Event-Driven

Back on the 18 December 2023, superannuation service provider Link Administration (LNK AU) entered into a Scheme with Mitsubishi UFJ Financial Group.
MUFJ offered Link shareholders A$2.10/share (in cash) plus a A$0.16/share dividend (25% franked), or a 32.9% premium, all-in.
The Scheme Meeting will now take place on the 24th April, with expected implementation on the 16 May. This looks done – and trading accordingly.

HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won

On 21 March, HLB Life Science announced a rights offering capital raise worth 150 billion won.
The expected rights offering price is 13,630 won (32% lower than current price of 19,930 won) and there are 11 million shares in this rights offering (10% of outstanding shares).
HLB Inc (028300 KS) is the largest controlling shareholder of HLB Life Science (067630 KS) with an 18.7% stake in the company.

Antin/Opdenergy: Squeeze-Out. Who’ll Be Next?

With acceptances from 99.6%, settlement of the offer for Opdenergy Holdings (OPDE SM) will happen on 26 March and squeeze-out on 15 April.
A done deal since outset, at a fair price. The agreement of Anti with the top shareholders left minorities with virtually no capacity to ask for a sweetening.
Readacross: Ecoener, Grenergy, Audax, Solaria could all be the object of takeover bids (either from private equity or minority buyouts), with Grenergy preferred. See comparables table in the insight.

Special Changes in KOSDAQ 150: Deletion (CanariaBio) + Addition (C&C International)

On 22 March, the Korea Exchange announced special changes to KOSDAQ 150. CanariaBio will be excluded from KOSDAQ 150 and it will be replaced by C&C International.
Canaria Bio was designated as “administrative issue” and “investment attention issue” on 22 March 2024, which resulted in KRX deciding to remove this stock from KOSDAQ 150 on 26 March.
We believe that this inclusion of C&C International in KOSDAQ 150 is likely to further positively impact its share price.

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Mar 22

Daily Brief Event-Driven: Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Link Admin (LNK AU): Scheme Vote on 24 April
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
IntelliCentrics (6819 HK): Clean, Illiquid “Arb”
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)
Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS
AstraZeneca/Fusion Pharma: Small Contingent Value
GXO/Wincanton: Scheme Document

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Link Admin (LNK AU): Scheme Vote on 24 April

The Link Administration (LNK AU) IE considers Mitsubishi UFJ Financial (MUFG) (8306 JP)’s A$2.26 offer fair and reasonable as it is within its A$2.11-2.70 per share valuation range.
The scheme remains conditional on several regulatory approvals – FIRB, Central Bank of Ireland, Isle of Man Financial Services Authority, India SEBI, and Financial Services Agency of Japan.
Several substantial shareholders have sold or exited, lowering the scheme’s risk. At the last close and for the 16 May payment, the gross/annualised spread was 1.3%/9.7%.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

IntelliCentrics (6819 HK): Clean, Illiquid “Arb”

Back on 9th Feb 2024, healthcare technology platform IntelliCentrics Global Holding (6819 HK) announced the proposed disposal of its key operations to Symplr Software Holdings for at least US$246.5mn.
Upon completion of the sale, IntelliCentrics will declare a special dividend, then seek a listing withdrawal. A key condition to the sale was FTC/DOJ approval. That is now satisfied.
The sale/dividend/delisting requires a Scheme-like vote, with 72.1% of shares out supportive. This is a super-clean pseudo arb. Pushback? Very illiquid.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

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 June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)

KRX announced special changes to KOSDAQ 150. Since STCube (052020 KS) has been designated as “administrative issue,” the Korea Exchange will exclude it from KOSDAQ 150 on 26 March 2024.
PSK Holdings Inc (031980 KS) will be new addition to KOSDAQ 150 index, replacing ST Cube.
PSK Holdings’ core business is providing process technology, source, and hardware for semiconductor packaging equipment.

Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS

After the market close on 21 March, Daishin Securities announced a capital raise worth 230 billion won through RCPS. Daishin Securities currently has a market cap of 901 billion won.
Through this issue of 230 billion won in RCPS, Daishin Securities achieved 3 trillion won in equity capital, which is a condition for applying as a comprehensive financial investment business.
We are Negative on Daishin Securities in the next 6-12 months as the concerns about RCPS capital raise related shares dilution are likely to weigh negatively on its stock price.

AstraZeneca/Fusion Pharma: Small Contingent Value

AstraZeneca PLC (AZN LN) bid to acquire Fusion Pharmaceuticals (FUSN US) for $21/share (~$2 billion; 97% premium) plus a non-transferrable CRV of $3/share, for up to $2.4 billion.
The transaction is expected to close in Q2 2024, which I expect to proceed given AZN’s lack of radiopharma R&D is not likely to raise anti-trust concerns.
I set my PT to $21. CVR offers 13.6% potential gain, 2.4% annualised (likely small considering the time it might take to materialise). The market may be pricing interloper risk.

GXO/Wincanton: Scheme Document

GXO Logistics (GXO US) offers 605p for Wincanton PLC (WIN LN), in a strategic move worth a 104% premium, 8.6x EV/25e EBITDA, 18.2 Fwd P/E (IBES), via scheme with 34% irrevocables.
Regulators are used to monitoring this industry, gradually consolidating on a worldwide scale as a result of cost pressures. GXO has smaller scale in the UK.
I don’t think antitrust issues are going to prevent this transaction. Interloper risk is minimal (DHL, Deutsche Post would have regulatory issues). Spread is 1.00%/7.14% (gross/annualised). Long.

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Mar 21

Daily Brief Event-Driven: The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
IntelliCentrics (6819 HK): Delisting and Special Dividend
Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible
Noteworthy Price Movements Associated with 1Q Ex-Dates Trading Setups
WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better
Coforge QIP Early Look – Shares Have Corrected Since the Announcement, Last Deal Did Well

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM

Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.

IntelliCentrics (6819 HK): Delisting and Special Dividend

On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.

Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

Noteworthy Price Movements Associated with 1Q Ex-Dates Trading Setups

Investors buying on February ex-dates, perhaps due to the Value-up factor, led to a successful strategy for local managers: buying before ex-date and selling at close, yielding positive results.
On March 19th, Kia Corp (000270 KS) diverged from February’s pattern. Notably, FINANCIAL INVESTMENT sold heavily on Kia’s ex-date, a deviation from their quiet February activity.
FINANCIAL INVESTMENT’s trend of liquidating positions held since last quarter, especially for dividends, gains momentum as March ends, possibly overshadowing February’s Value-up factor.

WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better

By Clarence Chu

WT Microelectronics (3036 TT) is looking to raise up to US$444m in its upcoming global depository receipts (GDRs) offering.
WT Microelectronics recently announced its board’s resolution to issue between 68-85m new shares in the form of GDRs, with the use of proceeds geared towards purchasing of raw materials overseas.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Coforge QIP Early Look – Shares Have Corrected Since the Announcement, Last Deal Did Well

By Clarence Chu

Coforge (COFORGE IN) is looking to raise around US$386m in its upcoming qualified institutional placement (QIP).
In an announcement released on Saturday, Coforge had mentioned its board’s approval to raise up to INR32bn via a QIP. Since then, the shares have corrected 9.1%.
The deal would be a large one to digest at 14 days of three month ADV. That being said, the company’s last selldown did well.

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Mar 20

Daily Brief Event-Driven: Shinko Electric (6967 JP): Tender State of Play and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shinko Electric (6967 JP): Tender State of Play
Boral (BLD AU) Rejects Seven’s Offer
SciClone Pharma (6600 HK): GL Capital Consortium Reload?
Tencent (700 HK): Gross Margins, Cost Cutting Likely to Be Focus Going into Q4 FY23 Results
SciClone Pharma (6600 HK): Privatisation Déjà Vu All over Again?
Snow Peak: Cheap MBO
Quiddity Leaderboard SET50 Jun 24: Reference Period Begins; Three Changes Likely; Some Trade Ideas
JSE Mar24 Rebalance: Auction Analytics
Orecorp (ORR AU): Well Played Perseus
EQD | KOSPI 200 WEEKLY Bottom May Be Behind the Corner

Shinko Electric (6967 JP): Tender State of Play

Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%.
The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains.
Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.

Boral (BLD AU) Rejects Seven’s Offer

Back on the 19 Feb, Seven Group Holdings (SVW AU) made a cash/scrip Offer for Boral Ltd (BLD AU) shares not owned, with certain tendering thresholds triggering more cash.
Boral has now recommended shareholders to reject the Offer after the independent expert (Grant Samuel) concluded the Offer is neither fair nor reasonable, supporting the view of Boral’s board.
Grant Samuel backed out a price range of $6.50-$7.13/share, versus SGH’s Offer of $5.96-$6.19/share; and up to $6.39/share including the conditional payments. SGH’s terms were best & final.

SciClone Pharma (6600 HK): GL Capital Consortium Reload?

A little over a year ago, shareholders approved Sciclone Pharmaceuticals (6600 HK)‘s buyback, which lifted GL Capital’s holding to 31.63% from 28.09%, enabling creep provisions.
After the share price gained 14% yesterday, SciClone was suspended pursuant to the Code on Takeovers and Mergers before trading commenced this morning. Mmm.
GL Capital, together with CDH Investments, Ascendent Capital Partner, Ocean Falcon Limited, and Boying Investments Limited, took SciClone private in 2017. Time for another privatisation?

Tencent (700 HK): Gross Margins, Cost Cutting Likely to Be Focus Going into Q4 FY23 Results

Tencent is due to release FY23 results tomorrow morning after the HK close. The earnings call is scheduled for 14:00 SAST.
The market is expecting 1.8% QoQ revenue growth, 8.6% YoY. Strong QoQ revenue growth of 10% is expected for the advertising segment.
QoQ revenue growth for the gaming sector is expected to decline by 4.9%. Domestic gaming revenue is expected to fall by 7.6%, international gaming revenue expected to increase by 9.6%.

SciClone Pharma (6600 HK): Privatisation Déjà Vu All over Again?

After rising 14% on Monday, Sciclone Pharmaceuticals (6600 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.”
SciClone US was listed on NASDAQ in March 1992 and was privatised in October 2017 by a GL Capital-led consortium. It was relisted on the HKEx on 3 March 2021.
A GL Capital-led consortium will likely once again lead the privatisation. An offer price at or slightly above the IPO price (HK$18.80) would be sufficient to get the vote up.

Snow Peak: Cheap MBO

By Michael Causton

Snow Peak agreement with Bain Capital to take the outdoor brand private next month seems to have been in the works for a couple of years.
Although sales are expected to rebound this year to near record highs, Snow Peak insists the domestic camping boom is over and will look at long-term growth overseas instead.
Even so, the MBO price looks cheap. Snow Peak is likely to see a rebound in domestic sales in FY2024 and its plans for overseas expansion are solid.

Quiddity Leaderboard SET50 Jun 24: Reference Period Begins; Three Changes Likely; Some Trade Ideas

The SET50 index tracks the performance of the top 50 largest and most liquid names listed in the Stock Exchange of Thailand (SET).
In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
The 3-month reference period used for average market cap rankings started on 1st March 2024 and as things stand, there could be three ADDs/DELs in June 2024.

JSE Mar24 Rebalance: Auction Analytics

JSE indices were rebalanced in the closing auction on Friday.
Turnover for the day on the JSE was R59.3bn, R44bn traded in the closing auction (74%).
Turnover at the December rebalance was R60bn, where around half traded in the closing auction.

Orecorp (ORR AU): Well Played Perseus

After Perseus (PRU AU) announced it had secured Tanzanian Fair Competition Commission approval, Orecorp (ORR AU) continued to sit on its hands as, technically, Silvercorp (SVM CN) terms were superior.
PRU added 2% overnight bringing its stake to 22% vs SVM’s 21%. SVM said they won’t extend beyond the 22nd March. Something had to give.
This morning, PRU bumped its all-cash Offer to A$0.575/share (from A$0.55/share), with 15.6% of shares out intending to accept. SVM have five business days to counter.

EQD | KOSPI 200 WEEKLY Bottom May Be Behind the Corner

By Nico Rosti

The KOSPI 200 INDEX is falling for the second week in a row, but the pullback is modest so far.
This pullback is probably just another occasion to buy at better prices, however some more pullback may be in store between here and the end of the week.
The support area where we think a LONG trade has good probability of success based on our models is between 356 and 350.

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Mar 19

Daily Brief Event-Driven: JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)
Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs
JSR Corporation (4185 JP): JIC Tender Starts and Should Succeed Despite Shin-Etsu’s Re-Rating
Orecorp Should Now Back Perseus’ Offer
Exploring Trading Setups Utilizing NPS’s ESG Fund Flows After July
Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell
Currys Lifts Profit Outlook After Suitors Walk Away
Southern Cross Media (SXL AU): Re-Engages with ARN Media (A1N AU)/Anchorage on Revised Terms

JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)

The Tender Offer is finally here. JIC announced the official launch after the close today.
JIC appears to be taking on the SUNY RF risk as-is. The Tender Offer details vs the original expectations in the late June 2023 document are unchanged.
Once started, unless a US court approves an injunction causing regulatory delay, this is done. But there are path events. And of course there is a double arb here.

Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs

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.
The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELETEs.

JSR Corporation (4185 JP): JIC Tender Starts and Should Succeed Despite Shin-Etsu’s Re-Rating

JSR Corp (4185 JP) notes that the pre-condition for JIC’s tender has been satisfied. The offer price remains unchanged at JPY4,350 per share.
The offer remains attractive despite the material re-rating of peers. The tender should succeed when combined with shareholder fatigue and a lack of vocal opposition.
The tender requires a 66.7% minority acceptance rate. The gross and annualised spread for a 23 April payment is 0.6% and 7.1%, respectively.

Orecorp Should Now Back Perseus’ Offer

Back in August, Silvercorp (SVM CN) bid A$0.15/share and 0.967 scrip for Orecorp (ORR AU); and secured board support after bumping the cash portion to A$0.19/share via an Off-market Offer.
Perseus Mining (PRU AU) countered on the 22 January with a A$0.55/share Offer, which was rejected by Orecorp, ostensibly over concerns Perseus had not secured Tanzanian Fair Competition Commission approval.
That regulatory approval has now been satisfied. The Offers for both Perseus and Silvercorp are conditional on 50.1% acceptance hurdles. I think Perseus’ all-cash Offer is superior.

Exploring Trading Setups Utilizing NPS’s ESG Fund Flows After July

From July, Korea’s listed firms will disclose value enhancement plans. Korea’s NPS may exclude non-compliant firms, pending official response, though internal review suggests likely implementation.
It’s crucial to know portfolio stocks for proactive positioning. A setup targeting potential exclusion from NPS’s ESG funds due to post-July compliance must be designed.
Managers often use KRX ESG Leaders 150, aligning portfolios with it. Thus, it’s crucial to use this list for post-July compliance monitoring and to adapt setups for NPS’s flow impacts.

Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell

By Sumeet Singh

The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
Tokio Marine Holdings (8766 JP) had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

Currys Lifts Profit Outlook After Suitors Walk Away

Neither Elliot nor JD.com (9618 HK) intend to pursue Currys PLC (CURY LN) at this stage and thus won’t be able to present an offer for the next six months.
Currys has issued an upbeat trading update. My new TP is 78p/share, >16% above Elliot’s sweetened offer, 10.4x 24e P/E vs 7.6x currently, and 9.1x 25e P/E vs 6.6x currently.
My TP implied equity value is 864 million. I believe the Board and top shareholders would be willing to consider offers around 80p.

Southern Cross Media (SXL AU): Re-Engages with ARN Media (A1N AU)/Anchorage on Revised Terms

Southern Cross Media (SXL AU) is re-engaging with ARN Media (A1N AU)/Anchorage at A$0.296 cash per share and 0.870 A1N shares per SXL share. Eligible shareholders get franking credits worth A$0.127.
SXL’s re-engagement was driven by major shareholders, who are also supporting a motion to remove Mr Rob Murray as chairman due to the glacial pace of negotiation.
While the offer is light compared to long-term adjusted exchange ratios and historical prices, large shareholders are supportive. Shares are trading through terms due to the large franking credits.

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Mar 18

Daily Brief Event-Driven: Fast Retailing (9983) – Now At Double Downweight Levels and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fast Retailing (9983) – Now At Double Downweight Levels
Merger Arb Mondays (18 Mar) – Roland DG, JSR, YSK, CIMC Vehicles, Alumina, QV Equities, Qantm
Aida Engineering (6118) Buyback – Not Big Enough, But Not Small; They Gotta Shrink E.
Liquid Universe of European Ordinary and Preferred Shares: March‘24 Report

Fast Retailing (9983) – Now At Double Downweight Levels

Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 2.8mm shares (US$2.5bn) to sell.
At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.

Merger Arb Mondays (18 Mar) – Roland DG, JSR, YSK, CIMC Vehicles, Alumina, QV Equities, Qantm

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

Aida Engineering (6118) Buyback – Not Big Enough, But Not Small; They Gotta Shrink E.

Late last week, machine tool and press maker Aida Engineering (6118 JP) made an announcement of a share buyback. Up to 2.3mm shs (3.59%) spending up to ¥2bn.
The company has filed a policy for “Action to Implement Management That is Conscious of Cost of Capital and Stock Price” in its most recent CorpGov report available (J/E) here.
It will be a little smaller than that, but it is worth taking a closer look at the details, etc.

Liquid Universe of European Ordinary and Preferred Shares: March‘24 Report

Since mid-February, spreads have not followed a clear pattern across our European liquid universe of ordinary and preferred shares (9 have tightened, 9 widened, 1 remained at same level).
Recommended trades long preferred / short ordinary shares: Danieli, Grifols, Media-for-Europe, Sixt.
Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, SSAB Svenska Stal, Roche.

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Mar 17

Daily Brief Event-Driven: HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”
(Mostly) Asia-Pac M&A:QV Equities, TASK, Qantm, Superloop, CIMC Vehicle, JSR, Roland DG, Outsourcing
Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation
Weekly Deals Digest (17 Mar) – JSR, Roland DG, CIMC Vehicles, Li Ning, Alumina, QV Equities, Japfa
Mainland Connect NORTHBOUND Flows (To 15 Mar 2024): Biggest Net Buying in a While, CATL a Big Buy
A/H Premium Tracker (To 15 Mar 2024): Liquid AH Premia Starting to Narrow
Quiddity Leaderboard BSE/SENSEX Jun 24: Who Will Replace Wipro?
Last Week in Event SPACE: Keisei Electric /Oriental Land, SingTel, Alumina/Alcoa, Li Ning

HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs

A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row.

Updated Tool and New “Diff File Generator” for TSE “Mgmt Conscious of Capital Cost/Stock Price”

In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links. On Feb 1, the TSE put out a presentation and set of case studies.
We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.

(Mostly) Asia-Pac M&A:QV Equities, TASK, Qantm, Superloop, CIMC Vehicle, JSR, Roland DG, Outsourcing

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed this week on Smartkarma: WAM Leaders (WLE AU) scrip-deal for QV Equities (QVE AU); and TASK Group (TSK AU)‘s Scheme with PAR Technology (PAR US).
Key updates took place on: Qantm Intellectual Property (QIP AU), Superloop (SLC AU), CIMC Vehicle (1839 HK), JSR Corp (4185 JP), Roland DG Corp (6789 JP), and Outsourcing (2427 JP).

Investigating the Size and Timing of Korea’s Local Dividend Arbitrage Traders’ Position Liquidation

Estimating FINANCIAL INVESTMENT’s dividend arbitrage positions’ exact size and liquidation plans is challenging. Yet, past trading patterns suggest a substantial portion may be liquidated soon, akin to January’s volume (≥₩2T).
Many local market participants expect a scenario unfolding post-March, aligning with KOSPI companies rescheduling ex-dividend dates. Expect substantial position liquidation by April’s end, likely impacting index negatively, akin to January.
Position setups should adapt to short-term index corrections, leveraging earnings season for earnings-based spreads using index short hedging.

Weekly Deals Digest (17 Mar) – JSR, Roland DG, CIMC Vehicles, Li Ning, Alumina, QV Equities, Japfa

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: Trial Holdings (5882 JP) and Lianlian DigiTech (2104619D CH) IPOs.
Event-Driven developments: JSR Corp (4185 JP), Roland DG Corp (6789 JP), Yaizu Suisankagaku Industry (2812 JP), Alumina Ltd (AWC AU), QV Equities Ltd (QVE AU), CIMC Vehicles.

Mainland Connect NORTHBOUND Flows (To 15 Mar 2024): Biggest Net Buying in a While, CATL a Big Buy

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 32.8bn of A-shares on decent volume after one RMB-3bn week following 5 weeks straight of net buying total RMB +63bn. Foreigners are in.
The volume now is back to chasing momentum, but given so much net buying, much of it appears to be passive plus a CATL kicker.

A/H Premium Tracker (To 15 Mar 2024): Liquid AH Premia Starting to Narrow

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND a net buyer every day since the end of Chinese New Year. NORTHBOUND a huge net buyer this week, now net buyers in size (RMB +93bn) over 7 weeks.
For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

Quiddity Leaderboard BSE/SENSEX Jun 24: Who Will Replace Wipro?

In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the June 2024 index rebal event.
As things stand, there could be one index change for the SENSEX index but there is room for these names to change during the remainder of the reference period.
Separately, there could be five ADDs/DELs for the BSE 100 index and six ADDs/DELs for the BSE 200 index.

Last Week in Event SPACE: Keisei Electric /Oriental Land, SingTel, Alumina/Alcoa, Li Ning

Even if you were an activist, or a trader with an activism tilt, be long Keisei Electric Railway Co (9009 JP) vs. Oriental Land (4661 JP).
Reportedly, Singtel (ST SP) is negotiating a sale of Optus. Both Singtel and Optus scotch those rumours.
Alumina Ltd (AWC AU) and Alcoa (AA US) enter into a Scheme. As expected. The key question: is CITIC, with 18.9% of shares out, supportive?

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Mar 16

Daily Brief Event-Driven: HK CEO & Director Dealings (15 Mar 2024): Sino Land and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK CEO & Director Dealings (15 Mar 2024): Sino Land, Hysan, FE Consortium, Champion REIT, Dongyue
NPN X PRX: Discounts Continue to Come Under Pressure
JSE March Rebalance Day: Top Sells AGL, MNP & INP
EQD | Hang Seng (HSI): How Far Can It Rally Now?
KKR/Encavis AG: Voluntary Offer

HK CEO & Director Dealings (15 Mar 2024): Sino Land, Hysan, FE Consortium, Champion REIT, Dongyue

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
The key stocks mentioned in this regular insight are Sino Land (83 HK), Hysan (14 HK), Far East Consortium (35 HK), Dongyue (189 HK) & Great Eagle Holdings (41 HK)/Champion REIT (2778 HK).

NPN X PRX: Discounts Continue to Come Under Pressure

Naspers and Prosus continue to come under pressure relative to their underlying holdings.
Since our last update on the 1st of March, Naspers’ look through discount has widened by 1.6 percentage points to 42%.
Naspers’ discount to Prosus’ market value has widened notably by 2.1 percentage points to 11.3%. Prosus’ discount is only 30bps wider and is trading at 35.4%.

JSE March Rebalance Day: Top Sells AGL, MNP & INP

We expect to see large volumes of AGL, MNP and INP to trade in the closing auction due to the index harmonisation.
Passive trackers and hedgers with exposure to vanilla indices will need to sell down their holdings to transition to the SWIX methodology.
The top buys include: NPN, FSR, SBK, GFI, CPI and PRX.

EQD | Hang Seng (HSI): How Far Can It Rally Now?

By Nico Rosti

The Hang Seng Index is rallying and could co higher this week but it seems there isn’t much room to go really higher.
A good target to cover your LONG holdings would be 17500, for this coming week and/or the following week.
A pullback this coming week is also possible, so it’s not sure the index can rally more from here, or at least not without some correction first.

KKR/Encavis AG: Voluntary Offer

KKR offers €17.50/share for Encavis AG (ECV GR), 53% premium, implied equity value of €2,818 million. This shows interest in renewables after the falls on the stock market in 2023-24.
The offer represents 12.7x EV/Fwd NTM EBITDA and 32.4x Fwd P/E. On a P/E basis, the offer seems fair vs. (depressed) comparables.
Given the current negative perception surrounding renewable energy companies, I think the shareholders are likely to tender at an attractive price. Spread is 3.77%/5.24% (gross/anualised, assuming closing by mid-December).

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Mar 15

Daily Brief Event-Driven: Outsourcing (2427) – The OTHER Arb – That One Neat Trick And Its Weird Risks and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Outsourcing (2427) – The OTHER Arb – That One Neat Trick And Its Weird Risks
JSR (4185) Tender May Start Next Week
JSR Corporation (4185 JP): SUNY RF Responds as JIC Tender Rumoured for a 19 Mar Start
EQD | NIFTY Down: Where to BUY WEEKLY
Another Brewing Fight for the Controlling Shareholding of Hanjin Kal?

Outsourcing (2427) – The OTHER Arb – That One Neat Trick And Its Weird Risks

Outsourcing Inc (2427 JP) has been an “interesting” risk arb situation. It was launched as a Cheeky, Opportunistic, Low-Priced MBO. Some bumps after launch turned out to be BAU.
The stock has not traded above terms since early on in the trade. I expect people are happy to get out. But there is ANOTHER ARB to do here.
The OTHER ARB is something quite particular to high float, low activism risk arb trades. In some ways better than the traditional arb, but it has some risks.

JSR (4185) Tender May Start Next Week

Just out this AM, an article in Bloomberg (J) says “people familiar with the matter” suggest the Tender Offer could be launched as early as 19 March.
The language regarding the nature of the China regulatory “approval” is different than recent media articles, but they are in the same vein.
Original and updated data, information, grids, etc are shown below.

JSR Corporation (4185 JP): SUNY RF Responds as JIC Tender Rumoured for a 19 Mar Start

Bloomberg reports that JIC will start the JSR Corp (4185 JP) tender as early as 19 March. Separately, SUNY RF filed a response to Inpria/JSR’s 6 March filing last night.
My reading of JSR and SUNY RF’s filings suggests that the Court is unlikely to conclude that SUNY RF’s lawsuit will be harmed if JIC proceeds with the tender offer.
JIC seems comfortable taking on the litigation risk (if required). The key risk remains timing. For a late April payment, gross/annualised spread is 0.6%/4.0%.

EQD | NIFTY Down: Where to BUY WEEKLY

By Nico Rosti

The NIFTY Index this week suddenly stopped its rally and started to correct.
This week should close down and the next week may be also down, but if it is the odds are great for a LONG trade.
Re-Enter the rally at prices between 21800 and 21150, this week or the next.

Another Brewing Fight for the Controlling Shareholding of Hanjin Kal?

On 14 March, NPS announced that it has decided to vote against the re-appointment of the CEO Cho Won-tae as the executive director of Korean Air Lines.
It was also announced on 14 March that GS Retail purchased a 1% stake in Hanjin Kal. In addition, Korean Air Lines also purchased a 1.2% stake in GS Retail.
One of the growing probabilities of the changing shareholding structures is that KDB may be interested in selling its 10.6% stake in Hanjin Kal.

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Mar 14

Daily Brief Event-Driven: New Information on Korea Value-Up Index Scoring System & Constituent Weighting and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

New Information on Korea Value-Up Index Scoring System & Constituent Weighting
Roland DG (6789 JP): Brother (6448 JP)’s Unexpected Competing Hostile Offer
Optus Sale Would Be A BIG Payday For SingTel
Quiddity Leaderboard STAR 50 Jun 24: 3 Changes Likely But Some Question Marks Over Certain Names
Roland DG (6789) – Brother (6448) Launches Hostile Overbid to Taiyo MBO – You Love To See It
QV Equities (QVE AU) Backs WAM Leaders’ Cash/Scrip Offer
Volpara Health (VHT AU): 12th April Shareholder Vote
Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Multiple Changes to Expectations; US$481mn One-Way
Volpara Health (VHT AU): Scheme Vote on 12 April
An Update of the Potential KOSPI200 Rebalance Candidates in June 2024

New Information on Korea Value-Up Index Scoring System & Constituent Weighting

KRX considers a comprehensive change to the Value-up Index scoring system. Weightings emphasize ROE, PER, and FCF while reducing PBR weight.
KRX considers adopting scoring-based constituent weighting to prevent JPX Prime 150’s issues, but NPS opposes. Float market cap weighting like JPX Prime 150 is contemplated to address concerns.
Momentum trading in the Value-up initiative will favor low PER and high ROE stocks over low PBR. The semiconductor sector is anticipated to benefit significantly from float market cap-based weighting.

Roland DG (6789 JP): Brother (6448 JP)’s Unexpected Competing Hostile Offer

Brother Industries (6448 JP) has disclosed an unexpected competing hostile offer for Roland DG Corp (6789 JP) at JPY5,200 per share, a marginal 3.3% premium to the Taiyo-sponsored MBO (JPY5,035).
Unlike the Taiyo offer, the Brother offer is pre-conditioned on regulatory approvals and has a proposed start date of mid-May. The Board is evaluating the Brother offer.
The Board’s three options with declining probability are to ask Taiyo for a bump, continue to recommend an unchanged Taiyo offer or recommend the Brother offer.

Optus Sale Would Be A BIG Payday For SingTel

Reportedly (AFR), Singtel (ST SP) is in advanced talks to sell Optus, Australia’s second-largest telco, to Brookfield for A$16bn-A$18bn.
SingTel quickly countered there is no impending deal; and “Optus remains an integral and strategic part of the Singtel Group and we are committed to Australia for the long term.”
Optus’ EBITDA in 3Q24 and 9M24 fell 1.8% and 8.3% in S$ terms. Extrapolating out for FY24E suggests pricing under this (very) indicative Offer of around 7.6-8.6 turns of EBITDA.

Quiddity Leaderboard STAR 50 Jun 24: 3 Changes Likely But Some Question Marks Over Certain Names

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the June 2024 index rebal event.
I currently expect three changes for the STAR 50 index in June 2024 but there are some questions marks over the names leading the race to become ADDs.

Roland DG (6789) – Brother (6448) Launches Hostile Overbid to Taiyo MBO – You Love To See It

A month ago, Engagement Investor Taiyo Pacific Partners launched an MBO on Roland DG Corp (6789 JP) after having done a takeover of their former sub years ago.
I said it was too cheap. Machinery company Brother Industries (6448 JP) has decided the same, and has announced a hostile/unsolicited overbid 3.3% higher. Tender to start in May. Fun!!!
This will almost certainly get bid even higher as people would expect the MBO bidders won’t simply give up. More below.

QV Equities (QVE AU) Backs WAM Leaders’ Cash/Scrip Offer

Back on the 31 Jan, WAM Leaders Ltd (WLE AU), said it intended to make an off-market Offer after QV Equities Ltd (QVE AU) rejected its all-scrip NBIO.
WAM and QVE have now entered into a Scheme. The current scrip terms are 0.7609 new WAM shares per QVE share; OR A$1.02/share cash. Terms will be adjusted …
… in accordance with the most recently released NTA/shares of WAM and QVE. QVE shareholders are also expected to receive the quarterly dividend of A$0.013/share.

Volpara Health (VHT AU): 12th April Shareholder Vote

On the 14 December, Volpara Health (VHT AU), which makes software enabling the early detection of breast cancer, announced an Offer by way of a Scheme with Lunit (328130 KS)
NZ’s OIO approval was satisfied on the 31 January. The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th April.
Lunit is offering Volpara shareholders A$1.15/share, in cash, a 47.4% premium to last close. Cornerstone investors with 25.92% of shares out are supportive. The IE says terms are fair.

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Multiple Changes to Expectations; US$481mn One-Way

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

Volpara Health (VHT AU): Scheme Vote on 12 April

The Volpara Health Technologies (VHT AU) IE considers Lunit (328130 KS)‘s A$1.15 offer fair and reasonable as it is above its A$0.67-0.82 per share valuation range.
NZ OIO approval has been received. The scheme is conditional on shareholders’ approval by more than 75% of votes cast and more than 50% of shareholders.
The scheme vote will get up as the offer is attractive vs. historical trading ranges. At the last close and for the 21 May payment, the gross/annualised spread was 2.2%/13.0%.

An Update of the Potential KOSPI200 Rebalance Candidates in June 2024