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There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift

We see 7 stocks moving from MidCap to LargeCap, 11 stocks moving from LargeCap to MidCap, 4 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 4 stocks are expected to be added to Large Cap, 3 stocks to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in March.

Vishal Mega Mart IPO: IPO Details & Index Entry Timing

Vishal Mega Mart (1620871D IN) is looking to list on the exchanges by selling INR 80bn (US$943m) of stock at a valuation of INR 352bn (US$4.15bn).
Anchor allocations were completed on 10 December, the IPO opens today, and the stock is expected to start trading on 18 December. Grey market premium is around 25%.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in May and June 2025.

LG Electronics India: IPO Details & Index Entry Timing

LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.

Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light

IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers.
Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.

[Japan Activism] Exedy (7278 JP) – Buying Back Bigly

Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.

CPMC Holdings (906 HK): Festive Cheer as Precondition Satisfied🎄

ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has received SAFE approval. Therefore, the precondition is satisfied.
The offer and response document will be despatched by 20 December and 3 January 2025, respectively. The Board will recommend the offer.
The offer should be declared unconditional by the first closing date. At the last close and late-January 2025 payment, the gross/annualized spread was 7.3%/88.0%.

HK Connect SOUTHBOUND Flows (To 13 Dec 2024); Politburo Policy Change Bullish, Markets Wary, Buying

SOUTHBOUND gross trading activity rebounded about 33% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK rebounded.
Alibaba Group Holding (9988 HK) was again the top buy and Tencent (700 HK) and Meituan (3690 HK) the top two sells. Tech is having a mixed outing now.
Gross SOUTHBOUND volumes back up this week to levels seen just off the autumn peak. An interesting week as stocks popped Monday, opened high Tuesday, then fell all week.

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Dec 14

Most Read: Cloud Village, Fosun Tourism, Zomato, LG Electronics India, Insignia Financial, Exedy Corp, Fuji Soft Inc, Vesync, Broadcom , Dexus Property and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KWEB Index Rebalance: 1 Add & 4 Deletes in December
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
LG Electronics India: IPO Details & Index Entry Timing
Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light
[Japan Activism] Exedy (7278 JP) – Buying Back Bigly
Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds
Vesync (2148 HK): Expect The Yangs To Privatise
Broadcom: AI Hyper-Growth to Continue – Worries of a Slowdown Are Wrong – Positive to SK Hynix, TSMC
Blackstone Eyes Move On Dexus (DXS AU)

KWEB Index Rebalance: 1 Add & 4 Deletes in December

The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

LG Electronics India: IPO Details & Index Entry Timing

LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.

Insignia Financial (IFL AU): Bain’s Indicative Proposal a Tad Light

IOOF Holdings (IFL AU) has received an indicative proposal from Bain Capital to acquire all of its shares at A$4/share in cash.
The offer takes advantage of IOOF Holdings (IFL AU)‘s underperformance over the last couple of years and there could be competing offers from other investment managers.
Short interest in IOOF Holdings (IFL AU) is around 2% of shares out and 2.5% of float. There could be short covering in the next few days.

[Japan Activism] Exedy (7278 JP) – Buying Back Bigly

Exedy Corp (7278 JP) announced an offering of 36% of its shares at end-May. Long-time “owner” Aisin (7259 JP) was getting out. Since then, the company has bought back shares.
Activist Murakami Group has bought 27% of the company. Between Murakami and the buyback, the public has net sold 5% of the company since end-March. Kinda shocking.
There is another 35% of Max Real World Float to buy back, and at current pace, they’ll be done by mid-March 2025. Then what? That’s the really big question.

Fuji Soft (9749 JP) – Bain Bumps UnBigly, and FSI Responds

~4 weeks ago, Fuji Soft Inc (9749 JP) responded to Bain’s Proposal to take over the company but got KKR to bid ¥1 more, then said that covered it.
The Special Committee then asked the FSI Board to halt further negotiations with Bain, and to ask Bain to destroy all confidential documentation.
Bain rejected saying it contravened METI Guidelines on Corporate Takeovers and reappeared 2 days ago with a ¥9,600 bid. The structure/details of Bain’s bid was probably a strategy mistake.

Vesync (2148 HK): Expect The Yangs To Privatise

Vesync (2148 HK), a manufacturer of small home appliance, is currently suspended pursuant to the Takeovers Code.
FY23 was Vesync’s best result since its December 2020 listing; and FY24E is on track to go one better. Yet the share price is 24% adrift of the IPO price.
The Yang family, led by chairman/CEO, control ~69.26% of Vesync. An Offer price around the IPO price may be enough to take Vesync private.

Broadcom: AI Hyper-Growth to Continue – Worries of a Slowdown Are Wrong – Positive to SK Hynix, TSMC

By Nicolas Baratte

FY24 AI revenue as guided US$12.2bn. 1Q25 AI revenue to increase 65% YoY. FY27 “serviceable market” or “opportunity” could reach US$60-90bn. Actual revenues could be ~70% of that.
Mngt announced another 2 hyperscale customers (one is Apple). At least 1 new new customer could add significant revenues before FY27 (adding to the 60-90bn above).
Stock up 14% aftermarket, trading at 32x FY25 EPS. We expect Consensus EPS to revise up 10-20%. Nvidia trades at 32x next FY (FY26). Positive to suppliers Hynix and TSMC.

Blackstone Eyes Move On Dexus (DXS AU)

Reportedly, Blackstone is running a ruler over Dexus Property (DXS AU), one of Australia’s leading fully integrated real estate groups.
The Australian article flips flops: “Blackstone is understood to have been back on the scene“; but “cooled on the opportunity for now“.
Almost exactly four year ago, Blackstone paid A$2.1bn for a 49% stake in the Dexus Australian Logistics Trust, a prime logistics portfolio managed and jointly owned by Dexus.

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Dec 13

Most Read: DigiCo REIT, Nec Networks & System Integr, Sieyuan Electric Co Ltd A, Seven & I Holdings, Zomato, Oji Holdings, VCredit Holdings Ltd, Insignia Financial, Lufax Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

DigiCo REIT (DGT AU) IPO: Offering Details & Index Implications
NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade
Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register
NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered
VCredit (2003 HK): Ma Makes His Move?
Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid
Lufax (6623 HK): On Ping An’s Stake Increases

DigiCo REIT (DGT AU) IPO: Offering Details & Index Implications

DigiCo REIT (DIGICO AU) is looking to raise nearly A$2bn in its IPO by selling 399.1m shares at A$5/share. Stock is expected to list on the ASX on 12 December.
HMC Capital (HMC AU) will own 18.2% of DigiCo REIT (DIGICO AU) after the IPO while IPO investors will own 72.5% of the company.
Subject to DigiCo REIT being an eligible stapled security, we expect the stock to be included in global and local indices between March and June mopping up 11.7% of float.

NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity

Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.

CSI300/CSI500/CSI1000 Index Rebalance: US$9bn Round-Trip Trade

There are 16 changes for the CSI 300 Index, 50 changes for the CSI 500 Index and 100 changes for the CSI1000 Index that will be implemented on 13 December.
There are 257 unique names that are adds or deletes and the round-trip trade across all 3 indices is close to US$9bn.
Stocks with the largest inflows and impact have outperformed stocks with the largest outflows and impact over the last few weeks. That could continue for the next couple of weeks.

7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump

By Michael Causton

Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

Oji Paper (3861 JP) – Big New Buyback After Crossholding Sales And An Activist Peeking From Register

Paper manufacturer Oji Holdings (3861 JP) has spent 25 years not going anywhere. Their current MTMP isn’t exciting. And it looks like they will fail worse than last time.
But an activist put their head above the parapet recently, and now the company has announced larger new cross-holding selldown targets, and a big 9% buyback, with a ToSTNeT-3 tomorrow.
The stock is at 0.47x book. They have nearly ¥400bn of financial assets which are non-core. They have land and property holdings. And they have lots of cross-holdings to repurchase.

NEC Networks (1973 JP) Final Showdown II – Synergies Not Included, So Fair Value Not Offered

Yesterday, NEC Corp (6701 JP) extended its Tender Offer to buy controlled subsidiary Nec Networks & System Integr (1973 JP) for another 10 days. It did not have enough shares.
As discussed here 4wks ago, then here yesterday, NEC might not get enough shares unless it offers a higher price. There’s a reason. It is not a high enough price.
METI Fair M&A Guidelines and Guidelines for Corporate Takeovers define fair. Guarantees of a floor price and a fair allocation of synergies. One is questionable. The other is not there.

VCredit (2003 HK): Ma Makes His Move?

VCredit Holdings Ltd (2003 HK), a provider of consumer financial services in China, was listed on the 21st June 2018 at HK$20/share. Shares are currently down 90%.
Ma Ting Hung, VCredit’s chairman, held 35.6% at the time of listing, and currently holds 39.85%.
VCredit was suspended this morning pursuant to the Takeovers Code. Now might be the time for Ma to take VCredit back into the fold.

Insignia Financial (IFL AU): Bain Contemplating a Privatisation Bid

IOOF Holdings (IFL AU) shares rose 11% in the final minutes of trade, fueled by media reports suggesting that Bain was in the advanced stages of making a buyout offer.
The presence of several substantial shareholders necessitates an attractive takeover premium. Takeover interest is unsurprising as Insignia trades at a material discount to peers.
We use several methods to triangulate the likely offer, which suggests a price range of A$3.44-5.50 per share, with an average of A$4.67, a 37.4% premium to the last close.

Lufax (6623 HK): On Ping An’s Stake Increases

As discussed in PA Gooddoctor (1833 HK) – The Arb Is To Take The Stock, Ping An increased its stake in Lufax (6623 HK) to 56.82% via a scrip dividend.
This triggered a zero-premium MGO, which closed on the 28 October 2024 with negligible tendering.
Via an amendment to a tri-party agreement, Ping An subsequently lifted its stake to 66.85%. It’s worth understanding how Ping An has taken its stake >50% and beyond.

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Dec 12

Most Read: Nec Networks & System Integr, Fosun Tourism, Seven & I Holdings, Topcon Corp, Vishal Mega Mart, Horizon Robotics, Fuji Soft Inc, Palantir Technologies , Zomato and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump
Topcon (7732 JP): Privatisation Auction Underscores Underlying Value
Vishal Mega Mart IPO: IPO Details & Index Entry Timing
Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels
Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer
Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention
NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine

A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.

NEC Networks (1973 JP) Final Showdown I – Extendy-Extendy, But Not Yet Bumpity Bumpity

Two days before the close of its TOB on subsidiary Nec Networks & System Integr (1973 JP), NEC Corp (6701 JP) announced it had no plans to raise the price.
The next day, the second largest shareholder reported a stake increase from 11.68% to 13.12%. That changes the dynamic further, and a change in terms was likely.
Today post-close, NEC extended the Tender Offer by 10 days. It is worthwhile understanding the likely current disposition of shares.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

7&I (3382JP) – Spanners in the Works: FTC Blocks Another US Retail Merger and 7-11 Japan Sales Slump

By Michael Causton

Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.

Topcon (7732 JP): Privatisation Auction Underscores Underlying Value

Topcon Corp (7732 JP) shares rose 51% over two days, confirming a Bloomberg report that is conducting a privatisation auction. The process is in the second round of bids.
Exploring the privatisation process is unsurprising, as Topcon has materially underperformed the Nikkei 225 since its last medium-term management term plan was announced on 12 May 2023.
Despite the share price pop, Topcon trades at a discount to median peer multiples. At an offer of JPY3,000, Topcon would trade in line with median peer multiples.

Vishal Mega Mart IPO: IPO Details & Index Entry Timing

Vishal Mega Mart (1620871D IN) is looking to list on the exchanges by selling INR 80bn (US$943m) of stock at a valuation of INR 352bn (US$4.15bn).
Anchor allocations were completed on 10 December, the IPO opens today, and the stock is expected to start trading on 18 December. Grey market premium is around 25%.
The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in May and June 2025.

Quiddity Leaderboard HSTECH Mar 25: Two ADDs/DELs Likely but Different Conviction Levels

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
We see two index changes based on the latest available data. However, the reference period is not complete which means our expectations can change over the next few weeks.

Fuji Soft (9749 JP): Bain Can’t Take No for an Answer and Returns with a JPY9,600 Offer

The battle for Fuji Soft Inc. (9749 JP) took an unexpected turn. Bain revised its offer to JPY9,600, a 1.6% premium to KKR’s JPY9,451 second tender offer.
Bain has introduced a minimum number of shares to be purchased criterion. Bain’s offer is structured to address most but not all of the special committee’s reasons for opposition.
The Board’s first reaction will be to ask KKR, its preferred bidder, to bump. Given the amount of time and effort KKR has put into this bid, it will bump.

Nasdaq100 December 2024 Forecast (Final): Palantir’s Last-Minute Entry; Arm’s Subtle Retention

By Dimitris Ioannidis

Palantir Technologies (PLTR US) is anticipated to be the largest addition following its eligibility, which was secured through a listing transfer from NYSE to Nasdaq just before the cut-off date.
Super Micro Computer (SMCI US) is projected to exit the index despite its recent entry in July 2024, as it has ranked above the exit threshold of 125.
ARM Holdings (ARM US) is not an expected deletion due to special ADR market cap treatment. Equinix Inc (EQIX US) is not an expected addition because it is a REIT.

NIFTY200 Momentum30 Index Rebalance: 38 Changes; 65% Turnover; US$1.7bn Trade

There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

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Dec 11

Most Read: Topcon Corp, Korea Zinc, Sanrio, CPMC Holdings, Crompton Greaves, Fosun Tourism, Japan Eyewear Holdings , Shanghai Fosun Pharmaceutical (Group), Talabat Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine
A Proxy Fight for Korea Zinc in January 2025
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
CPMC (906 HK): Why This Is Still A Buy
AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift
Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)
TOPIX Inclusions: Who Is Ready (Dec 2024)
Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook
Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover
Talabat Holding (TALABAT UH): IPO Fast-Entry to Be Delivered with Caution

Thinking About Topcon (7732) And the New METI-Enabled Bad Cop-Good Cop Routine

A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it).
This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically.

A Proxy Fight for Korea Zinc in January 2025

By Douglas Kim

There is likely to be a proxy fight for the control of Korea Zinc (010130 KS) between MBK/Young Poong alliance and Chairman Choi/Bain Capital alliance in January 2025.
Young Poong Precision announced that it will acquire 39,254 shares of Korea Zinc. Post this purchase, Young Poong Precision will own a 2.11% stake in Korea Zinc (up from 1.92%).
FSS Governor Lee Bok-Hyun mentioned that the FSS is seriously reviewing a potential accounting issue related to environmental pollution at Young Poong.

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

CPMC (906 HK): Why This Is Still A Buy

Back on the 29th August 2024, CPMC Holdings (906 HK) announced ORG Technology Co., Ltd. A (002701 CH) had secured SAMR approval. Mofcom and NDRC approvals subsequently followed.
The pre-condition long stop date is the 6th January. SAFE is the outstanding pre-condition. Separately, Zhang Wei’s 22.01% irrevocable expired on the 5th December – with no HKEx announcement.
Quite a lot to pack in with 16 business days to the pre-con long stop. Sounding out people involved with the transaction would be ideal. So that’s what I did.

AMFI Stock Reclassification Preview (Dec 2024): Recent Large IPOs Lead to Big Downward Shift

We see 7 stocks moving from MidCap to LargeCap, 11 stocks moving from LargeCap to MidCap, 4 stocks from SmallCap to MidCap, and 11 stocks from MidCap to SmallCap.
From the new listings, 4 stocks are expected to be added to Large Cap, 3 stocks to Mid Cap, and multiple stocks to Small Cap.
There are multiple stocks among the AMFI changes that will be changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and/or Nifty Midcap 150 Index in March.

Fosun Tourism (1992 HK): Scheme Buyback at HK$7.80 (95% Premium)

Fosun Tourism (1992 HK) disclosed a share buyback of the company through a scheme of arrangement at HK$7.80, a 95.0% premium to the last close price of HK$4.00.
The key condition is the scheme be approved by at least 75% of disinterested shareholders (rejection by <10% of disinterested shareholders).
The timing is arguably opportunistic, as the shares are down 31% YTD. Nevertheless, the high takeover premium and a potential scrip option lower the vote risk.

TOPIX Inclusions: Who Is Ready (Dec 2024)

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.
Reently-Listed Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), and Intermestic (262A JP) were added to the TOPIX index at the end of November 2024.
Our long-term pre-event candidate Japan Eyewear Holdings (5889 JP) has applied for a Section Transfer to the Prime Market which means there could be TOPIX Inclusion in the near future.

Shanghai Fosun Pharmaceutical (2196.HK) – Performance Pain Points and Henlius’ Privatization Outlook

By Xinyao (Criss) Wang

Fosun Pharma is just “a platform” and its performance mainly relies on the contributions of subsidiaries. However, such investment-driven business model has led to the current performance difficulties.
Although the motivation/underlying logic for Fosun Pharma to privatize Henlius are solid, we don’t know how this privatization ranks in terms of strategic significance of capital operations within Fosun’s system.
If, for example, Fosun Pharma finds more important acquisitions/capital expenditures, the priority of Henlius’ privatization could fall. So, we think if it takes too long, there may be more uncertainties.

Fosun Tourism (1992 HK): Fosun Int’l’s Indirect Takeover

When Fosun Tourism (1992 HK), a leisure-focused integrated tourism group, was suspended pursuant to the Takeovers Code, the obvious Offeror, by way of a Scheme, was Fosun International (656 HK)
Not quite. We do have a Scheme, but it’s being enacted by way of a buyback. Fosun Int’l still abstains from voting, but will control 100% if the Scheme completes.
The Cancellation Price is $7.80/share (not declared final), a punchy 95% premium to undisturbed. I previously speculated a 100% premium was not out of the question. Clean deal.

Talabat Holding (TALABAT UH): IPO Fast-Entry to Be Delivered with Caution

By Dimitris Ioannidis

Talabat Holding (TALABAT UH) is expected to be listed on 10 December 2024, on the Dubai Financial Market at a valuation of ~$10.3bn.
Fast-Entry is forecasted to be announced for the one Global Index at the close of 10 December and traded on 20 December in conjunction with the review.
Uncertainty regarding the Fast-Entry arises due to lack of shareholder information in the Institutional Offering which can result in the float market cap being determined as invalid.

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Dec 10

Most Read: Nec Networks & System Integr, Sanrio, Hua Nan Financial Holdings Co Ltd., Workday Inc Class A, CPMC Holdings, Apollo Global Management , Doosan Robotics , China National Building Material and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
Sanrio (8136 JP): The Current Playbook
NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact
Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY
CPMC Holdings (906 HK): Steady Nerves Required
S&P500/400/600 Index Rebalance: Apollo Global, Workday Added to SPX; AppLovin Misses Out
Flow Dynamics from NPS Exercising Appraisal Rights on Doosan Merger
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed

On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.

Sanrio (8136 JP): The Current Playbook

Since the announcement of the US$840 million secondary offering, Sanrio (8136 JP)’s shares have been down 3.9% from the undisturbed price of JPY5,160 per share (26 November).
It is instructive to look at recent large Japanese placements to understand the potential trading pattern. So far, Sanrio’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 10 December. The average large Japanese placement tends to generate positive returns.

NEC Networks & System (1973 JP): Oasis Stake Could Be a Headache for NEC

Oasis has become a substantial shareholder of Nec Networks & System Integr (1973 JP), representing 13.2 million shares or an 8.83% ownership ratio.
Oasis has not commented on its intentions, but its stake signifies two possibilities – the start of an activist campaign to secure a bump or a play on appraisal rights.
A bump while possible is not a certainty. NEC is likely to wait to see to if Oasis increases its stake to a level which threatens its offer.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: 15 Changes, 44% Turnover, US$4.8bn Trade, BIG Impact

There are 8 adds and 7 deletes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December. We had a 100% hit rate on our forecasts.
Estimated one-way turnover is 22.1% resulting in a one-way trade of TWD 78.8bn (US$2.4bn). There are 16 stocks with over 5 days of ADV to trade.
There has been a big increase in short interest on some of the deletions and there could be some short covering the stocks closer to implementation date.

Select Sector Indices and S&P Equal Weight Rebalance: US$16bn Trade; More Buying for APO and WDAY

Constituent changes to the S&P 500 INDEX and capping changes will result in a round-trip trade of US$15.9bn across the Select Sector indices and the S&P500 Equal Weight Index.
The Select Sector index trackers and S&P 500 Equal Weight trackers will need to buy Apollo Global Management and Workday, adding to the buying from S&P 500 INDEX trackers.
The flows will change over the next week as stock prices move around and final capping is done after the close on 13 December.

CPMC Holdings (906 HK): Steady Nerves Required

ORG Technology Co., Ltd. A (002701 CH)’s offer for CPMC Holdings (906 HK) has one remaining precondition: SAFE approval.
Mr Wei’s irrevocable was terminated. Nevertheless, as a seller, he will accept the offer, as the shares trade below the offer price, and there is no competing offer.
The precondition long stop date is 6 January, sufficient time to satisfy the precondition. It would be highly unusual to secure MOFCOM and NDRC approval but not SAFE approval.

S&P500/400/600 Index Rebalance: Apollo Global, Workday Added to SPX; AppLovin Misses Out

There are 2 changes for the S&P 500 INDEX, 2 changes for the S&P Midcap400 Index and 6 changes for the S&P SmallCap600 Index at the December rebalance.
Apollo Global and Workday will have large flows from S&P 500 INDEX trackers while AppLovin misses out. The SPX adds will have large inflows from the Select Sector index trackers too.
The outright adds are up a lot in the after-hours and there could be further upside over the next couple of weeks as positioning ramps up.

Flow Dynamics from NPS Exercising Appraisal Rights on Doosan Merger

By Sanghyun Park

If stocks close above the appraisal prices on the 10th, NPS will support the merger; otherwise, they’ll abstain to secure their appraisal rights.
Due to cancellation risk hitting the ceiling, NPS will likely exercise half its position and start buybacks after the results.
With both stocks heavily weighted in KOSPI 200, NPS is likely to opt for a tight buyback window, boosting chances for upward price action on Doosan’s shares in that period.

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

CNBM (3323 HK)’s Buyback Ups Parent’s Stake >50%

China National Building Material (3323 HK) (CNBM), a leading PRC building materials company, is offering to buy back 841,749,304 H-shares at HK$4.03/share, a 15.1% premium to undisturbed.
CNBM’s parent – the CNBM Parent Concert Group – will not participate in the tender, therefore elevating its stake to 50.01% of total shares from 45.02% currently.
That % increase necessitates a whitewash waiver so as to not make a mandatory general Offer.

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Dec 09

Most Read: HKBN Ltd, Kokusai Electric , De Grey Mining, Clarity Pharmaceuticals Ltd, Suntec REIT, Rakuten, Mitsubishi Logisnext Co., Ltd., Sanrio, Paradigm Biopharmaceuticals and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet
Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side
Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?
Northern Star’s A$5bn Tilt for De Grey (DEG AU)
S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted
Suntec REIT (SUN SP): Tang’s Obligatory Offer. But … Is ESR A Seller?
Rakuten (4755 JP) – Trying To Goose The Stock Price Before Year-End or Mobile Sub Numbers for 2025?
Mitsubishi Logisnext (7105 JP): Mitsubishi Heavy Industries (7011 JP) Seeks to Exit
Sanrio (8136 JP): The Current Playbook
Paradigm Biopharmaceuticals (PAR AU): Fund Raising Amidst Pipeline Progress Raises Conviction

Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet

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: Lifestyle China (2136 HK), Arcadium Lithium (ALTM US), Shanghai Henlius Biotech (2696 HK), ESR Group (1821 HK), Get Nice Financial Group Ltd (1469 HK), Canvest.
Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Capitol Health (CAJ AU), Elematec Corp (2715 JP).

Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side

The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I still see 2 IN and 2 OUT for the Mar25 Nikkei225 Rebal.
There is also a DOUBLE-capping event for Fast Retailing which on 8% outperformance could become a TRIPLE-capping event. For now, the trade is shaping up to be US$7bn a side.
There is still a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. Longer-term, the TOPIX Methodology Rejig is an interesting problem set.

Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?

A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP).
The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.

Northern Star’s A$5bn Tilt for De Grey (DEG AU)

De Grey Mining (DEG AU), which boasts one of Australia’s largest undeveloped gold projects, has announced a merger, by way of Scheme, with Northern Star Resources (NST AU).
Northern Star is offering 0.119 new shares for every De Grey share, and will hold ~80.1% of the combined entity, with De Grey shareholders the remaining ~19.9%.
Terms back out an implied price of A$2.08/share, or a ~37% premium to last close. This Offer has the unanimous backing of both boards.

S&P/ASX Index Rebalance (Dec 2024): CAR, Clarity Pharma Added; Dexus, Spark Deleted

CAR Group (CAR AU) replaces Dexus Property (DXS AU) in the S&P/ASX50 Index and Clarity Pharmaceuticals Ltd (CU6 AU) replaces Spark New Zealand (SPK AU) in the S&P/ASX200 (AS51 INDEX).
Dexus Property and Spark New Zealand were deleted from a global index a couple of weeks ago, so this will heap further pressure and increase the real float of the stocks.
There has been an increase in cumulative excess volume for all changes, but positioning in some stocks may continue post the announcement.

Suntec REIT (SUN SP): Tang’s Obligatory Offer. But … Is ESR A Seller?

Gordan Tang (& his wife Celine) acquired 2.14% in Suntec REIT (SUN SP), lifting their stake to 31.45% from 29.31%, triggering a MGO.
The Offer Price is $1.16/share against a recent close of $1.17. The Offer will be conditional on a 50% acceptance hurdle. That’s it. This is purely a technical Offer.
Share popped 7% on the news, and closed up ~5%. This appears unwarranted. Tang is not going to take Suntec private. But ESR Group (1821 HK) may be exiting.

Rakuten (4755 JP) – Trying To Goose The Stock Price Before Year-End or Mobile Sub Numbers for 2025?

Today, Rakuten (4755 JP) announced a new shareholder benefit (株主優待) program today, to reward shareholders as of end-December 2024. The stated goal? To “thank shareholders”…
…And provide more people with the opportunity to try out the benefits of Rakuten Mobile, with 1yr free of a 30GB/mo mobile plan. There are conditions, but it’s juicy.
Last year’s 3mo plan was given with one day of notice. This year’s larger full-year govt gets 3+wks. They are juicing the sub numbers for 2025.

Mitsubishi Logisnext (7105 JP): Mitsubishi Heavy Industries (7011 JP) Seeks to Exit

Mitsubishi Logisnext Co., Ltd. (7105 JP) shares rose 26% after the Nikkei reported that Mitsubishi Heavy Industries (7011 JP) is contemplating selling its 64.5% stake.
Logisnext confirmed the sale process. In a fair process, minorities should receive the tender offer price plus the proportionate share of Mitsubishi Heavy Industries’ TOB tax benefits.
Despite the rise in share price, Logisnext trades at a discount to peer multiples. At an offer of JPY2,000, Logisnext would trade in line with median peer multiples.

Sanrio (8136 JP): The Current Playbook

Since the announcement of the US$840 million secondary offering, Sanrio (8136 JP)’s shares have been down 3.9% from the undisturbed price of JPY5,160 per share (26 November).
It is instructive to look at recent large Japanese placements to understand the potential trading pattern. So far, Sanrio’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 10 December. The average large Japanese placement tends to generate positive returns.

Paradigm Biopharmaceuticals (PAR AU): Fund Raising Amidst Pipeline Progress Raises Conviction

By Tina Banerjee

Paradigm Biopharmaceuticals (PAR AU) has requested a trading halt to the ASX pending an announcement in relation to a capital raising. Normal trading will resume on Monday, December 9, 2024.
Assuming quarterly cash burn rate of A$7M, Paradigm’s cash balance should provide a runway through mid-Q3FY25. The company is in a dire need to raise fund.
With lead drug being in late-stage trial and having huge market potential, Paradigm seems to be an attractive biotech investment opportunity. Recently, optimism is growing surrounding Paradigm’s lead drug candidate.

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Dec 08

Most Read: Phison Electronics, Auckland Intl Airport, Kadokawa Dwango, Nexchip Semiconductor , Varun Beverages , Mitsubishi Logisnext Co., Ltd., Yang Ming Marine Transport, Korea Zinc, SGX Rubber Future TSR20 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
Auckland Airport (AIA NZ) Placement: Potential Index Flows
Kadokawa (9468 JP): Take Profits as a Sony Privatisation Rumours Surface
CES China Semiconductor Chips Index Rebalance: Multiple Index Inclusions for the Adds
Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?
What Is the Real Purpose of President Yoon’s Martial Law – To Reveal Election Fraud?
Taiwan Top 50 ETF Rebalance: Big Buying in Yang Ming Marine (2609 TT) In Two Weeks
Flow Trading Setup Triggered by Korea Zinc’s 21%p Float Rate Cut in KOSPI 200
Balancing The Scales: EUDR’s Evolving Impact On The Rubber Market

TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.

Auckland Airport (AIA NZ) Placement: Potential Index Flows

Auckland City Council is looking to sell 163.23m shares of Auckland Intl Airport (AIA NZ) in a clean-up trade. This is big at NZ$1.3bn and 64 days of ADV.
The placement was expected by the market and the stock has run up despite that. The stock is in a trading halt and should open lower.
There will be passive buying at the time of settlement of the placement shares and that will mop up around 15% of the offering.

Kadokawa (9468 JP): Take Profits as a Sony Privatisation Rumours Surface

Kadokawa Dwango (9468 JP) shares rose 16% after Reuters reported that Sony Corp (6758 JP) is in talks to acquire it. Kadokawa confirmed an initial letter of intent.
The privatisation interest is unsurprising as Kadokawa’s publishing arm, acclaimed intellectual properties, and positioning in the anime industry would be attractive to Sony.
The upside is limited as the last close reflects a significant takeover premium. There is a risk if a binding proposal emerges, it could be takeunder like Bain/T-Gaia.

CES China Semiconductor Chips Index Rebalance: Multiple Index Inclusions for the Adds

CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
There are 3 changes for the index, and we estimate one-way turnover of 1.7% resulting in a round-trip trade of CNY 570m (US$79m).
Nexchip Semiconductor (688249 CH) and United Nova Technology (688469 CH) are adds to other indices as well and the impact on the stocks will be a lot higher.

Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?

Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.

Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?

A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP).
The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.

What Is the Real Purpose of President Yoon’s Martial Law – To Reveal Election Fraud?

By Douglas Kim

One of the most important questions about the martial law three days ago is why did President Yoon send special forces (297) to the National Election Commission?
President Yoon may have ordered troops to be deployed to the NEC to get to the bottom of the election fraud since all the important election servers are stored there.
It is EXTREMELY DIFFICULT to prove an election fraud. Even if President Yoon declares a war on election frauds, he must have extraordinary pieces of data to back this up.

Taiwan Top 50 ETF Rebalance: Big Buying in Yang Ming Marine (2609 TT) In Two Weeks

Yang Ming Marine Transport (2609 TT) will replace Airtac International (1590 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 20 December.
Yang Ming Marine Transport (2609 TT) will also be added to the Yuanta/P-shares Dividend Plus ETF in December, so there will be increased flow and impact from the passive buying.
There has been an increase in cumulative excess volume in Yang Ming Marine Transport (2609 TT) but there is a similar trend in other stocks from the sector.

Flow Trading Setup Triggered by Korea Zinc’s 21%p Float Rate Cut in KOSPI 200

By Sanghyun Park

Korea Zinc’s free float is dropping from 52% to 31%, a 21%p cut.
Despite rising volume, retail still dominates. With this trend continuing, the 80,000-share sell volume is unlikely to get buried without triggering noticeable price moves.
Ahead of big one-day flow events, shorts are loaded, causing a dip. On rebalance day, traders buy back, triggering a bounce. This event is likely to follow the same pattern.

Balancing The Scales: EUDR’s Evolving Impact On The Rubber Market

By Vinod Nedumudy

FAQ and guidance documents bring clarity
Synthetic rubber out of the purview of EUDR
Allows for rubber suppliers in countries like Vietnam and Indonesia to catch up

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Dec 07

Most Read: Teco Electric & Machinery, Goodman Group, Meituan, Seven & I Holdings, Varun Beverages , Cromwell Property, Mitsubishi Logisnext Co., Ltd., Hua Nan Financial Holdings Co Ltd., AppLovin , Hotel Property Investments and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes
Goodman Group (GMG AU) Placement: Limited Index Flows
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
Cromwell Prop (CMW AU): ESR Exit Post-Privatization?
Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?
Quiddity TDIV/50/100 Dec 24 Results: 100% Hit Rate; 20x+ ADV for Many Names; US$2.3bn One-Way
S&P500 December 2024 Forecast (Final): Flipping the COIN
Hotel Properties (HPI AU): Charter Hall Declares Offer Unconditional

Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Last-Second Changes to the Last-Minute Changes

There are now new changes forecast for the Yuanta/P-Shares Taiwan Dividend Plus ETF in December for a total of 8 inclusions and 7 deletions.
Constituent changes along with capping changes will lead to a one-way turnover of 21.8% and in a one-way trade of TWD 75.8bn (US$2.33bn).
The potential changes had a big one-day move yesterday and we expect similar moves over the next couple of days.

Goodman Group (GMG AU) Placement: Limited Index Flows

China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)

The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.

Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up

On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion.
The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer.

Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?

Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.

Cromwell Prop (CMW AU): ESR Exit Post-Privatization?

Back in August 2021, ESR Group (1821 HK) acquired unlisted ARA Asset Management for US$5.2bn. This was discussed in ESR Cayman (1821 HK) Takes Out ARA Asset Management.
Included in the transaction (completed early-2022) was ARA’s ~30.7% stake in office play Cromwell Property (CMW AU).
ESR has in the past said Cromwell was a non-core holding. With ESR now expected to be privatized by Warburg/Starwood, does this accelerate the narrative?

Mitsubishi Logisnext (7105) – The Next Target in Logistics Space?

A Nikkei article this morning several hours pre-open said that Mitsubishi Heavy Industries (7011 JP) was preparing to sell its listed forklift subsidiary Mitsubishi Logisnext Co., Ltd. (7105 JP).
The story says “Investors had been pressuring Mitsubishi Heavy to spin off or delist Logisnext” and we know the TSE dislikes dual listings. I would have expected a buy-in but…
There are a number of reasons why a buyer could find this asset attractive. I suggest reading all the way through and the tone of the Conclusions.

Quiddity TDIV/50/100 Dec 24 Results: 100% Hit Rate; 20x+ ADV for Many Names; US$2.3bn One-Way

By Janaghan Jeyakumar, CFA

The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 6th December 2024.
There will be one ADD/DEL for T50, five ADDs/DELs for T100, and 8 ADDs/7 DELs for TDIV. All of these are perfectly in line with our final expectations.
In this insight, we take a look at Quiddity’s final flow expectations for the December 2024 index rebal event and potential trade ideas based on the flow dynamics.

S&P500 December 2024 Forecast (Final): Flipping the COIN

By Dimitris Ioannidis

Coinbase Global (COIN US) can be the unexpected addition by transition because of a high liquidity score and a close distance below the estimated transition threshold.
Lennox International (LII US) is the main candidate for addition by migration due to having the highest average mcap score and passing eligibility metrics.
Illumina Inc (ILMN US) has a muted conviction for addition because of ineligible earnings and a recent deletion from the index.

Hotel Properties (HPI AU): Charter Hall Declares Offer Unconditional

Declaring its Offer unconditional was always a possibility as Hotel Property Investments (HPI AU) board continues to reject terms. The alternative was a likely deal fail.
Charter Halls currently has 31.37%, including 6.66% via the acceptance facility. That facility has now closed following this unconditional statement.
It will be challenging for Charter Hall to clear 50% without board support. But IF they get 50%+, expect the board to change their mind and recommend shareholders accept terms.

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Dec 06

Most Read: Seven & I Holdings, Kakao Corp, Ecopro BM , ESR Group , Kioxia Holdings , Apollo Global Management , HKBN Ltd, Greatview Aseptic Packaging, NIO and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – Ito-San MBO Plan Includes 7-Eleven US IPO… Which LeadsTo A Modest Proposal
Latest Scoop on President Yoon’s Impeachment Motion and How to Play It in the Market
Ecopro BM (247540 KS): Index Implications as KOSPI Transfer Nears
ESR (1821 HK): HK$13.00/Share Offer
Kioxia IPO: Peer Comparison and Valuation
Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
Quiddity Leaderboard S&P 500 Dec 24 Rebal – Final Predictions
HKBN (1310 HK): Just How Likely Is An I Squared Offer?
GAPack (468 HK): No Further Progress On Co-Founder’s Offer. That’s Good For XJF
2025 High Conviction: Short NIO (NIO US/9866 HK)

7&I (3382 JP) – Ito-San MBO Plan Includes 7-Eleven US IPO… Which LeadsTo A Modest Proposal

A Bloomberg article late in the trading session today said the Seven & I Holdings (3382 JP) MBO proposal by Ito family scion Ito Junro includes a US assets IPO.
The idea? IPO proceeds would help pay down MBO debt to Japanese banks. Seven & i would retain a stake. This is not dissimilar to Berkshire Hathaway buying a stake.
But more directly, this leads us back to 7&I (3382) – What If… A Modest Proposal. Possible strategic mistake by Ito-san here. ACT should act on this.

Latest Scoop on President Yoon’s Impeachment Motion and How to Play It in the Market

By Sanghyun Park

The key point is Saturday—watch if eight ruling party lawmakers defect. Hahn Dong-hoon may push for an early election, with 15 loyalists backing him, so it’s definitely possible.
I’d bet on the ruling party leader pivoting, accepting impeachment, and pushing for an early election. Time to scout beneficiaries and set up an aggressive trading play.
Short-Term, I’m eyeing Kakao affiliates, under-the-radar IT stocks, and those likely to benefit from corporate governance changes. Low birth rate-related sectors are also set for strong upside.

Ecopro BM (247540 KS): Index Implications as KOSPI Transfer Nears

Eight months after shareholders approved the transfer from the KOSDAQ to the KOSPI market, Ecopro BM (247540 KS) has submitted the application for section transfer to the KRX.
Given historical precedent, the transfer could take place in February. Ecopro BM‘s deletion will mean an inclusion to the KOSDAQ150 Index to maintain the number of index constituents at 150.
Ecopro BM (247540 KS) will be deleted from the KOSDAQ 150 Index leading to passive selling and some short covering. Then will come the inclusion to the KOSPI 200 Index.

ESR (1821 HK): HK$13.00/Share Offer

By Shifara Samsudeen, ACMA, CGMA

HK$13.00/Share (deemed final). That’s the key takeaway here as the Starwood/Warburg Pincus Consortium (finally) tables a firm offer, by way of a pre-conditional Scheme.
Pre-Conditions are extensive, with a long stop date of the 4th September 2025.
HK$13.00 is below prior expectations of a HK$14+ handle. But with irrevocables of 30.79% of the register (and 51.24% of Scheme shares), this is done. A scrip option is afforded.

Kioxia IPO: Peer Comparison and Valuation

Kioxia has announced the terms for its IPO, and plans to raise $730m through issuing new shares as well as offer by existing shareholders, at a market capitalisation of $819bn.
Kioxia Holdings (285A JP) ‘s earnings have been volatile and margins have trailed compared to peers Micron and SK Hynix. Earnings are approaching a new peak.
Kioxia’s implied valuation multiples are at a deep discount to peer multiples, suggesting there is significant upside to the indicative IPO price range.

Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up

On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion.
The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer.

Quiddity Leaderboard S&P 500 Dec 24 Rebal – Final Predictions

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
The rankings used for the December 2024 index rebal event will be based on yesterday’s (4th December 2024) opening prices. Announcement date will be
Inside we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.

HKBN (1310 HK): Just How Likely Is An I Squared Offer?

Two hours before China Mobile’s pre-conditional voluntary Offer announcement on the 2 December, HKBN Ltd (1310 HK) flagged a possible separate Offer from I Squared Asia-backed HGC Global Communication (HGC).
No price was mentioned, although HKBN and I Squared “are in discussions on the terms of the proposal (including the price).” The media is reporting a HK$5-HK$6/share price range.
Apart from anti-competition concerns via a HKBN/HGC tie-in; would HGC even get approval from the powers that be to proceed with a merger?

GAPack (468 HK): No Further Progress On Co-Founder’s Offer. That’s Good For XJF

In Greatview Aseptic Packaging (468 HK) (GAPack)’s monthly update, there is no update.
No further progress on the management Offer. Four months and counting. In the meantime, Shandong Xinjufeng Technology (301296 CH) (XJF) secured SAMR approval; and the appointment of two friendly directors.
IF (and when) XJF’s Offer becomes open to acceptance and the IFA is supportive, management should back the Offer if their own Offer is unlikely to materialise.

2025 High Conviction: Short NIO (NIO US/9866 HK)