Most Read

Toyo Construction (1890 JP) situation changes day by day. In three days we have three Large Shareholder Report filings as The Expected Activist ducked out, replaced by A New Entrant.
Now one has to consider what the rest of this week has looked like.
And we wonder who it is, but reading between the lines can get you to a place where one might see what the aim is.

China Conch (586 HK): Post-Spinoff Blues

In my last note, I thought China Conch Venture Holdings (586 HK) (CCV) appeared fully-priced. If I had been long CCV, I recommended getting out.
CCV shed HK$11.35/share after going ex- the China Conch Environment Protection Holdings (587 HK) (CCEP) water treatment in-specie spin-off. CCEP closed at HK$9.77/share on its first day of trading.
CCV is trading back to around levels prior to the announcement of the spin-off. Separately, CCEP appears to be trading rich relative to waste treatment peers.

Daiho Post-Div STILL Trading Too Rich For the Event Trade

10 days ago, Daiho Corp (1822 JP) announced an exit for Murakami-san who had gone from zero to 42% of voting rights buying 18% of volume over two years.
They found a kind of white knight to buy the shares Murakami-san wanted to sell. The structure looks “fair” but is not. Almost all investors are now buying through terms.
And the result looks expensive with a rather unfortunate forward flow profile.

ECM Weekly (3rd Apr 2022)- JD, Tencent, Prosus, One Store, SK Shieldus, FWD, Ferretti, Recbio, Belle

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Placements continued to flow in, at a slower pace than last week, with Malaysia and ANZ chipping in.
While the HK IPO scene failed to produce anything noteworthy with its two listing, South Korea appears to be leading the charge, once again.

Asia-Pac Weekly Risk Arb Wrap: Uniti, Toyo Construction, Irongate, Crown, CIMIC, Jin Jiang Capital

There are 33 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
A quiet week with no new deals discussed on Smartkarma.
Key updates took place for: Razer (1337 HK), Uniti Group (UWL AU), Toyo Construction (1890 JP), Irongate (IAP AU), Crown (CWN AU), CIMIC (CIM AU), Jin Jiang Capital (2006 HK)

Before it’s here, it’s on Smartkarma

Apr 02

Most Read: Toshiba Corp, Tabcorp Ltd, Shinsei Bank, China Conch Venture Holdings, Toyo Construction and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba (6502) – Effissimo’s Pledge Isn’t One. It Is a Signalling Device.
Tabcorp (TAH AU): Spin-Off Upside & Index Implications
Nikkei 225 Rebalance Day – Shinsei Dip Chance?
China Conch (586 HK): Post-Spinoff Blues
Toyo Construction (1890) Funkier Still

Toshiba (6502) – Effissimo’s Pledge Isn’t One. It Is a Signalling Device.

Raymond Zage’s letter was super interesting in terms of its nuance, as discussed in Toshiba Board Ructions as Independent Director Goes Rogue.
In Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail, I discussed that this opens the door to exploring combinations of ideas.
Today Effissimo filed an amended LSR to say they’d sell their shares to a Bain Tender Offer if launched. The statement, and the break clause are informative, and more nuanced.

Tabcorp (TAH AU): Spin-Off Upside & Index Implications

If approved, Tabcorp Ltd (TAH AU) will spin-off the Lotteries and Keno business (The Lottery Corporation; TLC) from the Wagering & Media and Gaming Services business (new Tabcorp).
Based on peer valuations, we see an upside of 11% from the last price. The Scheme Meeting is on 12 May and the Second Court Hearing on 20 May.
TLC should remain in all major indices, while new Tabcorp Ltd (TAH AU) could be deleted from the S&P/ASX 50 Index and the MSCI Australia Index.

Nikkei 225 Rebalance Day – Shinsei Dip Chance?

The Nikkei 225 Rebalance to boot Shinsei Bank (8303 JP) and add Orix Corp (8591 JP) occurs today at the close.
The announcement was not a surprise per se, but BOTH have outperformed their Peer Baskets since the announcement, ORIX by a long ways.
ORIX is a bigger deal, Shinsei is worth buying a dip.

China Conch (586 HK): Post-Spinoff Blues

In my last note, I thought China Conch Venture Holdings (586 HK) (CCV) appeared fully-priced. If I had been long CCV, I recommended getting out.
CCV shed HK$11.35/share after going ex- the China Conch Environment Protection Holdings (587 HK) (CCEP) water treatment in-specie spin-off. CCEP closed at HK$9.77/share on its first day of trading.
CCV is trading back to around levels prior to the announcement of the spin-off. Separately, CCEP appears to be trading rich relative to waste treatment peers.

Toyo Construction (1890) Funkier Still

Toyo Construction (1890 JP) situation changes day by day. In three days we have three Large Shareholder Report filings as The Expected Activist ducked out, replaced by A New Entrant.
Now one has to consider what the rest of this week has looked like.
And we wonder who it is, but reading between the lines can get you to a place where one might see what the aim is.

Before it’s here, it’s on Smartkarma

Apr 01

Most Read: Toshiba Corp, PC Partner, Hang Seng China Enterprises Index, Toyo Construction and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toyo Construction (1890) Tender Situation Indeed Getting Funky
Toshiba (6502) – Effissimo’s Pledge Isn’t One. It Is a Signalling Device.
PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.
HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments
Toyo Construction (1890) Tender Still Funky – A New (Perhaps Serious), but Secretive Large Holder

Toyo Construction (1890) Tender Situation Indeed Getting Funky

Toyo Construction (1890 JP)‘s Independent Committee thought this deal was being done too cheaply, but they signed off on it. I thought it was cheap too.
I thought that a leading activist in the name would think so too, and try his hand because of his running start of 7+%. Huge volume Day1 sparked wider interest.
It has traded every day so far above terms so far but on the first full day of trading, the activist Murakami-san bailed. That changes things, but… it’s still funky.

Toshiba (6502) – Effissimo’s Pledge Isn’t One. It Is a Signalling Device.

Raymond Zage’s letter was super interesting in terms of its nuance, as discussed in Toshiba Board Ructions as Independent Director Goes Rogue.
In Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail, I discussed that this opens the door to exploring combinations of ideas.
Today Effissimo filed an amended LSR to say they’d sell their shares to a Bain Tender Offer if launched. The statement, and the break clause are informative, and more nuanced.

PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.

By Nicolas Van Broekhoven

Pc Partner posted record results with revenue and profits increasing by 99%% and 1,047% respectively. The final 1.61 HKD dividend was below my 2 HKD estimate but still solid.
Cash grew to 3.1 b HKD vs a market cap of 4.37 b HKD, or 70% of market cap. By end of FY22 cash could be 100% of market cap.
The outlook is mixed with short-term ASP pressure into 2Q22 but longer-term optimism into 2H22. As always visibility is low but offset by a cheap valuation and large cash buffer.

HSCEI Dividend Futures: 2022 Fair Value Update & CNOOC/Sunac/JD.com Adjustments

Most companies have announced their final dividends for 2021 and most of those have announced ex-dates. Banks and oil companies have announced higher dividends than last year.
CNOOC Ltd (883 HK) has not declared a dividend yet due to its IPO, while Sunac China Holdings (1918 HK)‘s suspension could lead to index deletion in June or July.
Using current/proforma index compositions and conservative estimates for interim dividends, we estimate fair value at 240.73 DIPS for 2022. This is a sell at the last close or higher.

Toyo Construction (1890) Tender Still Funky – A New (Perhaps Serious), but Secretive Large Holder

After Murakami-san reported yesterday selling most of his shares on 23 March, the stock fell heavily today. From 6.7% above terms to 0.65% above terms.
6.5 mm shares changed hands today at less than a 1% premium to terms.
After the close, a Cayman company, “WK 1 Limited”, announced it had two affiliates owned 5.89% as of 24-March. Still funky. Still fun. Bet it pops now.

Before it’s here, it’s on Smartkarma

Mar 31

Most Read: Apollo Hospitals Enterprise, Razer Inc, Toyo Construction, Crown Resorts, 51 Job Inc Adr and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

NIFTY Index Rebalance: Flows at the Close Today
Razer (1337 HK): Spread To Tighten On Potential Headcount Removal
Toyo Construction (1890) Tender Situation Indeed Getting Funky
Crown Resorts: Scheme Booklet Lodged. Shareholder Meeting On 29 April
51job (JOB US): EGM On The 27 April

NIFTY Index Rebalance: Flows at the Close Today

The changes to the NIFTY Index (NIFTY INDEX), Nifty Bank Index (NSEBANK INDEX) and NIFTY NEXT50 Indices were announced on 24 February and will be implemented at the close today.
There is a fair amount to trade on the NIFTY Index (NIFTY INDEX) and Nifty Bank Index (NSEBANK INDEX) stocks given the sizeable passive assets that track the indices.
There is pre-positioning on some of the names and there could be opportunities to build positions to play for a reversal.

Razer (1337 HK): Spread To Tighten On Potential Headcount Removal

Razer Inc (1337 HK)‘s Scheme Document is now out. The Court Meeting will be held on the 26 April. The IFA declares the Offer to be fair and reasonable.
More importantly, the Document flags the abolishment of the headcount test may become law ahead of the shareholder meeting. That is a game-changer.
Trading at a wide spread of 14.2%. This will narrow on this latest development.

Toyo Construction (1890) Tender Situation Indeed Getting Funky

Toyo Construction (1890 JP)‘s Independent Committee thought this deal was being done too cheaply, but they signed off on it. I thought it was cheap too.
I thought that a leading activist in the name would think so too, and try his hand because of his running start of 7+%. Huge volume Day1 sparked wider interest.
It has traded every day so far above terms so far but on the first full day of trading, the activist Murakami-san bailed. That changes things, but… it’s still funky.

Crown Resorts: Scheme Booklet Lodged. Shareholder Meeting On 29 April

Crown Resorts (CWN AU)‘s Scheme Booklet is now out. The Scheme Meeting will be held on the 29 April with possible implementation on the 12 May.
The Independent Expert has concluded Blackstone’s Offer is fair and reasonable and in the best interest of Crown shareholders.
This transaction is a done deal, and is trading accordingly.

51job (JOB US): EGM On The 27 April

On the 1 March, 51 Job Inc (JOBS US) said it had entered into a revised merger agreement at US$61.00/share, 22.8% down from the initial terms.
51job has now announced that it has called an extraordinary general meeting of shareholders to be held on April 27.
Despite regulatory opacity, this transaction appears done. Separately, 51job’s FY21 financials will be released tomorrow.

Before it’s here, it’s on Smartkarma

Mar 30

Most Read: Orient Overseas International, JD.com Inc., Uniti Group Ltd, Apollo Hospitals Enterprise, Shanghai Jin Jiang Capital Company Limited and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May 2022 Index Rebalance Preview: Three Weeks to Start of Review Period
JD.com (9618 HK): Passive Hang Seng Buying in June
Uniti (UWL AU): Macquarie Hung Out To Dry As Morrison/Brookfield Up Bid
NIFTY Index Rebalance: Flows at the Close Today
Jin Jiang Capital (2006 HK): Tardy, But Pre-Con Approvals Were Never In Doubt

MSCI May 2022 Index Rebalance Preview: Three Weeks to Start of Review Period

Given the market volatility, there have been quite a few changes to the potential inclusions and exclusions at the MSCI May SAIR, especially for China.
There are now three weeks to the start of the review period and we see 40 potential inclusions and 49 potential deletions. Most of the expected changes are in China.
The largest potential inclusions are Powerchip Semiconductor Manufacturing, Orient Overseas International, Pop Mart International, Eva Airways, China Airlines, Emtek, KT Corp, Sumber Alfaria Trijaya, Hyundai Heavy Industries and Xtep International.

JD.com (9618 HK): Passive Hang Seng Buying in June

JD.com Inc. (9618 HK) shares from the Tencent (700 HK) in-specie dividend settled on 25 March. That has increased the number of CCASS shares and the Hong Kong free float.
Given the large trading volumes in JD.com Inc. (9618 HK) on 25 March and 28 March, we expect most of the forced selling from the ADR allotment is done.
There will be selling in JD.com Inc. (9618 HK) from active investors and the overhang from the Prosus (PRX NA) holding. Buying from HSI/HSCEI trackers in June could help a bit.

Uniti (UWL AU): Macquarie Hung Out To Dry As Morrison/Brookfield Up Bid

Morrison, now with Brookfield on a 50/50 basis, have matched Macquarie Asset Management’s Real Assets division / Public Sector Pension Investment Board’s $5.00/share Offer for Uniti Group Ltd (UWL AU).
The revised proposal was predicated on Uniti severing talks with Macquarie as it may get access to competitively sensitive information. Uniti’s board has acquiesced – “at this time“.
Share pulled back on the news and closed at a 7.8% gross spread to the indicative terms.

NIFTY Index Rebalance: Flows at the Close Today

The changes to the NIFTY Index (NIFTY INDEX), Nifty Bank Index (NSEBANK INDEX) and NIFTY NEXT50 Indices were announced on 24 February and will be implemented at the close today.
There is a fair amount to trade on the NIFTY Index (NIFTY INDEX) and Nifty Bank Index (NSEBANK INDEX) stocks given the sizeable passive assets that track the indices.
There is pre-positioning on some of the names and there could be opportunities to build positions to play for a reversal.

Jin Jiang Capital (2006 HK): Tardy, But Pre-Con Approvals Were Never In Doubt

Hotel operator Shanghai Jin Jiang Capital Company Limited (2006 HK) announced yesterday that all pre-conditions to the Offer from Shanghai SASAC have been satisfied.
The Composite Document is expected to be dispatched on or before the 1 April.
Based on precedents for the privatisation of PRC incorporated companies, absent a tendering condition, payment is expected around the third week of May, on the assumption the vote gets up.

Before it’s here, it’s on Smartkarma

Mar 29

Most Read: KT Corp, Orient Overseas International, GOLFZON, JD.com Inc (ADR), Yashili International Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KT Corp (030200 KS): Potential MSCI Inclusion in May
MSCI May 2022 Index Rebalance Preview: Three Weeks to Start of Review Period
KOSDAQ150 Index Rebalance Preview (June): Potential Inclusions Starting to Outperform
JD.com Tencent Distribution Quick Update – Settlement Done. Shares Hit CCASS, but Not All Shares
Merger Arb Mondays – Yashili, Razer, 51job, Sezzle, Link, Uniti, Guodian, Jin Jiang

KT Corp (030200 KS): Potential MSCI Inclusion in May

NTT Docomo Inc (9437 JP) sold its entire holding of 14.26m shares in KT Corp (030200 KS) to Shinhan Group in January as part of a strategic alliance.
That increased the foreign room in KT Corp (030200 KS) to above 15% which can result in the stock being included in the MSCI Korea Index at the May SAIR.
SK Telecom (017670 KS), on the other hand, will see passive selling from FTSE All-World/All-Cap trackers in June due to its foreign room remaining below 10%.

MSCI May 2022 Index Rebalance Preview: Three Weeks to Start of Review Period

Given the market volatility, there have been quite a few changes to the potential inclusions and exclusions at the MSCI May SAIR, especially for China.
There are now three weeks to the start of the review period and we see 40 potential inclusions and 49 potential deletions. Most of the expected changes are in China.
The largest potential inclusions are Powerchip Semiconductor Manufacturing, Orient Overseas International, Pop Mart International, Eva Airways, China Airlines, Emtek, KT Corp, Sumber Alfaria Trijaya, Hyundai Heavy Industries and Xtep International.

KOSDAQ150 Index Rebalance Preview (June): Potential Inclusions Starting to Outperform

With over 80% of the averaging in the review period complete, we see 15 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
11 of the 15 changes are high/medium probability and it will take large moves over the rest of the review period for these stocks to drop out of the list.
Four potential inclusions have more than 3 days of ADV to buy from passives, while nine potential deletions have more than 3 days of ADV to sell from passives.

JD.com Tencent Distribution Quick Update – Settlement Done. Shares Hit CCASS, but Not All Shares

By Sumeet Singh

On 23rd Dec 2021, Tencent declared a special interim dividend in the form of a distribution in specie of 457.326m Class A ordinary shares of JD.com.
While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is happened on 25th Mar 2022.
In this note, we talk about the updates since our last note and the actual number of shares in CCASS.

Merger Arb Mondays – Yashili, Razer, 51job, Sezzle, Link, Uniti, Guodian, Jin Jiang

By Arun George

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
This week, the highest gross spreads are Yashili International Holdings (1230 HK), Razer Inc (1337 HK), 51 Job Inc Adr (JOBS US), Sezzle Inc (SZL AU)
Lowest gross spreads CIMIC Group Ltd (CIM AU), Z Energy Ltd (ZEL NZ), China Logistics Property Holdings (1589 HK), Virtus Health (VRT AU), Mapletree North Asia Commercial Trust (MAGIC SP)

Before it’s here, it’s on Smartkarma

Mar 28

Most Read: JD.com Inc., KT Corp, Daiho Corp, Mapletree Commercial Trust, KakaoBank and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: MSCI, S&P/ASX, KOSPI200, China A50, JD.com, Mapletree
KT Corp (030200 KS): Potential MSCI Inclusion in May
Daiho Corp (1822) A GIANT Transaction Which Is Not What It Looks Like. Smells Bad.
Noodling MNACT Vs MCT Deal Risk… Even the Complications Have Complications.
KOSPI 200 Index Rebalancing: Constituents Subject to Float Rate Increase

Index Rebalance & ETF Flow Recap: MSCI, S&P/ASX, KOSPI200, China A50, JD.com, Mapletree

The coming week has the implementation of the NIFTY indices at the close on 30 March and the Nikkei 225 (NKY INDEX) implementation at the close on 1 April.
31 March is the review cut-off date for the June rebalance of the Hang Seng indices. We expect one change to the HSCEI/HSTECH and few adds to the HSI.
There were large inflows to the Ishares Core Msci Emerging (IEMG US), iShares MSCI Emerging Markets (EEM US) and KraneShares CSI China Internet ETF (KWEB US) ETFs during the week.

KT Corp (030200 KS): Potential MSCI Inclusion in May

NTT Docomo Inc (9437 JP) sold its entire holding of 14.26m shares in KT Corp (030200 KS) to Shinhan Group in January as part of a strategic alliance.
That increased the foreign room in KT Corp (030200 KS) to above 15% which can result in the stock being included in the MSCI Korea Index at the May SAIR.
SK Telecom (017670 KS), on the other hand, will see passive selling from FTSE All-World/All-Cap trackers in June due to its foreign room remaining below 10%.

Daiho Corp (1822) A GIANT Transaction Which Is Not What It Looks Like. Smells Bad.

Daiho Corp (1822 JP) has announced a deal which is not quite what it looks like.
And despite a buyback of more than 50% of shares outstanding, and an “accretive” sale to another party at a higher price, it is a governance disaster.
And existing shareholders have an out, but it is complicated. If you own the stock, or you look at risk arb, or activism, this may be worth a read.

Noodling MNACT Vs MCT Deal Risk… Even the Complications Have Complications.

The MNACT/MCT deal has weird parameters which make it complicated as a risk arb situation, and as a way to think about relative value of MCT and MNACT vs Peers
Relative buying and selling pressure changes between the two names and their peer baskets depending on a) the May vote, b) index provider discretion, and c) MCT’s price in July.
Then it may depend on relative price movement before then too. It’s complicated.

KOSPI 200 Index Rebalancing: Constituents Subject to Float Rate Increase

By Sanghyun Park

Nine constituents will likely face an increase in the float rate: five stocks for the sale of the majority shareholder’s shares and four names for the IPO lockup release.
Kakao Bank (6.35x), LG Corp (003550 KS) (2.62x), Krafton (2.09x), and Woori Financial Group (316140 KS) (1.74x) are expected to have the most significant impact.
In general, float rate changes show price movement by passive flow similar to new changes (adds/deletes). So, we need to consider gradually building up positions two months before the rebalancing.

Before it’s here, it’s on Smartkarma

Mar 27

Most Read: Hanil Cement Co Ltd/New, Toshiba Corp, Olam Group, JD.com Inc., Crown Resorts and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes
First News of Toshiba “Studying a Privatisation Plan”
Olam Unlocks Value Through the Sale of 35.4% of Olam Agri to SALIC
Index Rebalance & ETF Flow Recap: MSCI, S&P/ASX, KOSPI200, China A50, JD.com, Mapletree
Crown Resorts’ Offer Spread Risk/Reward – The Perth Commission Report

KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes

Over 3/4th of the way through the review period for the June rebalance, we see 7 potential changes to the KOSPI200 Index. Most are high probability changes.
Potential inclusions: F&F (383220 KS), SD Biosensor (137310 KS), Meritz Fire & Marine (000060 KS), Iljin Hysolus (271940 KS), K Car (381970 KS), Hanil Cement (300720 KS), Hana Tour (039130).
Potential deletions: Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Nexen Tire (002350 KS), Hyundai Home Shopping (057050 KS), Cuckoo Homesys (284740 KS), Sk Discovery (006120), Grand Korea Leisure (114090).

First News of Toshiba “Studying a Privatisation Plan”

A Nikkei article overnight displays the first buds of “spring” around Toshiba management’s tilt towards trying to get shareholders what they want after the Separation Plan failed at the EGM.
The article doesn’t say much, but it is a sign the Toshiba Board are not “lying flat.”
However it doesn’t mean a deal is coming much less anywhere near doable. This is a long road. But it encourages more proactive portfolio resconstruction.

Olam Unlocks Value Through the Sale of 35.4% of Olam Agri to SALIC

By Oshadhi Kumarasiri

Olam Group (OLG SP) issued an update regarding its reorganization process today to announce the sale of a 35.4% stake in Olam Agri to the Saudi Agricultural and Livestock Investment Company.
The transaction assigns a valuation (equity) of S$4.7bn for the Olam Agri-Business, which is around 69% of Olam Group’s current market cap.
This is almost 2.0x the implied equity value of the Olam Agri-Business at the current share price of Olam Group, and suggests an upside of 33.8%.

Index Rebalance & ETF Flow Recap: MSCI, S&P/ASX, KOSPI200, China A50, JD.com, Mapletree

The coming week has the implementation of the NIFTY indices at the close on 30 March and the Nikkei 225 (NKY INDEX) implementation at the close on 1 April.
31 March is the review cut-off date for the June rebalance of the Hang Seng indices. We expect one change to the HSCEI/HSTECH and few adds to the HSI.
There were large inflows to the Ishares Core Msci Emerging (IEMG US), iShares MSCI Emerging Markets (EEM US) and KraneShares CSI China Internet ETF (KWEB US) ETFs during the week.

Crown Resorts’ Offer Spread Risk/Reward – The Perth Commission Report

By Arun George

The Perth commission report found Crown Resorts (CWN AU) not suitable to operate Crown Perth but did not call for the gaming licence to be revoked.
The key conditions precedent for the Blackstone deal are shareholder, gaming regulatory and FIRB approval. The scheme meeting is targeted to be held before the end of June 2022.
At the last close price of A$12.58, the gross and annualised spread for a 30 June implementation is 4.1% and 16.94%, respectively.

Before it’s here, it’s on Smartkarma

Mar 26

Most Read: JD.com Inc., GoTo, Toshiba Corp, AKM Industrial, Crown Resorts and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling
GoTo Vs Bukalapak Vs Grab Vs Sea
First News of Toshiba “Studying a Privatisation Plan”
AKM (1639 HK): Timeline Clarified As Pre-Conditions Nearly Fulfilled
No Surprise As Perth Royal Commission Finds Crown Resorts Unsuitable for WA Licence

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

GoTo Vs Bukalapak Vs Grab Vs Sea

By Arun George

GoTo (1379371D IJ) is the leading digital ecosystem in Southeast Asia. It has extended its book build for a $1.3 billion IPO to 24 March.
In GoTo Gojek Tokopedia IPO: Valuation Insights, we noted that our valuation analysis suggests that the price range is aggressive and unattractive.
In this note, we compare GoTo vs Bukalapak (BUKA IJ), Grab (GRAB US) and Sea Ltd (SE US)‘s relevant businesses across GTV, take rates and segmental margins.

First News of Toshiba “Studying a Privatisation Plan”

A Nikkei article overnight displays the first buds of “spring” around Toshiba management’s tilt towards trying to get shareholders what they want after the Separation Plan failed at the EGM.
The article doesn’t say much, but it is a sign the Toshiba Board are not “lying flat.”
However it doesn’t mean a deal is coming much less anywhere near doable. This is a long road. But it encourages more proactive portfolio resconstruction.

AKM (1639 HK): Timeline Clarified As Pre-Conditions Nearly Fulfilled

Flexible printed board player AKM Industrial (1639 HK) has announced the approvals for the pre-conditions attached to the Scheme are in the final stages.
Separately, the Court date for sanctioning the Scheme has been listed for the 19 July.
Trading at a gross spread to terms of 3.6%, including the final dividend.

No Surprise As Perth Royal Commission Finds Crown Resorts Unsuitable for WA Licence

The Perth Casino Royal Commission has found Crown Resorts (CWN AU)‘s casino in Perth, Western Australia, is “not suitable” to hold a gaming licence.
This follows the findings in New South Wales and Victoria that two of Crown Resort’s other subsidiaries were either not suitable to be granted a casino license or not suitable.
As with the recently announced AUSTRAC proceedings, Blackstone would have been well prepared for this latest development.

Before it’s here, it’s on Smartkarma

Mar 25

Most Read: JD.com Inc., Toshiba Corp, Hanil Cement Co Ltd/New, JD Logistics, KT Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling
Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail
KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes
JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps
KT (030200): MSCI Re-Inclusion Possibility with a Sharp Rise in Foreign Room

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail

Toshiba EGM fails to provide a positive result as both Toshiba’s own Separation Plan and 3D Investment’s proposal to enhance privatisation bidder engagement and transparency fail.
Activists are stuck. Management is too. 3+ years since the last big buyback and 3 new CEOs and we are back to the drawing board for both management and activists.
But both have a head start. The Shareholder Return Plan, eventual disposition of Kioxia, and non-core asset sales would be a start. And Raymond Zage’s letter is worth a re-read.

KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes

Over 3/4th of the way through the review period for the June rebalance, we see 7 potential changes to the KOSPI200 Index. Most are high probability changes.
Potential inclusions: F&F (383220 KS), SD Biosensor (137310 KS), Meritz Fire & Marine (000060 KS), Iljin Hysolus (271940 KS), K Car (381970 KS), Hanil Cement (300720 KS), Hana Tour (039130).
Potential deletions: Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Nexen Tire (002350 KS), Hyundai Home Shopping (057050 KS), Cuckoo Homesys (284740 KS), Sk Discovery (006120), Grand Korea Leisure (114090).

JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps

By Sumeet Singh

JD Logistics (JDL) aims to raise around US$1.1bn, with US$400m coming via an institutional placement. The balance will be funded by issuing shares at the same price to JD.com.
We have covered the stock extensively, links to our previous notes are below.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

KT (030200): MSCI Re-Inclusion Possibility with a Sharp Rise in Foreign Room

By Sanghyun Park

Based on yesterday’s closing price, KT’s foreign room fell to 17.6%. MSCI’s foreign room threshold for non-constituents subject to foreign ownership limit (FOLs) is 15%.
If KT’s foreign room stays above 15% by March 31, it will be re-included with an adjustment factor of 0.5 in May SAIR. Its float is 25%, 0.5x FOL (49%).
Passive flow is estimated at 6.17x ADTV, assuming a 25% float. This could provide momentum to outperform the sector peers, making us consider a sector long/short setup aimed at this.

Before it’s here, it’s on Smartkarma