Event-Driven

The changes to the Nikkei 225 Average for the March 2024 Review were announced today after the close. A little earlier than I expected.
Socionext, Disco, Zozo IN; Takara Hldgs, Sumi Osaka Cement, Pacific Metals OUT. Nitori PAF increase. US$4bn+ to trade one way on 29Mar close. One interesting surprise.
Overall more impactful than it looks. And it changes the front-end arithmetic on Fast Retailing (9983 JP). There may be fun on the DELETEs.

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

JSR Corporation (4185 JP): Something Is Brewing, but Nobody Knows Quite What

JSR Corp (4185 JP)’s shares rose 4.8% due to a Nikkan Kogyo article that states that JIC will start the tender within the month due to concluding negotiations with SAMR.
Caution is warranted as JSR has not provided a customary timeline update, no confirmatory disclosure from SAMR and JSR’s response to SUNY RF’s claims are yet to be filed.
Based on current information, there are five possible tender scenarios. In the worst case, the downside risk on a deal break should be muted due to the market re-rating.

Genex (GNX AU): J-Power’s Indicative Offer

Back in July 2022, Aussie renewable energy player Genex (GNX AU) announced an A$0.23/share NBIO from Skip Enterprises and Stonepeak, subsequently bumped to A$0.25/share, and confirmatory due diligence provided.
Negotiations ceased in December that year. As of today, Scott Farquhar’s Skip Enterprises continues to hold a 19.9% stake in Genex.
This morning, Genex announced an A$0.275/share NBIO from Electric Power Development (9513 JP) (J-Power), by way of a Scheme. A concurrent off-market A$0.27/share is in place.

TDCX (TDCX US)’s $7.20/Share Short-Form Merger

On the 2 January, TDCX (TDCX US), a Singapore-headquartered digital customer experience (CX) provider, announced it had received a preliminary non-binding proposal from Laurent Junique to be acquired at $6.60/ADS.
On the 1st March, TDCX entered in a definitive agreement by way of a short form merger at US$7.20/ADS, a 48% premium to undisturbed.
As Laurent Junique holds 98.4% of the voting power, there is no shareholder vote on the merger. This is done. The Offer should close in the 2Q24.

May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.

Ecopro Materials: Potential Selling by Second Largest Shareholder Post End of Lockup Period in May

We discuss the strong likelihood of potential selling of EcoPro Materials by BRV Capital Management (the second largest shareholder of Ecopro Materials with a 24.7% stake) in May 2024.
BRV Capital Management’s stake in Ecopro Materials is currently worth 3.1 trillion won. In the past seven years, BRV Capital Management has invested about 93 billion won in Ecopro Materials.
On 4 March, Ecopro Materials announced it has entered into a contract to supply precursor to a U.S. auto company. There is some local speculation that this could be Tesla.

Genex Power (GNX AU): J-Power’s Dual-Track Non-Binding Proposal

Genex Power Ltd (GNX AU) has disclosed a non-binding scheme proposal from Electric Power Development C (9513 JP) at A$0.275, a 48.6% premium to the undisturbed price of A$0.185.
If the scheme fails, J-Power will launch an off-market takeover offer with a 50.1% minimum acceptance condition at A$0.270 per share. The dual-track bid is meant to counter Skip’s stake.
The Board has granted exclusive due diligence until 31 March. The offer is attractive, but the scheme’s completion hinges on Skip Capital’s acceptance.

Vinda International (3331 HK): Pre-Condition Satisfied

Vinda International (3331 HK) has announced the pre-condition for Sukanto Tanoto’s HK$23.50 voluntary offer is satisfied. The composite document will be despatched on or before 11 March.
The offeror has received irrevocables from Essity (ESSITYB SS) and Mr Li, representing 72.62% of outstanding shares, which satisfies the 50% minimum acceptance condition.
Including irrevocables, the offeror currently represents 80.31% of outstanding shares. The offeror intends to exercise compulsory acquisition rights. The tight 0.4% gross spread reflects a done deal.

NIFTY100 Low Volatility 30 Index Rebalance Preview: Titan Could Replace IOCL

With the review period complete, Titan Co Ltd (TTAN IN) should replace Indian Oil Corp (IOCL IN) in the Nifty100 Low Volatility 30 Index at the close on 27 March.
Constituent changes, volatility changes and capping changes will result in one-way turnover of 13.2% resulting in a one-way trade of INR 4.2bn.
The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.

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Mar 04

Daily Brief Event-Driven: JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions
Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation
S&P 500/400/600 Index Rebal – It’s Not The Trade You Think
S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
HK Connect SOUTHBOUND Flows (To 1 Mar 2024); Continued Big Buys of SOEs (Getting Boring to Say This)
A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide
Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!
Mainland Connect NORTHBOUND Flows (To 1 Mar 2024): Foreigners Buy a New Set of Names
STTF Index Rebalance: The Widening Emperador Spread
What We Need to Know About Speeding Up Delisting in Korea

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

Korea Value-Up Index: Probable Constituents & Impact of NPS’ US$8.2bn Allocation

Media reports indicate that the National Pension Service (NPS) could invest up to KRW 11tn (US$8.2bn) in a new index tracking stocks with low Price to Book ratios.
Filtering stocks with market cap higher than US$500m, ADTV of atleast US$1m, div yield of atleast 1.5% and Price to Book less than 1 throws up 94 potential index candidates.
Choosing an index of 50 stocks will require managers to buy between 1.7-3.4% of the float on the stocks. Increasing the number of constituents will reduce the impact.

S&P 500/400/600 Index Rebal – It’s Not The Trade You Think

On Friday after the close, the S&P DJI Index Committee announced changes to the S&P 100, S&P500, S&P MidCap400, and S&P SmallCap600. Changes happen at the close 15 March 2024.
Super Micro Computer (SMCI US) and Deckers Outdoor (DECK US) replace Zions Bancorporation (ZION US) and Whirlpool Corp (WHR US) in the S&P500. 2 changes to 400, 6 to 600.
The immediate reaction was to send SMCI up 12.5%. That’s shortsighted. It pays to count the pennies involved. There are a LOT of pennies.

S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning

There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.

HK Connect SOUTHBOUND Flows (To 1 Mar 2024); Continued Big Buys of SOEs (Getting Boring to Say This)

A share indices were up on the week. HK stock indices were down except for HS Tech. H-shares with A-share pairs were up.
Net SOUTHBOUND buying was HK$9.1bn in the second post-holiday week after being +HK$20bn in the first week. LOTS of SOEs on the net buying side. Still.
SOUTHBOUND continues to buy high-div SOEs. ex-div is still three months away, and given the new KPIs discussed late January by SASAC official, these still seem to be appropriate targets.

A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND and NORTHBOUND flows net positive. NB 5 weeks in a row. AH premia rebounded slightly. AH Premia are still wide on average. Premia curves should still shift flatter.
Two Sessions seems like a good place to make positive public statements but recent speeches from the very top seem more oriented towards “The People Must Endure.”

Quiddity TDIV/50/100 Mar 24 Rebal: Disappointing Result but Trade Successful So Far; Bail Out Now!

By Janaghan Jeyakumar, CFA

The index changes for the March 2024 index rebal event for the T50/100 index family and the TDIV index were confirmed after market close on Friday 1st March 2024.
The confirmed changes for T50 and T100 were captured in our expectations but an additional change we expected did not materialize which adversely affected our flow expectations for March 2024.
In this insight, we take a close look at the breakdown of our final flow expectations for the upcoming Inclusion/Exclusion and Capping events.

Mainland Connect NORTHBOUND Flows (To 1 Mar 2024): Foreigners Buy a New Set of Names

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net BUY RMB 23.5bn of A-shares on strong average activity after RMB +49bn the previous four trading weeks. More efforts by authorities to eliminate selling.
No finance names of any kind in the top ten this week after 5/10 the week before. Slight tendencies to trade on reversion.

STTF Index Rebalance: The Widening Emperador Spread

The SPDR Straits Times Index ETF (STTF SP) will need to sell Emperador (EMI SP) at the close of trading on 15 March.
Other global index trackers will need to sell Emperador (EMP PM) at the close on 15 March.
There will be around US$55m to sell across both lines and varying liquidity has opened up a huge spread between the listings.

What We Need to Know About Speeding Up Delisting in Korea

Korea’s authorities aim to streamline delisting and tighten rules for smooth market funds. 71 companies (17 in KOSPI, 54 in KOSDAQ) under review, about 8 trillion won tied up.
It’s unclear if this ties directly to the FSS chief’s mention of kicking non-compliant firms of the Value-up Program. Rumors hint at FSS-FSC differences. Impact on Value-up trading seems minimal.
Nonetheless, we must explore stocks that may gain from expediting delisting for the 71 companies under review.

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Mar 03

Daily Brief Event-Driven: S&P500 Index Rebalance: SPCY Additions & Large Impact and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P500 Index Rebalance: SPCY Additions & Large Impact
(Mostly) Assia-Pac M&A: Alumina, Superloop, Qantm, Samsonite, ESR, APM , Adbri, CSR, Outsourcing
Weekly Deals Digest (03 Mar) – Aozora, Outsourcing, Tsuruha, Toei, Samsonite, Adbri, Alumina, APM
Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
Last Week in Event SPACE: Keisei Electric, CSR, Rakuten, HK Property, Aeon/TSURUHA/Welcia
Quiddity ASX Mar 24 Index Rebal: Many High-Impact Names

S&P500 Index Rebalance: SPCY Additions & Large Impact

Super Micro Computer (SMCI US) and Deckers Outdoor (DECK US) replace Whirlpool Corp (WHR US) and Zions Bancorporation (ZION US) in the S&P 500 INDEX at the close on 15 March.
There are a bunch of inclusions, deletions and migrations across the S&P 500 INDEX (SPX INDEX), the S&P Midcap 400 Index, and the S&P SmallCap 600 Index.
The largest flows will be in the S&P 500 INDEX (SPX INDEX) adds and the largest impact in the adds to the S&P SmallCap 600 Index.

(Mostly) Assia-Pac M&A: Alumina, Superloop, Qantm, Samsonite, ESR, APM , Adbri, CSR, Outsourcing

I tally 54 – 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 on Smartkarma (possible four): Offers for Alumina (AWC AU), Superloop (SLC AU) & Qantm Intellectual (QIP AU); Samsonite (1910 HK)‘s ESR (1821 HK)‘s rumoured approaches.
Key updates took place on APM Human Services Internation (APM AU), Adbri (ABC AU), CSR Ltd (CSR AU), Weiqiao Textile Co (2698 HK), and Outsourcing Inc (2427 JP).

Weekly Deals Digest (03 Mar) – Aozora, Outsourcing, Tsuruha, Toei, Samsonite, Adbri, Alumina, APM

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: Toei Animation (4816 JP)‘s prices its US$550 million secondary offering and Trial Holdings (5882 JP) IPO.
Event-Driven developments: Aozora Bank Ltd (8304 JP), Outsourcing Inc (2427 JP), Tsuruha Holdings (3391 JP), Samsonite (1910 HK), Alumina Ltd (AWC AU), APM Human Services Internation (APM AU).

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!

Last Week in Event SPACE: Keisei Electric, CSR, Rakuten, HK Property, Aeon/TSURUHA/Welcia

Apart from being mildly EPS accretive, Keisei Electric Railway Co (9009 JP)‘s buyback is a means to get crossholders out, therefore, it may not have much direct market impact.
Cie De Saint-Gobain (SGO FP) firms a decade-high-plus Offer price for CSR Ltd (CSR AU) – this is done.
Rakuten Group (4755 JP) announced it would propose an amendment to its Articles at the AGM (28 March) to issue “Bond-Type Class Shares.” First reaction: You wot, mate?

Quiddity ASX Mar 24 Index Rebal: Many High-Impact Names

By Janaghan Jeyakumar, CFA

The results for the March 2024 index rebal event for ASX indices were announced after the close on Friday 1st March 2024.
There is one change for ASX 20, two changes for ASX 100, and four changes for ASX 200.
There are 14 ADDs and 10 DELs for ASX 300 and while most of these are small-size flow names some of them have more than 15x ADV to trade.

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Mar 02

Daily Brief Event-Driven: Currys Rejects Second Elliot Approach and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Currys Rejects Second Elliot Approach
NPN X PRX Discount Update Discounts Widen to Pare Back Strong YTD Gains

Currys Rejects Second Elliot Approach

By Jesus Rodriguez Aguilar

Currys has rejected a second proposal from Elliot, at 67p/share, 8% higher. The Board rejected this second proposal, stating it undervalued the company and its potential for future growth.
My fair value estimate is 76p/share (FY24e PE of 10.2x vs 9.1x currently, and FY25e PE of 8.9x vs 7.9x currently). JD.com’s surely negotiating a friendly offer ahead of 18 March.
A major shareholder advises not to engage with Elliot unless a 75p/share proposal is tabled. JD.com, a trade buyer, should be capable of meeting the Board’s expectations. Reiterate long.

NPN X PRX Discount Update Discounts Widen to Pare Back Strong YTD Gains

By Charlotte van Tiddens, CFA

During the last 3 weeks, Naspers and Prosus have come under pressure relative to their underlying portfolios.
Since reaching a new all-time low on the 12th of February, Naspers’ discount has widened by 6 percentage points to 40.7%.
Prosus’ discount has widened 5.7 percentage points to 35.4%. Naspers and Prosus are down 9% and 8% respectively, relative to a decline of 1.9% for Tencent in ZAR.

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Mar 01

Daily Brief Event-Driven: TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
Clearing up Confusion About Bringing Back Short Selling in Korea
Sankei Real Estate (2972) Sponsor Buy Now On And It Isn’t Small (Even if the REIT Is)
FXI Rebalance: Three Buys. Three Sells
Block Deal Sale of 1.7% Stake of Woori Financial by IMM Private Equity
End of Mandatory Lock-Up Periods for 51 Companies in Korea in March 2024
(Mostly) Asia M&A, Feb 2024: Lawson, Altium, CSR, TCM, Boral, APM, Roland DG, Ssangyong Cement

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas

By Janaghan Jeyakumar, CFA

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.

Clearing up Confusion About Bringing Back Short Selling in Korea

Government sees foreign investors as key for Corporate Value-Up success, considering reinstating short selling.
Planning to expand short selling beyond 350 stocks, but anticipating pushback from retail investors, likely capping additional stocks around 100.
The head of the Financial Supervisory Service will formally disclose these plans during the upcoming short selling conference scheduled for March 13th.

Sankei Real Estate (2972) Sponsor Buy Now On And It Isn’t Small (Even if the REIT Is)

Last October, I wrote about the plan the sponsor of Sankei Real Estate (2972 JP) had to exchange buildings with the REIT to clean it up, then buy more units.
Today they announced the completion of the Portfolio Rebalancing Plan started in March 2023. And the plan to buy more units. The assets transferred out were gone at end Jan-2024.
Now that’s done, and there are units to buy. Maximum 46,652 units over maximum 220 days.

FXI Rebalance: Three Buys. Three Sells

Yankuang Energy, CGN Power and China Coal Energy are buys, China Resources Beer, China Vanke and Wuxi Biologics are sells for the iShares China Large-Cap (FXI) (FXI US) in March.
Shorts have been spiking in China Vanke (2202 HK) while there has been covering in Yankuang Energy (1171 HK), China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK).
There has been an increase in cumulative excess volume on all the adds and deletes over the last few months. There could be more over the next week.

Block Deal Sale of 1.7% Stake of Woori Financial by IMM Private Equity

IMM Private Equity announced that it is selling a 1.7% stake in Woori Financial Group (316140 KS) in a block deal sale.
The number of shares subject to sale is 12.56 million, or 177.7 billion won to 181.5 billion won.
Block deal sale discount range is reasonable, valuation multiples are low, and we expect continued positive capital inflow into stocks related to Corporate Value Up in the next 12 months.

End of Mandatory Lock-Up Periods for 51 Companies in Korea in March 2024

We discuss the end of the mandatory lock-up periods for 51 stocks in Korea in March 2024, among which 5 are in KOSPI and 46 are in KOSDAQ.
These 51 stocks on average could be subject to further selling pressures in March and could underperform relative to the market.
The top five market cap stocks including those of which at least 1% of outstanding shares could be sold include APR, WCP, DS Dansuk, GI Innovation, and Geolit Energy.

(Mostly) Asia M&A, Feb 2024: Lawson, Altium, CSR, TCM, Boral, APM, Roland DG, Ssangyong Cement

For the month of February 2024, 15 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$20bn.
The average premium for the new transactions announced (or first discussed) in February was ~33%.
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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Feb 29

Daily Brief Event-Driven: Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)
Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger! [Redux]
Confirmed: Conditions & Schedule of Block Deals Pre-Disclosure Rules in Korea
Hong Kong: Stamp Duties Axed; Mortgage Rules Relaxed
JAPAN ACTIVISM: Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?
Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder
APM Human Services (APM AU): CVC’s 141% Offer Premium
BAT’s Possible US$2.5bn ITC Selldown – Will Be Well Flagged but Still Won’t Be an Easy One to Digest
Aeon (8267 JP), Tsuruha (3391 JP) And Welcia (3141 JP)’s Long-Dated Plan
Goodman Group (GMG AU): Positioned for Outperformance

Hong Kong To Scrap All “Spicy Measures” (Property Cooling Measures)

RTHK just reporting that HK Finance Secretary Paul Chan has said in his budget speech that HK will remove all property cooling measures in place, with immediate effect.
That would be That is Special Stamp Duty, Buyer’s Stamp Duty, New Residential Stamp Duty. “Measures no longer necessary given the current economic and market conditions.”
This should cause people to get excited short-term about property developers.

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger! [Redux]

The first piece had a question mark in the title. This one has an exclamation point. The exclamation point has value for one investor. Other people? Not so much.
Today post-close we got the deal. I was a little surprised it came this fast, but it’s now mostly done it appears – largely as predicted in the last piece.
There are things one can probably read into the details. It is probably worth thinking about those, and how those details affect the industry.

Confirmed: Conditions & Schedule of Block Deals Pre-Disclosure Rules in Korea

Insiders must disclose transaction details, complete deals within 30 days, limit deviations to 30%, and submit disclosures 30 days before transactions.
Financial investors, including institutional ones, are exempt. This encompasses local pension funds (including NPS) and foreign financial investors. Deals under 1% of total shares and less than ₩5B are exempt.
Confirmation of the timeline indicates many block deals before July. We should hunt potential deals for proactive setups. Also, we should monitor basis widening in futures due to short-selling ban.

Hong Kong: Stamp Duties Axed; Mortgage Rules Relaxed

Hong Kong residential property prices declined 7% in 2023 and are down >20% from the 2021 peak in 2021. The average price of offices also declined ~7% in 2023.
Scrapping property cooling measures, such as the special stamp duty applied to homes resold within 24 months, have been rumoured, to push up housing prices.
In today’s annual budget, we got those. And then some.

JAPAN ACTIVISM: Is Murakami-San Going To Do A PacMetals Rug Pull on Aozora? Or Is This For Real?

Yesterday after the close, well-known Japanese activist Murakami-san’s preferred entity City Index Eleventh filed a Large Shareholder Report.
The blast across Bloomberg was “*AOZORA 5.4% STAKE REPORTED BY CITY INDEX ELEVENTH.” Sounds exciting after the shares dropped 34% in two days earlier this month after reporting big writedowns.
But there has to be a question here. Why? And Why this way? And what kind of activism would be possible?

Aozora Bank (8304 JP): Murakami Becomes a Substantial Shareholder

Murakami’s entity, City Index Eleventh, reported a 5.42% shareholding in Aozora Bank Ltd (8304 JP). Murakami started buying a day after the disastrous 3QFY23 results.
Murakami’s average buy-in price is JPY2,137.88 per share, a 34% discount to the pre-3QFY23 results share price.
Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term trading play replicating the Pacific Metals (5541 JP) playbook.

APM Human Services (APM AU): CVC’s 141% Offer Premium

Back on the 19th Feb, employment and disability services play APM Human Services Internation (APM AU) rejected PE-outfit CVC Asia Pacific’s A$1.60 proposal, a 93% premium to undisturbed.
Undeterred, CVC has returned with A$2.00/share indicative Offer, by way of a Scheme, a 141% premium to undisturbed; yet a 44% discount to APM’s November 2021 IPO price of A$3.55/share.
APM has determined it will engage and provide CVC with a four-week period of exclusivity.

BAT’s Possible US$2.5bn ITC Selldown – Will Be Well Flagged but Still Won’t Be an Easy One to Digest

By Sumeet Singh

Earlier this month, British American Tobacco (BATS LN)’s management stated that they were reviewing their stake in ITC Ltd (ITC IN) to enhance its balance sheet flexibility.
BAT has owned its stake in ITC for over a century and remains its largest shareholder.
In this note, we talk about the possible deal structure and dynamics.

Aeon (8267 JP), Tsuruha (3391 JP) And Welcia (3141 JP)’s Long-Dated Plan

Aeon Co Ltd (8267 JP), Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) have announced an alliance to establish the largest drugstore alliance in Japan by December 2027.
Aeon will carry out several Tsuruha transactions – buy Oasis 13.58% stake at JPY15,500 per share and, on receiving regulatory approval, reach 27.17% of the voting rights.
The agreements involve merging Tsuruha and Welcia through a share exchange offer and Aeon subsequently increasing its Tsuruha voting rights from 27.17% to less than 51%.

Goodman Group (GMG AU): Positioned for Outperformance

Goodman Group (GMG AU) has been moving higher recently and the stock has outperformed its peers handily over the last year.
The stock trades marginally expensive compared to its peers and that could be partially attributed to the stock being a part of large indices.
There is another index inclusion to come and that could lead to further outperformance in the short term.

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Feb 28

Daily Brief Event-Driven: Final Flows for Hang Seng and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Final Flows for Hang Seng, HSCEI, HS Tech on 1 March Rebal
Rakuten’s New “Bond-Type Share” Issuance – Quite Quirky to Quantulate Rakuten’s Quisquous New Quoz
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Mar 2024)
Samsonite (1910 HK): Evaluating a Potential Privatisation
Outsourcing (2427) MBO Arrives! Bain Launches Cheeky, Opportunistic, Low(Priced) TOB
Samsonite (1910 HK): Leader Of The Pack
Ecopro BM KOSPI Transfer Listing Disclosure
Block Deal Sale of 5% Stake In SFA Engineering by Samsung Display
Outsourcing (2427 JP): Relief as Bain Launches Tender at Unchanged Terms
Ecopro BM (247540 KS): Index Impact of KOSDAQ to KOSPI Transfer

Final Flows for Hang Seng, HSCEI, HS Tech on 1 March Rebal

The Hang Seng Index, HSCEI, and HS Tech rebals were announced on 16 Feb. Janaghan Jeyakumar, CFA had expected GDS out, Tongcheng Travel in on HSTECH, along with the…
…deletion of Zhongsheng Group (881 HK) in HSCEI, with a low conviction replacement of Zijin Mining, which turned out to be an add of China Unicom Hong Kong (762 HK).
No changes to the main HSI Index, which means evolution is further delayed. Today was the day to recap the caps. Mar1 Flow estimates are included below for all three.

Rakuten’s New “Bond-Type Share” Issuance – Quite Quirky to Quantulate Rakuten’s Quisquous New Quoz

Today, Rakuten Group (4755 JP) announced it would propose an amendment to its Articles at the AGM (28 March) to issue “Bond-Type Class Shares.” First reaction: You wot, mate?
The company states it wants to “strengthen its financial base through reducing interesting-bearing debt by equity-related financings and conduct proactive control of debt maturity schedule, etc.”
Now it wants to issue listed bond-type shares. Dividends not interest. The last Japanese issuer of something similar was NEC in 2001. Few will remember, so we study the situation.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Mar 2024)

The March rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
Tencent (700 HK), Meituan (3690 HK) and Tongcheng Travel (780 HK) are the biggest buys while Alibaba (9988 HK), Li Auto (2015 HK), HSBC (5 HK) are the biggest sells.
The round-trip trade across all stocks across the four indices is estimated at HK$16.16bn (US$2.06bn).

Samsonite (1910 HK): Evaluating a Potential Privatisation

Bloomberg reports that Samsonite (1910 HK) is drawing takeover interest from several PE firms which aim to relist Samsonite in the US to draw a higher valuation.
A standard takeover premium (around 30%) should be sufficient due to the shareholder register. There is no single large shareholder(s) to pose an issue to an offer.
The probability of an offer is medium, with an offer price likely around HK$30.00. Irrespective of a binding offer, the upside remains as Samsonite trades at an undemanding valuation.

Outsourcing (2427) MBO Arrives! Bain Launches Cheeky, Opportunistic, Low(Priced) TOB

After an extension due to a European Foreign Subsidies Review filing, and a small ‘accident’ regarding the earnings release, we have a deal.
The earnings release itself seemed more innocuous than articles and rumour suggested show the causes of impairments and so it seemed like there was little cause to walk/declare MAC.
Now it will be done in 20 days. I still think this is cheeky, opportunistic, and low, and it is up to the float to decide what to do.

Samsonite (1910 HK): Leader Of The Pack

Luggage maker Samsonite (1910 HK) is up 11.8% today, as I type, after Bloomberg reported it is working with advisers as it studies possibilities, including going private.
With the reopening of China and the ongoing recovery in travel globally, Samsonite’s net sales improved markedly across all regions. 1H23 profit gained 185.3% versus 1H22.
FY23 figures should be out in the middle of next month.

Ecopro BM KOSPI Transfer Listing Disclosure

The schedule includes submitting the transfer listing application post-EGM on March 26th. KRX approval expected in 4-6 weeks due to Ecopro BM’s financial soundness. KOSPI listing follows in 2-3 weeks.
As for KOSDAQ 150 ad-hoc change, it will be replaced with the top reserved issue. The anticipated timing for this ad-hoc change is around mid or late May.
Following Feb 7 disclosure, stock surged over 10% in 2 days. Precedents show rallies pre-shareholder meetings, but KOSPI listing brings corrections. Today’s resolution could boost Ecopro BM short term.

Block Deal Sale of 5% Stake In SFA Engineering by Samsung Display

After the market close on 27 February, Samsung Display announced that it will sell its 4.95% stake in Sfa Engineering (056190 KS) in a block deal sale.
We would take the trade. We like the relatively large block deal sale discount as well as the company’s attractive valuations.
SFA Engineering is trading at P/E of 8.3x, EV/EBITDA of 2.7x, and P/B of 0.7x in 2024, which are much lower than historical valuations.

Outsourcing (2427 JP): Relief as Bain Launches Tender at Unchanged Terms

Outsourcing Inc (2427 JP) announced that the pre-condition was satisfied, and Bain’s tender offer remains unchanged at JPY1,755 per share, a 52.1% premium to the undisturbed (8 December).
Shareholders will breathe a sigh of relief as the weak 4Q and significant impairments have raised concerns that Bain would cut its offer or walk away.
The offer attractiveness has increased partly due to lower consensus. At the last close and for a 3 April payment, the gross/annualised spread is 2.0%/22.8%.

Ecopro BM (247540 KS): Index Impact of KOSDAQ to KOSPI Transfer

Ecopro BM (247540 KS)‘s Board has approved the delisting of the stock from the KOSDAQ market and to list on the KOSPI market. The shareholder meeting is on 26 March.
Historically, the KRX has taken an average of 64 days from application to approve the listing to transfer from the KOSDAQ market to the KOSPI market.
Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index on its last trading day and inclusion in the KOSPI 200 Index could take place in September.

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Feb 27

Daily Brief Event-Driven: Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?
Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS
Alcoa (AA US) Makes an Offer for Alumina (AWC AU)
Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth
StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback
CSR (CSR AU): Saint-Gobain’s Binding Proposal at A$9.00
Alumina (AWC AU): Alcoa’s All-Scrip Non-Binding Proposal Seems Opportunistic
KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book
ABB Targets Superloop After Taking Out Symbio
CSR (CSR AU): Saint Gobain Firms $9/Share Bid

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?

Over the weekend there was an article in the Nikkei saying that Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) were considering a merger. Other media outlets followed.
This has been a possible outcome. Aeon Co Ltd (8267 JP) owns 51% of Welcia, 13.6% in Tsuruha, and is negotiating to buy another 13% in Tsuruha from Oasis.
This would create a behemoth. ¥2.2trln in revenues vs ¥1trln for MatsukiyoCocokara (3088 JP). It would be 25% of the market. Questions will be asked about concentration.

Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS

The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.

Alcoa (AA US) Makes an Offer for Alumina (AWC AU)

Alcoa (AA US) has made a non-binding, indicative and conditional proposal to acquire all shares in Alumina (AWC AU). Shareholders will receive 0.02854 shares of Alcoa for each Alumina share.
Alcoa (AA US) has entered into an agreement with Allan Gray Australia that gives them the right to acquire 19.9% of Alumina Ltd (AWC AU) at the same swap ratio.
Alumina Ltd (AWC AU) is a potential delete from the ASX100 Index at the March rebalance and that could provide an entry into the stock.

Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth

By Michael Causton

The possible merger between Welcia and Tsuruha under Aeon has been talked about for years despite concerns from both drugstores, but may now happen.
But calling these retailers drugstores is increasingly a misnomer: FMCG-drugstores is better because they and many others in the sector, increasingly compete with FMCG retailers like supermarkets and even CVS.
This evolution is rapid so the merits of a deal make more sense when we view it from a sector five years in the future than how it is today.

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback

Keisei Electric (9009 JP) has been an outperformer since activist fund Palliser Capital called on the company sell some Oriental Land (4661 JP) shares. It has now announced another buyback.
Preceding my comments on Keisei Electric 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%.

CSR (CSR AU): Saint-Gobain’s Binding Proposal at A$9.00

CSR Ltd (CSR AU) has entered a scheme implementation deed with Cie De Saint-Gobain (SGO FP) at A$9.00 per share, a 32.9% premium to the undisturbed price (20 February).
The offer has a ticking fee of A$0.02 per month (accrued daily) if the scheme’s effective date is delayed beyond 26 June. The offer requires FIRB approval.
The offer is attractive and represents a 15-year high. At the last close and for a mid-June payment, the gross/annualised spread is 7.4%/28.8%.

Alumina (AWC AU): Alcoa’s All-Scrip Non-Binding Proposal Seems Opportunistic

Alumina Ltd (AWC AU)‘s non-binding proposal from Alcoa (AA US) is 0.02854 Alcoa shares per Alumina share, implying a value of A$1.15, a 13.1% premium to the undisturbed price.
Alcoa has been granted a 20-business day exclusivity period. The Board intends to recommend a binding proposal. Allan Gray, the largest shareholder, is supportive.
While strategically sensible, the offer is not a knockout bid. The headcount test is a risk as retail forums suggest a majority view forming against the offer.

KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book

The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.

ABB Targets Superloop After Taking Out Symbio

The hunter becomes the hunted. After Superloop (SLC AU) failed to clinch Symbio Holdings (SYM AU) last year, Aussie Broadband (ABB AU) has now made an Offer for Superloop.
ABB’s indicative Offer provides Superloop shareholders with 0.21 new ABB shares for each Superloop share held, or an indicative Offer price of A$0.95/share, a 33.2% premium to the three-month VWAP.
ABB has picked up 19.9% in Superloop, also at A$0.95/share. Superloop has yet to respond.

CSR (CSR AU): Saint Gobain Firms $9/Share Bid

On the 21st Feb, Saint-Gobain (SGO FP) made an indicative Offer to CSR Ltd (CSR AU) shareholders of A$9/share by way of a Scheme, a 34% premium to last close.
Saint-Gobain and CSR have now entered into a definitive agreement, also at $9/share. The business combination has been unanimously approved by the boards of both companies.
Conditions include CSR’s shareholder approval and FIRB signing off. No specific mention of ACCC. The transaction is expected to close in the second half of this year.

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Feb 26

Daily Brief Event-Driven: ESR Group (1821 HK): Evaluating a Potential Privatisation and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ESR Group (1821 HK): Evaluating a Potential Privatisation
Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3
STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected
Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications
Aussie Broadband’s Non-Binding Indicative Offer for Superloop
Walgreens Boots Alliance (WBA US) – How Do Dow Jones Deletes Do Historically?
Details of Korea Value-Up Initiatives & Index, Announced This Morning
Merger Arb Mondays (26 Feb) – China TCM, Azure, A2B, Boral, CSR, Outsourcing, Snow Peak, Genetron
Alumina (AWC AU) Agrees To Alcoa’s Offer
T G S/P G S: Delayed by Competition Review, Spread

ESR Group (1821 HK): Evaluating a Potential Privatisation

On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation.
The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation.

Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3

Keisei Electric Railway Co (9009 JP) has long been the target of activist-ish-y holders who seek to have the company monetise its 20+% stake in Oriental Land (4661 JP).
Last autumn (17-Oct-2023), Keisei was the subject of a presentation by activist-ish-y fund Palliser Capital who called the stock 43% undervalued. They want Keisei to sell some OLC shares.
Palliser wanted Keisei to use resulting monies for growth capex+shareholder return, improve IR/governance, shrink board, adopt KPIs, etc. Thursday we got an announcement of a 2.9% stock buyback.

STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected

There are 10 changes for the STAR100 Index in March. We correctly forecast all 10 deletes and got 8 of the 10 adds right.
Estimated one-way turnover is 6.8% and that results in a one-way trade of CNY 1.79bn. Nearly all constituent changes have more than 1 day of ADV to trade.
The adds have started to outperform the deletes and the index over the last couple of weeks and there could be more outperformance in the next two weeks.

Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications

Hyosung Corporation (004800 KS) has announced that it is spinning off part of its business holdings to Hyosung New Holding Corporation in a 0.818:0.182 ratio.
The stock will remain suspended from late June to late July. We expect Hyosung Corporation (004800 KS) to maintain its index membership while the New Entity will not be added.
The dynamics between listed ETFs and non-listed passive trackers differ and we take a look at the potential index flows.

Aussie Broadband’s Non-Binding Indicative Offer for Superloop

Right on the heels of acquiring Symbio Holdings (SYM AU), Aussie Broadband (ABB AU) has made a non-binding indicative offer to take Superloop (SLC AU) private.
Superloop (SLC AU) had initiated the proposal to take Symbio Holdings (SYM AU) private before Aussie Broadband (ABB AU) swooped in. Now ABB has SLC in its sights.
The offer is a small premium and Aussie Broadband Pty Ltd (ABB AU)‘s 33.2% premium claim is disingenuous at best. Expect pushback from the Superloop Ltd (SLC AU) Board.

Walgreens Boots Alliance (WBA US) – How Do Dow Jones Deletes Do Historically?

On 31 January, Walmart (WMT US) announced a 3:1 stock split. For cognoscenti, that meant a Dow Jones Industrial Avg might be in the offing.
The last change to the index was in Aug-2020, spurred by the 4:1 split for Apple (AAPL US). This time, the likely deletion candidate was Walgreens Boots Alliance (WBA US).
Indeed, last week, the Index Keepers announced Amazon.com Inc (AMZN US) would replace Walgreens Boots Alliance on 26 Feb (i.e. WBA would be booted on the close of 23 Feb).

Details of Korea Value-Up Initiatives & Index, Announced This Morning

The rollout of the Korea Value-Up Index has encountered a minor delay. Completion of the index is slated for 3Q, with ETFs scheduled for release in 4Q.
The government will encourage the National Pension Service to utilize it as a benchmark.
Dividend payout ratio, dividend yield, PER, and cash flow will be included as screening factors for this index, in addition to the already known factors of PBR and ROE.

Merger Arb Mondays (26 Feb) – China TCM, Azure, A2B, Boral, CSR, Outsourcing, Snow Peak, Genetron

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 Probiotec Ltd (PBP AU), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), CSR Ltd (CSR AU), China Traditional Chinese Medicine (570 HK), Lithium Power International (LPI AU).
Lowest spreads – Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), T&K Toka Co Ltd (4636 JP), Snow Peak.

Alumina (AWC AU) Agrees To Alcoa’s Offer

Pittsburgh-Based Alcoa (AA US) is offering 0.02854 of its own shares for each Alumina Ltd (AWC AU) share, a 13% premium to last close. Alumina recommends the Offer to shareholders.
Alumina owns a 40% stake in Alcoa World Alumina & Chemicals, a JV with Alcoa that operates bauxite mining, alumina refining, and aluminium smelting operations. Alcoa owns the remaining 60%.
Separately, Alcoa announced it has entered into an agreement with Allan Gray Australia that gives it the right to acquire up to 19.9% of Alumina. CITIC also holds 18.9%.

T G S/P G S: Delayed by Competition Review, Spread

By Jesus Rodriguez Aguilar

TGS is seizing an opportunity by acquiring a competitor at a low valuation, in an all-share deal 0.06829 TGS NO x 1 PGS NO, departing from its traditional asset-light approach.
The Merger is subject to ongoing review by UK and Norwegian competition authorities. I believe the deal will be cleared, but might be delayed until Q4.
The dividend-adjusted gross spread is 6.7%. Regulatory approval concerns seem overblown. I would set up the spread.

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Feb 25

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: HSCEI and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide
A/H Premium Tracker (To 23 Feb 2024): Liquid AH Premia See Sharpest Fall in a LOONG (He-He) Time
HK Connect SOUTHBOUND Flows (To 23 Feb 2024); Selling of Consumer Stocks, But Big Buys of SOEs
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Boral, CSR, Ansarada, TCM, Snow Peak, Azure Min, Genetron
Mainland Connect NORTHBOUND Flows (To 23 Feb 2024): Foreigners Buy, Natl Team Buys; Retail Sells
A2B Australia (A2B AU): Scheme Vote on 25 March
Weekly Deals Digest (25 Feb) – Azure, A2B, Boral, CSR, China TCM, Outsourcing, Payroll, Snow Peak
Hyosung Corp Split: Potential Mirror of December 2021 LX-LG Block Deal
Last Week in Event SPACE: Outsourcing, Boral, Itoki, CIMC Vehicle, Dissentient Shareholder Rights
STAR50 Index Rebalance: Three Changes a Side; One Surprise Change

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide

The changes for the SSE STAR50 (STAR50 INDEX) and STAR100 Index were announced post market close on Friday.
The coming week is a full one with capping cutoffs, review cutoffs, announcements and implementations apart from futures expiries.
With China open after Lunar New Year, the National Team is back pouring money into ETFs with the largest inflows to the CSI 300, CSI 500, ChiNext and STAR50 indices.

A/H Premium Tracker (To 23 Feb 2024): Liquid AH Premia See Sharpest Fall in a LOONG (He-He) Time

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 and NORTHBOUND flows net positive. AH premia on average fell so Hs OUTperformed As by 2.1%. Liquid Hs saw their H outperform the A by 3.1% on average.
Last week was the sharpest one-week fall in AH premium in a very long time. SOUTHBOUND Flows Monitor here. NORTHBOUND Flows Monitor here.

HK Connect SOUTHBOUND Flows (To 23 Feb 2024); Selling of Consumer Stocks, But Big Buys of SOEs

A great week for HK and Chinese shares, especially the larger caps. Mainland indices were up 8 days in a row to Friday, helping HK shares stay bid.
Net SOUTHBOUND buying was HK$20.0bn in the first post-holiday week. LOTS of SOEs on the net buying side.
Remarkable this past week, was a new tendency to net sell names which were up a lot and net buy names which haven’t performed as well.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Boral, CSR, Ansarada, TCM, Snow Peak, Azure Min, Genetron

I tally 53 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Five new deals discussed this week on Smartkarma! Boral Ltd (BLD AU), CSR Ltd (CSR AU), Ansarada Group Ltd (AND AU),TCM (570 HK), and Snow Peak Inc (7816 JP).
Key updates took place on Azure Minerals (AZS AU), CIMC Vehicle Group Co Ltd (1839 HK), Outsourcing Inc (2427 JP), and Genetron Holdings Ltd (GTH US).

Mainland Connect NORTHBOUND Flows (To 23 Feb 2024): Foreigners Buy, Natl Team Buys; Retail Sells

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net BUY RMB 10.7bn of A-shares on strong average activity after RMB +16.1bn, +9.9bn and +12.1bn the three weeks before. More National Team buying this week.
Five of the top ten buys among liquid NORTHBOUND stocks were finance. Again. Info Tech saw net selling. Again. People trading long gamma now instead of short gamma.

A2B Australia (A2B AU): Scheme Vote on 25 March

The A2B Australia (A2B AU) IE considers Comfortdelgro Corp (CD SP)’s A$1.45 offer fair and reasonable as it above the midpoint of its A$1.30-1.54 per share valuation range.
The scheme is conditional on ACCC approval, which should be forthcoming as ComfortDelGro is not a significant player in Australia.
Several substantial shareholders have sold or exited, lowering the scheme vote risk. At the last close and for the 11 April payment, the gross/annualised spread was 2.5%/22.3%.

Weekly Deals Digest (25 Feb) – Azure, A2B, Boral, CSR, China TCM, Outsourcing, Payroll, Snow Peak

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: Toei Animation (4816 JP)‘s US$550 Million secondary offering and Trial Holdings (5882 JP) IPO.
Event-Driven developments: Azure Minerals (AZS AU), Boral Ltd (BLD AU), CSR Ltd (CSR AU), China Traditional Chinese Medicine (570 HK), Outsourcing Inc (2427 JP), Snow Peak Inc (7816 JP).

Hyosung Corp Split: Potential Mirror of December 2021 LX-LG Block Deal

Hyosung Corp’s split diverges from usual Korean market splits. No tender offer is expected post-new holding company formation, reducing value accretion opportunities.
Sibling separation in Hyosung Corp’s split mandates shares cross-transfers. Hence, block deals among siblings are plausible.
This scenario resembles the case in December 2021 when LX Koo Bon-joon disposed of LG Corp shares through a block deal instead of a swap, causing an 8% drop.

Last Week in Event SPACE: Outsourcing, Boral, Itoki, CIMC Vehicle, Dissentient Shareholder Rights

There is no suggestion of precondition breach attached to Outsourcing Inc (2427 JP)‘s impairment losses.
Seven Group, now holding 71.6%, has returned to the well, and made a cash/scrip Offer for shares not owned in Boral (BLD AU), with certain tendering thresholds triggering more cash.
Itoki Corp (7972 JP)‘s mega ToSTNeT-3 buyback is now done.

STAR50 Index Rebalance: Three Changes a Side; One Surprise Change