Event-Driven

In what is a surprising move to me, Murakami-san has gone substantial on JSR Corp (4185 JP) with the vast majority of his stake purchased at a spread of <0.05%.
As suggested in JIC Launches a NOT-¥1trln Tender Offer for JSR (4185). Welcome? Yes. Overwhelming? Meh, the deal price was not overwhelming. It got less so as the market rose.
But this is an odd target. High float. No competition. Would take a lot to block or force the bumpitrage, which suggests appraisal rights or a “technicality.”

JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder

Murakami’s City Index Eleventh entity reported a 5.11% position in JSR Corp (4185 JP). The share purchases started on 19 March, the day of the tender start.
Murakami’s average buy-in price of JPY4,346.22 per share is broadly in line with the JPY4,350 tender offer.
Murakami’s disclosure suggests two possibilities: starting an activist campaign for a bump or pursuing the appraisal process to determine a fair value. We think the latter is likely.

TOPIX Inclusions: Who Is Ready (Apr 2024)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.
There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate CELSYS (3663 JP) is one of them.

IntelliCentrics (6819 HK): 18th April “Scheme” Vote

Soon-To-Be ex-healthcare technology platform play IntelliCentrics Global Holding (6819 HK) is a pseudo risk arb.
IntelliCentrics is selling its key ops, declaring a special dividend from the sale proceeds, subsequently being wound up, then delisted.
Shareholders have the option of voting on a raft of resolutions on the 18th April. Irrevocables total 72.1%. This is done. Just the final dividend amount needs to be confirmed.

What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene

Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.

Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity

By Xinyao (Criss) Wang

Zadaxin is the biggest performance driver of SciClone. However, due to the challenge of generic drugs/VBP, sales of Zadaxin wouldn’t maintain strong growth momentum. SciClone’s revenue/profit would face a significant decline.
The capital participating the IPO had reduced their holdings or exit entirely. Considering the low valuation/poor liquidity in HKEX, we think this privatization provides investors with a great exit opportunity.
For arbitrage investors, the annualized return depends on the time it takes to complete the privatization (e.g. about 5%-10%). If the privatization fails, share price could fall back to HK$14.

Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%.
Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT.
Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.

Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter

Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments.
Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.

Keysight/Spirent: Recommended Competing Offer

By Jesus Rodriguez Aguilar

Keysight Technologies In (KEYS US) and Spirent Communications (SPT LN) have agreed a recommended 201.5p/share cash acquisition via Scheme of Arrangement, an increase of 26.5p (15.1%) relative to Viavi Solutions (VIAV US)‘s Offer.
Spirent, with some scarcity value, should be able to improve its cyclicality as part of Keysight. A counteroffer from Viavi looks unlikely unless Silver Lake significantly increases its stake.
Gross spread is 1.99%. Using Keysight’s forecast s about completion, at best, estimated annual return would be 3.51% while at worst, 1.88%. This suggests there may be better opportunities elsewhere.

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Apr 02

Daily Brief Event-Driven: If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
Isetan Singapore (ISET SP): Isetan Mitsukoshi (3099 JP)’s 154% Premium Scheme Offer
KRX Imposes a 20% Cap on Weight Ceiling in Sector ETFs with Few Constituents
IntelliCentrics (6819 HK): Special Dividend Vote on 18 April
Isetan Singapore (ISET SP): Mitsukoshi’s BIGLY Premium Offer
(Mostly) Asia M&A, Mar 2024: Chilled & Frozen, TDCX, MMA Offshore, JSR, Roland DG, SciClone

If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated

A couple of years ago, Rakuten (4755 JP) – burning through cash to start its mobile business – announced it would its Bank and Securities units. Bank listed. Securities didn’t.
Mizuho ended up buying 49% of Securities. Today, it was announced there would be discussions to put Bank, Securities, Card, and Insurance in a new listed Holdco.
How this works will end up being complicated. More complicated than it should be. But the complexity would make this more of a win-win for everyone.

Isetan Singapore (ISET SP): Isetan Mitsukoshi (3099 JP)’s 154% Premium Scheme Offer

Isetan Singapore (ISET SP) disclosed privatisation through a scheme of arrangement from Isetan Mitsukoshi Holdings Ltd (3099 JP) at S$7.20 per share, a 153.5% premium to the last close.
The high takeover premium reflects the fair value of investment properties of S$300.4 million, i.e., S$7.28 per share, marginally above the offer price.
The offer is attractive and 2.1% higher than the all-time high. The vote should comfortably get up. The scheme meeting is from early to mid-July.

KRX Imposes a 20% Cap on Weight Ceiling in Sector ETFs with Few Constituents

KRX limits individual stock weight to 20% in ETFs with few constituents. KRX confirms working on it, with an official announcement expected soon.
Excludes index ETFs like KOSPI 200. KRX hasn’t finalized criteria for constituent number but expected to involve fewer than 30 stocks.
This could open new passive trading opportunities. Sector ETF cap at 30%, large AUM ones offer noteworthy trading potential.

IntelliCentrics (6819 HK): Special Dividend Vote on 18 April

The IntelliCentrics Global Holding (6819 HK) IFA considers the terms for the disposal of assets to symplr software as fair and reasonable. The EGM vote is on 18 April.
The consideration will be distributed to shareholders as a special dividend with a minimum and maximum of US$0.52 (HK$4.07) and US$0.55 (HK$4.30), respectively.
Irrevocables ensure that the EGM vote will pass. At the last close and for a 7 May payment, the gross and annualised spread of the minimum dividend is 2.8%/33.6%.

Isetan Singapore (ISET SP): Mitsukoshi’s BIGLY Premium Offer

Isetan Mitsukoshi Holdings Ltd (3099 JP), the controlling shareholder of department store operator Isetan Singapore (ISET SP), is offering $7.20/share, by way of a Scheme.
That’s a whopping 153.5% premium to last close. And a 178.9% premium to ISET’s NAV (as at 31 Dec 2023).
Apart from Mitsukoshi’s 52.73% stake, no other shareholder has >5%. This is a done deal. But why the large premium?

(Mostly) Asia M&A, Mar 2024: Chilled & Frozen, TDCX, MMA Offshore, JSR, Roland DG, SciClone

For the month of March 2024, 8 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
The average premium for the new transactions announced (or first discussed) in March was ~55%. The average premium YTD is ~39%.
This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

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Apr 01

Daily Brief Event-Driven: A/H Premium Tracker (To 28 Mar 2024): Liquid AH Premia Still Very Wide and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

A/H Premium Tracker (To 28 Mar 2024): Liquid AH Premia Still Very Wide
Updated Tool (31Mar24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
Merger Arb Mondays (01 Apr) – SciClone, IntelliCentrics, CIMC Vehicles, Lawson, Roland DG, MMA
SciClone Pharma (6600 HK): Privatisation At IPO Price
EQD / NSE Volatility Update / 25-Mar-24 to 29-Mar-24

A/H Premium Tracker (To 28 Mar 2024): Liquid AH Premia Still Very Wide

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND’s consecutive buying streak ended on Monday, and a new buying streak started Tuesday. NORTHBOUND net bought the dip. Last week’s (double long) choice Longyuan Power was up 5.24%.
Narrow AH premia narrowed some. Wider AH premia saw Hs outperform. There is a LOT of spread left in this market. 7 recommendations this week.

Updated Tool (31Mar24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”

In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links, and we are weeks ahead of the TSE. Working to get months ahead.
We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.

Merger Arb Mondays (01 Apr) – SciClone, IntelliCentrics, CIMC Vehicles, Lawson, Roland DG, MMA

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Sciclone Pharmaceuticals (6600 HK), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Southern Cross Media (SXL AU), China Traditional Chinese Medicine (570 HK), QV Equities.
Lowest spreads: Tietto Minerals Ltd (TIE AU), Roland DG Corp (6789 JP), Chilled & Frozen Logistics Holdings (9099 JP), Pact Group Holdings (PGH AU), Mma Offshore (MRM AU).

SciClone Pharma (6600 HK): Privatisation At IPO Price

After Sciclone Pharmaceuticals (6600 HK) was suspended on the 19th March pursuant to the Takeovers Code, I speculated a Scheme at the March 2021 IPO Price. And that’s what unfolded.
Li Zhenfu (SciClone’s NED), Assicurazioni Generali (G IM) and concert parties (collectively controlling 36.61%) have made an Offer at $18.80/share, a 33.9% premium to last close. Terms are final.
The long stop date is the 31 October. That’s too conservative. This could be wrapped up late July.

EQD / NSE Volatility Update / 25-Mar-24 to 29-Mar-24

By Sankalp Singh

On-The-Run Quarterly Options now capture India General Elections. Position buildup can be seen in the 21,000 put and 24,000 call strikes
Weekly and Monthly contract risk premia being squeezed lower due to holiday shortened trading but Quarterly contracts exhibit vol richness
Scale back short gamma exposure as reward-risk unappealing at current IV levels

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Mar 31

Daily Brief Event-Driven: (Mostly) Asia-Pac M&A:MMA and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

(Mostly) Asia-Pac M&A:MMA, Boral, Orecorp, Probiotec, CPMC, CIMC Vehicle, Roland DG, Welbe, SciClone
Weekly Deals Digest (31 Mar) – Roland DG, Lawson, SciClone, Probiotec, MMA Offshore, Bharti Hexacom
HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy
Denso’s Big Multi-Year Toyota Industries (6201) Selldown
Koito Mfg – Stock Over-Pops on New MTMP/Buyback; There Will Be Overhang
Samsung C&T: Why Is Lee Seo-Hyun Returning as the President?
Last Week in Event SPACE: Lawson, Samsonite, Socionext, ZOZO
Mainland Connect NORTHBOUND Flows (To 28 Mar 2024): NB Turns Net Buyer Again, Flows Go Idiosyncratic

(Mostly) Asia-Pac M&A:MMA, Boral, Orecorp, Probiotec, CPMC, CIMC Vehicle, Roland DG, Welbe, SciClone

I tally 53 – 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 this week on Smartkarma: MMA Offshore (MRM AU)‘s Scheme with Singapore’s Cyan Renewables; and Sciclone Pharmaceuticals (6600 HK)‘s Scheme.
Key updates took place on: Boral (BLD AU), Orecorp (ORR AU), Lawson Inc (2651 JP), CPMC (906 HK), CIMC Vehicle (1839 HK), Roland DG (6789 JP), and Welbe (6556 JP).

Weekly Deals Digest (31 Mar) – Roland DG, Lawson, SciClone, Probiotec, MMA Offshore, Bharti Hexacom

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: Bharti Hexacom (6597372Z IN) and Lianlian DigiTech (2104619D CH) IPOs.
Event-Driven developments: Lawson Inc (2651 JP), Roland DG Corp (6789 JP), Sciclone Pharmaceuticals (6600 HK), CIMC Vehicle Group Co Ltd (1839 HK), HKBN Ltd (1310 HK), Probiotec Ltd (PBP AU).

HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy

A shares were down on the week, but rallied Thursday and Friday.
Net SOUTHBOUND buying was +HK8.5bn after $57bn the two weeks before. SOUTHBOUND ended its consecutive net daily buy streak Monday, then started buying again.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week. Again.

Denso’s Big Multi-Year Toyota Industries (6201) Selldown

We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then…

Koito Mfg – Stock Over-Pops on New MTMP/Buyback; There Will Be Overhang

With a new Medium-Term Management Plan and a buyback, the stock was cheap as of Thursday’s close. It was less cheap after it went limit up +25% on Friday.
That put it in the camp of “it may go up more but probably not a lot”. It has told you about big divs and buybacks.
But model it up and they need to do more buybacks. Both to meet share price gains and the needs of legions of potential cross-holders looking to sell.

Samsung C&T: Why Is Lee Seo-Hyun Returning as the President?

On 29 March, it was reported that Lee Seo-Hyun has been appointed as the President of Samsung C&T (028260 KS), returning to the company after more than five years.
Lee Seo-Hyun is the third child of the late Samsung Chairman Lee Kun-Hee. She will be in charge of the overall strategic planning of Samsung C&T.
Many investors will likely to question this move, since they may question her ability to make strategic decisions that are in the best interests of all the minority investors.

Last Week in Event SPACE: Lawson, Samsonite, Socionext, ZOZO

Lawson Inc (2651 JP)‘s Tender Offer is still too cheap. It is also a somewhat non-transparent and unfair process. And it does not adhere to the METI Fair M&A Guidelines.
Samsonite (1910 HK)‘s pursuit of a dual listing (primary or secondary?) appears to be put the buyout on the backburner. For now.
Socionext (6526 JP) and ZOZO Inc (3092 JP) have a large part of the Max Real World Float to displace. Neither of those two names are outlandishly expensive.

Mainland Connect NORTHBOUND Flows (To 28 Mar 2024): NB Turns Net Buyer Again, Flows Go Idiosyncratic

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net BUY RMB 5.4bn of A-shares on decent volume after buying RMB 25bn net the two weeks before.
The volume is still chasing momentum, and dip buying on the buys. Selling dips on losers. CATL the big buy, and less passive-feeling than last week.

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Mar 30

Daily Brief Event-Driven: Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics
End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024
EQD | Is the NIFTY’s Rally Halting?

Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics

Today, Lee Seo-hyun returned as the top executive at Samsung C&T, which officially announced her as the head of its Strategic Planning Division.
Her return to Samsung C&T might not just be a simple comeback – it could be seen as a setup for some big changes within the company.
Considering Samsung C&T’s Value-up Momentum, aligning with Lee Seo-hyun’s return, we must position for potential price impact, focusing on portfolio streamlining.

End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024

We discuss the end of the mandatory lock-up periods for 46 stocks in Korea in April 2024, among which 6 are in KOSPI and 40 are in KOSDAQ.
These 46 stocks on average could be subject to further selling pressures in April and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in April include APR, Angel Robotics, and Samhyun.

EQD | Is the NIFTY’s Rally Halting?

By Nico Rosti

The NIFTY Index has been rallying for months, but in the last few weeks there has been a considerable slow down in its rising pace.
Currently the index is at a point where it could pull back this coming week, based on our MRM patterns reading.
A possible alternative scenario would be a continuation of the rally for a total of 4-5 weeks up in a row.

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Mar 29

Daily Brief Event-Driven: Koito Mfg (7276) – New Medium Term Plan and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned
CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid
SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80
Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco
Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
As Toyota Group’s leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block.
Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.

CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid

On the 6th Dec 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China (NCSSF).
A decent premium (32.1%), presumed rubber-stamped regulatory approvals, and a 50% acceptance condition with 29.7% in the bag – this Offer looked done. Then ORG announced a possible competing proposal.
Nearly four months have elapsed and details on ORG’s Offer remain unknown. SASAC/NCSSF chip away at reg approvals. Shares are down 2.6% from its recent peak. That makes sense.

SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80

Sciclone Pharmaceuticals (6600 HK) disclosed a scheme privatisation offer from GL Capital at HK$18.80 per share, a 33.9% premium to the undisturbed price (HK$14.04 on 15 March).
The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The Bank of China, which holds a blocking stake, should be supportive.
The offer price has been declared final. It is reasonable, aligning with the all-time high and the IPO price. This is a done deal.

Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents, adjusted every year in August.
We look at the rankings of the potential ADDs/DELs every month for the next rebal, based on most recent trading data.
Every month we provide trade suggestions. The last three months have seen market-neutral returns of +3.0%, +6.5%, +3.2% respectively for the one-month periods. A new trade is suggested below.

Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern.
The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.
It is RARE for an auditor to raise concerns about a company’s viability of the entity as a going concern. This is likely to negatively impact Kum Yang’s share price.

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Mar 28

Daily Brief Event-Driven: KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
Alteogen: Block Deal Sale of About 3% of Shares
Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches
Probiotec (PBP AU): Scheme Vote on 29 May as Doubts on Pyridam’s Funding Linger
Probiotec (PBP AU): Trading Wide Ahead Of 29th May Shareholder Vote
Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.

Alteogen: Block Deal Sale of About 3% of Shares

On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale.
The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won.
This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches

Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share.
The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range.
Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms.

Probiotec (PBP AU): Scheme Vote on 29 May as Doubts on Pyridam’s Funding Linger

The Probiotec Ltd (PBP AU) IE considers Pyridam Farma (PYFA IJ)’s A$3.00 offer fair and reasonable as it is within its A$2.79-A$3.28 per share valuation range.
The scheme remains conditional on shareholders’ (Probiotec and Pyridam), FIRB, and OJK approvals. Probiotec can also pay a permitted dividend of up to A$0.04 per share.
The gross spread of 4.9% (6.3% including dividends) reflects doubts about Pyridam’s funding credibility, as Pyridam’s market cap is 16% of Probiotec’s implied by the offer.

Probiotec (PBP AU): Trading Wide Ahead Of 29th May Shareholder Vote

On the 22 December 2023, drugs maker/packager group Probiotec Ltd (PBP AU) entered into a Scheme with Indonesia’s Pyridam Farma (PYFA IJ).
Pyridam is offering Probiotec shareholders A$3.00/share (in cash, or a 19% premium to the undisturbed price). An interim dividend of A$0.035/share was also added (now gone ex).
The Scheme Booklet is now out. The Scheme Meeting will be held on the 29th May. The IE says terms are fair. I agree. Trading wide. Gross spread is 4.9%.

Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity

Lotte Tour Development announced that it will conduct a major asset revaluation which could positively impact its share price.
The company’s assets will increase to 2.39 trillion won and equity will increase to 569.3 billion won (up more than 8x) at end of 1Q 2024 due to asset revaluation.
As a result of the asset revaluation, the company’s balance sheet will improve significantly and this likely result in many investors taking another look at the company for potential investments.

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Mar 27

Daily Brief Event-Driven: Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment
CIMC Vehicles (1839 HK): Vote on 18 April as Uncertainty Lingers on the 90% Acceptance Threshold
Hanmi Science: NPS Sides With Mother (Chairwoman) And Daughter
Hana Tour Service: Major Shareholders Including IMM PE Likely to Sell Their Shares
EQD | S&P/ASX200 Pullback In Sight (This Week or the Next)
Quiddity Leaderboard F100/250 Jun 24: LONG OCN – SHORT FSJ Could Be Interesting
Preference for Deleveraging, Model Update
W-Scope IPO Lock-Up – Part of the Parent’s Stake Will Be Freed, but It’s Been Adding Instead

Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game

In response to Roland DG Corp (6789 JP) request, on 22 March, Taiyo said it was considering a revised offer. However, Taiyo has since remained silent.
Despite discussions with Brother Industries (6448 JP), the Board have not been able to eliminate dis-synergies concerns. The Board has left the decision to accept the Taiyo offer to shareholders.
While the Board is trying to dissuade Brother, Brother will take its offer directly to shareholders if the Taiyo offer fails. Taiyo’s behaviour suggests a reluctance to bump.

Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas

After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares).
The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons.

HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.

CIMC Vehicles (1839 HK): Vote on 18 April as Uncertainty Lingers on the 90% Acceptance Threshold

CIMC Vehicle Group Co Ltd (1839 HK) has despatched the offer document, and the H Share HK$7.50 offer is open. The H Shareholders class vote is on 18 April.
The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.
The de-rating of peers and ongoing US investigation favours meeting the 90% threshold. However, the dire minority AGM/EGM participation rates suggest that retail apathy may derail the offer.

Hanmi Science: NPS Sides With Mother (Chairwoman) And Daughter

After the market close on 26 March, it was reported that NPS has decided it will side with Chairwoman Young-Sook Song (mother) and her daughter Ju-Hyun Lim.
As a result, Chairwoman Young-Sook Song (mother) and Ju-Hyun Lim have secured 40.86% of the shares, which is slightly higher than the ownership of her two sons (38.4%).
In the near term, this battle for the control of the company could have a positive impact on Hanmi Science’s share price.

Hana Tour Service: Major Shareholders Including IMM PE Likely to Sell Their Shares

Hana Tour Service (039130 KS), the number one travel platform in Korea, announced that IMM PE (controlling shareholder of the company) is planning to sell its controlling stake.
The total stake in the company that is up for sale could rise to 27.78%, including stakes held by Hana Tour founder Park Sang-hwan and co-founder Kwon Hee-seok.
Potential buyers of the controlling stake in Hana Tour include Yanolja, Hotels.com, Booking.com, and Trip.com.

EQD | S&P/ASX200 Pullback In Sight (This Week or the Next)

By Nico Rosti

The S&P/ASX 200 Index has reached a specific resistance level that often precedes a short-term pullback, when this pattern is encountered.
The pullback may happen next week, but this week is also a potential candidate since the 2nd week up is usually pretty weak when this pattern is encountered.
Hold your LONG positions and cover them to hedge. Going SHORT is probably best at the end of the week, on Friday, if the week is closing up.

Quiddity Leaderboard F100/250 Jun 24: LONG OCN – SHORT FSJ Could Be Interesting

In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the June 2024 index rebal event.
There could be up to three intra-review changes for the F250 index during the next two months.
Separately, there could be one change for F100 and two changes for F250 during the regular rebalance in June 2024.

Preference for Deleveraging, Model Update

By Jesus Rodriguez Aguilar

Net debt improved by around €1 billion to c. €5.8 billion. Prioritising deleveraging and allocations to new venture investments over dividends seem to have a negative impact on valuation.
Porsche SE is viewed as a holding company of Volkswagen Group, which should warrant a discount of 15%-25% on the stock, instead of the massive 44.6% discount to NAV.
Assuming a typical company holding discount of 15-25% range, the current share price indicates Porsche SE is liable for the whole c. €6.5 billion legal claims.

W-Scope IPO Lock-Up – Part of the Parent’s Stake Will Be Freed, but It’s Been Adding Instead

By Sumeet Singh

WCP raised around US$314m via selling a mix of primary and secondary shares in its Korean IPO. The lockup on some of its parent’s stake will expire soon.
WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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Mar 26

Daily Brief Event-Driven: MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners
Samsonite (1910 HK): Dual-Listing Musings
SillaJen Rights Offering Worth 34% of Outstanding Shares
MMA Offshore (MRM AU): A Polarising Offer from Seraya Partners
Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way
Quiddity Leaderboard T50/100 Jun 24: TDIV Deletion Likely for Bizlink and Farglory Land
Boral (BLD AU): Seven Slams “Fundamentally Misleading” IE Report

MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners

Marine and subsea services provider MMA Offshore (MRM AU) has entered into a Scheme with Singapore’s Cyan Renewables.
Cyan, wholly-owned by Seraya Partners, is offering A$2.60/share in cash, a 11% premium to last close and a 31% premium to the 90-day VWAP.
MMA shareholder approval and FIRB are the key conditions. This Offer will tentatively complete mid-late July.

Samsonite (1910 HK): Dual-Listing Musings

It seems like every week, Bloomberg reports a HK-listed company weighing privatisation options. HKBN (1310 HK), ESR (1821 HK), and Samsonite (1910 HK) have all been rumoured of late.
Last Friday, Samsonite announced it was focused on pursuing the listing of its shares on a second exchange.
No preferred exchange was mentioned. Nor whether the goal is to secure a dual primary listing, or a secondary listing. A buyout, for now, appears to be on the backburner.

SillaJen Rights Offering Worth 34% of Outstanding Shares

On 22 March, SillaJen Inc (215600 KS) announced that it will conduct a rights offering worth about 129 billion won for R&D and financials improvement.
The rights offering size is 34.5 million shares, representing 34% of total outstanding shares. The expected rights offering price is 3,750 won which is 26% lower than current price.
We would not subscribe to this rights offering and we remain negative on the company.

MMA Offshore (MRM AU): A Polarising Offer from Seraya Partners

Mma Offshore (MRM AU) has entered a scheme implementation deed with Seraya Partners at A$2.60 per share, a 10.6% premium to the undisturbed price (22 March).
While the offer is attractive compared to historical prices, it is light compared to peer and historical multiples. Some shareholders are supportive, while others are not.
The shares are trading at terms that suggest an expectation for a bump to get the vote up or a competing bidder. The offer has not been declared final.

Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way

In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
I currently see 5 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
The estimate for one-way flow in June 2024 is US$1.22bn.

Quiddity Leaderboard T50/100 Jun 24: TDIV Deletion Likely for Bizlink and Farglory Land

In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the June 2024 index rebal event.
I do not see any changes for the T50 index but there could be at least four changes for the T100 index based on current data.
If prices fluctuate significantly between now and the base date, there could be more changes.

Boral (BLD AU): Seven Slams “Fundamentally Misleading” IE Report

In its 19th March Target Statement, Boral (BLD AU) rejected Seven Group Holdings (SVW AU) cash/scrip Offer after the independent expert (IE) concluded the Offer was neither fair nor reasonable.
In its updated Bidder’s Statement, Seven slammed the IE report and its conclusions, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
Of interest: the IE’s maximum value for Seven’s Offer is just 1.7% below its fair valuation range. Including a control premium. Yet Seven obtained control of Boral in July 2021.

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Mar 25

Daily Brief Event-Driven: HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides
Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM
EQD / NSE Volatility Update / 18-Mar-24 to 22-Mar-24
Mainland Connect NORTHBOUND Flows (To 22 Mar 2024): NB Turns Net Seller, CATL the Big Buy

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

A shares were down small on the week. Larger caps down more. H-shares down more after a hard Friday.
Net SOUTHBOUND buying was +HK35.8bn after $21.4bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week.

Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update

ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND a net buyer every day since the end of Chinese New Year. Still. NORTHBOUND a huge net seller this week, but net buyers in size (RMB +86bn) over 8wks.
For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: APM Human Services Internation (APM AU), Chilled & Frozen Logistics Holdings (9099 JP), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU).
Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).

EQD / NSE Volatility Update / 18-Mar-24 to 22-Mar-24

By Sankalp Singh

Indian markets to implement T+0 settlement cycle starting 28-March-2024. Phase-wise transition planned .
Upcoming long weekends causing drastic markdown in IV levels. This combined with “High & Down” vol regime – short gamma/ short vega trades recommended.
Contango shape of Volatility curves are an additional reason to be short gamma & earning theta

Mainland Connect NORTHBOUND Flows (To 22 Mar 2024): NB Turns Net Seller, CATL the Big Buy