Event-Driven

Japan Investment Corp (JIC) has launched a Tender Offer on top photoresist maker JSR Corp (4185 JP), at ¥4,350/share.
That is a decent price, but it is not overwhelming. Furthermore, process for determining (and understanding) “fair” remains inadequate.
Significant foreign ownership, a high price, Japanese equity excitement, etc, all make this a situation where we likely see a pop (the last bit), a fade, then a re-drift better.

[UPDATE] Tax-Loss Selling in Australia – Time To Unwind the Basket

In Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket at the start of June I proposed a basket.
We are getting to the end of June. Time to unwind that short basket. The named ticker was -26%. The 70-name basket underperformed ASX200 by 4.4%.
One can now go long the basket into end-June as historically it outperforms S&P-ASX200 over two months. If one did not short, one can still go long. Basket below.

JSR Corporation (4185 JP): JIC’s Pre-Conditional Tender Offer at JPY4,350

JSR Corp (4185 JP) has recommended JIC’s pre-conditional tender offer of JPY4,350 per share, a 34.5% and 10.6% premium to the undisturbed price and last close, respectively.
The pre-conditions relate to various country approvals. China’s approval should be challenging due to Japan’s recent curbs on Chinese exports of chipmaking equipment.
The offer is long-dated and opens in late December. The offer price is attractive compared to peer multiples and just a touch below the all-time share price high.

LQ45 Index Rebalance Preview (July): Review Period Nearly Complete

The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 31 July.
Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

DDH1 To Merge With Perenti

Specialty mining driller DDH1 (DDH AU) has announced a merger, by way of a Scheme, with Perenti Global (PRN AU).
Under the proposed terms, DDH1 shareholders will receive for each DDH1 share held $0.1238 cash plus 0.7111 Perenti shares, for an implied value of A$1.01/share, or a 17.4% premium.
Directors and shareholders with a combined 38% of DDH1 shares have indicated an intention to vote in favour of the transaction. Scheme implementation is expected in early October 2023.

MUFG Seeks A Majority Stake In Mandala

Mitsubishi UFJ Financial (MUFG US) and 92.7%-held Adira Dinamika Multi Finance (ADMF IJ) have entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
MUFG and Adira appear to be paying IDR 3,297/share or IDR 7tn all-in. The SPAs are subject to regulatory approvals with completion expected in early 2024.
Upon completion, MUFG will hold 70.6% in Mandala and Adira 10% in the Indo car/motorcycle loan lender. This will trigger a Mandatory Tender Offer for the remaining 19.4%.

Quiddity Leaderboard-DAX Jun 23: A SHORT Sartorius LONG Merck Trade Might Be Interesting

In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices in the September 2023 Rebalance.
Software AG (SOW GR)‘s takeover situation could result in intra-review index changes prior to the September 2023 rebalance.
Fresenius Medical Care (FME GR) and Deutsche Lufthansa AG (LHA GR) are close to becoming DAX ADDs as they require very small price gains to trigger Fast Entry additions.

Silk Laser Firms Offer With Wesfarmers

On the 19 April, Silk Laser Australia (SLA AU), an operator of specialist clinic networks across Australia, announced a $3.15/share NBIO from Wesfarmers Ltd (WES AU)
Ahead of the expiry of Wesfarmers’ due diligence, EC Healthcare (2138 HK) snuck in a $3.35/share NBIO. Wesfarmers opted out of its matching rights. Although due diligence remained ongoing.
SLA has now announced a binding implementation agreement with Wesfarmers at A$3.35/share. No word, as yet, from EC Healthcare. Nor is one expected.

Silk Laser Australia (SLA AU): Wesfarmers Binding Offer, Next Move EC Healthcare

Silk Laser Australia (SLA AU)‘s binding offer from Wesfarmers Ltd (WES AU) is at A$3.35 per share which is in line with EC Healthcare (2138 HK)’s non-binding proposal.
While EC Healthcare is a relative minnow, it secured HK$1 billion (A$191 million) financing in May, which suggests a chance of returning with a higher offer.
If EC Healthcare deployed the HK$1.0 billion loan for the acquisition, it would imply a price of A$3.60 per share, 7.6% above Wesfarmers’ offer.

DDH1 (DDH AU): Binding Offer from Perenti (PRN AU)

DDH1 (DDH AU) has entered a SID with Perenti Global (PRN AU) at A$0.1238 cash plus 0.7111 PRN shares for each DDH share, a 17.4% premium to DDH’s 5-day VWAP.
The key conditions are shareholder scheme approval and ACCC clearance. Shareholders representing 38.0% of outstanding shares will vote in favour of the scheme.
The offer is attractive compared to peer multiples, and the net exchange ratio is fair on a 1-year basis. A critical risk is volatility risk around PRN shares.

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Jun 26

Daily Brief Event-Driven: JIC To Launch ¥1 Trillion Takeover on JSR (4185) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JIC To Launch ¥1 Trillion Takeover on JSR (4185)
Merger Arb Mondays (26 Jun) – Eoflow, ENM, Estia, InvoCare, United Malt, Arclands, Chindata
KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December

JIC To Launch ¥1 Trillion Takeover on JSR (4185)

The Nikkei followed by other media outlets revealed Saturday that the JIC (株式会社産業革新投資機構) were in talks with JSR Corp (4185 JP) to acquire the photoresist maker for ¥1 trillion.
JSR’s release (Japanese/English) noted that they are considering the matter, but no decision has been made. They note, however, a Board of Directors meeting on Monday 26 June 2023.
Articles suggest a Tender Offer “this year”, delisting next. ¥1 trillion is a 50% premium. Or 35%. I expect shares go limit up, then we will get more news post-close.

Merger Arb Mondays (26 Jun) – Eoflow, ENM, Estia, InvoCare, United Malt, Arclands, Chindata

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 – 111 Inc (YI US), Silk Laser Australia (SLA AU), United Malt Group Ltd (UMG AU), ENM Holdings (128 HK), Chindata Group (CD US), Estia Health (EHE AU).
Lowest spreads – Healius (HLS AU), Musgrave Minerals (MGV AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Mincor Resources NL (MCR AU), Lian Beng (LBG SP).

KOSDAQ150 Index Rebalance Preview: A Dozen Potential Changes from Now to December

Nearly a third of the way through the review period, we see 12 potential changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
There could be one change to the index in July/August following Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Market to the KOSPI Market.
The potential adds have outperformed the potential deletes over the last few months and there could be further outperformance as we go through the review period.

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Jun 25

Daily Brief Event-Driven: JSR Corporation (4185 JP): JIC’s Tender Offer Looming? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JSR Corporation (4185 JP): JIC’s Tender Offer Looming?
Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Loose Lips Sinks Ships
Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Amara, SBI Shinsei Bank, Yashili, EOFlow

JSR Corporation (4185 JP): JIC’s Tender Offer Looming?

Nikkei reports that Japan Investment Corporation (JIC) is in talks to acquire JSR Corp (4185 JP) for around JPY1 trillion (US$7 billion) through a tender offer.
JSR responded, “No decision has been made at this moment, although JSR is considering this matter.” The Board will discuss the proposal on Monday.
Minorities will be supportive as the JPY1 trillion valuation implies a tender price of JPY4,850 per share, a 50% premium to the last close and an all-time share price high.

Index Rebalance & ETF Flow Recap: NKY, KOSPI2, New Deal, SET50, MOG Digitech, Syngenta IPO

There were a couple of ad hoc rebalances in Korea last week for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) and KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY).
Coming Friday will mark the end of the review period for the next rebalance of the HSI, HSCEI, HSTECH, HSCI, LQ45, PCOMP as well as the SET50 June implementation.
With Japan indices moving higher, the largest inflows went into ETFs tracking the Nikkei 225 (NKY INDEX) and other local/global indices.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Loose Lips Sinks Ships

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

Last Week in Event SPACE: Great Wall Motor, China Feihe, EcoPro, PCCW

RMB dual counter started trading. Great Wall Motor (2333 HK)‘s A-shares trade at 3x the multiple. THAT is a big discount to harvest.
China Feihe (6186 HK)‘s CFO exits an indirect stake of 6.38% around Feihe’s all-time low.
EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Amara, SBI Shinsei Bank, Yashili, EOFlow

There are 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
No new deals were announced this week although the major shareholders of Amara Holdings (AMA SP) are in discussions with a third party
Key updates took place for SBI Shinsei Bank (8303 JP), Yashili International Holdings (1230 HK), and Eoflow (294090 KS)

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Jun 24

Daily Brief Event-Driven: Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics
Silver Lake/Software AG: Bain Clears the Way

Celltrion Merger Announcement in July: Trading Angles Utilizing Appraisal Rights Exercise Dynamics

According to Invest Chosun, Celltrion plans to submit a merger registration statement to the KRX in July, with Mirae Asset Securities acting as the lead underwriter.
Given that the approximate timing of the merger registration statement submission has already been exposed to the market, we can track the difference between the spot and exercise prices.
Celltrion Inc will likely attempt to minimize the appraisal rights price. We can consider capitalizing on this possibility by shorting Celltrion Inc while going long on the other two companies.

Silver Lake/Software AG: Bain Clears the Way

By Jesus Rodriguez Aguilar

Silver Lake announced it waived the minimum acceptance threshold of 50% + 1 share in its offer for Software AG (SOW GR) . The acceptance period has been extended until 28 June.
Bain Capital abandons the pursuit and will sell its 10.01% stake to Silver Lake, which will now controls 41%, plus another 10% from a convertible bond.
Silver Lake is now pressing the minority shareholders to tender. Spread is 1.44%/15.13% (gross/annualised), assuming settlement on 31 July. I believe that Silver Lake will be successful. Long and tender.

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Jun 23

Daily Brief Event-Driven: Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes
SK Square’s Special Dividend Momentum Trading: Entry Timing at Month End.
Quiddity Leaderboard ES50 Sep 23: Ferrari Retains the Lead; US$1.26bn Potential Inflow
SK Square: Share Cancellation and More Share Buyback Likely from Sale of SK Shieldus in 2H 2023
Quiddity Leaderboard SE600 Sep 23: One Intra-Review Change and 4 Regular ADDs/DELs Likely
Vivendi Acquires A Stake In PCCW’s Viu

Nikkei 225 Index Rebalance Preview (Sep 2023): Ranking, Capping, Funding & Other Changes

The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We take another stab at identifying potential inclusions and exclusions.
There will be a big impact on the potential index changes. Fast Retailing (9983 JP)‘s index weight could be capped and there will be a big funding trade.
There are many things to watch out for that could affect the impact on the inclusions, including stock splits among potential adds and stepwise inclusion of stocks in the index.

SK Square’s Special Dividend Momentum Trading: Entry Timing at Month End.

The market’s attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.
There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.
We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.

Quiddity Leaderboard ES50 Sep 23: Ferrari Retains the Lead; US$1.26bn Potential Inflow

The ES50 Index is one of the most highly-tracked indices in mainland Europe and the annual index review takes place in September.
Historically, these Rebalance events have had significant volume and ADV impact and they generally involve large cap names.
In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2023.

SK Square: Share Cancellation and More Share Buyback Likely from Sale of SK Shieldus in 2H 2023

By Douglas Kim

SK Square announced that it will cancel treasury shares worth 2.5 million shares on 4 October 2023, which represents 1.8% of its current outstanding shares.
Our NAV analysis of SK Square suggests NAV of 9.4 trillion won or NAV per share of 66,421 won, representing a 45% upside from current levels.
SK Square’s positive shareholder return policies including higher share buybacks, cancellations, and dividends are result in further outperformance of SK Square relative to KOSPI this year.

Quiddity Leaderboard SE600 Sep 23: One Intra-Review Change and 4 Regular ADDs/DELs Likely

In this insight, we take a look at the names leading the race to become ADDs/DELs for the SE600 and EURSTX Indices for the September 2023 Rebalance.
There could be one intra-review deletion for the SE600 index in July or August.
I see 4 ADDs and 4 DELs for the SE600 index in the September 2023 Rebalance.

Vivendi Acquires A Stake In PCCW’s Viu

PCCW Ltd (8 HK) is selling an initial 26.1% equity stake in its streaming platform Viu, to Vivendi SA (VIV FP)‘s Canal+, for US$200mn.
Via a staggered investment, Canal+ can increase its equity to US$300mn. In addition, a further investment, at Canal+’s option, could result in increasing its stake in Viu to 51%.
Elsewhere, PCCW’s 18% discount to NAV is the narrowest in over two years.

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Jun 22

Daily Brief Event-Driven: HS Holdings (8699 JP) Buyback – Adds More to BVPS and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HS Holdings (8699 JP) Buyback – Adds More to BVPS
Quiddity Leaderboard ASX Sep 23: Many Changes Ahead
Hong Kong CEO & Director Dealings (21 June): China Feihe’s CFO Sells Around All-Time Low
Nikkei 225 Sep 2023 Review – The Mercari Conundrum
KFin Tech Lock-Up – US$183m Lockup Expiry Could See PE Investor Trim Further
KRX New Deal Index Rebalance Preview: Interesting Changes Emerging
Hyundai Elevator Chairwoman Hyun Seeks Capital from H&Q Korea
Alpha Auto Group/Lookers: Consolidation at a Cheap Offer Price

HS Holdings (8699 JP) Buyback – Adds More to BVPS

HS Holdings (8699 JP) remains an interesting hodgepodge of assets. It owns just under 50% of Mongolia’s biggest bank, recently IPOed Khan Bank (KHAN MO).
It has a pile of cash. And it has a glorified pawn shop business in Japan. The bank shares must be sold, to a significant degree, by end of year.
Today it announced a buyback tomorrow of 6.4% of shares out. I expect it is one of two large individual holders. We’ll probably know more within a week.

Quiddity Leaderboard ASX Sep 23: Many Changes Ahead

In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run up to the September 2023 Rebalance.
I currently expect one change for the ASX 100 index and five changes (including one intra-review change) for the ASX 200 index.
There could be 7 ADDs and 5 DELs for the ASX 300 index.

Hong Kong CEO & Director Dealings (21 June): China Feihe’s CFO Sells Around All-Time Low

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 stock mentioned in this regular insight is China Feihe (6186 HK)

Nikkei 225 Sep 2023 Review – The Mercari Conundrum

Mercari Inc (4385 JP) is potentially a leading candidate for inclusion in the Nikkei 225 in September.
There are other technical reasons to think it is not.
This insight looks at the issue of why it might be a leading candidate and why it might not be.

KFin Tech Lock-Up – US$183m Lockup Expiry Could See PE Investor Trim Further

By Clarence Chu

KFin Technologies (1804170D IN) was listed on 29th Dec 2022, when it raised around US$180m in its India IPO. Its six-month lockup will expire on 24th Jun 2023.
KFin Technology (KFin) is a technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem.
Coming up for six-month expiry is General Atlantic (the Promoter) and other pre-IPO shareholders. The Promoter had been the sole selling shareholder in the IPO.

KRX New Deal Index Rebalance Preview: Interesting Changes Emerging

The review period for the September rebalance ends on 31 July, the changes will be announced towards end August and implemented at the close of trading on 7 September.
There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. Plus there are a couple of changes for the BBIG indices.
SK Biopharmaceuticals Co Ltd (326030 KS) has overtaken SK Bioscience (302440 KS) on average market cap and there will be large flows on both stocks at the rebalance.

Hyundai Elevator Chairwoman Hyun Seeks Capital from H&Q Korea

By Douglas Kim

It was reported in the local media that Hyundai Elevator Chairwoman Hyun Jeong-Eun is close to completing a deal with H&Q Korea in a deal worth nearly 300 billion won.
The three major reasons driving higher share price of Hyundai Elevator in the last three months include share buyback/cancellation, potential M&A, and solid 1Q 2023 results.
With noticeable downturn in the Korean construction sector, Hyundai Elevator could face worsening industry prospects for both residential and commercial elevators in the next 12-24 months in Korea.

Alpha Auto Group/Lookers: Consolidation at a Cheap Offer Price

By Jesus Rodriguez Aguilar

Long expected consolidation is arriving to UK car retailers. Alpha Auto agreed to acquire Lookers PLC (LOOK LN) via scheme at 120p/share, c.£465.4 million, 35.3% premium, 8.4x Fwd P/E.
The sector appears materially undervalued, with Lookers before announcement on 6.2x Fwd P/E, 4% FY23e yield (4x cover). My fair value estimate is 143p/share (multiples and DCF), 19% above offer price.
Spread 1.17%/4.32% (gross/annualised, assuming settlement around 1 October). Top shareholders have only signed letters of intent (40% aggregate). I’d be long in case of sweetening. VTU LN could be next.

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Jun 21

Daily Brief Event-Driven: Shinsei’s TOB Period Almost Done – What Next? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shinsei’s TOB Period Almost Done – What Next?
StubWorld: EcoPro Continues To Defy Logic
KOSPI200 Index Rebalance Preview: A Busy December Rebalance
Doosan Bobcat Placement – Past Deals Have Been Mixed but the Stock Has Been Doing Well
Exploring Two Lucrative Arbitrage Trading Opportunities in CJ CGV’s Monumental Rights Offer
Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn
Quiddity Leaderboard for F100/250 Sep 2023: One F100 Change and Two F250 Changes Likely

Shinsei’s TOB Period Almost Done – What Next?

The Tender Offer by SBI Holdings (8473 JP) to take private SBI Shinsei Bank (8303 JP) is almost done. The tender closes on 23 June.
The stock has not traded below theTOB Price since the announcement. People have built positions. Expect minimal liquidity from here on out. I expect a somewhat ‘weak’ result.
Now starts a series of ‘technical’ events and deadlines which will culminate for some in delisting at end-Q3/start-Q4 and for some ends in years after an Appraisal Rights case.

StubWorld: EcoPro Continues To Defy Logic

EcoPro Co Ltd (086520 KS) has swatted aside analyst downgrades and the indictment of its chairman to touch an all-time high.
Preceding my comments on EcoPro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

KOSPI200 Index Rebalance Preview: A Busy December Rebalance

Just over a quarter of the way through the review period, we see six changes for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the December rebalance.
There are a few stocks that are close adds at the current time and a move higher can take them into inclusion zone leading to more deletions.
While there is little to no short interest on the potential inclusions, short interest on the potential deletions ranges from 4.3-12.2 days of ADV and 0.5-3.5% of free float.

Doosan Bobcat Placement – Past Deals Have Been Mixed but the Stock Has Been Doing Well

By Sumeet Singh

Doosan Enerbility (034020 KS) aims to raise around US$220m via selling around 4.9% of Doosan Bobcat Inc (241560 KS) .
This will be the third selldown in the company in less than a year with the previous two deals in Nov 22 and May 23 having delivered mixed results
In this note, we will run the deal through our ECM framework and comment on other deal dynamics.

Exploring Two Lucrative Arbitrage Trading Opportunities in CJ CGV’s Monumental Rights Offer

A capital increase event of this size allows for a classic arbitrage trading strategy involving the acquisition of subscription rights and the simultaneous sale of an equal amount of SSF.
We can aim to profit from the price movements between warrants and SSF during the warrants trading period by getting out of the positions before the trading period ends.
We will also likely encounter a significantly juicy price difference between warrants+subscription and SSF, given a discount rate of 25% with an enormous capital increase rate,

Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

By Douglas Kim

After the market close on 20 June, Doosan Enerbility announced that it will sell 5 million shares of Doosan Bobcat through a block deal worth about 300 billion won.
The block deal price range is from 54,800 won to 56,200 won, which represents a discount range from 6.18% to 8.51% (versus current price).
We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn in North America.

Quiddity Leaderboard for F100/250 Sep 2023: One F100 Change and Two F250 Changes Likely

In this insight, we take a look at the potential index changes for F100 and F250 in the run up to the September 2023 Rebalance.
I currently see one change for the F100 index and two separate changes for the F250 index.
There are several names lurking just outside the borders and could be involved in index changes in September 2023 if there are sharp price changes.

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Jun 20

Daily Brief Event-Driven: Two Trading Opportunities from LG Chem’s Stake Sale in LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Two Trading Opportunities from LG Chem’s Stake Sale in LG Energy Solution
Canon Strikes Again. One Buyback Done, Another Begins. Shareholder Structure STILL Matters
Syngenta IPO – Index Entry Possibilities
MOG Digitech (1942 HK): What the Flow Is Going On?
Amara Holdings Gains On Possible Offer

Two Trading Opportunities from LG Chem’s Stake Sale in LG Energy Solution

This issue offers two trading opportunities. The first is the passive inflow resulting from an increase in the float rate. The second is the possibility of additional stake sales.
It will provide LG Energy with a passive inflow of 760K shares (₩426.4 billion), which is a significant passive impact at approximately 3.2x ADTV.
There would be further stake sales of LG Chem’s shares in LG Energy. LG Chem plans to pursue additional stake sales targeting local institutional investors.

Canon Strikes Again. One Buyback Done, Another Begins. Shareholder Structure STILL Matters

Canon Inc (7751 JP) has, as discussed in these pages, conducted 18 buybacks since the GFC. Every single one is ¥50bn. They are short and sharp. The longest? 23 days.
The most recent took 18 days, and was only 15% of ADV, significantly lower than the average of the last dozen at 23-24%.
This time, 3 days after the finished they launched another. The stock popped 5% the first day. There’s a reason for that. Shareholder structure STILL matters a lot.

Syngenta IPO – Index Entry Possibilities

Syngenta AG (SYNN SW) has passed the listing committee meeting to raise CNY 65bn (US$9.1bn) in a Main Board listing on the Shanghai Stock Exchange.
We forecast Syngenta AG (SYNN SW) will be added to the SSE180 Index, SSE50 Index and the CSI 300 Index (SHSZ300 INDEX) indices at the December rebalance.
Inclusion in the SSE A Share Index could take a year and that will hold up inclusion in Northbound Stock Connect and consequently in global indices.

MOG Digitech (1942 HK): What the Flow Is Going On?

MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

Amara Holdings Gains On Possible Offer

Hotel and investment property play Amara Holdings (AMA SP) announced that its controlling shareholders are in discussions with a third party in relation to a possible transaction.
Shares up for grabs controlled by the Teo family are estimated to exceed 65% of shares out.
No price was mentioned. And there is no guarantee a firm Offer will unfold. Shares have gained 38% in the past three trading sessions.

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Jun 19

Daily Brief Event-Driven: JAPAN FLOW: Foreign Investor Inflows Increased; Next Is Foreigners Vs Buybacks Vs GPIF and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JAPAN FLOW: Foreign Investor Inflows Increased; Next Is Foreigners Vs Buybacks Vs GPIF
Great Wall Motor (2333 HK) – RMB Dual Counter Trading Starts Today, Watch that A-Share Discount
Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Stock Moves
Merger Arb Mondays (19 Jun) – Golden Eagle, Hailan, Yitai Coal, Toshiba, Kenedix, Tesserent, Oishi
Weekly Deals Digest (18 Jun) – Toshiba, Kenedix, Abacus Storage King, Austal, Hailan, Yitai Coal
Amara Holdings (AMA SP): Key Shareholders Ponder an Offer

JAPAN FLOW: Foreign Investor Inflows Increased; Next Is Foreigners Vs Buybacks Vs GPIF

On 8 May I wrote JAPAN FLOW: Foreign Investor Inflows May Increase. Since the data used in that insight, TSE data shows net foreign buying of ¥3.5trln+.
Investor flows appear to work in patterns which are correlated to TOPIX gains and outperformance vs S&P500.
The history of autocorrelation of net buying suggests while the current streak may end, a four week average of net buys could remain positive for a while.

Great Wall Motor (2333 HK) – RMB Dual Counter Trading Starts Today, Watch that A-Share Discount

24 different HK-listed stocks will be tradable in RMB on the HKEX starting 19 June. They make up 35% of HKEX market cap, 40% of total turnover. They are fungible.
The ultimate goal is to allow mainland investors to trade HK stocks in RMB, but we’re not there yet. Southbound has yet to be approved for the 21 SB-eligible names.
Only five of the 24 have A-shares, and of those, three (China Mobile, CNOOC, and Great Wall Motor) have wide H-share discounts. Those should be the ones to look at.

Yuanta/P-Shares Taiwan Dividend Plus ETF: Day 1 Flows & Stock Moves

The Yuanta/P-shares Dividend Plus ETF (0056 TT) started to rebalance its holdings on Friday and will continue to do so for the next 4 trading days.
Stocks with buy flows dropped 0.8% on average on Friday while the stocks with sell flows rose 0.27%. On a flow weighted basis, the numbers were -0.63% vs +1.99%.
The stocks with outflows have outperformed stocks with inflows by a huge margin in the recent past and short interest has jumped on most stocks recently.

Merger Arb Mondays (19 Jun) – Golden Eagle, Hailan, Yitai Coal, Toshiba, Kenedix, Tesserent, Oishi

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 111 Inc (YI US), United Malt Group Ltd (UMG AU), Silk Laser Australia (SLA AU), Estia Health (EHE AU), Chindata Group (CD US), ENM Holdings (128 HK).
Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Musgrave Minerals (MGV AU), Toyo Construction (1890 JP), Lian Beng (LBG SP), Penguin International (PBS SP).

Weekly Deals Digest (18 Jun) – Toshiba, Kenedix, Abacus Storage King, Austal, Hailan, Yitai Coal

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 – Amman Mineral Internasional (1416286D IJ), Tata Technologies (TATATECH IN), JD Industrials (2231713D CH) and JD Property (JDP HK) IPOs.
Event-Driven developments Toshiba Corp (6502 JP), Kenedix Office Investment Co (8972 JP), Abacus Property (ABP AU), Austal Ltd (ASB AU), Tesserent Ltd (TNT AU), Hailan Holdings (2278 HK), Yitai Coal.

Amara Holdings (AMA SP): Key Shareholders Ponder an Offer

Amara Holdings (AMA SP) received a written notification from Mr Albert Teo Hock Chuan (CEO) and Ms Susan Teo Geok Tin (Company Secretary) that they mulling an offer.
The shares entered a trading halt on 16 June as the share price increased 23.9% from S$0.355 on 14 June to S$0.440 per share on 16 June.
Recent SGX privatisation proposals have shown that offerors tend to be miserly with their premiums. The sharp share price rally makes it challenging to launch an offer.

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Jun 18

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, HSTECH, STAR50, KOSDAQ150, CPSE/CNXBANK, Kenedix Merger
Last Week in Event SPACE: Kesei/Oriental Land, Intouch, Abacus Property, Great Eagle, JS Global
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-A Rising Tide Lifts All Boats
SET50 Index Rebalance: TLI, WHA to Replace JMART, JMT
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Lutronic, Hailan, Mason, Tesserent, Kenedix

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, STAR50, KOSDAQ150, CPSE/CNXBANK, Kenedix Merger

There were a bunch of rebalances across different index families that were implemented at the close of trading on Friday.
The coming week is quieter though there are a couple of ad hoc rebalances for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX).
Yet another week of inflows to Tracker Fund of Hong Kong Ltd (2800 HK) as the number of units outstanding is nearly the highest over the last couple of years.

Last Week in Event SPACE: Kesei/Oriental Land, Intouch, Abacus Property, Great Eagle, JS Global

Activist investor influence in distributing Keisei Electric Railway Co (9009 JP)‘s ¥1,980bn Oriental Land (4661 JP) stake to existing shareholders could unleash over 150% potential upside
Intouch Holdings (INTUCH TB) is coming up cheap versus Advanced Info Service (ADVANC TB). Yet the longer-term view suggests otherwise.
Abacus Property (ABP AU) confirmed the spin-off of an ASX-listed self-storage REIT with A$3bn in total assets. There’s a trade here.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-A Rising Tide Lifts All Boats

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

SET50 Index Rebalance: TLI, WHA to Replace JMART, JMT

Thai Life Insurance (TLI TB) and WHA Corp Pcl (WHA TB) will replace Jaymart PCL (JMART TB) and JMT Network Services (JMT TB) in the SET 50 Index in June.
Estimated one-way turnover is 1.7% and will result in a one-way trade of THB 1,533m. The Financials and Real Estate sectors gain at the expense of the other sectors.
The largest impact of passive buying will be on Thai Life Insurance (TLI TB) in terms of days of ADV to buy and in terms of free float to buy.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Lutronic, Hailan, Mason, Tesserent, Kenedix