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• Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
• If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 8.4mm shares (US$2.5bn) to sell.
• At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.

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

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

• Tata Sons, holding company of Tata Group, is looking to raise around US$1.1bn via selling a 0.65% stake in Tata Consultancy Svcs (TCS IN).
• The deal doesn’t appear to be well-flagged although it could be part of Tata Sons’ recent moves to avoid an RBI mandated listing next year.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
• In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELETEs.

• Swire Pacific (19 HK)‘s discount to NAV is around a one-year high; and its implied stub (net of Swire Properties (1972 HK) has just rolled over from a multi-year high. 
• 45%-Held Cathay Pacific Airways (293 HK) recently reported its highest annual profit in more than a decade.
• Reportedly (Bloomberg) Air China Ltd (A) (601111 CH) is mulling a stake increase in the Hong Kong carrier. This is inevitable. It’s just a question of timing. 

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

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

• We look at which Japan banks have the most cash which can see a major boost to returns.
• Banks with lower margins can see a higher net interest income pick up from rising rates.
• Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.

• On 19 March, Choi Sang-Mok announced that the Korean government plans to provide corporate tax reduction benefits to companies that cancel their treasury shares. 
• The separate taxation of dividend income is also expected to be promoted. All of these are law amendment issues and must go through the legislative process of the National Assembly. 
• At this time, the Korean government did not provide the entire details about the exact amount of corporate tax reductions from share cancellation and separate taxation of dividend income. 

• Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
• If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 8.4mm shares (US$2.5bn) to sell.
• At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.

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

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

• Tata Sons, holding company of Tata Group, is looking to raise around US$1.1bn via selling a 0.65% stake in Tata Consultancy Svcs (TCS IN).
• The deal doesn’t appear to be well-flagged although it could be part of Tata Sons’ recent moves to avoid an RBI mandated listing next year.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Hong Kong appears to be heading towards its first US$100m+ IPO for the year.
• For placements, after a flurry of placements in the prior week, past week was relatively quiet with only the US$2bn ITC Ltd (ITC IN) block.

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
• In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELETEs.

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

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

• Our NAV analysis of LG Corp suggests an implied market cap of 16.3 trillion won or 103,781 won per share which is 16% higher than current share price.
• For holdco discount, we used a 50% holdco discount. If investors perceive improvement in value (such as through corporate governance improvements), the holdco discount on LG Corp would decline.
• LG Corp’s shares are up 5.9% in the past six months, outperforming all the major LG Group related companies including LG Chem, LG H&H, LG Electronics, and LG Energy Solution. 

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

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

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

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

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

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

• Nvidia GTC Conference This Week Likely to Create Newsflow for Many Tech Names
• Samsung Could Hike NAND Flash Prices by 20%; Silicon Motion for Exposure
• TSMC Reportedly Placing Orders for Additional Advanced Packaging Capacity, Likely In Response to Demand Strength

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

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

• TSMC: +15% ADR Premium; Likely to Trend Further Lower Over Time
• UMC: -2.3% Discount; Decent Level to Long the ADR vs. Short Local
• ASE: +11.6% Premium; Continue to Advocate Shorting the Spread Here

• Since October, Evergreen shares have performed well on rising spot rates
• Over the same period, Maersk and ZIM shares fell on longer-term concerns
• Pair trade idea: SHORT Evergreen vs LONG Maersk / ZIM position

• The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
• The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
• Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!

• With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
• We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
• The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

• There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
• There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
• Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX). 

• Nine months ago I first wrote on Anycolor (5032 JP). I thought the guidance growth pattern and valuations remarkable. Results handily beat guidance. Now we’re in Year 2 of guidance.
• After the first full year listed, FY2024 guidance was for +30% in revenue to ¥33bn, and +35% growth in OP. For Q1, reported yesterday, actual results were +51% and +91%.
• The stock is popping this AM, but it is still cheap vs growth rates and margins. There are, notably, still “context issues” here. They merit some consideration (and investigation).

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

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

• The P/E ratio has risen above 20x this fiscal year from no more than 13x in the previous four years, reflecting successful restructuring and investor enthusiasm for AI. 
• Profit margins are rising, but remain moderate in absolute terms with room for further improvement. The shares may consolidate, but they do not look overvalued.
• Management is aiming for generative AI sales of ¥50 billion in three years time. This is less than 2% of total sales, but a positive indicator for NEC’s software business.

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

• What is a stress test? How it is being calculated?
• Key Takeaways of Mutual Fund’s Stress Test Results. What should investors know?  
• Flaws in SEBI’s Stress Testing Results and Way Ahead for investors

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

• Emerald Resources Nl (EMR AU) will be added to the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March while there are 3 deletions for the index.
• The constituent changes along with float and capping changes result in an estimated one-way turnover of 6.4% and a one-way trade of US$263m.
• There are 9 stocks with more than US$10m to trade and 9 stocks with over 2x ADV to trade.

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

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

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

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

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

• Our base case valuation is market cap of US$5.4 billion or target price of US$35.9 per share, which is 20% higher than high end of the IPO price range (US$30).
• We estimate Astera Labs (ALAB US) to generate revenue of $221.3 million (up 91.1% YoY) in 2024 and $304.5 million (up 37.5% YoY) in 2025.
• Many investors are willing to take extra risk to invest in companies such as Astera Labs that could generate strong sales growth amid rush to aggressively expand AI capabilities.

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

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

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

• Goodman Group (GMG AU) has been moving higher recently and the stock has outperformed its peers handily over the last year.
• The stock trades marginally expensive compared to its peers and that could be partially attributed to the stock being a part of large indices.
• There is another index inclusion to come and that could lead to further outperformance in the short term.

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

For our next Corporate Webinar, we are glad to welcome Centurion Corp’s CEO, Mr Kong Chee Min. 

In the upcoming webinar, Chee Min will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh.

Angus will also be providing an industry overview, featuring landscape commentary and returns analysis. The Corporate Webinar will include a live Q&A session

In the spirit of giving back to our community, one of the attendees will also be awarded an Amazon Kindle as part of our exclusive lucky draw. 

The Corporate Webinar will be hosted on Thursday, 21 March 2024, 19:00 SGT.

About Centurion Corporation 

Centurion Corporation Limited (“Centurion” or the “Company” and together with its subsidiaries, the “Group”) owns, develops and manages quality, purpose-built workers accommodation assets in Singapore and Malaysia, and student accommodation assets in Australia, the United Kingdom (“UK”) and the United States (“US”). The Group owns and manages a strong portfolio of 34 operational accommodation assets totalling approximately 66,607 beds as of 30 September 2023. Centurion’s established portfolio of workers accommodation assets are managed under the “Westlite Accommodation” brand and comprises nine workers accommodation assets in Singapore as well as eight workers accommodation assets in Malaysia. The Group’s student accommodation assets are managed under the “Dwell” brand, with ten assets in the UK, five assets in US and two assets in Australia. With global reach and a clear growth strategy to actively enhance and manage its assets, identify strategic acquisitions and joint ventures, as well as develop customised accommodation management services, Centurion is well-positioned as a leading provider of quality, purpose-built accommodation.

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

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

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

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

• We provide an update of the potential KOSPI200 rebalance candidates in June 2024. 
• The bottom 5% market caps in KOSPI200 could be excluded from the KOSPI200 rebalance in June 2024. These 10 stocks are down on average 12.6% YTD. 
• We identified seven potential inclusion candidates. Among them, those that have low PBR multiples including HHI and Dongwon Industries could continue to outperform the market leading up to rebalance announcement. 

• Belle Fashion (BF) aims to raise up to US$1bn in its Hong Kong listing. The company recently refiled its application proof after a gap of two years.
• As per F&S, it was the largest player in China’s fashion footwear market with a 12.3% market share, based on 2022 retail sales.
• We have looked at the company’s past performance based on its earlier filings in 2022. In this note, we talk about the updates from its recent filings.

• Gross spread (as of 13 March closing) on an estimated 1 Mondi PLC (MNDI LN) x 0.2701 DS Smith PLC (SMDS LN) exchange equation is 5.6%. New PUSU is 4 April.
• The merger would create a European board and packaging giant. Interloper risk seems low, as are the chances of the deal being contested by antitrust regulators. 
• Mondi and DS Smith are verifying the anticipated synergies resulting from their combination. Considering synergies of 3% of DS Smith revenues, the present value might not cover the premium offered.

• In late February, Keisei Electric Railway Co (9009 JP) announced a 5.0mm share (2.96%) ¥33bn buyback, to be executed in the following 3 months. That meant likely ToSTNeT-3.
• I thought that mildly bullish. Shares rose 0.05% the next day. Then we got an OLC offering announcement. I thought that bearish. The stock popped early but fell hard.
• Today the announcement. It IS a ToSTNeT-3. tomorrow. At ¥6,320/share. But it is an Accelerated Share Repurchase. Which changes things. Or it doesn’t. But it bears watching closely, maybe acting.

• Taiyo Pacific Partners took the original parent company (Roland Corp (7944 JP) of Roland DG Corp (6789 JP) private in 2014. It was re-listed in 2020. 
• Roland DG is one of the world’s leading large format digital printer manufacturers. They also make some interesting medical devices and systemic tools, and 3D milling/printing/engraving/photo impact machines.
• This TOB is at a 30.1% premium. Almost a 10yr high. But it is not expensive. And even if TPP has 20%, there is a LOT of float left over.

• IMM Private Equity announced that it is selling a 1.7% stake in Woori Financial Group (316140 KS) in a block deal sale. 
• The number of shares subject to sale is 12.56 million, or 177.7 billion won to 181.5 billion won.
• Block deal sale discount range is reasonable, valuation multiples are low, and we expect continued positive capital inflow into stocks related to Corporate Value Up in the next 12 months. 

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

• The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
• MS&AD Insurance (8725 JP) had a stake over US$100m in at least 29 listed Japanese stocks, amounting to a total of US$17.4bn.
• In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

• Keisei Electric Railway Co (9009 JP)‘s previously announced buyback is now confirmed to be a ToSTNeT-3 buyback. But also an accelerated share repurchase.
• Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

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

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

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

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

• In late February, Keisei Electric Railway Co (9009 JP) announced a 5.0mm share (2.96%) ¥33bn buyback, to be executed in the following 3 months. That meant likely ToSTNeT-3.
• I thought that mildly bullish. Shares rose 0.05% the next day. Then we got an OLC offering announcement. I thought that bearish. The stock popped early but fell hard.
• Today the announcement. It IS a ToSTNeT-3. tomorrow. At ¥6,320/share. But it is an Accelerated Share Repurchase. Which changes things. Or it doesn’t. But it bears watching closely, maybe acting.

• As the Hong Kong bourse languishes, recent Hong Kong privatisation include mainland Chinese firms such as Vinda International (3331 HK) and China Traditional Chinese Medicine (570 HK) . 
• Reportedly (Reuters) Li Ning (2331 HK) is now in the crosshairs.  Shares are up 7.8% as I type.
• Olympic champion Li Ning holds ~10.5% in his self-named company, which was recently in the news after acquiring a HK$2.2bn commercial building from Henderson Land (12 HK)  as its headquarters.

• In Feb 2024,  BAT’s management stated that they were reviewing their stake in ITC Ltd (ITC IN).  The news of a possible selldown by BAT was leaked again earlier today.
• BAT has owned its stake in ITC for over a century and remains its largest shareholder.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Back on the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a paltry 8.6% premium to last close.
• This Scheme-like Offer, with a tendering condition, secured SAFE approval late January. But last month CIMC announced a CBP investigation into the evasion of U.S. anti-dumping and countervailing duties.
• Now CIMC has announced a firm Offer at HK$7.50/share. Terms are final. The majority of independent H-shareholders are supportive. This looks done. Possible completion late-May, early-June.

• Reuters reported that due to the steep share price declines, Mr Li Ning is considering leading a consortium to privatise Li Ning (2331 HK). 
• The shares have been weighed down by concerns about channel inventory, steep retail discounts, and unauthorised distributor sales. To counter this, Li Ning aims to achieve RMB50bn sales by 2028.
• The probability of an offer is low as funding the scheme consideration could prove challenging. Nevertheless, the downside is low as Li Ning trades at an undemanding valuation. 

• According to public news today afternoon during trading hours, the founder and biggest shareholder of Li Ning (2331 HK), Mr. Li Ning, is mulling privatizing the public company. 
• Mr. Li Ning has shown the opposite intention over the last few years, with several major sell-down of stake.
• The company is trading at 16x 2024 PE, with visibility being quite low. 

• On the 26 February, via an NBIO, Alcoa (AA US) offered 0.02854 of its own shares for each Alumina Ltd (AWC AU) share, a 13% premium to last close.
• Alcoa/Alumina control 60%/40% of the AWAC JV, an owner and operator of global bauxite mines and alumina refineries. Both companies have now entered into a Scheme on the same terms. 
• Alcoa holds 19.9% in AWC after reaching an agreement with Allan Gray Australia. The key risks to the deal are FIRB approval and how CITIC, holding 18.9%, will respond.

• Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
• Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
• In our previous note we looked at the company’s past performance and undertook a peer comparison. In this note, we will talk about valuations.

• There is an increasing probability that KCC Corp is closer to separating the ownership structures of the three Chung brothers regarding the various KCC Group related companies.
• KCC’s 9.17% stake in Samsung C&T is worth 2.8 trillion won. KCC’s stake in Samsung C&T is worth 117% of KCC’s own market cap. 
• According to our valuation analysis, it suggests NAV of 355,925 won per share, representing a 30% upside from current levels.

• The reshuffle results align with expectations, but the decision to list 11 KOSDAQ Global stocks in April is surprising. Local authorities seem to prioritize boosting the derivatives market for liquidity.
• Ecopro Materials’ SSF listing, earlier than expected, attracts attention, potentially leading to an unusual basis pattern, coinciding with a major lockup release on May 17th.
• We should also be wary of a pattern akin to last July’s in KOSDAQ stocks. Spot prices of recent SSFs showed a pronounced short-term uptrend, especially in KOSDAQ, versus KOSPI.

• At end-January 2023 it became clear activist Elliott Management had set its sights on Dai Nippon Printing (7912 JP). The stock popped and people got bullish.
• I warned about the “complicated” nature of gains going forward here. Three weeks later they announced details of including ¥100bn of buybacks per year for 3yrs. That’s discussed here.
• I rarely write bearishly about a huge buyback program but from next day open, over 1yr, total return has been 4.9%. Stage 2 starts 11 March with ¥50bn through end-Sep24. 

• WisdomTree has dropped ESG considerations while selecting stocks for the EMXSOE, CHXSOE and WTEMXC indices.
• That results in a lot of inclusions and fewer deletions across indices that will be implemented at the close on 15 March.
• The round-trip trade across the indices will exceed US$500m with Tencent (700 HK) as the largest buy.

• There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in March but there are a lot of float and capping changes.
• Taiwan Semiconductor (TSMC) – ADR (TSM US) is the largest buy while capping results in NVIDIA Corp (NVDA US) being the largest sell by far.
• Estimated one-way turnover is 8.3% resulting in a round-trip trade of nearly US$3bn. There are a few stocks with more than 0.2x ADV to trade.

• Emerald Resources Nl (EMR AU) will be added to the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March while there are 3 deletions for the index.
• The constituent changes along with float and capping changes result in an estimated one-way turnover of 6.4% and a one-way trade of US$263m.
• There are 9 stocks with more than US$10m to trade and 9 stocks with over 2x ADV to trade.

• The Offering priced today at ¥7,338/share vs ¥8,039/share traded at the close on the day of the announcement. That’s an 8.7% discount for no dilution. 
• Compared to a broad basket of Peer Baskets (yes, a basket of baskets), the stock has underperformed by 4.2%, and the 3% discount today puts it at 7+% move.
• Given the relative cheapness, one should be comfortable putting this on if it gets sold off. This is not different to my initial opinion.

• There are no constituent changes for the MVIS Australia Equal Weight Index at the March rebalance. 
• Float and capping changes will result in a one-way turnover of 4.4% and in a round-trip trade of A$195m.
• We had Lendlease Group (LLC AU), IDP Education (IEL AU) and nib holdings (NHF AU) as close deletes and they will now have inflows due to capping.

• CIMC Vehicle Group Co Ltd (1839 HK) announced the H Share buyback offer, excluding CIMC’s shares, is at HK$7.50, a 16.5% premium to the undisturbed price. The offer is final.
• The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.  
• Excluding the irrevocables, the 90% threshold requires an independent H Shareholder acceptance rate of 77.7%, which could be challenging due to a light offer. Risk/reward unfavourable. 

• Inaba has bumped its Yaizu Suisankagaku Industry (2812 JP) offer by 6.5% to JPY1,438 and lowered the minimum number of shares to be purchased from 66.67% to 60.00% ownership ratio.
• The bump was forced by 3D Investment Partners increasing its shareholding from 9.78% to 13.81% ownership ratio after the previous JPY1,350 offer was announced on 5 February.
• While the offer continues to value YSK below book value, Murakami and 3D’s support paves the way for completion. At the last close, the gross spread was 7.1%.  

• Back on the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a paltry 8.6% premium to last close.
• This Scheme-like Offer, with a tendering condition, secured SAFE approval late January. But last month CIMC announced a CBP investigation into the evasion of U.S. anti-dumping and countervailing duties.
• Now CIMC has announced a firm Offer at HK$7.50/share. Terms are final. The majority of independent H-shareholders are supportive. This looks done. Possible completion late-May, early-June.

• Back in 2004, Hahn & Co and Hankook Tire (161390 KS) acquired a 70% stake in Hanon Systems (018880 KS) from Visteon (VC US), an automotive electronics supplier, for ₩3.8tn.
• Three years ago, Hahn/Hankook explored the sale of this 70% stake, which was expected to fetch ~₩8tn (US$7bn). Reportedly, Carlyle, TPG, Bain and auto supplier Mahle submitted preliminary bids.
• That 70% stake is now worth ₩2.3tn. And reportedly, Carlyle has returned to the trough. 

• With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
• We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
• The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

• At end-January 2023 it became clear activist Elliott Management had set its sights on Dai Nippon Printing (7912 JP). The stock popped and people got bullish.
• I warned about the “complicated” nature of gains going forward here. Three weeks later they announced details of including ¥100bn of buybacks per year for 3yrs. That’s discussed here.
• I rarely write bearishly about a huge buyback program but from next day open, over 1yr, total return has been 4.9%. Stage 2 starts 11 March with ¥50bn through end-Sep24. 

• There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in March but there are a lot of float and capping changes.
• Taiwan Semiconductor (TSMC) – ADR (TSM US) is the largest buy while capping results in NVIDIA Corp (NVDA US) being the largest sell by far.
• Estimated one-way turnover is 8.3% resulting in a round-trip trade of nearly US$3bn. There are a few stocks with more than 0.2x ADV to trade.

• There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
• There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
• Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX). 

• WisdomTree has dropped ESG considerations while selecting stocks for the EMXSOE, CHXSOE and WTEMXC indices.
• That results in a lot of inclusions and fewer deletions across indices that will be implemented at the close on 15 March.
• The round-trip trade across the indices will exceed US$500m with Tencent (700 HK) as the largest buy.

• Emerald Resources Nl (EMR AU) will be added to the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March while there are 3 deletions for the index.
• The constituent changes along with float and capping changes result in an estimated one-way turnover of 6.4% and a one-way trade of US$263m.
• There are 9 stocks with more than US$10m to trade and 9 stocks with over 2x ADV to trade.

• There are no constituent changes for the MVIS Australia Equal Weight Index at the March rebalance. 
• Float and capping changes will result in a one-way turnover of 4.4% and in a round-trip trade of A$195m.
• We had Lendlease Group (LLC AU), IDP Education (IEL AU) and nib holdings (NHF AU) as close deletes and they will now have inflows due to capping.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: APM Human Services Internation (APM AU), Probiotec Ltd (PBP AU), Genex Power Ltd (GNX AU), China Traditional Chinese Medicine (570 HK), Genetron Holdings Ltd (GTH US). 
• Lowest spreads: Tietto Minerals Ltd (TIE AU), CIMC Vehicle Group Co Ltd (1839 HK), Pact Group Holdings (PGH AU), CPMC Holdings (906 HK), Payroll (4489 JP), Welbe Inc (6556 JP). 

• A cross-country study on the post earning announcement drift effect.
• We explore the use of various options-implied analytics to systematically view returns around earnings announcements.  
• Options-Implied Analytics can provide empowering information to better inform investment decisions.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Trial Holdings (5882 JP) was hoping for better luck with its listing this time around.
• For placements, it was a very busy week for a change with most regions, apart from Hong Kong, chipping in.