Event-Driven

A month after China’s leading state-backed brokerages, Guotai Junan Securities (2611 HK) and Haitong Securities (H) (6837 HK), announced an intention to merge, we have a firm deal.
Via a share swap, each Haitong H share may be exchanged for 0.62 H shares of GJS. A similar ratio is in place for the As. Cash options are afforded
Conditions include GJS and Haitong shareholder approval; plus the usual suspects on the regulatory front. The key risk, as with TCM (570 HK)‘s Offer, is one of timing.

7&I Results and Plans – The Good, The Bad, The Ugly, The Respectable, Unfortunate, and Encouraging

H1 sales were GOOD. H1 earnings were BAD. New forecasts are UGLY. The CVS initiatives are RESPECTABLE, but US CVS market environment UNFORTUNATE. The creation of the new Holdco ENCOURAGING.
The Couche-Tard Bid? That’s SEPARATE. Confidential. But three weeks after receiving the new proposal, it hasn’t been publicly rejected. So that’s a thing.
7&i is progressing with its Standalone Plan, as it should, because ACT’s bid is more a show of faith for discussions. The York Holdings structure is INTERESTING.

7-Eleven Corporation: A Clear Strategy for Long-Term Value, Founding Family Return to Super-Stores

By Michael Causton

Seven & I released 1H24 earnings today as well as details on planned restructuring of its business. Results included some one-off items hitting operating profit as well as lower footfall.
The bigger news was the plan to hive off the non-CVS retail operations into a new company, York Holdings, leaving a newly named 7-Eleven Corporation running CVS globally.
Unusually, Seven also mentioned the possibility of new strategic partners investing in York, including even the “original founding families”, suggesting one way of holding on to control.

Digging into Today’s Potential T’way Air Tender Offer Saga

It’s unclear if this will turn into a tender offer battle like Korea Zinc, and we need to assess both sides’ financial strength carefully.
Today’s reports suggest Sono has more financial flexibility than T’way Holdings, but we should be cautious. T’way Air might also consider buying back shares with borrowed funds.
T’way Air has fewer institutional investors and more available float than Korea Zinc, suggesting significant price swings and an attractive trading setup, as seen in today’s volume spike.

Rigaku Holdings (268A JP): Low, Slow and Steady in Global Indices

By Dimitris Ioannidis

Rigaku Holdings (268A JP) is scheduled to be listed at the Tokyo Stock Exchange on 25 October 2024 at a valuation of ~$1.9bn.
The company’s modest market capitalization fails fast-entry but easily surpasses the quarterly small cap thresholds of both main global indices.
Rigaku Holdings (268A JP) is expected to be added at the May and June 2025 quarterly reviews with the potential greenshoe exercise increasing the passive fund demand upon inclusion.

Quiddity Leaderboard BSE/SENSEX Dec 24: Some Changes to Expectations + Zomato Question Mark

In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 indices in the December 2024 index rebal event.
We expect six ADDs/DELs for BSE 100 and six ADDs/DELs for BSE 200.
Zomato is one of the six BSE 100 expected DELs but its fate will depend on when its expected F&O list inclusion takes place and the index provider’s discretionary choices.

Rio Tinto/Arcadium: More Brine To Compliment Rocks

Rio Tinto Ltd (RIO AU) has reached an agreement to buy Arcadium Lithium (LTM AU)/(ALTM US) for US$5.85/share (~A$8.70/share), a ~90% premium to the October 4th closing price of $US3.08/share.
Terms remain below where Arcadium was trading back in January of this year. But it is perhaps disingenuous to call the Offer Price opportunistic. More a counter-cyclical move.
The Scheme Offer is subject to a 75% shareholder vote and minimal regulatory approvals. The transaction is expected to close in mid-2025. The long stop is the 9th October 2025.

T’Way Air: Increasing Possibility of an M&A Fight Between Yearimdang and Daemyung Sono Group

In the past several days, there have been an increased speculation in the local media about a potential M&A fight for T’Way Air between Yearimdang Publishing and Daemyung Sono Group.
The difference in ownership of T’Way Air by Daemyung Sono Group and Yearimdang Group is only 3.2%, which could lead to an intensified management rights dispute.
According to local sources, Daemyung Sono Group has recently contacted several law firms to review plans to potentially conduct a tender offer on T’Way Air.

Shiyue Daotian US$480m Lockup Expiry – Would Need Some Selling to Improve Its Liquidity

By Clarence Chu

Shiyue Daotian (1892269D CH) was listed in Hong Kong on 12th Oct 2023 after raising US$105m close to the top end of its indicative IPO price range.
Shiyue Daotian is a pantry staple food company in China, providing consumers with pre-packaged premium rice, whole grain, bean, and dried food products.
The firm’s one-year lockup will expire on 12th Oct 2024. In this note, we will talk about the lock-up dynamics and updates since our last note.

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Oct 10

Daily Brief Event-Driven: Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal
MBK Rules Out Further Tender Price Hike for Korea Zinc, Game Plans Shift
Seven & I Holdings (3382 JP): Pressure Mounts with a Couche-Tard Revised Offer
Arcadium Lithium (ALTM US/LTM AU): Rio’s Binding Proposal
KOSDAQ150 Index Rebalance Preview: 10 Changes in December
HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week
Quiddity Leaderboard NIFTY Mar 25: Four Changes Likely for NIFTY Next 50 + Hyundai Motor India IPO
Concerns About Transferring Doosan Bobcat Shares Held by Doosan Enerbility to Doosan Robotics
Shin Kong and Taishin – There’s a Good Value Swap Trade To Do Here

Revised Couche-Tard Bid for 7&I and a Flurry of News Items Ahead of Earnings

This AM, partway through the morning session, Bloomberg carried an article saying Alimentation Couche-Tard (ATD CN) had upped its bid for Seven & I Holdings (3382 JP) to US$18.19/share.
The stock popped, then faded sharply. Near and after the close we got more headlines. Some of these preview tomorrow’s earnings report. Some preview the restructuring announcements.
The Nikkei comment regarding an earnings shortfall vs Plan suggests weaker US convenience store sales and consumer footfall are to blame. Details will matter. But I’d buy dips.

Haitong Securities (6837 HK)/GTJA (2611 HK) Merger Is a Done Deal

Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) all-scrip merger is set at an exchange ratio of 0.62x.
The merger is conditional on the GJTA/Haitong shareholder vote, which is low risk. Regulatory approvals are a formality as they involve two entities with SOE backgrounds.
The share exchange ratio is attractive compared to historical price ratios and precedent transactions. The recent material re-rating of peers is irrelevant to the vote as the offer is all-scrip.

MBK Rules Out Further Tender Price Hike for Korea Zinc, Game Plans Shift

MBK’s strategy is clear: they believe they have the upper hand with the current price level and are optimistic about a favorable ruling on the second injunction.
All eyes are on Choi to raise the price by this Friday, the 11th, before the deadline, especially with the FSS’s scrutiny looming.
If that happens, MBK will likely go all-in on the second injunction whose hearing is on the 18th. Choi raising the price this Friday won’t significantly boost Korea Zinc’s stock.

Seven & I Holdings (3382 JP): Pressure Mounts with a Couche-Tard Revised Offer

In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a revised non-binding proposal from Alimentation Couche-Tard (ATD CN).
The rumoured revised offer is US$18.19, a 22.4% premium to the initial US$14.86 offer. The revised terms are attractive vs precedent transactions and analyst price targets.
The Board would cite regulatory concerns and the revised offer’s implied discount compared to peer multiples. At tomorrow’s results, the Board must present a credible alternative value generation path.

Arcadium Lithium (ALTM US/LTM AU): Rio’s Binding Proposal

Arcadium Lithium (LTM AU) has disclosed a binding offer from Rio Tinto PLC (RIO LN) at US$5.85 per share, a 90% premium to the undisturbed price of US$3.08 (4 October).
The offer is attractive compared to analyst price targets and peer multiples but unattractive compared to cyclical low timing and precedent transactions.
The shareholder structure requires an activist to disrupt the vote. The long-dated offer provides optionality on a bump if lithium prices materially re-rates.

KOSDAQ150 Index Rebalance Preview: 10 Changes in December

With over 85% of the review period complete, there could be 10 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
Even with 10 potential changes, there is sector balance with half the changes in the Information Technology sector. Passive trading impact varies from 0.2-7.7x ADV.
The potential adds have outperformed the potential deletes and the KOSDAQ150 Index since the start of the review period, though there has been a gentle drift lower since July.

HSCI Index Rebalance Preview: Midea Group (300 HK) To Be Added in December; Stock Connect Next Week

There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.

Quiddity Leaderboard NIFTY Mar 25: Four Changes Likely for NIFTY Next 50 + Hyundai Motor India IPO

NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
In this insight, we take a look at the names leading the race to become ADDs/DELs for these indices in the March 2025 index rebal event.
There are no changes for NIFTY 50 but there could be four changes for NIFTY Next 50 according to current rankings.

Concerns About Transferring Doosan Bobcat Shares Held by Doosan Enerbility to Doosan Robotics

In the process of transferring Doosan Bobcat shares held by Doosan Enerbility to Doosan Robotics, there are increasing concerns about negatively impacting minority shareholders of Doosan Enerbility.
This current restructuring structure could potentially benefit the Park family/relatives which is the largest shareholder group of Doosan Corp but could negatively impact minority shareholders of Doosan Enerbility.
On 25 September, Doosan Enerbility announced that 10 October will be the shareholder confirmation date (shareholder register closing date) for the spin-off NEWCO merger agreement with Doosan Robotics.

Shin Kong and Taishin – There’s a Good Value Swap Trade To Do Here

Media reports indicate that the shareholder base of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) have approved their merger.
Shin Kong meeting results were public just before the market closed. The results from Taishin were known earlier. The market and spread were un-moved. If anything, things widened a little.
Next, the two companies try to get fair Trade Commission, FSC, and Exchange approval to join to become Taishin Shin Kong FHC. And there’s a good trade to do here.

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Oct 09

Daily Brief Event-Driven: The TOPIX October FFW Trade – BIG Numbers and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The TOPIX October FFW Trade – BIG Numbers
Hyundai Motor India: Index Entry Timing for India’s Biggest IPO
Boqi Env (2377 HK): MBO; Or Sinopec Offer?
LQ45 Index Rebalance Preview (Oct 2024): Identifying Potential Index Changes
Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs Possible
China TCM (570.HK) Privatization Update – The Long Stop Date to Extend or Not?
First Pacific (142 HK): Even More Value In The Stub

The TOPIX October FFW Trade – BIG Numbers

Post-Close on the 5th business day of October every year, the TSE announces the Free Float Weight review for all stocks where the FY ends in the Jan-March quarter.
Yesterday saw 210 decent changes to FFW (more up than down). There are still 400+ Phased Weight Reductions, 3 new adds (3663, 3993, 9341), and some share cancellation-based share-count reductions.
It turns out there is a LOT to trade. I see ¥2trln one-way (¥2trln net to buy on 245 names, and ¥2trln to sell on the other nearly 1,900 names).

Hyundai Motor India: Index Entry Timing for India’s Biggest IPO

Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

Boqi Env (2377 HK): MBO; Or Sinopec Offer?

China Boqi Environmental Hol (2377 HK), a flue gas treatment play in China, is suspended pursuant to the Takeovers Code.
Co-Founders Zeng Zhijun (27.71%, chairman) and Richard Cheng (16.76%, NED) collectively hold 44.47%. However, they had a falling out in January 2021, and probably won’t jointly bid. Individually, maybe.
China Petroleum & Chemical (386 HK) (a.k.a. Sinopec) holds 10.97% and could make a move to secure control.

LQ45 Index Rebalance Preview (Oct 2024): Identifying Potential Index Changes

The review period for the LQ45 Index October rebalance ended 30 September. The changes should be announced the last week of October, becoming effective after the close on 31 October.
We highlight 4 potential inclusions and 5 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
There are a few stocks that will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 5 ADDs & 6 DELs Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
We expect up to five ADDs and six DELs for the KOSPI 200 Index during this rebal event based on the latest available data. Small increase vs two weeks ago.

China TCM (570.HK) Privatization Update – The Long Stop Date to Extend or Not?

By Xinyao (Criss) Wang

Investors are concerned the Long Stop Date may be extended.But the style of SOEs is rigorous, which means CNPGC has anticipated the potential delays and reserved more time in advance.
Although CNPGC can extend Long Stop Date, this indicates CNPGC fails to complete the set work in scheduled time, which is equivalent to admitting its previous work arrangement was “inappropriate”.
If there’re unexpected circumstances, one possible scenario is privatization would be completed before the Chinese New Year.Because entering 2025, integrating China TCM and Taiji will be the focus of CNPGC.

First Pacific (142 HK): Even More Value In The Stub

Back in October 2023, a consortium including First Pacific (142 HK) took Metro Pacific Investments Co (MPI PM) private. First Pac’s 46.2% share at delisting was worth ~US$1.25bn.
Following Mitsui (8031 JP)–backed Mit-Pacific’s possible stake in a tollway operator held by MPIC, First Pac’s 43.2% holding in MPIC, including the 47.5% stake in Meralco, is potentially worth ~US$3.21bn.
The question is whether this recent development from Mitsui has any bearing. First Pac’s discount to NAV is elevated versus its historical trading range.

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Oct 08

Daily Brief Event-Driven: Rio Tinto Taps Arcadium As Lithium Prices Sag and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Rio Tinto Taps Arcadium As Lithium Prices Sag
Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities
Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light
Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained
Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
TOPIX Inclusions: Who Is Ready (Oct 2024)
Greatview Aseptic Packaging (468.HK) Update – Some New Information Worth the Attention
WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: US$300m Round-Trip Trade
Boqi Environmental (2377 HK): Privatisation by Management?
EQD | The Nikkei Is At The Top But Could Rally A Bit More…

Rio Tinto Taps Arcadium As Lithium Prices Sag

Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition.
No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable.

Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities

Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%.
The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month.
Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH). The question: how much more in the tank?

Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light

In response to media reports, Arcadium Lithium (LTM AU) confirmed receiving a non-binding proposal from Rio Tinto Ltd (RIO AU). No terms were disclosed.
According to press reports, Rio aims to acquire Arcadium at a valuation range of US$4-6 billion (A$5.9-8.8 billion). Blackwattle thinks a fair price is closer to US$8 billion.
The rumoured valuation range is unattractive and arguably a bear case valuation assuming no significant recovery in lithium prices.

Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained

This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.

Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025

Rigaku Holdings (268A JP) listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
At the reported indicative IPO price of JPY 1230/share, Rigaku Holdings (268A JP) will be valued at JPY 277.1bn (US$1.87bn).
The stock should be added to the TOPIX INDEX on 28 November while inclusion in global indices will take place in February and June next year.

TOPIX Inclusions: Who Is Ready (Oct 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.
Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.

Greatview Aseptic Packaging (468.HK) Update – Some New Information Worth the Attention

By Xinyao (Criss) Wang

The loss of control over Greatview’s international business will lead to significant loss of Newjf’s interests,which is the most direct trigger of Newjf’s decision to initiate an acquisition of Greatview.
Newjf is actively fulfilling the Pre-Conditions and is now progressing smoothly. Newjf’s acquisition of Greatview is complied with the Anti-monopoly Law. Newjf will make every effort to complete the acquisition.
Greatview urges shareholders to reject Newjf’s Offer is not for the benefit of the entire company. The “true motives” behind are questionable. We advise investors to take Newjf’s Offer seriously.

WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: US$300m Round-Trip Trade

The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
There are 154 adds and 80 deletes for the index with an estimated round-trip trade of US$300m.

Boqi Environmental (2377 HK): Privatisation by Management?

China Boqi Environmental Hol (2377 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. The shares have been up 39% since 30 September.
It is likely that management, representing 59.59% of outstanding shares, is seeking to privatise Boqi through a Cayman scheme.
Sinopec, a pre-IPO investor potentially holding a blocking stake, is likely seeking to exit. At the last close, Boqi trades in line with the median peers’ P/B multiple.

EQD | The Nikkei Is At The Top But Could Rally A Bit More…

By Nico Rosti

In our last Nikkei 225 insight we predicted that the Nikkei 225 INDEX was overbought and about to pullback and that is exactly what happened the following week.
We also reiterated our view about the index’s overall trend, not looking good, and the fact that our seasonal quantitative model point to a coin flip scenario (up/down) for October.
This week the index gapped up and the current SHORT pattern model is showing a good chance to rally from here. Let’s check how high it can go.

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Oct 07

Daily Brief Event-Driven: ESR Group (1821 HK): Inching Closer to a Binding Proposal and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ESR Group (1821 HK): Inching Closer to a Binding Proposal
7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value
WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade
WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade
Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps
CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?
Merger Arb Mondays (07 Oct) – GA Pack, Henlius, Canvest, Samson, T-Gaia, Descente, Platinum
EQD | Asia Monthly Vol Roadmap: Elevated IV’s in CSI300 and Hang Seng Present Tactical Opportunity
EQD / NSE Vol Update / Skew & Smile Unmoved by Equity Selloff – Options Market Ill-Prepared for More
Temasek’s USD1Bn+ Bite into India’s Booming Snack Food Sector.Top Listed Stocks to Watch

ESR Group (1821 HK): Inching Closer to a Binding Proposal

ESR Group (1821 HK) provided a positive update on the indicative proposal. The update notes that the consortium has expanded from three to six, representing 39.91% of outstanding shares.
The addition of new consortium members is a positive. While the recent market rally is not a dealbreaker, it should give the consortium renewed impetus to launch an acceptable offer.
The downside to a deal break is low as ESR’s valuation is undemanding, which is supported by the potential earnings recovery in a more benign interest rate environment.

7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value

Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish.

WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade

The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.

WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade

The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.

Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps

MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.

CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?

By Xinyao (Criss) Wang

Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer
ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.

Merger Arb Mondays (07 Oct) – GA Pack, Henlius, Canvest, Samson, T-Gaia, Descente, Platinum

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: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Capitol Health (CAJ AU).
Lowest spreads: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Xingda International (1899 HK), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP).

EQD | Asia Monthly Vol Roadmap: Elevated IV’s in CSI300 and Hang Seng Present Tactical Opportunity

By John Ley

Hang Seng Index (HSI INDEX), Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX EQUITY) and Nikkei 225 (NKY INDEX) all have elevated implied vols vs their peers and vs historical observations for October.
NIFTY Index (NIFTY INDEX) , S&P 500 INDEX (SPX INDEX) and S&P/ASX 200 (AS51 INDEX) implied vols are on the low end of what is typically realized in October.
Most markets see price weakness in the 3rd week of the month with realized volatility underperforming over the back half of the month.

EQD / NSE Vol Update / Skew & Smile Unmoved by Equity Selloff – Options Market Ill-Prepared for More

By Sankalp Singh

Nifty50 Monthly IVs post +2.6 vol jump as risk premia gets marked higher on return from 02.10.2024 holiday – China-induced Index selloff & FII Options-buying being the main drivers.
Vol Term-Structure has switched from Contango to Backwardation in the front end for Nifty50 options. BankNifty Vol Curve flattens due to 11th hour IV markdown.
Options Market looks ill-prepared for another leg lower in indices – Smile & Skew subdued in spite of IV-jump.

Temasek’s USD1Bn+ Bite into India’s Booming Snack Food Sector.Top Listed Stocks to Watch

By Devi Subhakesan

Temasek Holdings Pte Ltd (TMSK SP), Singapore’s state investment firm, is reportedly eyeing a 10-15% stake in India’s top snack maker Haldirams (Unlisted), valued at $11 billion.
India’s packaged and processed food sector is booming, driven by modern retail growth, improved food standards, rising convenience demand, and greater affordability.
Big acquisitions, upcoming IPOs, and strong growth prospects keep this sector in the spotlight, with listed companies offering investors opportunity to play the upswing.

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Oct 06

Daily Brief Event-Driven: Quiddity Mar25 Nikkei 225 Rebal: Likely 2 IN and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Quiddity Mar25 Nikkei 225 Rebal: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family
Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)
(Mostly) Asia-Pac M&A: Descente, Shin Kong Financial, T Gaia, Shinsegae E&C, MPHB, Pacific Smiles
Last Week in Event SPACE: Shin Kong/Taishin, ASMPT, Korea Zinc/Young Poong Precision, Sigma Health

Quiddity Mar25 Nikkei 225 Rebal: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor

The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I see 2 IN and 2 OUT for the Mar25 Nikkei 225 Rebal.
There is also a capping event for Fast Retailing which on mild outperformance could become a double-capping event.
There is a bit of a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. The Committee will regret not adding PPIH last time.

Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family

We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares.
Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc.
We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc.

Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)

In August, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
Everyone had expected a delay, but the stock fell. Then tech/AI fell out of bed, Ibiden crashed, China export restrictions noise/pushback caused further upset. But Ibiden and tech are rebounding.
At 9% it was a raging buy;post-dip at 7% it was good. Now it’s 6+%. Still wide, still interesting, still stable but year-end path dependency… So I still like Ibiden.

(Mostly) Asia-Pac M&A: Descente, Shin Kong Financial, T Gaia, Shinsegae E&C, MPHB, Pacific Smiles

I tally 44 – 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 discussed this week: T Gaia (3738 JP)‘s and Shinsegae E&C (034300 KS) Tender Offers, and MPHB (MPHB MK)‘s SCR. Plus ASMPT (522 HK) in the crosshairs. Again.
Key updates took place on: Sigma Healthcare (SIG AU), Descente Ltd (8114 JP), Shin Kong Financial Holding (2888 TT), Pacific Smiles (PSQ AU), and Greatview Aseptic Packaging (468 HK).

Last Week in Event SPACE: Shin Kong/Taishin, ASMPT, Korea Zinc/Young Poong Precision, Sigma Health

Taishin‘s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.
KKR’s “bid” for ASMPT (522 HK) has all the hallmarks of the “approach” by PAG last year. Which came to nought. From a regulatory standpoint, it’s unlikely to get up.
Never a dull moment for Korea Zinc (010130 KS). The Choi family makes Offers for KZ and Young Poong Precision (036560 KS) (YPP). Then MBK counters for both.

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Oct 05

Daily Brief Event-Driven: MBK Raised Korea Zinc’s Tender Price to ₩830K and Dropped the Hard Floor and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MBK Raised Korea Zinc’s Tender Price to ₩830K and Dropped the Hard Floor, Keeping the Upper Hand
MBK Raises Tender Offer Price of Korea Zinc to 830,000 Won
MPHB Capital (MPHB MK)’s Offer Stalls At the Finish Line
EQD | Is the NIFTY A BUY Here?
Sigma Healthcare (SIG AU): Possibility of Merger with CWG Is Still Alive

MBK Raised Korea Zinc’s Tender Price to ₩830K and Dropped the Hard Floor, Keeping the Upper Hand

MBK ditched the hard floor, eliminating cancellation risk. With a 15% GGT rate, there’s a 4% spread, so if you can secure volume, the deal looks solid.
MBK’s tender offer has less volume than Choi’s buyback (18%), increasing proration risk, but Choi’s deal also faces legal headaches, leaving some cancellation risk.
Tax implications differ: MBK’s offer incurs capital gains tax, while Choi’s buyback is subject to dividend tax. Foreign investors may prefer MBK’s 0% withholding tax, impacting participation.

MBK Raises Tender Offer Price of Korea Zinc to 830,000 Won

On 4 October, MBK Partners announced that it is raising its tender offer price of Korea Zinc from 750,000 won to 830,000 won, matching Choi family’s tender offer price.
As the price and conditions have changed, the tender offer period for Korea Zinc by MBK Partners and Young Poong will be extended by 10 days until 14 October.
Unless the Choi family makes another counter offer, upping the tender offer price even further, MBK/Young Poong is in a better position to win this M&A war for Korea Zinc.

MPHB Capital (MPHB MK)’s Offer Stalls At the Finish Line

On the 28 May, credit service provider MPHB Capital (MPHB MK) announced that controlling shareholder and chairman Tan Sri Surin Upatkoon intended to delist the company via a selective capital reduction.
Shareholders approved the RM1.70/share (87.21% FOR, 8.34% AGAINST) terms. The Offer required the Court to sign off on the SCR, and that’s when matters unravelled.
ISM Sdn Bhd, MPHB’s minority partner in six JVs, filed an intervening application on the grounds that sanctioning the SCR may affect its rights in an ongoing legal dispute.

EQD | Is the NIFTY A BUY Here?

By Nico Rosti

Our last insight predicted quite precisely what happened to the NIFTY Index during the last 3 weeks (our forecast was a 3-5 weeks rally, around +4%/+5% higher).
After 3 weeks up in a row, last week the NIFTY pulled back – the question obviously now is: would this be a good time to enter/re-enter the trade LONG?
The answer, as always, lies in our Market Reversal Matrix models, keep reading to find out…

Sigma Healthcare (SIG AU): Possibility of Merger with CWG Is Still Alive

By Tina Banerjee

Sigma Healthcare (SIG AU) has offered a court-enforceable undertaking to alleviate preliminary anti-competition concerns raised by ACCC in relation to its proposed merger with CWG.
Sigma will let its franchisees who entered their franchising arrangements prior to January 1, 2024 to terminate their franchise agreements with Sigma without any penalty, for the next three years.
The company will also limit the usage of confidential information from its wholesale customers and franchisees for the next three years. Final decision of ACCC is expected on November 7.

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Oct 04

Daily Brief Event-Driven: Korea Zinc (010130 KS)’s ₩830 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Korea Zinc (010130 KS)’s ₩830,000/Share Offer. Mmm …
Legal Chaos Amid Young Poong Filing a Criminal Complaint Against Korea Zinc’s BOD and What’s Next?
Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares
MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th
Bharti Hexacom IPO Lockup – US$1.2bn Lockup Expiry, Will Have to Sell for Free-Float
Samson (531 HK): 21 Oct Shareholder Vote
Samson Holding (531 HK): Scheme Vote on 21 October
MBK Raises Tender Offer Price of Young Poong Precision to 30,000 Won
Quiddity Leaderboard Hang Seng Index Dec 24: Special Focus on IT, Healthcare, and SOEs
SET50 Index Rebalance Preview: Four Changes as Adds Outperform Deletes

Korea Zinc (010130 KS)’s ₩830,000/Share Offer. Mmm …

Never a dull moment for Korea Zinc (010130 KS) (KZ). After MBK/Young Poong’s injunction to block KZ’s buyback was denied, KZ, together with Bain Capital, tabled a punchy Offer.
KZ has launched a 3.21mn share buyback (15.5% of shares out) at ₩830,000/share. Bain will also buy 2.5%. KZ’s buyback is to be funded by short-term loans and corporate bonds.
MBK/Young Poong have filed another injunction against this buyback. Its case has merit. And that legal overhang ostensibly accounts for KZ trading ~14% below the buyback terms.

Legal Chaos Amid Young Poong Filing a Criminal Complaint Against Korea Zinc’s BOD and What’s Next?

Young Poong filed a criminal complaint against the board of directors of Korea Zinc (010130 KS) who voted in favor of the tender offer by buying back Korea Zinc’s shares.
If Korea Zinc proceeds with the share buyback at higher price than the tender offer price by MBK, there are two main scenarios.
Trading Action Point: If Uncertain, Watch the Price Action in the Next Several Days

Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares

The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.
In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in Kusuri no Aoki Holdings (3549 JP).
The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.

MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th

MBK is raising its tender offer for Young Poong Precision to ₩30,000 per share, matching Choi’s offer and extending the deadline to October 14. Filing expected tomorrow before market open.
MBK targets 6.84 million shares, surpassing Choi’s 3.94 million cap. No hard floor, no cancellation risk, but MBK holds an edge in proration.
The buzz is whether MBK will raise its Korea Zinc bid beyond 900,000 KRW, as Choi prepped with a 950,000 KRW offer. A bid hike and extension seem likely.

Bharti Hexacom IPO Lockup – US$1.2bn Lockup Expiry, Will Have to Sell for Free-Float

By Sumeet Singh

Government of India raised around US$513m via selling some of its stake in Bharti Hexacom’s IPO in Apr 2024. Its IPO lockup is set to expire soon.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the Northeast.
In this note, we will talk about the lockup dynamics and possible placement.

Samson (531 HK): 21 Oct Shareholder Vote

Back on the 16th July, furniture trader Samson Holding (531 HK) announced an Offer, by way of a Scheme, from Shan Huei Kuo, Samson’s Chairman.
The Cancellation Price is $0.48/share (final), a 50% premium to last close; but more notable if going back a month. This looks done. However, Samson is an illiquid micro-cap.
The Scheme Doc is now out, with a Court Meeting to be held on the 21st October. Expected payment on the 14 November. The IFA says fair & reasonable.

Samson Holding (531 HK): Scheme Vote on 21 October

Samson Holding (531 HK)’s IFA opines that Mr Samuel Kuo (Chairman)’s HK$0.48 privatisation offer to be fair and reasonable. The vote is on 21 October.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). Despite the market rally, most peers’ shares have declined since the offer announcement.
The attractive premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. At the last close, the gross/annualised spread is 3.2%/29.8%.

MBK Raises Tender Offer Price of Young Poong Precision to 30,000 Won

MBK Partners announced that it is raising its tender offer price for Young Poong Precision from 25,000 won to 30,000 won, matching Choi family’s tender offer price of 30,000 won.
Accordingly, MBK’s tender offer period for Young Poong Precision has been extended from 6 October to 14 October.
The revised up tender offer price of Young Poong Precision by MBK at 30,000 won is likely to result in boosting its stock price closer to the 30,000 won.

Quiddity Leaderboard Hang Seng Index Dec 24: Special Focus on IT, Healthcare, and SOEs

The Hang Seng Index is the benchmark index for Hong Kong stocks. It follows a highly-subjective selection process which makes it difficult to predict index changes.
In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes during the next review in December 2024.
The index changes for the December 2024 index rebal event will be announced after market close on 22nd November 2024.

SET50 Index Rebalance Preview: Four Changes as Adds Outperform Deletes

A third of the way through the review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX), we see four potential index changes.
Passive trackers will need to buy between 0.5-4.3 days of ADV on the inclusions and sell between 0.1-2.9 days of ADV on the deletions.
The forecast adds have outperformed the forecast deletes and the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) over the last 5 months.

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Oct 03

Daily Brief Event-Driven: Korea Zinc’s Buyback Tender Offer at ₩830 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon
ASMPT (522 HK): Don’t Bet on a KKR Privatisation
GA Pack (468 HK): Crunch Time
Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital
ASMPT (ASM Pacific). 522 HK. M&A. Takeover Target Talk. Déjà Vu ?
CMCDI (133 HK)’s Proposals Light On Detail
ASMPT (522 HK): KKR’s Proposal Is A Non-Starter
KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December
Quiddity Leaderboard HSTECH Dec 24: Midea Group Question Mark and Final Rankings for Exp ADDs/DELs

Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK

Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.

Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon

The court rejected MBK and Young Poong’s injunction to block Korea Zinc’s buyback, allowing Choi’s side to continue using buybacks to defend control.
Korea Zinc plans an emergency board meeting to launch a tender offer, using internal funds, to buy back shares at 800K-850K KRW starting around October 7.
If Choi converts discretionary reserves into distributable profits, Korea Zinc could unlock 2-3 trillion KRW for the buyback, but uncertainty keeps the stock around 700K KRW.

ASMPT (522 HK): Don’t Bet on a KKR Privatisation

Bloomberg reported that KKR has made a non-binding, preliminary approach to taking ASM Pacific Technology (522 HK) private. ASMPT has been the subject of takeover rumours in the past.
The trading patterns of the substantial shareholders suggest a willingness to exit. However, past privatisation rumours suggest issues with the offeror matching key shareholders’ price expectations.
A binding proposal is unlikely as the timing would be viewed as opportunistic, with the recent market rally eroding a potential takeover premium and ASMPT’s premium multiple compared to peers.

GA Pack (468 HK): Crunch Time

Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.
Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management.

Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital

Korea Zinc plans to repurchase and cancel shares worth 2.663 trillion won. Korea Zinc’s partner Bain Capital also plans to purchase around 430 billion won for a 2.5% stake.
Korea Zinc plans to buy back shares at 830,000 won per share, which is 11% higher than MBK’s revised up tender offer price of 750,000 won.
Choi family/Bain Capital’s efforts to conduct a massive share buyback and cancellation at higher prices than the market price goes against the globally accepted market practices.

ASMPT (ASM Pacific). 522 HK. M&A. Takeover Target Talk. Déjà Vu ?

By Neil Campling

The second PE rumoured interest in ASMPT in 18 months, with KKR circling.
Semiconductor M&A has surged in 2024 YTD with a 33% increase in deal activity compared to 2023.
ASM’s leadership in TCB, potential growth within HBM, expansion at TSM and enabling the Nvidia Blackwell platform are all reasons for M&A interest.

CMCDI (133 HK)’s Proposals Light On Detail

Argyle Street Management (ASM), a 9.01% shareholder in China Merchants China Direct Investments (133 HK), has been (very) publicly angling for change in this closed-end fund. Here is their website.
The core issue is CMCDI’s P/NAV ratio of 0.41x compared to closed-end fund peers of 0.8x-0.9x.
CMCDI has finally responded to ASM’s overtures with the prospect of a share buyback and a special dividend. But details are thin on the ground.

ASMPT (522 HK): KKR’s Proposal Is A Non-Starter

Reportedly – Bloomberg – KKR has made a non-binding proposal for ASM Pacific Technology (522 HK), the world’s leading back-end semiconductor production equipment supplier.
ASMPT’s largest shareholder, ASM International Nv (ASM NA), with 25%, has been the focus of activists for some time to sell its stake.
This bid has all the hallmarks of the approach (also cited by Bloomberg) by PAG last year. Which came to nought. From a regulatory standpoint, I can’t see this happening.

KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December

85% of the way through the review period, there could be 4 adds and 5 deletes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.
The impact on the potential inclusions ranges from 1.4-17 days of ADV while the impact on the potential deletions varies from 4-8 days of ADV.
The potential adds outperformed the potential deletes early in the review period before giving up all the gains over the following months.

Quiddity Leaderboard HSTECH Dec 24: Midea Group Question Mark and Final Rankings for Exp ADDs/DELs

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the final rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
We do not expect any changes for the HSTECH index in December 2024. However, we expect there to be capping flows of US$1,079mn one-way.

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Oct 02

Daily Brief Event-Driven: Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again… and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…
HSTECH Index Rebalance Preview: $800m Round-Trip Trade
Choi Family Launches a Counter Tender Offer for Young Poong Precision
HSCEI Index Rebalance Preview: High & Low Probability Changes
Choi Drops a Counter-Tender for Young Poong Precision at ₩30,000 Before the Market Bell Tomorrow
Namoi Cotton (NAM AU): Well Played LDC
Young Poong Precision (036560 KS): Choi’s Opening Salvo
ADNOC/Covestro: Fair Offer at €62

Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…

At end-September, the Nikkei 225 semi-annual review imposed a “cap” on Fast Retailing (9983 JP) in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.
At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.
And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.

HSTECH Index Rebalance Preview: $800m Round-Trip Trade

The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

Choi Family Launches a Counter Tender Offer for Young Poong Precision

Choi family has launched a counter tender offer for Young Poong Precision at the tender offer price of 30,000 won (20% higher than MBK’s 25,000 won tender offer price).
The tender offer involves a plan to acquire 3,837,500 shares (24.36% of outstanding shares) of Young Poong Precision.
All eyes are on the court’s decision on the injunction application for ‘prohibition of acquisition of treasury stocks by Korea Zinc’, which is expected to be announced on 2 October.

HSCEI Index Rebalance Preview: High & Low Probability Changes

PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

Choi Drops a Counter-Tender for Young Poong Precision at ₩30,000 Before the Market Bell Tomorrow

Choi aims to acquire 3.84 million shares (24.36%) of Young Poong Precision at ₩30,000 each, with a tender period from October 2 to November 1, managed by Hana Securities.
Seoul Economic Daily may not be as prominent, but they reliably scoop this type of news, making it likely Choi will announce their counter-tender for Young Poong Precision tomorrow.
MBK targets the full 49.14% stake, while the Choi family seeks about half, creating proration risk, which may still make MBK’s lower offer more appealing to shareholders.

Namoi Cotton (NAM AU): Well Played LDC

A$0.77/Share. That’s Louis Dreyfus Company (LDC)’s revised unconditional bid. Plus it now holds 47.66% after Samuel Terry Asset Management, Namoi’s largest shareholder, tendered into the revised term.
Expect Namoi Cotton Co Operative (NAM AU)‘s board to shortly back LDC’s Offer. LDC’s Offer is $0.02/share above Olam Agri’s conditional bid.
After LDC first approached Namoi in November last year, this is now done. Expect Olam to tender its stake, and fold its tent.

Young Poong Precision (036560 KS): Choi’s Opening Salvo