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Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.

Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move

The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread ballooned today due to LVC’s amassing a blocking stake.
There are valid arguments for LVC to block the vote or to support the offer. LVC’s trading behaviour over the coming days will point to its voting intentions.
I continue to believe that LVC will support the offer. At the current price and for a 15 February payment, the gross/annualised spread is 9.1%/160%.

Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand

Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved.
Lockup expiry is next week, and there is a likely large index event in ~10 weeks.

SHIFT (3697) The Next – Potential Big Index Add

Shift Inc (3697 JP) is a high-growth stock in the software services, testing, consulting, development business. They have a big specialist TAM ahead of them.
Revenue is up 50-fold in 10 years. OP is up 85-fold in that period. Revenue is guided +17.5% in the year to Aug 2025. OP is guided +28%.
There is an event coming up shortly which could trigger an imminent index inclusion. It’s worth a look.

Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline

Bloks Group (1850960D CH) was massively oversubscribed, traded 82% higher on Friday and closed its listing day 40% higher than the IPO price.
Bloks Group (1850960D CH) now has a full market cap of US$2.7bn. However, lock-ups and cornerstone allocations result in a much lower free float.
Index inclusions could take place in August and September, but the passive buying is a fraction of the number of shares that will come off lock-up expiry in early July.

Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding

The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.

BayCurrent Consulting (6532) – High Growth, OK Multiple, Big Index Inclusion Coming Up?

BayCurrent Consulting (6532 JP) is a high-growth consulting company. This year sees 22% annual revenue growth and 25% OP growth to Feb 2025. Q3 results come out tomorrow.
The stock has a fairly large and concentrated active institutional holder base, though interestingly, the foreign active insto base is very long-tailed. LOTS of investors hold this.
The company is likely to see an index inclusion imminently which will over time mean a buy of more than a third of Maximum Real World Float.

HMM’s Shaping up to Be a Solid Pick for Classic Dividend Arbitrage Plays

To stay in the Value-up index by June, HMM needs to maintain high ROE, but with 2023’s dip and a 2024 estimate around mid-10%, they’ll be borderline in the rankings.
Local markets expect HMM’s dividend payout to range from 840 KRW to mid-1,000 KRW, with a yield of 4.5% to 8%, while futures show mild backwardation in February and March.
HMM may finalize the dividend and announce the record date by late January, with the record date likely in mid to late February.

Insignia Financial (IFL AU): Bain Calls CC Capital’s $4.30/Share NBIO

After wealth manager Insignia Financial (IFL AU) announced – and subsequently rejected Bain’s A$4.00/share Offer, CC Capital waded in on the 6th January with its own A$4.30/share NBIO.
IFL have yet to reach an opinion on CC Capital bid. And to make things interesting, Bain has sweetened its Offer to $4.30/share, matching CC Capital’s terms.
What now? Either, IFL opens the data room to both parties. Or rejects both. I think they should engage.

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Jan 13

Most Read: WuXi XDC Cayman , CSSC (Hong Kong) Shipping Co Ltd, ESR Group , Pressance Corp, Shanghai Henlius Biotech , Xiamen Amoytop Biotech Co Ltd, Jusung Engineering, Bloks Group, Seven & I Holdings, Weichai Power Co Ltd H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well
BUY/SELL/HOLD: Hong Kong Stock Update (January 10)
Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance
Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap
Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness
STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance
FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly
Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline
Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking
A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well

By Sumeet Singh

WuXi AppTec (2359 HK) aims to raise around US$150m via selling around 3% stake in WuXi XDC Cayman (2268 HK).
WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
In this note, we will talk about the placement and run the deal through our ECM framework.

BUY/SELL/HOLD: Hong Kong Stock Update (January 10)

By David Mudd

Hong Kong and China shares have outperformed most Asian markets over the last year. In HK the consumer discretionary sector has lost strength and momentum over the last 4 weeks.
CSSC (Hong Kong) Shipping Co Ltd (3877 HK) was rated BUY after reporting strong results. Analysts have a target price of $2.50 on the stock.
Bosideng International Holdings (3998 HK) has shown earnings growth exceeding revenue growth for the last seven years. Technically, the stock looks weak near term, but analysts project 60% upside.

Merger Arb Mondays (13 Jan) – ESR, Henlius, Goldlion, Canvest, 7&I, Fujitsu General, Pressance

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: Smart Share Global (EM US), Pressance Corp (3254 JP), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK).
Lowest spreads: Lifestyle China (2136 HK), Makino Milling Machine Co (6135 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU).

Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap

Four-Plus years ago, Open House (3288 JP) bought the stake in Pressance Corp (3254 JP) owned by its embattled CEO (who had been arrested for a scandal).
Four years ago, Open House launched a partial tender and capital injection to go to ~65%. A takeout was a matter of time.
That time has come. Today Open House announced a Tender Offer to take Pressance fully-private. This is an easy deal. A done deal. Done too cheap.

Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness

Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.

STAR50/STAR100 Index Rebalance Preview: Migrations & Outright Changes Lead to Outperformance

95% of the way through the review period, there could be 3 changes for the SSE STAR50 (STAR50 INDEX) and 8 changes for the STAR100 Index.
We estimate turnover of 4.1% for the STAR50 INDEX and 9.3% for the STAR100 Index. The net round-trip trade is CNY 14.1bn (US$1.9bn).
The forecast adds to the STAR50 INDEX have outperformed the forecast deletes with steady outperformance over the last 3 months; the performance for the STAR100 Index is a lot better.

FnGuide Semiconductor Top10 Index Rebalance Preview: Three Changes as Adds Rally Bigly

Early in the review period, we forecast 3 changes for the FnGuide Semiconductor Top10 Index at the April rebalance.
Based on the passive assets tracking the index, there will be between 0.6-1.6x ADV to buy in the adds and between 2-4.7x ADV to sell in the deletes.
The forecast adds have outperformed the forecast deletes by a wide margin over the short-term and the medium-term. There could be more prior to the end of the review period.

Bloks Group (325 HK): Bumper Listing; Index Inclusion Timeline

Bloks Group (1850960D CH) was massively oversubscribed, traded 82% higher on Friday and closed its listing day 40% higher than the IPO price.
Bloks Group (1850960D CH) now has a full market cap of US$2.7bn. However, lock-ups and cornerstone allocations result in a much lower free float.
Index inclusions could take place in August and September, but the passive buying is a fraction of the number of shares that will come off lock-up expiry in early July.

Seven & I Holdings (3382 JP): The MBO Is Still Alive and Kicking

On 10 January, Bloomberg reported that Apollo is considering an equity commitment of JPY1.5 trillion in the Seven & I Holdings (3382 JP) MBO.
Securing financing is a key challenge for the MBO. Apollo’s involvement suggests a shift to a higher mix of equity vs debt, which should ease concerns about securing debt financing.
The article suggests that the MBO valuation could be lower than previously reported. However, 7&i’s underlying value supports a JPY8 trillion MBO valuation (market cap).

A/H Premium Tracker (To 10 Jan 2025): Super Wide Tech Spreads Best Over Holidays and into NY.

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on Tencent, telcos, and banks.
Finance and Tech are seeing large buying, but the really big moves over the past few weeks have been on Industrial Names (CRRC), and Materials, and Tech
The VERY WIDE Tech spreads such as SMIC (981), Shanghai Fudan Microelectric (1385), CHina Rail Signal (3969), and Flat Glass (6865) have been HUGE performers.

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Jan 12

Most Read: ZTO Express Cayman , Tencent, Seven & I Holdings, Sigma Healthcare, Horizon Robotics, Japfa Comfeed Indonesia, Bloks Group, Shift Inc, Pressance Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet
7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger
HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March
LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry
[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way
Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.

7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace

Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.

S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger

Nearing the end of the review period, there could be 36 adds/deletes across the S&P/ASX family of indices in March.
Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
Completion of the merger with Chemist Warehouse in February will set off huge passive buying in Sigma Healthcare (SIG AU) over the February to June period.

HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March

The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.

LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes

The review period for the LQ45 Index January rebalance ended 31 December. The changes should be announced the last week of January, becoming effective after the close on 31 January.
We highlight 4 potential inclusions and 4 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
Nearly all stocks will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.

Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry

By Dimitris Ioannidis

Bloks (325 HK) is expected to be assigned an index nationality of Hong Kong instead of China due to its incorporation in the Cayman Islands.
The security is expected to be added at the September 2025 review following the 6-month IPO lock-up expiry which increases the fcap above the APAC threshold.
The security is ineligible for the other global index until January 2026 because of the free float being below the minimum threshold of 15%.

[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way

In December, I thought the March 2025 Nikkei 225 Rebalance was going to be 2 ADDs 2 DELETEs and a double-capping for Fast Retailing.
Fast Retailing has fallen sharply vs Nikkei 225, and another stock has announced a large-multiple share split, making it a strong candidate for Nikkei 225 ADDITION in March 2025.
There is short-term path risk on all three ADDs, but they are definitely worth watching. Keep an eye out for separate insights on two of these names.

Open House Finally Takes Out Pressance (3254) – Done Deal Done Cheap

Four-Plus years ago, Open House (3288 JP) bought the stake in Pressance Corp (3254 JP) owned by its embattled CEO (who had been arrested for a scandal).
Four years ago, Open House launched a partial tender and capital injection to go to ~65%. A takeout was a matter of time.
That time has come. Today Open House announced a Tender Offer to take Pressance fully-private. This is an easy deal. A done deal. Done too cheap.

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Jan 11

Most Read: Jiangsu Hengrui Medicine, Seven & I Holdings, Horizon Robotics, Inari Amertron, Samsung KODEX Autos ETF, VCredit Holdings Ltd, Haitong Securities Co Ltd (H), Shift Inc, WuXi XDC Cayman and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing
7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March
Southeast Asia: The Passive Axe Hangs as Positioning Increases
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing
VCredit (2003 HK): Offer Now Open. IFA Says Not Fair. Not Even Close
GJS/Haitong Merger: One Formality Reg To Go
[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way
Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well

Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing

Jiangsu Hengrui Medicine (600276 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$2bn.
In line with the Midea Group (300 HK) and S.F. Holding (6936 HK) H-share listings, the discount on the H-shares could be in the 20-25% range.
There will be no Fast Entry in any indices but there will be index inclusions in multiple indices if the raise is larger or once the cornerstone investor lock-up ends.

7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace

Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March

The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.

Southeast Asia: The Passive Axe Hangs as Positioning Increases

There are 8 stocks listed in Indonesia, Malaysia, Thailand and Philippines that could be deleted from passive portfolios in February.
There is a fair bit to sell in the stocks with over US$50m flow and between 3.5-64x ADV. Positioning is not very high in a lot of the stocks.
Stocks could avoid deletion if they move higher in the next week or two. But increased positioning could keep a lid on that.

Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch

The exchange ratio for the merger between Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) is 0.62x.
The merger closing is subject to several effectiveness and implementation conditions. The latest update suggests that the remaining conditions are CSRC and HKEx approvals.
The satisfaction of the remaining conditions is a formality. At the last close and for an end February payment, the gross/annualised spread is 3.2%/26.4%.

KRX’s Responses to TMI-Related Confusions on KRX Semicon & Autos Rebalancing

KRX confirmed no immediate changes on KRX Semicon and KRX Autos. The universe will switch from BMI to TMI large and mid-caps, with constituent updates happening in the September rebalancing.
TMI rebalances quarterly, while KRX Semicon and Autos rebalance annually in September. KRX confirmed these indices will use the September TMI rebalancing results.
TMI rebalances quarterly, likely releasing results before KRX Sector Indices, giving a window to predict shifts in KRX Semicon and Autos stocks and position ahead of the sector rebalancing.

VCredit (2003 HK): Offer Now Open. IFA Says Not Fair. Not Even Close

Back on the 20 December, VCredit Holdings (2003 HK), a provider of consumer financial services in China, announced a unconditional MGO from Ma Ting Hung, VCredit’s chairman. and concert parties.
The catch? The Offer Price of HK$1.80/share was a 9.09% discount to undisturbed. It will not be increased.
VCredit’s Composite Doc is now out, with the Offer open for tendering, with a 3rd February first close. The IFA says “not fair and not reasonable“. Trading 45% through terms.

GJS/Haitong Merger: One Formality Reg To Go

Back on the 9th October, China’s leading state-backed brokerages Guotai Junan Securities (2611 HK) (GJS) and Haitong Securities (6837 HK) announced a scrip merger, with GJS the surviving entity.
Barring a China Traditional Chinese Medicine (570 HK)-like obstacle/debacle, this transaction was a wrap. Fortunately, key regulatory approvals (SAMR and SASAC) have been ticked off.
Approval from the Shanghai Stock Exchange was secured overnight. That was a formality. One approval remains – CSRC. Expect that condition to be satisfied shortly. GJS is no longer shortable.

[Quiddity Index Jan25] Nikkei 225 Mar Rebal: 3 IN, 3 OUT, $3bn One Way

In December, I thought the March 2025 Nikkei 225 Rebalance was going to be 2 ADDs 2 DELETEs and a double-capping for Fast Retailing.
Fast Retailing has fallen sharply vs Nikkei 225, and another stock has announced a large-multiple share split, making it a strong candidate for Nikkei 225 ADDITION in March 2025.
There is short-term path risk on all three ADDs, but they are definitely worth watching. Keep an eye out for separate insights on two of these names.

Wuxi XDC Placement – A Repeat of Biologics Placement Saga, Last Deal Did Well

By Sumeet Singh

WuXi AppTec (2359 HK) aims to raise around US$150m via selling around 3% stake in WuXi XDC Cayman (2268 HK).
WuXi XDC Cayman (WXDC) is a contract research, development, and manufacturing organization (CRDMO) focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
In this note, we will talk about the placement and run the deal through our ECM framework.

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Jan 10

Most Read: Seven & I Holdings, LG CNS, Horizon Robotics, Inari Amertron, Haitong Securities Co Ltd (H), Bloks Group, Dongwon Industries, Suntec REIT, Fuji Soft Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace
LG CNS: Updated IPO Valuation Analysis
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March
Southeast Asia: The Passive Axe Hangs as Positioning Increases
Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch
Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry
[Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 Changes Possible
Suntec REIT (SUN SP): Tang’s Curious Bump
Fuji Soft (9749 JP): KKR Extends Again, Delaying the Inevitable Bump
Ohayo Japan | Diverging Results for Fast & Seven

7&I (3382 JP) – Dippity Doo Dah – Irrational Fears, Earnings Vol, But Restructuring Proceeding Apace

Recent news on the Seven & I Holdings (3382 JP) situation includes better-than-expected possible sale of the SST business, a little headline fear-mongering on national security, and earnings.
Earnings this year will be volatile vs expectations. Timing (and magnitude) of kitchen-sinking matters. But neither ACT nor you should be buying it based on trough earnings expectations.
The call transcript is worth listening to. The math on the takeover maths well. This is a buy on dip. Again.

LG CNS: Updated IPO Valuation Analysis

By Douglas Kim

According to our updated valuation analysis of LG CNS, it suggests a base case implied market cap of 7.4 trillion won, representing target price of 76,383 won per share.
Our base case valuation target price of 76,383 won is 23% higher than the high end of the IPO price range.
We lowered our target price by 6%, mainly due to greater political risks arising from the recent cancelled martial law and ongoing impeachment of President Yoon.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Up to 5 Changes in March

The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.

Southeast Asia: The Passive Axe Hangs as Positioning Increases

There are 8 stocks listed in Indonesia, Malaysia, Thailand and Philippines that could be deleted from passive portfolios in February.
There is a fair bit to sell in the stocks with over US$50m flow and between 3.5-64x ADV. Positioning is not very high in a lot of the stocks.
Stocks could avoid deletion if they move higher in the next week or two. But increased positioning could keep a lid on that.

Haitong Securities (6837 HK)/GTJA (2611 HK) Merger: The Home Stretch

The exchange ratio for the merger between Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) is 0.62x.
The merger closing is subject to several effectiveness and implementation conditions. The latest update suggests that the remaining conditions are CSRC and HKEx approvals.
The satisfaction of the remaining conditions is a formality. At the last close and for an end February payment, the gross/annualised spread is 3.2%/26.4%.

Bloks (325 HK): Global Index Inclusion Following IPO Lock-Up Expiry

By Dimitris Ioannidis

Bloks (325 HK) is expected to be assigned an index nationality of Hong Kong instead of China due to its incorporation in the Cayman Islands.
The security is expected to be added at the September 2025 review following the 6-month IPO lock-up expiry which increases the fcap above the APAC threshold.
The security is ineligible for the other global index until January 2026 because of the free float being below the minimum threshold of 15%.

[Quiddity Index Jan25] KOSPI 200 Leaderboard Jun25: Up to 6 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 2025.
We expect six ADDs and six DELs for the KOSPI 200 index during this index rebal event based on the latest available data.

Suntec REIT (SUN SP): Tang’s Curious Bump

Back on the 5th December, Gordan Tang (& his wife Celine) acquired a 2.14% stake in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
This had all the hallmarks of a technical Offer. The Offer price was S$1.16/share compared to the S$1.17/share undisturbed price. The IFA opined the Offer was not fair nor reasonable.
The Tangs have now bumped to S$1.19/share. Terms are not final. The IFA viewpoint won’t budge. This is an opportunistic move from the Tangs. But why not roll the dice?

Fuji Soft (9749 JP): KKR Extends Again, Delaying the Inevitable Bump

KKR has extended the close date of the Fuji Soft Inc (9749 JP) second tender offer period from 9 to 24 January. All other terms remain unchanged.
KKR unconvincingly tries to criticize the Bain offer and unsurprisingly believes there will not be a tender offer by Bain that investors can tender into.
Despite KKR’s gamesmanship, it has not declared its offer final. A bump remains necessary as Bain remains resolute in launching its offer. The final winning offer could be around JPY10,000.

Ohayo Japan | Diverging Results for Fast & Seven

By Mark Chadwick

The US equity markets were closed on Thursday in honour of the national day of mourning following the passing of former President Jimmy Carter.
Fast Retailing, Uniqlo’s parent company, reported a 7.4% rise in quarterly operating profit to ¥157.6bn
Seven & i Holdings reported a 65% drop in nine-month net profit to ¥63.6bn, citing difficulties in North American operations

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Jan 09

Most Read: Jiangsu Hengrui Medicine, Tencent, Mitsui Matsushima, CPMC Holdings, Sigma Healthcare, Ping An Healthcare and Technology, Greatview Aseptic Packaging, Shanghai Henlius Biotech , LG Corp, Japan Eyewear Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing
Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet
[JAPAN Activism]: Murakami Target Mitsui Matsushima (1518 JP) Getting Sold Down For a Reason
CPMC (906 HK): Tendering Now Open
Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn
PA Gooddoctor (1833 HK)’s Unconditional MGO
GAPack (468 HK): Additional Thoughts On Mengniu Selling
Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote
The Unexpected Passive Trade from the LG CNS IPO: Short LG Corp
TOPIX Inclusions: Who Is Ready (Jan 2025)

Jiangsu Hengrui Pharma (600276 CH): Index Inclusion Post H-Share Listing

Jiangsu Hengrui Medicine (600276 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$2bn.
In line with the Midea Group (300 HK) and S.F. Holding (6936 HK) H-share listings, the discount on the H-shares could be in the 20-25% range.
There will be no Fast Entry in any indices but there will be index inclusions in multiple indices if the raise is larger or once the cornerstone investor lock-up ends.

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.

[JAPAN Activism]: Murakami Target Mitsui Matsushima (1518 JP) Getting Sold Down For a Reason

Mitsui Matsushima (1518 JP) was trading ¥2,800-3,200 earlier this year before Murakami-san bought a large stake. All the news of coal shut down and cash pile were in the price.
After he bought, the stock popped. It fell back, went sideways in a range, and for 5 weeks has been falling in a straight line.
There’s a reason for that. But it may not be a great reason. And the stock is in a great place.

CPMC (906 HK): Tendering Now Open

At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December.
The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January.
I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.

Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn

SigmaHealthcare and ChemistWarehouse shareholders meet on 29 January. If the merger resolutions are approved, Second Court Hearing is on 3 February and the merger will be effective on 4 February.
Upward migration in one large global index could take place on 13 February while upweights and upward migrations in the S&P/ASX indices should be at the close on 21 March.
Upward migration in the other global index could take place in March or June. Total passive buying estimate is A$2.76bn. This will be offset by positioning and CWG shareholders selling.

PA Gooddoctor (1833 HK)’s Unconditional MGO

Back on the 14th November, Ping An Healthcare and Technology (1833 HK) (PA Gooddoctor announced a change in use of proceeds, including the payment of a punchy HK$9.70/share special dividend.
A scrip option was concurrently afforded. The results of that scrip election have now been announced, the completion of which, triggers an unconditional MGO from Ping An Insurance (601318 CH).
The MGO price is HK$6.12/share, a price made public last month. For those investors trading the event and who bought PA Gooddoctor cum dividend, it has worked out well.

GAPack (468 HK): Additional Thoughts On Mengniu Selling

Following on from the surprise development that China Mengniu Dairy (2319 HK) had reduced its stake below 5%, I’ve had a few readers asking about hypothetical situations regarding its stake.
IF Mengniu is a seller, can’t Mengniu simply sell its entire stake to Shandong Xinjufeng Technology Packaging (301296 CH) (XJF)? Can Mengniu sell to XJF above the Offer Price?
Both questions are addressed in the Takeovers Code. But only one is permitted.

Henlius (2696 HK): Anxiety Creeping Back Ahead of the 22 January Vote

The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread widened after the initial tightening due to the precondition satisfaction.
Several readers have enquired about my thoughts on the widening spread. Our conversations have raised several potential concerns that could explain it.
I think these concerns are unwarranted, and the vote should pass. At the last close and for a 15 February payment, the gross/annualised spread is 4.7%/55.0%.

The Unexpected Passive Trade from the LG CNS IPO: Short LG Corp

I’m focusing on the price action of LG Corp when LG CNS enters the KOSPI 200 IT sector, causing LG Corp to be removed from the index.
With LG Corp’s 6% weight, its removal could trigger ETF rebalancing (TIGER), leading to an outflow exceeding twice the usual daily trading volume.
If LG CNS misses Fast Entry, it’ll enter in December, not June. We’ll time our short position on LG Corp to align with passive outflows during that window.

TOPIX Inclusions: Who Is Ready (Jan 2025)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Japan Eyewear Holdings (5889 JP) continues to be our top pre-event pick for TOPIX Inclusion.
Core Concept Technologies Inc (4371 JP) is another potential TOPIX Inclusion candidate but it is quite far away from being satisfy the main Section Transfer requirements.

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Jan 08

Most Read: Tencent, LG CNS, Sigma Healthcare, Horizon Robotics, Shinko Electric Industries, WH Group, Korea Zinc, Greatview Aseptic Packaging, Tokyo Metro and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet
LG CNS Pre-IPO – Thoughts on Valuation – Retail Demand Appears Hot, Digestible Val at Bottom End
S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger
HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025
Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal
WH Group (288 HK): Smithfield’s IPO Doc Now Out
NPS Stake in Korea Zinc Revealed: EGM Vote Locked, Short Play in Focus
GAPack (468 HK): IFA Says “Reject”. But Mengniu Selling Down
Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn
Aequitas 2024 IPOs and Placements Performance Review-India Driving Volumes as HK Shows Signs of Life

Tencent (700 HK): DoD Says Chinese Military Company; Not on NS-CMIC List Yet

The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.

LG CNS Pre-IPO – Thoughts on Valuation – Retail Demand Appears Hot, Digestible Val at Bottom End

By Clarence Chu

LG CNS (LGCNSZ KS) is looking to raise around US$850m in its upcoming Korea IPO.
LG CNS is a South Korean information technology company. The firm primarily provides comprehensive digital transformation services and solutions backed AI, big data, and cloud.
In our previous notes, we looked at the firm’s past performance and undertook a peer comparison. In this note, we discuss our thoughts on valuation.

S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger

Nearing the end of the review period, there could be 36 adds/deletes across the S&P/ASX family of indices in March.
Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
Completion of the merger with Chemist Warehouse in February will set off huge passive buying in Sigma Healthcare (SIG AU) over the February to June period.

HSCI Index Rebalance Preview and Stock Connect: Updated Potential Changes in March 2025

We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Shinko Electric (6967 JP) – SAMR Approved, Trading Tight, Done Deal

Overnight, we got news that the JIC Consortium Deal for Shinko Electric Industries (6967 JP) was approved 27Dec2024. That was the last approval required (other than TSE TOB Launch approval).
This is “on schedule” or slightly early from the previously-announced expected launch date.
This morning, the stock is up sharply and is trading <0.75% from terms. Expect an announcement within two weeks. Current arb annualised at high 6% is OK. One could hold.

WH Group (288 HK): Smithfield’s IPO Doc Now Out

On 17 November 2024, WH Group (288 HK) announced an EGM to approve the spin-off and separately list subsidiary Smithfield Foods on the NYSE or NASDAQ.
WHG, the world’s largest pork producer, announced on the 6th December the spin-off overwhelmingly gained shareholder approval.
Yesterday, the Smithfield NASDAQ IPO doc was made public. As per the filing: “the number and dollar amount of Smithfield Shares to be offered and sold have not been determined“.

NPS Stake in Korea Zinc Revealed: EGM Vote Locked, Short Play in Focus

NPS’s stake has dropped, and most minority shareholders are passive. NPS might oppose cumulative voting, so Choi’s chances of getting 67% support at the EGM on the 23rd are slim.
The showdown is between MBK’s 14 picks and Choi’s 7. Without cumulative voting, even with NPS’s shares, Choi’s chances of beating MBK are slim.
If you’re short on Korea Zinc, holding seems fine. Backwardation in Jan-Feb futures isn’t steep, so a new position before the EGM could also be worth a shot.

GAPack (468 HK): IFA Says “Reject”. But Mengniu Selling Down

Quite a lot of new news to digest – GAPack (468 HK)‘s IFA, not altogether surprisingly, concluded that shareholders should not accept the Offer – in bold, red caps.
But more surprisingly, is the disclosure announcement that China Mengniu Dairy Co (2319 HK) has reduced its stake below 5%.
Evidently Mengniu is keeping its options open to tender – or not – and not have to make public disclosures. Keep an eye out on CCASS movements.

Sigma Healthcare (SIG AU): Index Inclusions & Upweights Increase Passive Buying to A$2.7bn

SigmaHealthcare and ChemistWarehouse shareholders meet on 29 January. If the merger resolutions are approved, Second Court Hearing is on 3 February and the merger will be effective on 4 February.
Upward migration in one large global index could take place on 13 February while upweights and upward migrations in the S&P/ASX indices should be at the close on 21 March.
Upward migration in the other global index could take place in March or June. Total passive buying estimate is A$2.76bn. This will be offset by positioning and CWG shareholders selling.

Aequitas 2024 IPOs and Placements Performance Review-India Driving Volumes as HK Shows Signs of Life

By Sumeet Singh

2024 marked our ninth year covering Equity Capital Markets in Asia-Pacific. In 2024, IPO volumes were mainly driven by India, even as Hong Kong showed signs of turning a corner.
We ended 2024 with an accuracy rate of 79.4% across 68 IPOs that we covered and 68.8% across 109 placements.
For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

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Jan 07

Most Read: Shinko Electric Industries, Horizon Robotics, Fujitsu General, Korea Stock Exchange KOSPI 200, Japfa Comfeed Indonesia, LG CNS, Jio Financial Services, Sigma Healthcare, Greatview Aseptic Packaging and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shinko Electric (6967) – Waiting for a Package
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.
Fujitsu General (6755 JP): Fujitsu (6702 JP) Supports a Light Tender Offer
Korea Short Selling Comeback: How Pre-Registering Accounts Will Affect the Trading Scene
LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
LG CNS IPO: Valuation Insights
NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed
S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger
GA Pack (468 HK): Shandong Xinjufeng’s Offer Gets a Boost as Mengniu Sells Down

Shinko Electric (6967) – Waiting for a Package

Shinko Electric Industries (6967 JP) has been on the block. 2nd Round Bids were apparently due last month, but with “Economic Security” considerations, one wonders if that stretches a bit.
The stock is now at the low end of its range vs Ibiden, and the timing is right for a deal which could give it a pop.
A “split price” takeover seems reasonable as a structure. I expect upside. Still.

HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade

The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.

Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.

In December 2019, an article in slightly odd Japanese business magazine Sentaku (選択) suggested Fujitsu Ltd (6702 JP) would imminently seek to address dual listings of subs.
Some subs went early. The auction for Fujitsu General (6755 JP) started spring 2023, failed, started again, failed again, and the shares languished.
Two years later we have a deal. Large privately-held company Paloma-Rheem Holdings is the buyer in a split-price deal which comes at a decent but not exorbitant premium.

Fujitsu General (6755 JP): Fujitsu (6702 JP) Supports a Light Tender Offer

Fujitsu General (6755 JP) announced a preconditional tender offer from Paloma Rheem Holdings Co at JPY2,808 per share, a 23.5% premium to the last close.
The offer, which is preconditional on regulatory approvals and will open in early July, is attractive compared to historical trading ranges and peer multiples.
The process is lacking as Fujitsu declined to conduct an auction. The offer is below the midpoint of the IFA DCF valuation range, and the Board requested price.

Korea Short Selling Comeback: How Pre-Registering Accounts Will Affect the Trading Scene

KRX and FSS confirmed the NSDS is ready and account registration numbers will be issued, confirming short selling will resume on April 1st, despite no official FSC statement yet.
Today’s buzz is about pre-registration for short selling, with FSS tracking accounts down to individual desks. This could limit short-selling flexibility, despite addressing the overseas lending issue.
Exposing too much info on short-selling accounts could shrink securities lending participants, causing supply-demand imbalances, spiking borrowing fees, and creating unique trading opportunities early on.

LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes

The review period for the LQ45 Index January rebalance ended 31 December. The changes should be announced the last week of January, becoming effective after the close on 31 January.
We highlight 4 potential inclusions and 4 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
Nearly all stocks will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.

LG CNS IPO: Valuation Insights

LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
We previously discussed the IPO in LG CNS IPO: The Bull Case and LG CNS IPO: The Bear Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that LG CNS is attractive in the IPO price range. We would participate in the IPO.

NIFTY50 Index Rebalance Preview: Yuuge Flow & Impact; Positioning Mixed

Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) should replace Bharat Petroleum Corp (BPCL IN) and Britannia Industries (BRIT IN) in the NIFTY Index (NIFTY INDEX) in March.
Passive NIFTY Index trackers will need to trade at least 4.5x ADV and 8.8x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
There does not appear to be a lot of positioning in Jio Financial Services (JIOFIN IN) and the stock could outperform its peers over the next few months.

S&P/ASX Index Rebalance Preview: Lots of Change; Could Be More with Sigma/CWG Merger

Nearing the end of the review period, there could be 36 adds/deletes across the S&P/ASX family of indices in March.
Passive trackers will need to trade a lot of stock in the forecast changes, with the impact being especially large for the changes to the S&P/ASX 200 and S&P/ASX 300.
Completion of the merger with Chemist Warehouse in February will set off huge passive buying in Sigma Healthcare (SIG AU) over the February to June period.

GA Pack (468 HK): Shandong Xinjufeng’s Offer Gets a Boost as Mengniu Sells Down

China Mengniu Dairy Co (2319 HK), Greatview Aseptic Packaging (468 HK)‘s largest customer, has ceased to be a substantial shareholder. Mengniu opposes the Shandong Xinjufeng offer.
This development suggests that Mengniu has low confidence in a management competing offer and will likely shift its business away from GA Pack.
The stake sale will help the Shandong Xinjufeng Technology Packaging (301296 CH) offer turn unconditional as it will nudge minorities to tender, partly due to GA Pack’s uncertain outlook.

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Jan 06

Most Read: Makino Milling Machine Co, Vesync, Canvest Environmental Protection Group, Horizon Robotics, Japfa Comfeed Indonesia, Nidec Corp, LG CNS, Insignia Financial, Greatview Aseptic Packaging and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I
Ohayo Japan | Happy 2025.
Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes
Nidec (6594) | Sharpens Its Edge in Global Manufacturing
LG CNS IPO: Valuation Insights
Insignia Financial (IFL AU): CC Capital Wades In With A $4.30/Share NBIO
Greatview Aseptic Packaging (468.HK) Update – Newjf’s Offer Should Be Prioritized

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Merger Arb Mondays (06 Jan) – Vesync, Canvest, Get Nice, Fosun Tourism, GAPack, HKBN, Seven & I

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: Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), ESR Group (1821 HK), Goldlion Holdings (533 HK).
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP).

Ohayo Japan | Happy 2025.

By Mark Chadwick

The Topix ended 2024 up 18%. By comparison, the S&P was up 25% and the Nasdaq up 30%
Microsoft’s announced a $80 billion in AI data center spending for fiscal 2025
The Biden administration has blocked Nippon Steel’s $14.9 billion acquisition of US Steel on national security grounds

Weekly Deals Digest (05 Jan) – Canvest, Get Nice, CPMC, GAPack, Macromill, ACJennings, LG CNS

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: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Canvest Environmental Protection Group (1381 HK), Get Nice Financial Group Ltd (1469 HK), Greatview Aseptic Packaging (468 HK), Macromill, Inc (3978 JP), Avjennings Ltd (AVJ AU).

HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade

The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.

LQ45 Index Rebalance Preview (Jan 2025): Identifying Potential Index Changes

The review period for the LQ45 Index January rebalance ended 31 December. The changes should be announced the last week of January, becoming effective after the close on 31 January.
We highlight 4 potential inclusions and 4 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
Nearly all stocks will have over 1x ADV to trade from passive trackers if they are added to or deleted from the index.

Nidec (6594) | Sharpens Its Edge in Global Manufacturing

By Mark Chadwick

Nidec’s tender offer of Makino would strengthen its portfolio, combining advanced machining technologies with automation solutions to lead the global machine tool industry.
The synergy between Nidec and Makino unlocks cost savings, streamlined operations, and innovative solutions for high-growth sectors like electric vehicles and aerospace.
We estimate that the deal to acquire Makino would be between 8-13% EPS accretive for Nidec.

LG CNS IPO: Valuation Insights

LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
We previously discussed the IPO in LG CNS IPO: The Bull Case and LG CNS IPO: The Bear Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that LG CNS is attractive in the IPO price range. We would participate in the IPO.

Insignia Financial (IFL AU): CC Capital Wades In With A $4.30/Share NBIO

Last month, wealth manager Insignia Financial (IFL AU) announced – and subsequently rejected – a A$4.00/share non-binding and indicative proposal from PE outfit Bain Capital.
The question was whether Bain returned to the well, in a space where Regal (RPL AU) recently binned its Platinum (PTM AU) tie-in; and Perpetual (PPT AU)‘s carve-out has hit a snag.
Roughly two weeks after that Bain rejection, US-based asset investment manager CC Capital Partners has now tabled a A$4.30/share, in cash, non-binding Offer. That’s probably enough for Insignia to engage.

Greatview Aseptic Packaging (468.HK) Update – Newjf’s Offer Should Be Prioritized

By Xinyao (Criss) Wang

All Pre-Conditions of Newjf’s Offer have been satisfied. Based on Offer Document, the latest date for posting of the Response Document is Jan.7, 2025. First Closing Date is Jan.21, 2025.
Newjf will make every effort to complete the acquisition and regain the control of international business so as to protect shareholders’ interests.So, the logic behind the deal is very solid.
Mengniu’s attitude could be positive. A higher management offer seems more out of reach because the management lacks sincerity. We advise investors not to walk away from Newjf’s Offer easily.

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Jan 05

Most Read: Mazda Motor, Hang Seng TECH Index, ZTO Express Cayman , Endeavour Group /Australia, InnoScience Suzhou Technology, Adani Green Energy, Contact Energy, China Boqi Environmental Hol, LG CNS and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?
How Has the Index Rebalance Strategy Performed in 2024?
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Australia: Six Stocks in Passive Selling Crosshairs for February
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?
NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms
Boqi Env (2377 HK)’s Partial Offer Now Open. But First The EGM
2024 Was Ugly for Turnarounds, 2025 Should Be Awesome!
LG CNS: Updated IPO Valuation Analysis

Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?

By Michael Allen

2025 will start with more attractive turnaround opportunities than we have seen in a long time.
An uptick in TOBs, MBOs and merger discussions makes it suddenly no longer safe to short low-PBR companies indiscriminately.
Investors are noticing. More than two-dozen large- and medium-cap stocks with deep discounts to the benchmark began to bounce off well-defined support levels in late December.

How Has the Index Rebalance Strategy Performed in 2024?

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Australia: Six Stocks in Passive Selling Crosshairs for February

Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.

Boqi Env (2377 HK)’s Partial Offer Now Open. But First The EGM