that it will swap its treasury shares with LG Chem and Hanwha Corp and sell part of its treasury shares to other investors.
Korea Zinc could gain additional dividend payments by exchanging part of its treasury shares with shares of LG Chem and Hanwha Corp.
Potential separation of Young Poong and Korea Zinc between the Choi and Jang families is likely to be an on-going process, although it is difficult to tell the exact timing.

EQD | TSMC (TSM US): Buffet Is Betting on Long Term Upside – We Look at the Options Market for Ideas

Stock has suffered this year (-47% YTD) with rising geopolitcal tensions and slowing global economy
Berkshire Hathaway is betting on a recovery in the stock with their $4.1bn stake
We look at the options market to identify some trades

Chip Eng Seng (CHIP SP)’s S$0.72 VGO from the Tangs

Chip Eng Seng Corp (CHIP SP) disclosed a conditional VGO from the Tangs at S$0.720, a 6.7% premium to the undisturbed price (6 September). The price is not declared final.
Irrevocables and family represent 41.44% of outstanding shares. The VGO has a 50%+ minimum acceptance condition which requires around a 15% minorities acceptance rate.
While the last close is in line with the offer, it is attractive in the context of historical prices/multiples. Therefore, there is a good chance of hitting the 50% threshold.

Lygend (2245 HK) IPO: No Index Inclusions Expected

Media reports indicate that Lygend Resources & Technology (2245 HK) has priced its IPO near the low end of the range at HK$15.80/share and will raise HK$3.67bn (US$470m).
Most of the cornerstone investors will be classified as non-float and the stock will not be included in the MSCI or FTSE indices due to low float market cap.
Importantly, Lygend Resources & Technology (2245 HK) will not meet the threshold for inclusion in the HSCI which means no inclusion to Southbound Stock Connect and no mainland flows.

MergerTalk:Why Broadcom’s Pursuit of VMware Will Fare Better Than Nvidia’s Doomed Bid For ARM

By Robert Sassoon

While the size of the $61BN Broadcom/VMware deal has naturally attracted the scrutiny of regulators, the transaction’s regulatory obstacles are far less onerous than the failed Nvidia/Arm deal
Timing risk is a consideration as we can expect a protracted review process
If the regulatory review timeline does not stretch too far beyond the end 2023, there are still decent IRRs to be earned by arbs

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Nov 24

Daily Brief Event-Driven: FTSE TWSE Taiwan Div+ Index: Recent Performance & Potential Trades and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE TWSE Taiwan Div+ Index: Recent Performance & Potential Trades
A Guide to Arb Trade in Rights Offer: Feat. HLB & Lotte Chemical
Disaster As VTOs Cancelled Under DTAC/True Merger
Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec
Mori Trust Sogo – Mori Trust Hotel REIT Merger
Nikkei 225 Index Rebalance Preview (March): Three Potential Changes & Large Funding Trade
Link Admin (LNK AU) Sets in Motion a Strategy to Realise Underlying Value
Pendal/Perpetual: 23 Dec Scheme Meeting
NIFTY Quiddity Leaderboard Mar 23: Tata Motor DVR Could Be Included in NIFTY 100
SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

FTSE TWSE Taiwan Div+ Index: Recent Performance & Potential Trades

The review period for the FTSE TWSE Taiwan Dividend+ index ended Monday, 21 November. We forecast 26 adds/ 5 deletes in December – the flows are huge.
Stocks with potential inflows have outperformed stocks with potential outflows over multiple time periods going back a month. Yesterday was an especially good day for the strategy.
We expect continued pre-positioning ahead of the passive flows will help the stocks with inflows outperform stocks with outflows. A reversal of performance could come post implementation.

A Guide to Arb Trade in Rights Offer: Feat. HLB & Lotte Chemical

This post will specifically examine arb trade opportunities during the subscription rights trading period, with the recent HLB and Lotte Chemical cases.
HLB gave an arb yield of 8%. As for Lotte Chemical, the size (₩1.1T) is much bigger, and it carries single-stock futures, a powerful incentive for arb traders.
Another thing for Lotte Chemical is that it is unclear whether the major shareholders will participate in the subscription, which can lead to a widening of our arb spread.

Disaster As VTOs Cancelled Under DTAC/True Merger

“The conditions precedent to the VTO have not been satisfied within one year from 22 November 2021 … the parties have declined to carry out the VTO.“
This statement was lifted from Telenor’s (the major shareholder of Total Access Communication (DTAC TB)) brief announcement. Telenor/CP Group aim to complete the transaction within the first quarter of 2023
This appears a cop-out on behalf of both Tender Offerors (Telenor & CP Group), who probably could have pushed for an extension. And why weren’t the scrip terms addressed?

Keppel (KEP SP) Vote on Keppel O&M and Sembcorp Marine Transaction on 8 Dec

Keppel Corp (KEP SP)’s EGM on 8 December requires majority shareholder approval of two ordinary resolutions. The IFA notes that the transaction terms are “not prejudicial” to minorities.
Keppel shareholders will be supportive due to attractive terms. The other key conditions precedent is Sembcorp Marine (SMM SP) shareholders and regulatory approvals (SGX-ST and Maritime Port Authority of Singapore).
The deal is expected to close by the end of the year. Our Keppel SoTP valuation is S$8.30 per share, which is 12% above the last close.

Mori Trust Sogo – Mori Trust Hotel REIT Merger

Yesterday, Mori Trust Sogo Reit (8961 JP) (MTR) and Mori Trust Hotel Reit (3478 JP) (MTH) announced a merger to be effective 1 March 2023. MTR will be the survivor.
The ratio is 1.00 : 0.92 MTR:MTH but MTR will conduct a 2:1 stock split on effective date to make it 1.00 : 1.84 to allow retail to continue holding.
This will effectively increase the size of MTR by 35%, and re-distributes earnings structure. There will be index consequences.

Nikkei 225 Index Rebalance Preview (March): Three Potential Changes & Large Funding Trade

With just over two months left in the review period, we expect three changes to the Nikkei 225 (NKY INDEX) at the March rebalance.
Lasertec Corp (6920 JP), Oriental Land (4661 JP) and Renesas Electronics (6723 JP) could replace Toyobo Co Ltd (3101 JP), Nippon Light Metal (5703 JP) and Toho Zinc (5707 JP).
As with the last rebalance, there will be a large funding trade estimated at JPY 417bn. There are many stocks with over 0.5x ADV to sell.

Link Admin (LNK AU) Sets in Motion a Strategy to Realise Underlying Value

The EGM to approve the PEXA Group (PXA AU) distribution of Link Administration (LNK AU)’s remaining 38.49% stake is on 23 December. Shareholders get one PEXA share per 7.52 Link shares.
This marks the latest move to unlock the underlying value by pursuing a breakup strategy. Discussions continue on DND’s acquisition of the CM and the BCM business for A$1.27 billion.
Our base-case SoTP value is A$4.42 per share, which is 28% above the last close. If you haven’t been turned off by the Link saga, it is worth a look.

Pendal/Perpetual: 23 Dec Scheme Meeting

After the Supreme Court of NSW ruled that Perpetual Ltd (PPT AU) cannot stall the Scheme for Pendal Group (PDL AU), the Scheme Booklet is now out.
Under the revised terms, Pendal shareholders will receive 1 Perpetual (share for every 7 Pendal shares plus $1.65/share cash. The IE concluded the terms are fair and reasonable.
The Scheme Meeting will be held on the 23 December, with an expected implementation date on the 23 January.

NIFTY Quiddity Leaderboard Mar 23: Tata Motor DVR Could Be Included in NIFTY 100

In this insight, we take a look at the potential ADDs/DELs for the NIFTY 50, 100, and 500 Indices in the run up to the March 2023 Rebalance.
In October 2022, NIFTY Indices Ltd initiated a market consultation recently on the “treatment of merger/demerger in Nifty equity indices” and its outcome has been confirmed now.
Separately, Tata Motors DVR (TTMT/A IN) – previously ineligible for NIFTY 100 Inclusion for liquidity reasons – could become eligible for the March 2023 Rebalance event.

SM Investments (SM PM): Retail Income Now Exceeds Pre-Covid Levels

SM Investments (SM PM), the leading Filipino conglomerate, recently announced strong 9M22 earnings, buoyed by increased economic activity and strong consumer sentiment.
The standout was the unlisted SM Retail segment which recorded net income of PHP 11.5bn, exceeding 2019 pre-pandemic levels.
The implied stub/share – net of all listcos – of PHP 208/share compares to the five-year average of PHP 273/share, and the two-year average of PHP 252 preceding Covid.

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Nov 23

Daily Brief Event-Driven: China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion
SET50 Index Rebalance Preview: Four Potential Changes in December
Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale
DTAC/True Merger to Proceed but Without the VTOs
KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates
Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December
GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO
EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index

China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion

China Huarong Asset Management (2799 HK) has announced the full conversion of 8.358bn Domestic Shares to H-shares. The increased float could help the stock get added to the MSCI/FTSE indices.
Depending on when the conversion is completed, the stock could be added to the MSCI China Index at the February QCIR though inclusion in May is more likely.
There is a high probability of inclusion in the FTSE indices at the March SAIR – though it remains to be seen if that’s to the All-World or All-Cap Index.

SET50 Index Rebalance Preview: Four Potential Changes in December

The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ends in 6 trading days.
Following the market consultation and reduction in the turnover ratio, there could be four changes to the index. The DTAC/TRUE merger could result in another inclusion in Q1 2023.
Estimated one-way turnover at the December rebalance is 8.1% and will result in a one-way trade of THB 7.4bn. More than 1x ADV to trade on most stocks.

Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale

Link Administration (LNK AU) has released the explanatory memorandum regarding the PEXA Group (PXA AU) in-specie distribution.
Link shareholders will receive one PEXA share for every 7.52 Link shares. Shareholders will vote on the distribution on the 23 December. The IE, rightfully, deemed the process fair.
If D&D buys Link’s BCM/CM ops for A$1.27bn, Link would be net cash of ~A$1.40/share versus an ex-entitlement price of ~A$1.58/share. And Link would still hold the lucrative RSS ops.

DTAC/True Merger to Proceed but Without the VTOs

Telenor and CP Group will proceed with the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger but without the VTO due to missing the VTO conditions precedent deadline.
The likely real reason for the VTO cancellation was the realisation that the VTO prices were too generous, particularly in the context of the NBTC’s harsh conditions.
Completion is targeted for 1Q23. The current share price ratio of 8.750x vs the exchange ratio of 10.221x is attractive. Timing and potential tweaks to the exchange ratio are risks.

KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates

Meritz Financial Group’s decision to delist Meritz Fire & Marine Insurance and Meritz Securities in 1H 2023 will result in at least two new additions to KOSPI 200.
We highlight five companies which could be potential additions to KOSPI 200 in 1H 2023.
Five potential additions to KOSPI 200 in 1H 2023 include Jb Financial Group, Hyundai Construction Equipment, Dentium, Samyang Foods, and Lotte Rental.

Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December

The IE considers Perpetual Ltd (PPT AU)‘s cash and scrip offer for Pendal Group (PDL AU) to be fair and reasonable as it is within its valuation range of A$4.87-5.71.
Perpetual shareholders are getting the short end of the stick. While possible, Regal Partners (RPL AU)/BPEA EQT riding to the rescue of Perpetual shareholders is low.
Pendal shareholders, who are the net beneficiaries, will be supportive of the offer. At the last close prices, the gross spread to the offer is 11.3%.

GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO

By Sumeet Singh

In Mar 2022, GoTo raised around US$1bn from what was essentially a domestic Indonesian IPO. Its pre-IPO shareholders will be released from their lockup soon.
GoTo was formed in May 2021 as a result of a merger between two of Indonesia’s largest unicorns Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
In this note, we will talk about the upcoming lockup expiry.

EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index

SX7E spot has rallied and vols have sold off significantly
The spread between the sector and SX5E Index has converged and there are still many reasons to expect volatility in banking stocks into next year
Trade a 6M relative value vol spread to take advantage of the recent vol compression

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Nov 22

Daily Brief Event-Driven: FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: 46% One-Way Turnover and US$5bn Two-Way Trade and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: 46% One-Way Turnover and US$5bn Two-Way Trade
FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER
FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO
Meritz Merger Event: Swap Conditions, Spread Arb Trade, & K200 Flow Implementation
Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month
AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February
FTSE TWSE 50 & 100 Dec 22 Final Expectations: Greatek Is Still the Main Talking Point
Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance
Lifestyle (1212 HK)’s Scheme Gets Up
FTSE China 50 Index Rebalance Preview: JD Health Could Replace Xpeng

FTSE TWSE Taiwan Dividend+ Index Rebalance Preview: 46% One-Way Turnover and US$5bn Two-Way Trade

Today is the review cutoff for dividend data and stock prices that will be used to select the inclusions and exclusions as well as for capping of index weights.
We see 26 adds and 5 deletes for the index at the December rebalance resulting in one-way turnover of 46% and a one-way trade of TWD 78.1bn (US$2.51bn).
Passive trackers will need to buy over 5 days of ADV on 15 stocks and sell over 5 days of ADV on 19 stocks and this will present trading opportunities.

FTSE TWSE Dividend+ Dec 22 Quiddity Final Expectations: Crucial Shift in Tracking AUM a GAME CHANGER

In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
Considering the combined effect of expected index changes and capping flows, there could be 27 potential inflows names and 28 potential outflow names with total one-way flow size of US$2.45bn.
There are multiple names on both sides with several days of volume to trade.

FTSE TWSE Taiwan 50 Index Rebalance Preview: Far Eastern Could Replace AUO

Today is the review cutoff and we expect Far Eastern New Century (1402 TT) to replace AU Optronics (2409 TT) in the FTSE TWSE Taiwan 50 Index in December.
Passive Taiwan 50 trackers will need to buy nearly 6 days ADV on Far Eastern New Century (1402 TT) and sell 1.6 days of ADV on AU Optronics (2409 TT).
There will be same way flows from the FTSE TWSE Taiwan Dividend+ Index trackers and will substantially add to the impact on the stocks.

Meritz Merger Event: Swap Conditions, Spread Arb Trade, & K200 Flow Implementation

The last trading day to secure appraisal rights is today (the 22nd). You must buy stocks by today to make arb trade possible using appraisal rights.
We should consider LONG FINANCIAL SHORT FIRE/SECURITIES. KSD allows us to maintain borrowed stocks of the target company without redemption procedures if new stocks are listed after the merger.
K200 trackers will have to buy in for FIRE at the close on January 27, whereas SECURITIES will be on March 31. We should design a setup targeting this preemptively.

Medley (4480) – Move to Prime Means TOPIX Inclusion Next Month

A year ago, TSE Growth-listed Medley (4480 JP) said they would “make preparations” for a listing on TSE Prime. Last month, Janaghan Jeyakumar, CFA had it at “Almost Ready.”
Today they announced they would list on TSE Prime on 28 November which means a TOPIX Inclusion at end-December.
Shareholder structure and stock bias matter a lot in this case. It’s very much worth looking at the details.

AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February

Just under two weeks ago, AXXZIA Inc (4936 JP) announced it had on that day (9 November) applied to move to TSE Prime from TSE Growth.
It’s an interesting one because of the strange differential between “tradable shares” and “float.”
After some study, I think this could be a TOPIX inclusion at end-Feb 2023, but there are steps to take between now and then.

FTSE TWSE 50 & 100 Dec 22 Final Expectations: Greatek Is Still the Main Talking Point

The base date for the December 2022 index review FTSE TWSE Taiwan 50 and Taiwan Mid-Cap 100 for the December 2022 Rebalance is today (21st November 2022).
In this insight, we take a look at Quiddity’s final predictions for expected ADDs/DELs for the December 2022 index review.
I expect one change for the Taiwan 50 Index and one change for the Taiwan Mid-Cap 100 index.

Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

After the market close today, Meritz Financial Group (MFG) made one of the biggest announcements in the history of the group.
It announced that Meritz Fire & Marine Insurance and Meritz Securities will become fully owned subsidiaries of Meritz Financial Group. Meritz F&M Insurance and Meritz Securities will also be delisted.
MFG is making a real positive change through the share swaps among the three companies. This will likely have the biggest positive impact will be on MFG.

Lifestyle (1212 HK)’s Scheme Gets Up

Independent shareholders of Lifestyle International Holdings (1212 HK) comfortably voted through the Scheme resolution.
94.93% of stakeholders present (and via proxy) voted FOR, with 5.07% voting AGAINST.
The last day of trading is the 6 December with payment expected on or before the 30 December.

FTSE China 50 Index Rebalance Preview: JD Health Could Replace Xpeng

At the end of the review period for the December rebalance, we see JD Health (6618 HK) replacing XPeng (9868 HK) in the FTSE China 50 Index.
There is a very slim possibility of Longfor Properties (960) being deleted; it could be replaced with either Yum China Holdings Inc (9987) or PICC Property & Casualty H (2328).
Short interest has stayed rangebound on JD Health (6618 HK) this year, while shorts have gone parabolic on XPeng (9868 HK) over the last few months.

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Nov 21

Daily Brief Event-Driven: Hang Seng Index Dec22 Rebal – 3 IN and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)
FTSE All-World/All-Cap Index Rebalance: Watch Golden Agri-Resources & Delhivery
Hang Seng TECH Index Rebalance: Float & Capping Changes
HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow
Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile
Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro
Link Admin’s In-Specie Distribution of PEXA: Active Selling Followed by Passive Buying
Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow
Despature Family/Somfy: Lowball Simplified Takeout, Timetable
Lowering Tick Sizes for KOSPI & KOSDAQ Starting Next January

Hang Seng Index Dec22 Rebal – 3 IN, None Out (The March to 80 Continues)

Hang Seng Index continues its march to 80 names, after which it will commence a march, or a slog, to 100 names in an effort to gain more comprehensive coverage
Doing so will admit names which move to Hong Kong from New York and will make way for more dynamism and lower SOE weights.
The three ADDs are Tingyi Holding (322 HK), China Resources Mixc Lifestyle Services (1209 HK), and Haier Smart Home Co Ltd (6690 HK) with a pro-forma combined weight just <1%.

FTSE All-World/All-Cap Index Rebalance: Watch Golden Agri-Resources & Delhivery

For Asia Pacific, there are 2 adds to the FTSE All-World Index, 2 adds to the FTSE All-Cap Index and 2 deletions from the FTSE All-World Index.
All changes are on expected lines. The one surprise is the non-inclusion of Rainbow Children’s Hospital (RAINBOW IN) to the All-Cap Index where it likely just failed investable market cap.
Sungeel Hitech (365340 KS) is also an add to the KOSDAQ 150 Index at the close on 8 December, while there is a huge lock-up expiry for Delhivery (DELHIVER IN).

Hang Seng TECH Index Rebalance: Float & Capping Changes

As expected, there are no adds or deletes for the Hang Seng Tech Index (HSTECH INDEX) in December. However, there are plenty of capping and float changes to drive flows.
The December rebalance is expected to have a one-way turnover of 2.3% resulting in a one-way trade of HK$1.9bn.
Short interest is greater than 5% of float on a few stocks and a continued recovering in markets could lead to a squeeze higher.

HSCEI Dec 2022 Rebalance – 4 IN, 4 OUT, 3% One-Way Flow

The HSCEI sees 4 names out, 4 names in. The ADDs are PetroChina (857 HK), Zhongsheng Group (881 HK), Li Auto (2015 HK), Haier Smart Home Co Ltd (6690 HK).
The DELETEs are Alibaba Health Information Technology (241 HK), China Gas Holdings (384 HK), Innovent Biologics Inc (1801 HK), and Bilibili (9626 HK).
One way volume is just under 4.7% with all the name changes, FAF changes, and capping flows.

Sapporo Holdings: Activist Investor, 3D Investment Partners Is Just A Few Steps From Turning Hostile

By Oshadhi Kumarasiri

Following a couple of investor-activism campaigns against Toshiba Corp (6502 JP) and Fuji Soft Inc (9749 JP), Singapore-based Japan-focused activist investor, 3D-Investment-Partners seems to be turning its attention towards Sapporo.
Earlier this month, 3D Investment Partners requested Sapporo’s outside directors to postpone the announcement of the new Medium Term Plan until they hear out opinions and new ideas from shareholders.
We believe that there’s a chance that 3D Investment Partners could turn hostile as Sapporo Holdings (2501 JP) seems to be completely ignoring the activist investor’s requests and proposals.

Merger Arb Mondays (21 Nov) – Halcyon, Lifestyle, OZ Minerals, Perpetual/Pendal, Nearmap, Nitro

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Golden Energy & Resources (GER SP), 111 Inc (YI US), Perpetual Ltd (PPT AU).
Lowest spreads – Tyro Payments (TYR AU), Warrego Energy (WGO AU), Jinke Smart Services (9666 HK), Nitro Software Ltd (NTO AU), Uzabase Inc (3966 JP), PTB Group Ltd (PTB AU).

Link Admin’s In-Specie Distribution of PEXA: Active Selling Followed by Passive Buying

Link Administration (LNK AU) is selling 10% of its shareholding in PEXA Group (PXA) and plans to proceed with an in-specie distribution of the remainder to Link shareholders in January.
The increased float will make PEXA Group (PXA AU) the highest ranked non-index constituent and that should result in inclusion to the S&P/ASX 200 (AS51 INDEX) in March.
There could be selling on PEXA Group (PXA AU) from Link Administration (LNK AU) shareholders following the distribution. Then the passive flows will kick in and support the stock.

Hang Seng Tech Rebalance Dec 2022 – No Name Changes, Decent Flow

The Hang Seng Tech Index Review was announced on Friday after the close. There are no name changes but there is decent flow. 3% one-way turnover.
There are five capping changes and one very large share count change making things interesting.
All told, this is less impactful than it was last time, and less impactful than the other index rebalances announced.

Despature Family/Somfy: Lowball Simplified Takeout, Timetable

By Jesus Rodriguez Aguilar

Majority shareholders Despatures (73.9%) plan to use the abundant cash holdings of Somfy to finance a simplified cash offer at €143/share (16.8x EV/23e EBIT, 21.1x P/23e E, 20.6% premium).
In case of squeeze-out, Somfy intends to distribute afterwards an extraordinary dividend up to €620m (source: draft memo). The market believes the offer is low (gross spread is +0.98%).
I believe there are grounds for an offer sweetening (base-case valuation throws €150.98/share) and the risk-reward seems favorable considering a very motivated (and opportunistic) buyer. Long.

Lowering Tick Sizes for KOSPI & KOSDAQ Starting Next January

KRX will lower the tick sizes for KOSPI and KOSDAQ starting next January to reduce actual transaction costs and increase market liquidity by attracting more high-frequency traders.
KRX’s acceptance of the market’s long-standing demand at this point can be seen as primarily driven by the purpose of resolving the problem of reduced market liquidity.
We need to design a setup that takes a tighter holding period of event and flow trading in the Korean local market from next year.

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Nov 20

Daily Brief Event-Driven: HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home
HSCEI Index Rebalance: Four Sets of Changes; And Some Close Calls
Fairfax India Holdings: Major Value Unlock Via BIAL IPO
Index Rebalance & ETF Flow Recap: HSCI, S&P/ASX, HSI, HSCEI, KOSPI2, KOSDAQ150, Wharf, Meituan
Weekly Deals Digest (20 Nov) – OZ Minerals, Pendal, Nearmap, Halcyon, Yashili, I-Tail, Lygend
Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date
SENSEX Dec 22 Index Rebalance: Tata Motors (TTMT) To Replace Dr Reddy (DRRD)
Last Week in Event SPACE: Tencent/Meituan, Halcyon Agri, Swire Pac, Perpetual/Pendal, OZ Minerals
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software
Hong Kong CEO & Director Dealings (18 Nov): Cross Harbour, Grand Ming, Ganglong, Pharmaron, JL Mag

HSI Index Rebalance: Baby Steps; Double Inclusion for Haier Smart Home

The inclusion of Tingyi Holding (322 HK), China Resources Mixc Lifestyle Services (1209 HK) and Haier Smart Home Co Ltd (6690 HK) gets us to 76 index constituents.
Changes to the stocks, number of shares, float and capping result in an estimated one-way turnover of 2.01% and will result in a one-way trade of HK$3,845m.
Shorts on Haier Smart Home Co Ltd (6690 HK) and Tingyi Holding (322 HK) are around 5% of float and covering could take the stocks higher.

HSCEI Index Rebalance: Four Sets of Changes; And Some Close Calls

There are 4 adds and 4 deletes for the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance. The only surprises are some non-adds and non-deletes.
Using prices from the close on 18 November, estimated one-way turnover is 4.64% and will result in a one-way trade of HK$2,612m at the close on 2 December.
Short interest is larger on the deletes than the adds. However, at 17 days of ADV to cover and 11.7% of float, short interest on Zhongsheng Group is huge.

Fairfax India Holdings: Major Value Unlock Via BIAL IPO

Fairfax India Holdings (FIH/U CN), a holdco with investment activities exclusively in India, is edging closer to IPOing 49%-held Bangalore International Airport (BIAL).
Reportedly FIH is seeking a value upward of C$3.7bn for BIAL, a 45% premium over the current fair value holding.
Currently trading at a P/B of 0.6x compared to its five-year average of 0.8x, and the two-year average pre-Covid of 1.06x.

Index Rebalance & ETF Flow Recap: HSCI, S&P/ASX, HSI, HSCEI, KOSPI2, KOSDAQ150, Wharf, Meituan

Plenty of index change announcements in the last week – Kospi 200 Index, KOSDAQ 150 Index, Hang Seng Index, HSCEI, HSTECH, S&P BSE SENSEX Index and FTSE AW/AC Index.
There are a bunch of indices that have the end of their review periods in the coming week while announcements for China indices are expected post market close on Friday.
There were outflows from ETFs for most Asian markets over the week with China and Hong Kong ETFs taking the biggest hits.

Weekly Deals Digest (20 Nov) – OZ Minerals, Pendal, Nearmap, Halcyon, Yashili, I-Tail, Lygend

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 – I-Tail (ITC TB) launches an up to US$593 million SET IPO, Lygend Resources & Technology (LR HK) set to launch an HKEx IPO to raise US$700-800 million.
Event-Driven developments – OZ Minerals Ltd (OZL AU), Perpetual Ltd (PPT AU)/Pendal Group (PDL AU), Nearmap Ltd (NEA AU), Halcyon Agri (HACL SP), Yashili International Holdings (1230 HK).

Lotte Chemical Offering Terms & Trading Angle Targeting K200 Inflow on Ex-Date

Lotte Chemical offers 8.5M new shares, which is ₩1.1T based on the provisional price of ₩130,000. This is a capital increase rate of 24.8%.
This event has already been leaked in advance from early last week, so it isn’t easy to expect a significant return from the short-selling approach immediately after the announcement.
Instead, we should pay attention to the KOSPI 200 passive inflow that occurs the day before the ex-date. It is estimated to be approximately 0.8x ADTV.

SENSEX Dec 22 Index Rebalance: Tata Motors (TTMT) To Replace Dr Reddy (DRRD)

As forecast, Tata Motors Ltd (TTMT IN) will be added to the S&P BSE SENSEX Index (SENSEX INDEX) in December to replace Dr. Reddy’s Laboratories (DRRD IN).
We estimate passive trackers will need to buy 2.3x ADV (7.2x delivery volume) on Tata Motors Ltd (TTMT) while selling 5x ADV (10.5x delivery volume) on Dr. Reddy’s Laboratories (DRRD).
The HDFC Limited (HDFC IN) / HDFC Bank (HDFCB IN) merger should see Adani Enterprises (ADE IN) added to the S&P BSE SENSEX Index (SENSEX INDEX) prior to the June rebalance.

Last Week in Event SPACE: Tencent/Meituan, Halcyon Agri, Swire Pac, Perpetual/Pendal, OZ Minerals

The in-specie distribution is basically a forward block sale of Meituan (3690 HK). You know it’s coming. You don’t know how large it is. It is not unlike a lockup situation.
China Hainan Rubber Industry (601118 CH) will start with 36% in Halcyon Agri (HACL SP). Founders and friends have ~10%. Getting to 50%+ will be easy.
The Swire Pacific (B) / Swire Pacific (A) ratio is near a 19-year low. The last time it dipped to 6% under its 3mo average, it bounced back in 4 weeks.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Warrego, Sumitomo Precision, Halcyon Agri, Nitro Software

There are 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
Three new deals were discussed on Smartkarma: Beach Energy’s tilt for Warrego (WGO AU), Sumitomo’s offer for Sumitomo Precision (6355 JP), and Hainan Rubber’s offer for Halcyon (HACL SP).
Key updates took place for: Perpetual Ltd (PPT AU) / Pendal Group (PDL AU), Nitro Software Ltd (NTO AU), and OZ Minerals Ltd (OZL AU).

Hong Kong CEO & Director Dealings (18 Nov): Cross Harbour, Grand Ming, Ganglong, Pharmaron, JL Mag

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
These insights may flag those companies where shares have been pledged. Stocks mentioned include Cross Harbour (32 HK), Grand Ming (1271 HK), and Ganglong China Property (6968 HK)

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Nov 19

Daily Brief Event-Driven: Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further
OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP
Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End
Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

Bajaj Holdings (BJHI IN): Potential Index Inclusion Can Narrow Hold Co. Discount Further

By Devi Subhakesan

Bajaj Holdings and Investment (BJHI IN) is expected to be included in the MSCI India Index at the November SAIR (Read more about the index inclusion here: https://skr.ma/xhbPx)
Bajaj Holdings, a holding and investment company, with significant stakes in Bajaj Auto Ltd and Bajaj Finserv has historically traded at a steep discount to the market value of investments.
Its Holdco discount has narrowed to around 53% and has the potential to narrow further with greater ownership and visibility post the likely index inclusion.

OZ Minerals (OZL AU)’s A$28.25 Non-Binding Offer from BHP

OZ Minerals Ltd (OZL AU) has received a revised non-binding indicative offer from BHP Group Ltd (BHP AU) at A$28.25 per share, a 13.0% premium to the previously rejected offer.
The Board has granted four weeks of due diligence and intends to recommend a binding offer at A$28.25 per share, in the absence of a superior proposal.
While the offer is below the rumoured Board’s target of a A$30 offer, it is still attractive. At the last close, the gross spread to the offer is 3.3%.

Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote

Lifestyle International Holdings (1212 HK)’s vote on Mr Lau’s offer of HK$5.00 per share is at 10 am on Monday, 21 November. The wide spread of 6.6% reflects vote risk.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
Ongoing weak Hong Kong retail sales and peers’ slightly de-rating should lower the vote risk. Headcount test not applicable. While light, we continue to expect the offer to succeed.

EQD | Alibaba (BABA US): Use Elevated Upside to Buy Call Ratios into Year-End

Alibaba unveiled an upsized buyback plan this week and stock rallied despite a revenue miss
Sentiment in China is changing with tweaks to the Covid strategy and improving economic outlook
Call buying has elevated upside vols providing trading opportunites for both directional and volatility traders

Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)

Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
Overall, net inflow over the past week was ~US$5.7bn, split between Shanghai (+US$2.98bn) and Shenzhen (+US$2.8bn).
The largest inflows were into Kweichow Moutai (600519 CH) and Midea Group (000333 CH). The largest outflows were in NARI Technology (600406 CH) and China Yangtze Power (600900 CH).

Shanghai/Shenzhen Southbound Connect: Weekly Moves (18 November 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, the net outflow over the past week was ~HK$0.14bn, split (-HK$0.47bn) for Shanghai and (+HK$0.32bn) for Shenzhen.
The largest inflows were in Tencent (700 HK) and Hang Seng H Share (2828 HK). The largest outflows were inMeituan (3690 HK) and Tracker Fund of HK (2800 HK).

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Nov 18

Daily Brief Event-Driven: Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)
Halcyon Agri: Hainan Rubber’s Conditional MGO
OZ Minerals (OZL AU): BHP Ups Offer by 13%; This Should Get Done
Delhivery IPO Lockup Expiry – US$2.8bn Lockup Release, with Softbank the Largest Holder
Pendal/Perpetual: Revised Terms As Supreme Court Orders Scheme To Proceed
Sea & Pinduoduo Are in Dangerous Territory With Tencent in Disposal Mode
OZ Minerals (OZL AU) And BHP Have a Deal – Investors Have an OTM Option on Copper
Lotte Chemical – Ready to Announce Rights Offering Close to 2 Trillion Won?
Pendal (PDL AU)/Perpetual (PPT AU) Deal Gets a Lifeline from the Court
STOXX Europe Quiddity Leaderboard Dec 22: ~7 Regular ADDs/DELs & ~5 Intra-Review ADDs/DELs Possible

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)

Early predictions for the March 2023 Nikkei rebalance (TBA early Feb) are little changed. One way turnover would still be about 1.4%. I see 3 ADDs and 3 DELETEs.
The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723), and Japan Airlines (9201). The 3 DELETES Toho Zinc (5707), Toyobo (3101), and Nippon Light Metal (5703).
Oriental Land is the one to watch in March. The Sep 2023 rebalance and subsequent ones are smaller in size but more interesting in impact.

Halcyon Agri: Hainan Rubber’s Conditional MGO

Halcyon Agri (HACL SP) has announced Sinochem, its largest shareholder with 65.2%, has entered into a SPA to sell 36% of shares out to China Hainan Rubber Industry (601118 CH).
Upon completion of the SPA, Hainan Rubber will make an MGO, conditional on a 50% tendering acceptance. Sinochem has provided an undertaking not to tender its remaining 29.2% stake.
The Offer Price? The SPA price is US$0.315/share and the Offer Price will be the SGD equivalent at the close of the SPA.

OZ Minerals (OZL AU): BHP Ups Offer by 13%; This Should Get Done

BHP Group has made a revised conditional, non-binding and indicative proposal to acquire all shares in OZ Minerals Ltd (OZL AU) at A$28.25/share, 13% higher than its earlier offer.
The OZ Minerals Board has agreed to give BHP Group Ltd (BHP AU) exclusive due diligence access for 4 weeks and intends to unanimously recommend the revised proposal.
Barring a competing proposal, this is BHP Group‘s best and final price – expect the stock to trade close to A$28/share today.

Delhivery IPO Lockup Expiry – US$2.8bn Lockup Release, with Softbank the Largest Holder

By Sumeet Singh

In May 2022, Delhivery raised around US$680m in its India IPO, the company is backed by a host of financial investors, the largest being Softbank.
Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
In this note, we will talk about the upcoming lockup expiry.

Pendal/Perpetual: Revised Terms As Supreme Court Orders Scheme To Proceed

Under the revised terms, Pendal (PDL AU) shareholders will receive 1 Perpetual (PPT AU) share for every 7 Pendal shares plus $1.65/share cash versus 7.50 Pendal shares and $1.976 cash.
Separately, the Supreme Court of NSW ruled that Perpetual cannot delay the Scheme on the expectation of a more favourable Offer for the company.
The first court hearing for the Scheme has been deferred until next week to seek orders convening the Scheme Meeting and for the despatch of the Scheme Booklet to shareholders.

Sea & Pinduoduo Are in Dangerous Territory With Tencent in Disposal Mode

By Oshadhi Kumarasiri

After distributing over 450m of JD.com Inc. (9618 HK) shares to its shareholders late last year, Tencent (700 HK) took a short break from the downsizing of its public investments.
Downsizing seems to have restarted with yesterday’s announcement of the distribution of more than 950m Meituan (3690 HK) shares to Tencent shareholders.
Having already met Tencent’s soft self-sustainability criteria, Pinduoduo (PDD US) and Sea Ltd (SE US) could be lined up as Tencent’s next portfolio downsizing targets.

OZ Minerals (OZL AU) And BHP Have a Deal – Investors Have an OTM Option on Copper

After nearly 3 months of no talks and movement, then a flurry of both, BHP Group Ltd (BHP AU) and OZ Minerals Ltd (OZL AU) have an agreed Revised Proposal.
OZ Minerals Board has agreed to support the Revised Proposal at A$28.25/share, a 13% bump, subject to due diligence provided on an exclusive basis for four weeks.
A fully-franked dividend or capital return will be allowed (Scheme price to be adjusted). This will probably trade tight. One owns a call option on copper for probably 3-4 months.

Lotte Chemical – Ready to Announce Rights Offering Close to 2 Trillion Won?

Numerous local media mentioned today that Lotte Chemical (011170 KS) is getting ready to announce a major rights offering to acquire Iljin Materials.
The size of the rights offering has not been finalized but the range of the rights offering could be about 1 trillion won to 2 trillion won.
There are additional concerns about Lotte Chem funding additional capital into Lotte E&C, which could face more financial difficulties in the local construction sector.

Pendal (PDL AU)/Perpetual (PPT AU) Deal Gets a Lifeline from the Court

Pendal Group (PDL AU) entered a revised SID with Perpetual Ltd (PPT AU). The revised offer consists of scrip (1 Perpetual share for every 7 Pendal share) and cash (A$1.650).
Separately, the court found that Pendal could seek a range of remedies in addition to the A$23 million break fee should Perpetual terminate the scheme.
While Regal Partners (RPL AU)/BPEA EQT could yet derail the scheme by lobbing another bid for Perpetual, the unprecedented court ruling makes it more challenging and costly.

STOXX Europe Quiddity Leaderboard Dec 22: ~7 Regular ADDs/DELs & ~5 Intra-Review ADDs/DELs Possible