Event-Driven

The Sep 2024 Nikkei 225 Review base date is here. As before, I see one ADD, one DELETE, one capping, and one Very Dark Horse.
The rules are clear, but not. This causes confusion. There may be unwritten rules keeping the Very Dark Horse out til next time.
The Nikkei Index Team announced Fast Retailing (9983 JP) would be capped. I didn’t expect that now. That means $2.2bn+ of selling 30Sep and a reverse funding trade.

True Wind Raises Partial Offer for Sun Corp Further, Leaving an Interesting Back End

On 10 June, Sun Corp subsidiary Cellebrite DI (CLBT US)‘s SPAC sponsor True Wind Capital launched a Tender Offer for 19% of SunCorp at a premium but discount to NAV.
The price was too low. CLBT shares rose. They lifted the TOB price by 8% to ¥4750. Still too low. It was trading there. Now they have lifted to ¥5500.
Now a 49% premium to undisturbed, 29.4% premium to all-time high prior to the first tender. Changes in terms means this could get done. More bullish than it looks.

Nikkei 225 Index Rebalance Preview (Sep 2024): Review Period Done; Fast Retailing Capping Confirmed

The review period for the Nikkei 225 (NKY INDEX) September rebalance ended yesterday. There could be three changes at the rebalance with sector balance in focus for the additions.
Fast Retailing (9983 JP)‘s capping in the index has been confirmed and its index weight will drop by around 0.9% resulting in big selling at the close on 30 September.
Passive trackers will need to buy between 3.5-35x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-42.5x ADV on the deletions.

Sun Corporation (6736 JP): Third’s Time a Charm for True Wind’s Final Offer

True Wind has increased its partial offer for Sun Corp (6736 JP) to JPY5,500 and materially lowered the minimum number of shares to be purchased from 3.3m to 1.1m.
True Wind’s previous two offers were a non-starter due to an unattractive price and an onerous minimum acceptance threshold. The final offer addresses both these issues.
The offer will succeed due to the low minimum acceptance threshold and the 25% price uplift vs. the 19% value increase in the Cellebrite stake (since the offer announcement).

Rio Tinto (RIO AU/LN): Thinking About The “Unification”

Just shy of three years ago, BHP (BHP AU) announced the unification of its dual-headed corporate structure to make BHP “simpler and more agile”.
Collapsing DLCs/share-classes was all the rage back then. The prior year, Unilever (UNA NA) collapsed its DLC; and Royal Dutch Shell unified its A and B lines in 2021.
Rio (RIO AU/LN) is one of only a handful of remaining DLCs. Renewed investor calls to unwind the DLC and the recent UK’s listing regime reform necessitate a rethink.

KRX’s September Major Rebalancing Events: Why We Should Focus on KRX BBIG

The KRX BBIG’s concentrated weight and top three replacements still attract significant flow trading interest despite a decline in AUM.
In the Battery Sector, Posco Future M will replace Ecopro BM, while in the Bio Sector, Alteogen will replace SK Biopharmaceuticals.
A significant single-day passive flow is expected, especially for SK Biopharm. Additionally, a day trading setup with Posco Future M and Ecopro BM will likely attract substantial interest.

Quiddity Leaderboard SET50 Dec 24: 3 Changes Likely; INTUCH-GULF Merger Should Be Monitored

The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
In this insight, we take a look at the potential ADDs/DELs for SET 50 during the index rebal event in December 2024.
At present, we see 3 ADDs and 3 DELs but since the reference period is yet to start, the rankings can fluctuate significantly before the base date.

End of Mandatory Lock-Up Periods for 41 Companies in Korea in August 2024

We discuss the end of the mandatory lock-up periods for 41 stocks in Korea in August 2024, among which 2 are in KOSPI and 39 are in KOSDAQ.
These 41 stocks on average could be subject to further selling pressures in August 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 August include APR, Fadu, and Kuk Il Paper.

Latest Update on Hanon Systems Stake Sale: Consider Long Short Setup on Hankook Tire & Hanon

Today’s news indicates Hankook Tire found contingent liabilities in Hanon Systems’ finances, meeting conditions to break the May agreement and putting the deal on indefinite hold.
Hankook Tire plans to adjust the new share price first, then the existing share price, while Hahn & Co, unable to delay its exit, will likely accept it.
With Hahn & Co likely to accept Hankook Tire’s price adjustment request, consider a long-short setup: Hankook Tire may benefit from positive momentum, while Hanon Systems faces negative dilution.

(Mostly) Asia M&A, July 2024: Canvest, Furukawa, Arvida, Advanced Info, Sermsuk, Thaicom

For the month of July 2024, 11 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$10bn.
The average premium for the new transactions announced (or first discussed) in July was ~31%. The average premium YTD is ~44%.
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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Jul 31

Daily Brief Event-Driven: India: Potential Free Float Changes & Passive Flows in August and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

India: Potential Free Float Changes & Passive Flows in August
CPMC (906 HK): Champion’s Offer Now Open. But All Eyes On ORG’s Tilt
Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off
CPMC Holdings (906 HK): Poker Face off as Changping Industrial Launches Offer at Unchanged Terms
Block Deal Sale Of 2.3% Stake in Woori Financial and Highlights of Its Corporate Value Up Program
Quiddity Leaderboard ES50 Sep 24: Billion Dollar Flows Now in the Money
KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today
Nasdaq (NDAQ): $2.7bn Offering’s Global Index Implications
Southern Cross Gold (SXG AU)/Mawson (MAW CN): Hybrid Dual-Listing
Solaria: The Next Big Takeover in Spanish Renewables?

India: Potential Free Float Changes & Passive Flows in August

Companies in India have disclosed their shareholding pattern as of end-June in July. There are companies with significant float changes from end-December and/or end-March.
The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
Depending on the date that the shareholding was published, there could be 12 stocks with passive inflows from global trackers while 5 could see passive outflows in August.

CPMC (906 HK): Champion’s Offer Now Open. But All Eyes On ORG’s Tilt

Back on the 6th December 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer of $6.87/share, in cash, from SASAC/NCSSF-backed Champion.
The Offer Document is now out. This is not a Composite Document. A “Response Document” is expected in two weeks, which will include the IFA opinion.
All the above is moot. ORG Technology Co., Ltd. A (002701 CH)‘s superior HK$7.21/share Offer is currently navigating the necessary regulatory approvals. With irrevocables, ORG has 46.44% in the bag.

Reservoir Hogs: WH Group (288 HK) Mulls US/Mexican Spin-Off

Earlier this month, WH Group (288 HK) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ,
These ops accounted for 54% of WHG’s FY23 revenue and 22.4% of the operating profit; compared to 56% and 44.9% respectively in FY22.
We’ve been here before. A Smithfield spin-off was touted in 4Q23 (in the media). WHG acquired Smithfield for US$4.7bn in 2013, ahead of its 2014 listing.

CPMC Holdings (906 HK): Poker Face off as Changping Industrial Launches Offer at Unchanged Terms

Changping Industrial’s offer for CPMC Holdings (906 HK) opens at an unchanged HK$6.87, 4.7% below ORG Technology Co., Ltd. A (002701 CH)’s competing HK$7.21 offer.
Changping Industrial thinks deal fatigue may tip the balance in its favour. However, minorities will call Changping’s bluff, as the offer at current terms has a low chance of success.
Despite the current posturing, Changping Industrial will likely need to bump above ORG’s offer marginally to succeed. Expect more twists and turns in this contested battle.

Block Deal Sale Of 2.3% Stake in Woori Financial and Highlights of Its Corporate Value Up Program

On 30 July, it was reported that IMM Private Equity (PE) sold a 2.3% stake (16.78 million shares) of Woori Financial Group (WFG), which was worth 264 billion won.
Block deal sale price was 15,737 won (0.4% higher than current price). Today’s block deal sale represents a second block deal sale of Woori Financial by IMM PE in 2024.
Under the mid-to-long term Value Up program, Woori Financial Group aims to achieve a sustainable ROE of 10% and total shareholder returns of 50%.

Quiddity Leaderboard ES50 Sep 24: Billion Dollar Flows Now in the Money

The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
In this insight, we take a look at Quiddity’s estimation of the latest ranks of potential ADDs and DELs for the upcoming index rebal event in September 2024.
We have been tracking these movements for several months and it seemed like index changes were unlikely to take place but our expectations have changed now.

KRX New Deal Index Rebalance Preview: Potential Changes as Review Period Ends Today

The review period for the September rebalance ends today, the changes will be announced in the first week of September and implemented at the close of trading on 12 September.
There is at least one change expected for each of the Secondary Battery, Bio, Internet, Game and BBIG indices.
The largest flows will be in Posco Future M, Ecopro BM, SK Biopharmaceuticals, Alteogen, Celltrion, SKC Co, Kakao Corp, Douzone Bizon, Krafton and Samsung Biologics.

Nasdaq (NDAQ): $2.7bn Offering’s Global Index Implications

The size of the offering is expected to trigger intra-quarter implementations for both main global indices to be announced on 30 July and become effective 1 August.
Free float increase is estimated to take place due to Thoma Bravo – Nasdaq’s major strategic shareholder – offering almost half of its stake equivalent to ~$2.7bn.
Total forecasted passive fund demand is ~5.3m shares, ~$368m and ~1.8 ADV. It is expected to materialize at close of 1 August 2024.

Southern Cross Gold (SXG AU)/Mawson (MAW CN): Hybrid Dual-Listing

On the 11th June, Southern Cross Gold (SXG AU) announced a proposed merger with Mawson Gold (MAW CN). It’s a novel approach to dual-list both companies in Australia and Canada..
MAW intends to divest all its non-SXG assets, and reduce its shares out to mirror shares held in SXG. Then issue new shares to SXG shareholders on a one-for-one basis.
Terms are now firmed for what the media calls a “reverse spin-out”, with a Scheme Meeting expected in October, and potential implementation late-October/early-November.

Solaria: The Next Big Takeover in Spanish Renewables?

By Jesus Rodriguez Aguilar

Solaria Energia y Medio Ambiente (SLR SM) faces stock market volatility amid takeover rumors. The controlling family reportedly won’t sell below €20/share, a 79% premium to current prices.
After the takeover of other independent power developers, Solaria may now hold some scarcity value. Premia in comparable transactions range from 27% to 54%. Solaria trades at 11.2x fwd EBITDA.
A 50% premium (€16.8/share, €3.1bn EV) takeover wouldn’t be irrational at 14.7x EBITDA. I believe the shares are undervalued and recommend buying SLR SM at current prices, anticipating a possible deal.

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Jul 30

Daily Brief Event-Driven: Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity
Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures
Stanley Electric (6923) – Salutary Q1 and BIG Buyback
Why Is Proportionate Shareholder Protection Key to Korea’s Value-Up, and What Is Its Status?
Charoen Rearranges ThaiBev and TCC’s Deckchairs
Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder
Ola Electric IPO: Offering Details & Index Inclusion
Big (Relatively Speaking) NEG (5214 JP) Buyback – Walking The Walk, Faster
STAR100 Index Rebalance Preview: Potential Adds Diverge Further from Potential Deletes
A8 New Media (800 HK): Wide Spread Ahead of the 23 August Vote

Fancl (4921) – Extendy-Extendy-Bumpity-Bumpity

The Kirin Holdings (2503 JP) Tender Offer to buy out minorities in Fancl Corp (4921 JP) closes today. Or at least the current one does.
The original deal announced was light, and the stock has traded above terms since the announcement, with one fund buying up to 7.94%.
I expect Kirin to extend and bump next week, or bump/extend now, depending on their visibility on Fancl Q1.

Examining a Proactive Flow Trading Setup Targeting Korean Value-Up Disclosures

Value-Up plan announcements had a significant immediate price impact, especially for Woori Financial and Shinhan Financial, amplified by recent dividend tax reductions.
We should target companies likely to announce value-up disclosures soon, focusing on those with prior notices. Notably, KB Financial and DB HiTek have issued prior notices.
Both companies hold many treasury shares. KB Financial is a dividend stock, with value-up disclosures likely during their Q3 and Q4 earnings announcements.

Stanley Electric (6923) – Salutary Q1 and BIG Buyback

Today after the close Stanley Electric (6923 JP) announced a salutary Q1 result which was “ahead of in-line” in most metrics towards unchanged H1 and FY guidance.
The company also announced a BIG on-market buyback at 8.1% of shares out, to be bought back with a delayed start over the 7.5mos starting 13 August.
At last price, the buyback is ~10mm shares. The details are interesting and are worth a look.

Why Is Proportionate Shareholder Protection Key to Korea’s Value-Up, and What Is Its Status?

A new tax support framework for Korea’s value-up policy was introduced, but local markets argue that proportionate protection for minority shareholders is crucial for a significant market value increase.
Korean political leaders are united in supporting this amendment to the Commercial Act, with recent events increasing the likelihood of bipartisan support for this crucial change.
Given the administration’s commitment to the value-up and recent negative sentiment towards recent restructurings at Doosan and SK, there’s growing potential for minority shareholder protection to take root in Korea.

Charoen Rearranges ThaiBev and TCC’s Deckchairs

Back on the 18th, the Sirivadhanabhakdi family-backed Thai Beverage (THBEV SP) announced it would swap its 28.78% stake in Frasers Property Ltd (FPL SP) with THBEV-affiliate TCC Assets.
Under the agreement, TCC will transfer a 41.3% stake in food and beverage play Fraser And Neave (FNN SP) to THBEV, lifting THBEV’s holding to 69.61% from 28.31% currently.
The share swap triggers no Offers for either F&N or FPL. THBEV says it has no plans to privatise F&N … at the moment.

Heiwa Real Estate (8803 JP): Murakami Becomes a Substantial Shareholder

Murakami’s entity, City Index Eleventh, and daughter reported a 5.05% position in Heiwa Real Estate (8803 JP). The shares were purchased from 24 May to 22 July.
Murakami’s average buy-in price is JPY3,907.38, a 6.7% discount to the last close price. Recently, Simplex (the previous largest shareholder) sold its entire stake to Taisei Co Ltd (4649 JP).
Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents indicate the latter.

Ola Electric IPO: Offering Details & Index Inclusion

The Ola Electric (1700674D IN) IPO will see the company and existing shareholders sell 808.6m shares at a price range of INR72-76/share, valuing the company between US$3.79bn-US$4bn.
Ola Electric (1700674D IN) will have a float of around 10% at the time of listing and that will increase to around 20% after the lock-up on anchor investors ends.
Ola Electric (1700674D IN) could be added to global indices in February and March 2025, but inclusion in local indices with meaningful tracking assets will take longer.

Big (Relatively Speaking) NEG (5214 JP) Buyback – Walking The Walk, Faster

Today, Nippon Electric Glass (5214 JP) announced an on-market buyback of up to 7.0mm shares (8.08%) spending up to ¥20bn from tomorrow through end-January 2025.
An impressive headline, but fewer shares. Importantly, this follows a ¥20bn buyback from last November. They are moving through their MTMP more quickly than expected.
This new buyback is worth about 25% of the inbound cross-holdings. And some of those holders plan to sell. This may be designed to let them sell in the market.

STAR100 Index Rebalance Preview: Potential Adds Diverge Further from Potential Deletes

The review period for the September rebalance ends 31 July. We expect the changes to be announced 30 August with the implementation taking place after the close on 13 September.
We forecast 6 changes for the index, including migrations between the STAR100 Index and the STAR50 INDEX. There is uncertainty for a few adds given profitability (or lack of it).
The outright potential adds have outperformed the outright potential deletes since the start of the calendar year with 12% outperformance in just the last 3 weeks.

A8 New Media (800 HK): Wide Spread Ahead of the 23 August Vote

A8 New Media (800 HK)’s IFA opines that Mr Liu Xiaosong (Chairman and CEO)’s HK$0.36 privatisation offer to be fair and reasonable. The vote is on 23 August.
Key conditions include approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection).
No shareholder holding a blocking stake, low AGM minority participation rate and the massive 162.8% takeover premium suggest a done deal. At the last close, the gross/annualised spread is 5.9%/36.0%.

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Jul 29

Daily Brief Event-Driven: Merger Arb Mondays (29 Jul) – China TCM and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Merger Arb Mondays (29 Jul) – China TCM, Canvest, CPMC, GA Pack, Tohokushinsha, Furukawa, Tatsuta
ENEOS Bumps Tatsuta Elec (5809) Bid – 8.3% Bump Matches 8.7% Rise in BVPS Since Announcement
STAR50 Index Rebalance Preview: Positioning Indicates Further Gains for a Long/Short Trade
Ansarada (AND AU)’s Scheme Is Back On Track
NIFTY NEXT50 Index Rebalance Preview: 7 Changes as Non-F&O Stocks Replace F&O Members
A8 Media (800 HK): 23rd August Shareholder Vote
Mainland Connect NORTHBOUND Flows (To 19 July 2024): A Big Broad Sell in Third Plenum Week
S&P 500 / S&P 1500: Exclusion by Earnings

Merger Arb Mondays (29 Jul) – China TCM, Canvest, CPMC, GA Pack, Tohokushinsha, Furukawa, Tatsuta

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: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), Asia Cement China (743 HK).
Lowest spreads: Fancl Corp (4921 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP), L’Occitane (973 HK), Qantm Intellectual Property (QIP AU), Alps Logistics (9055 JP).

ENEOS Bumps Tatsuta Elec (5809) Bid – 8.3% Bump Matches 8.7% Rise in BVPS Since Announcement

Several weeks ago, ENEOS Holdings (5020 JP) launched its long-delayed Tender Offer for Tatsuta Electric Wire & Cable (5809 JP) with no bump despite the time value of money.
It said the price reflected Tatsuta’s value sufficiently. A week ago on the 19th, ENEOS extended the Tender Offer, likely because they didn’t have the shares. Price was still “sufficient.”
I suggested it might not be; I didn’t expect a big bump, but caveated earnings. Friday produced great Q1 earnings, and a bump from ¥720/share to ¥780/share.

STAR50 Index Rebalance Preview: Positioning Indicates Further Gains for a Long/Short Trade

There are only 3 trading days left in the review period for the September rebalance of the SSE STAR50 (STAR50 INDEX).
We see two potential changes that could result in a one-way turnover of 3.6% and in a one-way trade of CNY 4.7bn (US$644m).
Cumulative excess volume has started to pick up in the stocks over the last few weeks and that could be an indicator of further gains for a long/short trade.

Ansarada (AND AU)’s Scheme Is Back On Track

Datasite’s A$2.50/share, in cash, lifetime-high Offer for virtual room provider Ansarada Group Ltd (AND AU), announced on the 13th Feb, appeared a total slam dunk.
And for the most part it was, with the Explanatory Doc lodged on the 12th April, and Scheme Meeting initially scheduled for the 14th June. Then the ACCC waded in.
The ACCC has now signed off. FIRB will follow shortly. The revised Scheme Meeting will be held on the 19 August, with expected implementation on the 6 September.

NIFTY NEXT50 Index Rebalance Preview: 7 Changes as Non-F&O Stocks Replace F&O Members

With 3 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
Estimated one-way turnover is 18% resulting in a one-way trade of INR 55bn (US$660m). 9 stocks will have over 1x ADV to trade from passive trackers.
All the deletes are F&O members while most adds are not. NSE Indices may have to revisit the index membership criteria especially given the launch of futures on the index.

A8 Media (800 HK): 23rd August Shareholder Vote

Back on the 12th June, PRC property rental play A8 New Media (800 HK) announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
The Cancellation price was $0.36/share, a punchy 162.77% to last close. The price was declared final.
The Scheme Doc is now out, with an independent shareholder vote on the 23 August and payment on or around the 2nd October. This is a done deal.

Mainland Connect NORTHBOUND Flows (To 19 July 2024): A Big Broad Sell in Third Plenum Week

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 SELL RMB 11.4bn of A-shares. NORTHBOUND sold everything. Seemed somewhat cap-weighted. Not a pretty flow picture.
A-Shares sharply underperformed HK indices, but AH spreads didn’t recover the prior week’s disaster. That said, there WAS dip-buying this week on the worst hit, which is unusual recently.

S&P 500 / S&P 1500: Exclusion by Earnings

The ‘Financial Viability’ (GAAP earnings) criterion is the main obstacle that keeps companies out of the S&P 500 and overall S&P 1500.
Uber Technologies (UBER US) and Crowdstrike Holdings (CRWD US) are past examples of companies that got added to S&P 500 after passing the GAAP Earnings criterion.
Marvell Technology (MRVL US) and Snowflake (SNOW US) are currently ineligible for S&P 500 inclusion due to failing the GAAP Earnings eligibility requirement.

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Jul 28

Daily Brief Event-Driven: Tohokushinsha Film (2329 JP): Potential Scenarios as 3D Lobs a Privatisation Proposal and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tohokushinsha Film (2329 JP): Potential Scenarios as 3D Lobs a Privatisation Proposal
Mandala Multifinance (MFIN IJ): Offer Now Open
HK Connect SOUTHBOUND Flows (To 26 Jul 2024); ETFs Get Bought, Banks Have Gone Missing
(Mostly) Asia-Pac M&A: Furukawa Battery, Arvida, Warehouse Group, Pacific Smiles, Canvest, Jeisys
Last Week in Event SPACE: Sun Corp, Amorepacific, Canon Marketing, Jeisys Medical
Quiddity Leaderboard NIFTY Sep 24: Final Expectations; Trades Perform Positively; New Ideas
Weekly Deals Digest (28 Jul) – Fancl, Furukawa Battery, Sun Corp, TFC, Canvest, CPMC, GAPack, Arvida
A/H Premium Tracker (To 26 Jul 2024): SB Bought, NB Sold, HK/China Markets Weak, Spreads Volatile

Tohokushinsha Film (2329 JP): Potential Scenarios as 3D Lobs a Privatisation Proposal

On 24 July, 3D Investment Partners proposed to privatise Tohokushinsha Film (2329 JP) through a tender offer at JPY600-650 per share. A special committee will evaluate the proposal.
3D’s privatisation plan, in its current terms, is a non-starter as the price is low, and its activism campaign has so far been met with the Board’s scepticism.
The possible scenarios are that a white knight emerges to buy 3D’s stake/launch a counteroffer, 3D bumps the offer price, or the Board introduces a more ambitious MTM plan.

Mandala Multifinance (MFIN IJ): Offer Now Open

Waaay back in June 2023, MUFG (8306 JP) and 92.7%-held Adira Dinamika (ADMF IJ) entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
MFIN’s shareholders overwhelmingly approved the change of control at the 13th Feb EGM. OJK signing off was the next hurdle.
The Tender Offer is now open, at the (expected) price of IDR 3,297/share. The close of the Offer is the 21st August, with payment on the 28th August.

HK Connect SOUTHBOUND Flows (To 26 Jul 2024); ETFs Get Bought, Banks Have Gone Missing

SOUTHBOUND was again a net buyer, for HK$7.8bn this week (now 25wks in a row of net buying), on smallish two-way volumes.
I’ve thought national team was buying banks for months. This week, 1 bank showed up in the top 20 net buys after only 1 in the top ten last week.
There were three ETFs in the top six SOUTHBOUND buys this past week. That was unusual. Some high div SOEs got sold.

(Mostly) Asia-Pac M&A: Furukawa Battery, Arvida, Warehouse Group, Pacific Smiles, Canvest, Jeisys

I tally 47 – 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 discussed this week on Smartkarma: Furukawa Battery (6937 JP)‘s TOB, and the Arvida (ARV NZ). Warehouse Group Limited (WHS NZ)‘s co-founder is kicking tyres.
Key updates took place on Pacific Smiles (PSQ AU), Canvest Environmental Protection Group (1381 HK), CPMC Holdings (906 HK), Jeisys Medical (287410 KS), and Hollysys Automation Technologies (HOLI US).

Last Week in Event SPACE: Sun Corp, Amorepacific, Canon Marketing, Jeisys Medical

Expect True Wind to walk away rather than raising their price further for Sun Corp (6736 JP). They’d need to pay ¥5,500-5,800 to dislodge a large chunk. And they won’t.
Amorepacific Group (002790 KS) plumbs new discount lows as Amorepacific Corp (090430 KS) gets a boost from Amazon Prime Day.
Canon Marketing Japan (8060 JP) is still significantly under-levered. That means the stock price will generically not be that volatile. That generally means one should buy dips and sell pops.

Quiddity Leaderboard NIFTY Sep 24: Final Expectations; Trades Perform Positively; New Ideas

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.
With three more trading days left in the reference period, we are presenting our final expectations for ADDs and DELs for the September 2024 index rebal event.
We see five changes for the NIFTY 100 index which will also affect the NIFTY Next 50 index. There could also be multiple changes for the NIFTY 50 index.

Weekly Deals Digest (28 Jul) – Fancl, Furukawa Battery, Sun Corp, TFC, Canvest, CPMC, GAPack, Arvida

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: Sanil Electric (062040 KS) and Hyundai Motor India (1342Z IN) IPOs.
Event-Driven developments: Fancl Corp (4921 JP), Furukawa Battery (6937 JP), Sun Corp (6736 JP), Canvest Environmental Protection Group (1381 HK), CPMC Holdings (906 HK), Greatview Aseptic Packaging (468 HK).

A/H Premium Tracker (To 26 Jul 2024): SB Bought, NB Sold, HK/China Markets Weak, Spreads Volatile

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 inflow strong but SOEs not leading. Hang Seng down again, A-shares down more. Bank buying minimal.
AH Premia fell 30bp on average. 1% for Liquid names. HK vs A-shares saw an even wider spread (the opposite of last week). SUPER-tight AH premia saw best H outperformance.

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Jul 27

Daily Brief Event-Driven: StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
Zhihu (2390 HK/ZH US)’s Cheeky Buyback
Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
Tatsuta Electric (5809 JP): Eneos Returns with a Token Bump to JPY780
EQD | WHAT IF The NIFTY Starts to Pullback This Week?
STOXX 600: First September Forecasts for Europe and Eurozone

StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low

A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
Preceding my comments on Amorepacific are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Zhihu (2390 HK/ZH US)’s Cheeky Buyback

Back on the 19th July, online Q&A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS).
Assuming the buyback is fully taken up, chairman Yuan Zhou’s stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares).
The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated.

Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger

On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone.
We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire.

Tatsuta Electric (5809 JP): Eneos Returns with a Token Bump to JPY780

ENEOS Holdings (5020 JP) has increased the Tatsuta Electric Wire & Cable (5809 JP) tender offer price by 8.3% to JPY780 and extended the offer period to 19 August.
Eneos tried to get the required acceptances by refusing to bump and subsequently extending the offer period. The tactics failed as minorities required a bump due to the market re-rating.
While the revised offer remains light, the token bump and deal fatigue should suffice to nudge the marginal vote to accept. At the last close, the gross/annualised spread was 5.0%/85.8%.

EQD | WHAT IF The NIFTY Starts to Pullback This Week?

By Nico Rosti

The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.

STOXX 600: First September Forecasts for Europe and Eurozone

Koninklijke Vopak Nv (VPK NA) & Shaftesbury PLC (SHB LN) are currently passing the entry rank of SXXP. Forecasted passive fund demands are $22m-$34m and 3-5 ADV.
Indivior PLC (INDV LN) is currently the only one below the exit rank of SXXP. Forecasted passive fund supply is $11.5m and 1.4 ADV.
‘Most liquid stock’ criterion can cause a ‘switch‘ of share lines in the index as it happened with Lindt (LISP SW) and Lindt (LISN SW) in September 2022.

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Jul 26

Daily Brief Event-Driven: Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today
StubWorld: Legend (LEGN US) Offer Or Not, Genscript (1548 HK) Is Attractive
Arvida (ARV NZ): Stonepeak’s Offer
Canvest (1381 HK): Trading Wide To Grandblue’s Offer
Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$500m Trade
Arvida Group (ARV NZ): Stonepeak’s Binding Proposal at NZ$1.70
Quiddity Leaderboard BSE/SENSEX Dec 24: Could Zomato’s Share Price Rally Become a Problem?
IDX30/LQ45/IDX80 Index Rebalance: Constituent, Float & Capping Changes
Jeisys Medical (287410 KS): Archimed Reloads Delisting Offer
STOXX 50: First September Forecasts for Europe and Eurozone

Overall Assessment of the Value-Up Policy-Related Aspects of the Tax Reform Plan Released Today

The highest dividend tax rate drops from 49.5% to 25%, leading the local capital market to view the reform as more shareholder-focused than company-focused.
The top inheritance tax rate drops from the 60% range to 40%, a meaningful reduction for conglomerates like Hyundai and Hanwha, though below initial expectations.
Tax incentives in the reform are less aggressive than expected, with modest corporate and inheritance tax cuts. However, this compromise increases the likelihood of its passage, boosting short-term market expectations.

StubWorld: Legend (LEGN US) Offer Or Not, Genscript (1548 HK) Is Attractive

Biotech play Genscript Biotech (1548 HK) and ~48%-held Legend Biotech (LEGN US) popped recently on a reported tilt for Legend. Neither Genscript nor Legend made exchange announcements supporting the claim.
Preceding my comments on Genscript/Legend are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Arvida (ARV NZ): Stonepeak’s Offer

Arvida (ARV NZ), a leading retirement living and aged care service provider in New Zealand, announced a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed.
The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ’s Overseas Investment Office also required.
A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete.

Canvest (1381 HK): Trading Wide To Grandblue’s Offer

On the 22 July, waste-to-energy play Canvest Environmental Protection (1381 HK) announced a pre-conditional Offer from Grandblue Environment (600323 CH) at $4.90/share (best & final), by way of a Scheme.
Terms mirror that announced on the 7th July. Best Approach (54.75% of shares out) is seeking to roll over 7.23%. Pre-cons include the usual regulators: MoC, NDRC, SAMR and SAFE.
Any new dividends paid will be netted. 4.478% blocking stake. Pre-IPO investor AEP Green Power, has 5.67%. Best Approach is required to abstain from voting on the Scheme and rollover.

Solactive Global Uranium & Nuclear Components Index Rebalance: Two Adds & US$500m Trade

Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index with implementation at the close on 31 July.
Oklo Inc (OKLO US) and Western Uranium & Vanadium Corp (WUC CN) will be added to the index. Estimated one-way turnover is 7.9% resulting in a round-trip trade of US$486m.
There are only 4 trading days to implementation of the changes and we’d watch out for big moves on stocks that have more than 2x ADV to trade.

Arvida Group (ARV NZ): Stonepeak’s Binding Proposal at NZ$1.70

On 22 July, Arvida (ARV NZ) entered a scheme implementation agreement with Stonepeak at NZ$1.70, a 65.0% premium to the undisturbed price.
The transaction will require OIO approval, statutory supervisors’ consent and shareholder approval. The Metlifecare Ltd (MET NZ) precedent suggests that the OIO and statutory supervisor should be forthcoming.
The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the gross/annualised spread was 4.9%/14.2%.

Quiddity Leaderboard BSE/SENSEX Dec 24: Could Zomato’s Share Price Rally Become a Problem?

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.
At present, 3 changes for the BSE 100 index and 7 changes for the BSE 200 index.
The BSE 100 handling rules for names without futures and options (F&O) sometimes punish companies that have enjoyed good share price rallies and Zomato could get into such a trap.

IDX30/LQ45/IDX80 Index Rebalance: Constituent, Float & Capping Changes

There is 1 constituent change for the LQ45 Index and 2 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 31 July.
The largest passive inflows are expected in Amman Mineral Internasional (AMMN), Bank Rakyat Indonesia (BBRI), Bank Central Asia (BBCA), Bank Mandiri Persero (BMRI) and Jasa Marga (Persero) (JSMR).
The adds have moved higher over the recent past and are near their highs while the deletes have dropped over the last few years and are trading near their lows.

Jeisys Medical (287410 KS): Archimed Reloads Delisting Offer

Last month, aesthetic laser maker Jeisys Medical (287410 KS) announced French PE outfit Archimed SAS was seeking to delist the company.
Via a Tender Offer, Archimed sought to acquire 72% of Jeisys at ₩13,000. Archimed also inked agreements with founders/directors for 26.44%, taking its possible % holding to 98.44%.
The Tender Offer closed on the 22nd July with Archimed holding 81.39% (including the aforementioned agreements). Archimed has now reloaded, on the same terms. There is no minimum acceptance condition.

STOXX 50: First September Forecasts for Europe and Eurozone

Nokia OYJ (NOKIA FH) is currently the lowest ranked security in SX5E but still above the exit threshold. Its potential deletion can cause the addition of DSM-Firmenich (DSFIR NA).
Deutsche Post (DHL GR) & Reckitt Benckiser (RKT LN) are below the SX5P exit threshold. Their deletion can cause the addition of Intesa Sanpaolo (ISP IM) & Banco Bilbao (BBVA SM) .
Cap Gemini SA (CAP FP) and Compass (CPG LN) are examples of companies with significant market caps which are excluded due to supersector coverage.

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Jul 25

Daily Brief Event-Driven: Sep24 S&P500 Index Rebal – Two Changes Expected; $6bn One-Way Flow and Two Spinoffs? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sep24 S&P500 Index Rebal – Two Changes Expected; $6bn One-Way Flow and Two Spinoffs?
Tohokushinsha (2329 JP) – 3D Investment Partners Proposes Take-Private
FSS Orders Doosan Group to Resubmit the Merger Plan – “Merger Plan Is Not Illegal, But Is It Fair?”
CPMC Holdings (906 HK): Decisions, Decisions as Changping Industrial’s Offer Set to Open
Clarifications Regarding the FSS’s Unexpected Revision Request for the Doosan Mergers
CPMC Holdings (906.HK) Privatization Update – The Story Behind the Delay of Offer Document Despatch
Archimed Group Plans to Conduct a Second Tender Offer for Jeisys Medical
Shinsung Tongsang: Tender Offer Fails and How to Take Away Customers From Uniqlo
KOSPI Size Indices: Outperformance Slows on Momentum Stalls
Hanwha Energy Acquires An Additional 5.2% of Hanwha Corp Through a Tender Offer

Sep24 S&P500 Index Rebal – Two Changes Expected; $6bn One-Way Flow and Two Spinoffs?

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.
We expect two regular changes during September. More interestingly, a couple of SP500 members are working on spin-offs which could trigger some high-impact deletions over the next few months.

Tohokushinsha (2329 JP) – 3D Investment Partners Proposes Take-Private

3D Investment Partners, known to be activist-ish-y, purchased 18% of Tohokushinsha Film (2329 JP) in the 12 months to March 2024. They started a public activism campaign in February.
The company has started down a better governance track, but now 3D has made a takeover proposal to Tohokushinsha, which will consider it under Special Committee.
There are a couple of possible outcomes here which are interesting to consider. There are no other spoilers possible except those friendly to founders and management.

FSS Orders Doosan Group to Resubmit the Merger Plan – “Merger Plan Is Not Illegal, But Is It Fair?”

On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan.
It is rare for FSS to reject companies’ merger reports but there has been an exception this time since this deal is egregiously negative to many minority investors.
Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn.

CPMC Holdings (906 HK): Decisions, Decisions as Changping Industrial’s Offer Set to Open

On 15 July, the precondition for Changping Industrial’s HK$6.87 offer for CPMC Holdings (906 HK) was satisfied, but the despatch of the offer document was delayed until or before 30 July.
Since ORG Technology Co., Ltd. A (002701 CH) announced its HK$7.21 offer on 7 June, the shares have traded above Changping Industrial’s offer on all but bar one trading day
Changping Industrial has three options: launch at unchanged terms (low probability), match ORG’s offer (medium probability) or bump marginally higher than ORG’s offer (high probability).

Clarifications Regarding the FSS’s Unexpected Revision Request for the Doosan Mergers

The FSS requested Doosan Robotics to revise the prospectuses for both the Share Swap with Doosan Bobcat and Merger with Doosan Enerbility.
Although the FSS’s wording seems aggressive, it does not request the cancellation. Authorities are displeased but lack political momentum to derail Doosan’s restructuring.
The FSS asks Doosan to clarify merger synergies, warn of Robotics’ overvalued stock price and potential decline, and highlight the collaborative robot market’s growth risks.

CPMC Holdings (906.HK) Privatization Update – The Story Behind the Delay of Offer Document Despatch

By Xinyao (Criss) Wang

Since all the Pre-Conditions have been fulfilled, Baosteel has taken a solid step towards the successful acquisition of CPMC. Comparatively, ORG could encounter resistance and uncertainties in the upcoming process.
The acquisition of CPMC by ORG cannot be completed by ORG and Zhang Wei alone.Without the “nod” of COFCO/SASAC, what ORG’s going to do is equivalent to a “hostile takeover”.
ORG’s acquisition of control of CPMC could go against the national strategy of “building strong alliances between SOEs”. In fact, what ORG wants is for Baosteel to raise its Offer.

Archimed Group Plans to Conduct a Second Tender Offer for Jeisys Medical

In the first tender offer, 42.5 million shares of Jeisys Medical were purchased by Archimed Group. Post tender offer, Archimed now owns an 82.1% stake in Jeisys Medical.
On 24 July, it was announced that Archimed will be conducting a second tender offer for Jeisys Medical. The second tender offer will be made for 17.2% of common shares.
It could be difficult for Archimed to gain more than 95% stake at the end of the second tender offer. Rather, a third tender offer is likely in 2025.

Shinsung Tongsang: Tender Offer Fails and How to Take Away Customers From Uniqlo

Shinsung Tongsang shares rose 10% to 2,510 won today after it was announced that the tender offer failed. Basically, the tender offer failed because the tender offer price was too low.
Only 26% of the 31.664 million shares responded to the tender offer. Accordingly, the shareholding ratio of Chairman Yeom and his related parties increased from 77.98% to 83.88%.
Top Ten has benefited from executing its strategy well (such as employing Lee Na-Young in advertisements to grab customers from Uniqlo). Overall, we remain positive on Shinsung Tongsang.

KOSPI Size Indices: Outperformance Slows on Momentum Stalls

The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
We see 8 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 11 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
There are a few stocks that are expected to have passive flows from global and local index trackers over the next few months and that will add to the impact.

Hanwha Energy Acquires An Additional 5.2% of Hanwha Corp Through a Tender Offer

After the market close on 24 July, Hanwha Corporation (000880 KS) announced that Hanwha Energy secured an additional 5.2% stake in Hanwha Corp through a tender offer.
A total of 3.9 million shares have been applied for the tender offer as of 24 July (65% of targeted amount).
We believe that the Hanwha Group is likely to grab more shares in Hanwha Corp through an additional tender offer sometime in the next 6-12 months.

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Jul 24

Daily Brief Event-Driven: Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private
Furukawa Battery (6937 JP): Long-Dated Pre-Conditional Offer at JPY1,400
Sun Corporation (6736 JP): The Uphill Struggle for True Wind’s Revised Partial Offer
Quiddity Leaderboard ASX Sep 24 Rebal: The Strong Returns of ASX 300 LONG-SHORT Trade Could Continue
EQD | The HSI Is Ripe For A Rally In August (IF July’s Close Is Negative)
FXI Rebalance Preview: One High Probability Change; One More Possible
Midea Group (000333 CH): CSRC Approval ✓; IPO Size Will Depend on H-Share Discount

Furukawa Battery (6937) – Ugly Process in Virtual Take-Under Take-Private

Today after the close, Advantage Partners announced the intention to launch a TOB to take over Furukawa Battery (6937 JP) at ¥1,400 – a 26% premium to last.
This will require substantial time to obtain regulatory and foreign investment clearances so it is anticipated the Tender Offer will be launched at end-March 2025. I expect that is conservative.
The price paid to minorities is a premium. But the price paid by the buyer is actually a takeunder. And it gets worse from there.

Furukawa Battery (6937 JP): Long-Dated Pre-Conditional Offer at JPY1,400

Furukawa Battery (6937 JP) recommended a pre-conditional tender offer from Advantage Partners, Tokyo Century Corp (8439 JP) and Furukawa Electric (5801 JP) consortium at JPY1,400, 22.6% premium to the undisturbed price.
The precondition is approval under the competition laws of Japan and Thailand. The offer is long-dated and anticipated to commence in March 2025.
While not a knockout bid, the required minority acceptance rate is not onerous. A long-dated offer presents a free option on a bump due to earnings upside or a counteroffer.

Sun Corporation (6736 JP): The Uphill Struggle for True Wind’s Revised Partial Offer

True Wind has increased its partial offer for Sun Corp (6736 JP) by 8.0% to JPY4,750 and lowered the minimum number of shares to be purchased from 3.8 to 3.3m.
True Wind’s offer has inadvertently spotlighted the valuation disparity vs the Cellebrite DI (CLBT US) stake, resulting in the shares trading through terms.
True Wind’s revised offer will struggle to succeed as the 8% price uplift is materially lower than the 19% value increase in the Cellebrite stake (since the offer announcement).

Quiddity Leaderboard ASX Sep 24 Rebal: The Strong Returns of ASX 300 LONG-SHORT Trade Could Continue

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the September 2024 index rebal event.
We see one ASX 100 change and two ASX 200 changes but there are a couple of names lurking just outside the border which have to be monitored carefully.
For ASX 300, we see 13 ADDs and 6 DELs. Many of these expected ADDs and DELs could have more than 10 days of volume to trade.

EQD | The HSI Is Ripe For A Rally In August (IF July’s Close Is Negative)

By Nico Rosti

The Hang Seng Index has been falling in June and July, but our MONTHLY seasonal pattern model indicates the index has a very good chance to close August up.
The condition we need, to forecast that August will be closing up, is to have July closing down, i.e. <17718.61.
The index is WEEKLY OVERSOLD, so the timing to buy will be critical, because you want to get in early, but not too early (and July must close down).

FXI Rebalance Preview: One High Probability Change; One More Possible

A month out from cutoff for the September rebalance, we see one potential change for the iShares China Large-Cap (FXI) (FXI US).
China Tower (788 HK) is a potential inclusion while China International Capital Corporation (3908 HK) should be deleted from the ETF.
Shorts have been dropping in China Tower (788 HK) and are near their lows while increasing in China International Capital Corporation (3908 HK).

Midea Group (000333 CH): CSRC Approval ✓; IPO Size Will Depend on H-Share Discount

The CSRC has approved Midea Group Co Ltd A (000333 CH)‘s application to issue H-shares to be listed on the HKEX (388 HK).
Under the approval, Midea Group Co Ltd A (000333 CH) can issue up to 650.85m shares. Depending on the H-share discount, that could raise up to HK$43.6bn (US$5.6bn).
The IPO is likely to be smaller and will depend on market conditions and the discount demanded on the H-shares. That in turn will determine index inclusion for the H-shares.

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Jul 23

Daily Brief Event-Driven: KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations
Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump
Kakao’s Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies
True Wind Raises Partial TOB Price for Sun Corp (6736 JP) By 8%. Not Enough.
Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90
Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations
The Warehouse Group (WHS NZ): Tindall (Potentially) Reloads
NIFTY50 Index Rebalance Preview: Big Flow, Big Impact, Big Positioning
Block Deal Sale of Kumho Tire: More Shares Likely to Be Sold by Creditors
China A50 ETFs Rebalance Preview: Two Changes in September

KRX’s Plan to Integrate KOSPI & KOSDAQ into a Tiered System: Trading Considerations

The major framework of this realignment is likely decided, integrating KOSPI and KOSDAQ into a tiered system based on liquidity, market cap, and financial status, with periodic replacements.
The KOSPI 200’s continued existence is uncertain under the new realignment plan, which may shift its role to the value-up index, resembling Japan’s market restructuring model.
The first-tier market’s entry requirements will likely reflect value-up index criteria, suggesting greater speculative money movement toward the value-up index starting in September.

Fancl (4921 JP): Evaluating the Potential of Kirin (2503 JP) Offer Bump

Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer.
The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump.

Kakao’s Kim Beom-Su Arrested: Analyzing Its Impact on Related Companies

Kakao’s Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company’s legal troubles.
Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.
Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.

True Wind Raises Partial TOB Price for Sun Corp (6736 JP) By 8%. Not Enough.

Today, the final day of the Tender Offer that True Wind Capital launched on 10 June 2024 to buy 19% of Sun Corp (6736 JP), TWC raised its price to ¥4,750/share./
They also lowered their minimum from 3.7934mm shares (17.0%) to 3.3472mm shares (15.0%).
As Cellebrite DI (CLBT US) had traded higher, SunCorp had too, and even though shares fell today, they are at ¥4,785/share.

Canvest Environmental (1381 HK): Grandblue’s Pre-Condition Privatisation at HK$4.90

Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.

Robotics+Bobcat Merger: Merger Ratio Revision Possibility & Arb Spread Recalculations

During Kim Byung-hwan’s hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan’s ability to maintain the original merger ratio.
Calculating Bobcat’s net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.

The Warehouse Group (WHS NZ): Tindall (Potentially) Reloads

General merchandise retailer Warehouse Group Limited (WHS NZ) (TWG) has announced it has received an approach from Stephen Tindall and PE outfit, Adamantem Capital Partners
Founder and major shareholder Tindall holds a shade over 50%. He launched a $1.6bn privatisation attempt in 2006, but Foodstuffs and Woolworths Ltd (WOW AU) effectively blocked the Offer.
The approach arrives after TWG’s shares trade around multi-year lows.

NIFTY50 Index Rebalance Preview: Big Flow, Big Impact, Big Positioning

Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are shoo-ins to replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
Passive NIFTY Index trackers will need to trade at least 3.3x ADV and 7.7x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
Cumulative excess volume has increased in all stocks but there are some stocks where there will still be more positioning over the next few weeks.

Block Deal Sale of Kumho Tire: More Shares Likely to Be Sold by Creditors

Woori Bank completed a block deal sale of 11 million shares of Kumho Tire Co (073240 KS) (3.83% of outstanding shares) on 18 July.
After the recent sales by Woori Bank and the Export-Import Bank of Korea, the creditors’ stakes in Kumho Tire has been reduced to 19.17%.
Despite Kumho Tire’s recent improvement in financial performance, we are more concerned about the additional stake sale by the financial institutions that still own 19.2% stake in the company.

China A50 ETFs Rebalance Preview: Two Changes in September