Most Read

Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.

Auckland Airport (AIA NZ) Placement: Index Impact

Auckland Intl Airport (AIA NZ) has announced an underwritten placement of NZ$1.2bn and a non-underwritten retail offer to raise NZ$200m.
The stock is trading near the low end of its range over the last few years and the 7% discount from the last close should attract investor interest.
We estimate passive trackers will need to buy around 13.5% of the placement shares coinciding with the settlement date on 20 September.

HSCEI Index Rebalance Preview: High & Low Probability Changes

PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

HK RE Series (4) With Macro Backdrop in US & China, HK Is Positioned for a Strong Rerating, Buy Now!

By Jacob Cheng

The wait is finally over. The Fed delivered a 50bps rate cut in September meeting, kick- starting a new rate cut cycle
The rate cut is an absolute game changer for Hong Kong real estate. Physical market will recover with lower mortgage rate and companies will enjoy lower borrow rate
With the macro backdrop in US and China, Hong Kong is well positioned for as strong re-rating with mega catalysts ahead – Buy HK real estate, especially SHKP and NWD

Quiddity Mar25 Nikkei 225 Rebal: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor

The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I see 2 IN and 2 OUT for the Mar25 Nikkei 225 Rebal.
There is also a capping event for Fast Retailing which on mild outperformance could become a double-capping event.
There is a bit of a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. The Committee will regret not adding PPIH last time.

Impact on Korea Zinc’s Balance Sheet and Debt Ratios Post Massive Debt Raise Proposed by Choi Family

We discuss the impact on the balance sheet and debt ratios of Korea Zinc’s efforts to conduct a massive debt increase to buyback and cancel shares.
Although the Choi family may consider raising further debt to increase the tender offer price even further, we believe this could pose further balance sheet risk on Korea Zinc.
We provide sensitivity analysis of higher debt on the interest coverage ratios of Korea Zinc.

Shinko Electric (6967 JP) Takeover – Still Buy Dips, and Ibiden (4062 JP)

In August, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
Everyone had expected a delay, but the stock fell. Then tech/AI fell out of bed, Ibiden crashed, China export restrictions noise/pushback caused further upset. But Ibiden and tech are rebounding.
At 9% it was a raging buy;post-dip at 7% it was good. Now it’s 6+%. Still wide, still interesting, still stable but year-end path dependency… So I still like Ibiden.

(Mostly) Asia-Pac M&A: Descente, Shin Kong Financial, T Gaia, Shinsegae E&C, MPHB, Pacific Smiles

I tally 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals discussed this week: T Gaia (3738 JP)‘s and Shinsegae E&C (034300 KS) Tender Offers, and MPHB (MPHB MK)‘s SCR. Plus ASMPT (522 HK) in the crosshairs. Again.
Key updates took place on: Sigma Healthcare (SIG AU), Descente Ltd (8114 JP), Shin Kong Financial Holding (2888 TT), Pacific Smiles (PSQ AU), and Greatview Aseptic Packaging (468 HK).

ASX Short Interest Weekly (Sep 27th): Rio Tinto, BHP, Fortescue, Goodman, Santos

By Ke Yan, CFA, FRM

We analyzed the changes in short interest of ASX Stocks as of Sep 27th (reported today) which has an aggregated short interest worth USD27.6bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
We highlight short interest changes in Rio Tinto, BHP, Fortescue, Goodman, Santos.

Weekly Deals Digest (06 Oct) – Tokyo Metro, Rigaku, CR Beverage, K Bank, ASMPT, Samson, T-Gaia

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Tokyo Metro (9023 JP), Rigaku Holdings (268A JP), K Bank (279570 KS) and China Resources Beverage (CRB HK) IPOs.
Event-Driven developments: ASM Pacific Technology (522 HK), Greatview Aseptic Packaging (468 HK), Samson Holding (531 HK), Descente Ltd (8114 JP), T Gaia Corp (3738 JP).

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Oct 05

Most Read: Longfor Properties, Kusuri no Aoki Holdings , Young Poong Precision, Rigaku Holdings, Korea Zinc, Mphb Capital, Com7 , Shiseido Company and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCEI Index Rebalance Preview: High & Low Probability Changes
Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital
Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares
MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th
Rigaku IPO – Peer Comparison – Compensating for Smaller Scale with Better Growth and Margins
MBK Raised Korea Zinc’s Tender Price to ₩830K and Dropped the Hard Floor, Keeping the Upper Hand
MPHB Capital (MPHB MK)’s Offer Stalls At the Finish Line
MBK Raises Tender Offer Price of Korea Zinc to 830,000 Won
SET50 Index Rebalance Preview: Four Changes as Adds Outperform Deletes
China Consumer Plays Listed In Japan

HSCEI Index Rebalance Preview: High & Low Probability Changes

PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital

Korea Zinc plans to repurchase and cancel shares worth 2.663 trillion won. Korea Zinc’s partner Bain Capital also plans to purchase around 430 billion won for a 2.5% stake.
Korea Zinc plans to buy back shares at 830,000 won per share, which is 11% higher than MBK’s revised up tender offer price of 750,000 won.
Choi family/Bain Capital’s efforts to conduct a massive share buyback and cancellation at higher prices than the market price goes against the globally accepted market practices.

Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares

The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.
In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in Kusuri no Aoki Holdings (3549 JP).
The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.

MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th

MBK is raising its tender offer for Young Poong Precision to ₩30,000 per share, matching Choi’s offer and extending the deadline to October 14. Filing expected tomorrow before market open.
MBK targets 6.84 million shares, surpassing Choi’s 3.94 million cap. No hard floor, no cancellation risk, but MBK holds an edge in proration.
The buzz is whether MBK will raise its Korea Zinc bid beyond 900,000 KRW, as Choi prepped with a 950,000 KRW offer. A bid hike and extension seem likely.

Rigaku IPO – Peer Comparison – Compensating for Smaller Scale with Better Growth and Margins

By Clarence Chu

Rigaku Holdings (268A JP) is looking to raise US$762m in its Japan IPO.
Rigaku engages in developing, manufacturing, sales and servicing scientific instruments specializing in X-ray technologies.
In our earlier notes, we looked at the firm’s past performance. In this note, we undertake a peer comparison.

MBK Raised Korea Zinc’s Tender Price to ₩830K and Dropped the Hard Floor, Keeping the Upper Hand

MBK ditched the hard floor, eliminating cancellation risk. With a 15% GGT rate, there’s a 4% spread, so if you can secure volume, the deal looks solid.
MBK’s tender offer has less volume than Choi’s buyback (18%), increasing proration risk, but Choi’s deal also faces legal headaches, leaving some cancellation risk.
Tax implications differ: MBK’s offer incurs capital gains tax, while Choi’s buyback is subject to dividend tax. Foreign investors may prefer MBK’s 0% withholding tax, impacting participation.

MPHB Capital (MPHB MK)’s Offer Stalls At the Finish Line

On the 28 May, credit service provider MPHB Capital (MPHB MK) announced that controlling shareholder and chairman Tan Sri Surin Upatkoon intended to delist the company via a selective capital reduction.
Shareholders approved the RM1.70/share (87.21% FOR, 8.34% AGAINST) terms. The Offer required the Court to sign off on the SCR, and that’s when matters unravelled.
ISM Sdn Bhd, MPHB’s minority partner in six JVs, filed an intervening application on the grounds that sanctioning the SCR may affect its rights in an ongoing legal dispute.

MBK Raises Tender Offer Price of Korea Zinc to 830,000 Won

On 4 October, MBK Partners announced that it is raising its tender offer price of Korea Zinc from 750,000 won to 830,000 won, matching Choi family’s tender offer price.
As the price and conditions have changed, the tender offer period for Korea Zinc by MBK Partners and Young Poong will be extended by 10 days until 14 October.
Unless the Choi family makes another counter offer, upping the tender offer price even further, MBK/Young Poong is in a better position to win this M&A war for Korea Zinc.

SET50 Index Rebalance Preview: Four Changes as Adds Outperform Deletes

A third of the way through the review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX), we see four potential index changes.
Passive trackers will need to buy between 0.5-4.3 days of ADV on the inclusions and sell between 0.1-2.9 days of ADV on the deletions.
The forecast adds have outperformed the forecast deletes and the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) over the last 5 months.

China Consumer Plays Listed In Japan

By Steve Zhou, CFA

Nippon Paint Holdings (4612 JP) is a branded decorative paint player. China made up nearly 40% of the operating profit of the company.
Saizeriya (7581 JP) is a Japanese restaurant chain of fast casual Italian food, with currently the majority of operating profit and growth coming from China.
Shiseido Company (4911 JP) is a Japanese beauty company that relies heavily on China.

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Oct 04

Most Read: Alibaba Group Holding , ASM Pacific Technology, Korea Zinc, Hyosung Heavy Industries Corp, XPeng , Kusuri no Aoki Holdings , Rigaku Holdings, Young Poong Precision and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSTECH Index Rebalance Preview: $800m Round-Trip Trade
Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
ASMPT (522 HK): KKR’s Proposal Is A Non-Starter
Korea Zinc (010130 KS)’s ₩830,000/Share Offer. Mmm …
KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December
Legal Chaos Amid Young Poong Filing a Criminal Complaint Against Korea Zinc’s BOD and What’s Next?
Quiddity Leaderboard HSTECH Dec 24: Midea Group Question Mark and Final Rankings for Exp ADDs/DELs
Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares
Rigaku Holdings (268A JP) IPO: The Bear Case
MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th

HSTECH Index Rebalance Preview: $800m Round-Trip Trade

The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK

Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.

ASMPT (522 HK): KKR’s Proposal Is A Non-Starter

Reportedly – Bloomberg – KKR has made a non-binding proposal for ASM Pacific Technology (522 HK), the world’s leading back-end semiconductor production equipment supplier.
ASMPT’s largest shareholder, ASM International Nv (ASM NA), with 25%, has been the focus of activists for some time to sell its stake.
This bid has all the hallmarks of the approach (also cited by Bloomberg) by PAG last year. Which came to nought. From a regulatory standpoint, I can’t see this happening.

Korea Zinc (010130 KS)’s ₩830,000/Share Offer. Mmm …

Never a dull moment for Korea Zinc (010130 KS) (KZ). After MBK/Young Poong’s injunction to block KZ’s buyback was denied, KZ, together with Bain Capital, tabled a punchy Offer.
KZ has launched a 3.21mn share buyback (15.5% of shares out) at ₩830,000/share. Bain will also buy 2.5%. KZ’s buyback is to be funded by short-term loans and corporate bonds.
MBK/Young Poong have filed another injunction against this buyback. Its case has merit. And that legal overhang ostensibly accounts for KZ trading ~14% below the buyback terms.

KOSPI200 Index Rebalance Preview: 4 Adds, 5 Deletes Likely in December

85% of the way through the review period, there could be 4 adds and 5 deletes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.
The impact on the potential inclusions ranges from 1.4-17 days of ADV while the impact on the potential deletions varies from 4-8 days of ADV.
The potential adds outperformed the potential deletes early in the review period before giving up all the gains over the following months.

Legal Chaos Amid Young Poong Filing a Criminal Complaint Against Korea Zinc’s BOD and What’s Next?

Young Poong filed a criminal complaint against the board of directors of Korea Zinc (010130 KS) who voted in favor of the tender offer by buying back Korea Zinc’s shares.
If Korea Zinc proceeds with the share buyback at higher price than the tender offer price by MBK, there are two main scenarios.
Trading Action Point: If Uncertain, Watch the Price Action in the Next Several Days

Quiddity Leaderboard HSTECH Dec 24: Midea Group Question Mark and Final Rankings for Exp ADDs/DELs

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 final rankings of potential ADDs and potential DELs for the December 2024 index rebal event.
We do not expect any changes for the HSTECH index in December 2024. However, we expect there to be capping flows of US$1,079mn one-way.

Kusuri No Aoki (3549) Big Buyback – Accretive, And May Involve Musical Shares

The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.
In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in Kusuri no Aoki Holdings (3549 JP).
The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.

Rigaku Holdings (268A JP) IPO: The Bear Case

Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
In Rigaku Holdings (268A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on weakening forward growth indicators, China revenue risk, rising cash conversion cycles, mid-tier FCF margin and large post-IPO share overhang.

MBK Hikes Youngpoong Precision Tender Price to ₩30,000: Tender Deadline Extended to the 14th

MBK is raising its tender offer for Young Poong Precision to ₩30,000 per share, matching Choi’s offer and extending the deadline to October 14. Filing expected tomorrow before market open.
MBK targets 6.84 million shares, surpassing Choi’s 3.94 million cap. No hard floor, no cancellation risk, but MBK holds an edge in proration.
The buzz is whether MBK will raise its Korea Zinc bid beyond 900,000 KRW, as Choi prepped with a 950,000 KRW offer. A bid hike and extension seem likely.

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Oct 03

Most Read: Alibaba Group Holding , Longfor Properties, Korea Zinc, ASM Pacific Technology, Greatview Aseptic Packaging, K Bank, China Resources Beverage and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSTECH Index Rebalance Preview: $800m Round-Trip Trade
HSCEI Index Rebalance Preview: High & Low Probability Changes
Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK
Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon
ASMPT (522 HK): Don’t Bet on a KKR Privatisation
GA Pack (468 HK): Crunch Time
Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital
ASMPT (ASM Pacific). 522 HK. M&A. Takeover Target Talk. Déjà Vu ?
K Bank IPO – Should Price Below Its Range
China Resources Beverage Pre-IPO – PHIP Updates – Revenue Slowing, Margins Growing

HSTECH Index Rebalance Preview: $800m Round-Trip Trade

The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

HSCEI Index Rebalance Preview: High & Low Probability Changes

PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

Korea Zinc’s Buyback Tender Offer at ₩830,000: Market Vibe Still Leans Towards MBK

Korea Zinc is launching a 3.21M share buyback (15.5% of total shares) via a KRW 2.66T tender offer at ₩830,000 per share, with Bain Capital involved.
If tendered shares fall short, Korea Zinc and Bain Capital will buy all. If over the target, they’ll buy pro rata. Below 1,215,283 shares, they will opt out.
Should we dive into Korea Zinc’s risky buyback or choose safer, lower-priced MBK? The market vibe favors MBK, reflected in Korea Zinc’s closing price today.

Court Dismisses Injunction; Korea Zinc to Announce Buyback Tender Offer Soon

The court rejected MBK and Young Poong’s injunction to block Korea Zinc’s buyback, allowing Choi’s side to continue using buybacks to defend control.
Korea Zinc plans an emergency board meeting to launch a tender offer, using internal funds, to buy back shares at 800K-850K KRW starting around October 7.
If Choi converts discretionary reserves into distributable profits, Korea Zinc could unlock 2-3 trillion KRW for the buyback, but uncertainty keeps the stock around 700K KRW.

ASMPT (522 HK): Don’t Bet on a KKR Privatisation

Bloomberg reported that KKR has made a non-binding, preliminary approach to taking ASM Pacific Technology (522 HK) private. ASMPT has been the subject of takeover rumours in the past.
The trading patterns of the substantial shareholders suggest a willingness to exit. However, past privatisation rumours suggest issues with the offeror matching key shareholders’ price expectations.
A binding proposal is unlikely as the timing would be viewed as opportunistic, with the recent market rally eroding a potential takeover premium and ASMPT’s premium multiple compared to peers.

GA Pack (468 HK): Crunch Time

Unsurprisingly, the Greatview Aseptic Packaging (468 HK) Board has recommended shareholders vote against the appointment of Shandong Xinjufeng Technology Packaging (301296 CH)’s two director nominees.
The EGM vote on 18 October is too close to call and depends on Shandong Xinjufeng and management’s ability to rally disengaged minorities to their respective causes.
Irrespective of the EGM vote results, Shandong Xinjufeng will be keen to launch its offer to ward off the threat of a possible competing offer from management.

Korea Zinc: Plans to Buy Back and Cancel Shares Worth 2.7 Trillion Won + Team Up with Bain Capital

Korea Zinc plans to repurchase and cancel shares worth 2.663 trillion won. Korea Zinc’s partner Bain Capital also plans to purchase around 430 billion won for a 2.5% stake.
Korea Zinc plans to buy back shares at 830,000 won per share, which is 11% higher than MBK’s revised up tender offer price of 750,000 won.
Choi family/Bain Capital’s efforts to conduct a massive share buyback and cancellation at higher prices than the market price goes against the globally accepted market practices.

ASMPT (ASM Pacific). 522 HK. M&A. Takeover Target Talk. Déjà Vu ?

By Neil Campling

The second PE rumoured interest in ASMPT in 18 months, with KKR circling.
Semiconductor M&A has surged in 2024 YTD with a 33% increase in deal activity compared to 2023.
ASM’s leadership in TCB, potential growth within HBM, expansion at TSM and enabling the Nvidia Blackwell platform are all reasons for M&A interest.

K Bank IPO – Should Price Below Its Range

K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
In our previous note, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we will talk about valuations.

China Resources Beverage Pre-IPO – PHIP Updates – Revenue Slowing, Margins Growing

China Resources Beverage (CRB HK) is looking to raise up to US$1bn in its upcoming Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
In our earlier notes, we talked about the company’s past performance and provided our thoughts on valuations. In this note, we will look at updates from its most recent filings.

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Oct 02

Most Read: T Gaia Corp, Fast Retailing, Alibaba Group Holding , Tokyo Metro, Young Poong Precision, Longfor Properties, Namoi Cotton Co Operative, Rigaku Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder
Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…
HSTECH Index Rebalance Preview: $800m Round-Trip Trade
Tokyo Metro IPO – Thoughts on Valuation
Choi Family Launches a Counter Tender Offer for Young Poong Precision
HSCEI Index Rebalance Preview: High & Low Probability Changes
Choi Drops a Counter-Tender for Young Poong Precision at ₩30,000 Before the Market Bell Tomorrow
Tokyo Metro (9023 JP) IPO: Valuation Insights
Namoi Cotton (NAM AU): Well Played LDC
Rigaku Holdings (268A JP) IPO: The Bull Case

T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder

Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.

Mar25 Nikkei 225 Rebal: Considering Fast Retailing Capping…. Again…

At end-September, the Nikkei 225 semi-annual review imposed a “cap” on Fast Retailing (9983 JP) in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.
At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.
And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.

HSTECH Index Rebalance Preview: $800m Round-Trip Trade

The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

Tokyo Metro IPO – Thoughts on Valuation

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

Choi Family Launches a Counter Tender Offer for Young Poong Precision

Choi family has launched a counter tender offer for Young Poong Precision at the tender offer price of 30,000 won (20% higher than MBK’s 25,000 won tender offer price).
The tender offer involves a plan to acquire 3,837,500 shares (24.36% of outstanding shares) of Young Poong Precision.
All eyes are on the court’s decision on the injunction application for ‘prohibition of acquisition of treasury stocks by Korea Zinc’, which is expected to be announced on 2 October.

HSCEI Index Rebalance Preview: High & Low Probability Changes

PICC Property & Casualty H (2328 HK) inclusion and Longfor Properties (960 HK) deletion are high probability changes for the Hang Seng China Enterprises Index (HSCEI INDEX) in December.
There is a lower probability of China Resources Power (836 HK) being added and of Sino Biopharmaceutical (1177 HK) being deleted at the rebalance.
There has been big short covering in PICC Property & Casualty (2328 HK) over the last couple of months while shorts would have covered Longfor Properties (960 HK) recently.

Choi Drops a Counter-Tender for Young Poong Precision at ₩30,000 Before the Market Bell Tomorrow

Choi aims to acquire 3.84 million shares (24.36%) of Young Poong Precision at ₩30,000 each, with a tender period from October 2 to November 1, managed by Hana Securities.
Seoul Economic Daily may not be as prominent, but they reliably scoop this type of news, making it likely Choi will announce their counter-tender for Young Poong Precision tomorrow.
MBK targets the full 49.14% stake, while the Choi family seeks about half, creating proration risk, which may still make MBK’s lower offer more appealing to shareholders.

Tokyo Metro (9023 JP) IPO: Valuation Insights

Tokyo Metro (9023 JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.
We previously discussed the IPO in Tokyo Metro (9023 JP) IPO: The Bull Case and Tokyo Metro (9023 JP) IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Tokyo Metro is attractively valued at the IPO price compared to peer multiples.

Namoi Cotton (NAM AU): Well Played LDC

A$0.77/Share. That’s Louis Dreyfus Company (LDC)’s revised unconditional bid. Plus it now holds 47.66% after Samuel Terry Asset Management, Namoi’s largest shareholder, tendered into the revised term.
Expect Namoi Cotton Co Operative (NAM AU)‘s board to shortly back LDC’s Offer. LDC’s Offer is $0.02/share above Olam Agri’s conditional bid.
After LDC first approached Namoi in November last year, this is now done. Expect Olam to tender its stake, and fold its tent.

Rigaku Holdings (268A JP) IPO: The Bull Case

Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement and testing instruments. It is seeking to raise up to US$760 million.
In Japan, Rigaku’s XRD (X-ray diffraction) has a high market share of 75%. Around 70% of its revenue is derived from customers outside Japan.
The bull case rests on high customer switching costs, peer-leading revenue growth, top-quartile profitability, FCF generation, and low leverage.

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Oct 01

Most Read: Shin Kong Financial Holding, Korea Zinc, Descente Ltd, T Gaia Corp, Wonik Ips, Tokyo Metro, China Galaxy Securities (H), Ana Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts
Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb
Latest Forecast for Korea Zinc’s Tendering Rate
Itochu (8001 JP) Lowball TOB for Descente (8114) Is Here – Trades Tight But No Big Holder Appeared
T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder
T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder
FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC
Tokyo Metro IPO – Peer Comparison – Pre-COVID to 1Q25
A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus
Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts

Taishin Financial Holding (2887 TT) has raised its bid for Shin Kong Financial Holding (2888 TT) and CTBC Financial Holding (2891 TT) has dropped its bid after FSC rejection.
Shin Kong’s Board approved the revised (25% higher) Taishin bid. Shares in Shin Kong fell sharply on the FSC rejection of the CTBC bid.
Taishin’s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.

Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb

Tokyo Metro (9023 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.
At the reported indicative IPO price of JPY 1100/share, Tokyo Metro (9023 JP) will be valued at JPY 639.1bn (US$4.49bn).
The stock should be added to one global index on 29 October, to the TOPIX INDEX on 28 November, while another global index inclusion will need to wait till February.

Latest Forecast for Korea Zinc’s Tendering Rate

Overseas institutions might tender around 4%, locals about 6%, giving a realistic max of 10%. MBK may struggle to even reach that minimum of 7%.
Mirae Asset and Samsung Life, holding the largest portion of the targetable stakes, hinted they’ll participate in the tender but won’t tender all their shares.
Allocation risk for the tender is minimal, but cancellation risk remains. MBK may barely exceed the 7% minimum, making predictions tough and reducing chances of a post-tender stock price drop.

Itochu (8001 JP) Lowball TOB for Descente (8114) Is Here – Trades Tight But No Big Holder Appeared

Today, Itochu Corp (8001 JP) announced that it had received SAMR approval and would launch its Tender Offer to take private its affiliate, Descente Ltd (8114 JP).
As warned last year, Descente is cheap on a forward basis due to very strong growth and profitability of Descente China Holdings but Itochu can downplay that future.
And indeed, it appear they did, and unless someone takes them to task, this probably gets done. So far, nobody has.

T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder

Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.

T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder

T Gaia Corp (3738 JP) disclosed a Bain tender offer at JPY2,670, a 35.9% premium to the undisturbed price but a 27.2% discount to the last close.
Bain has set the minimum number of shares to be purchased at a 12.67% ownership ratio to appease the Board, which has a neutral recommendation.
Bain hopes the offer’s harsh reality check will burst the share price bubble, nudging minorities to accept. An auction process suggests that the chance of a competing offer is low.

FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC

Today is the last trading day in the review period for the October rebalance of the FnGuide Semiconductor Top10 Index.
Wonik Ips (240810 KS) is a high probability add and ISC Co Ltd (095340 KS) is a high probability delete. This will reverse the changes from the April rebalance.
Passive trackers will need to buy over 3.5x ADV in Wonik Ips (240810 KS) and sell nearly 2x ADV in ISC Co Ltd (095340 KS).

Tokyo Metro IPO – Peer Comparison – Pre-COVID to 1Q25

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous note. In this note, we will undertake a peer comparison.

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse.
But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2025 based on trading data as of end-September 2024.

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Sep 30

Most Read: Shinsegae Eng & Construction, Fuji Soft Inc, Shin Kong Financial Holding, Kawasaki Heavy Industries, Kum Yang , Canvest Environmental Protection Group, Tokyo Metro, Wonik Ips, NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Emart’s Tender Offer for Shinsegae Construction: Arb Trading Angles
FujiSoft (9749) – Somewhat Inexplicable Renewed Opinion of Fairness on KKR Tender
Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts
Best Outright and Pair Trades for an Ishiba-Led LDP
Kumyang’s Capital Raise Drop: Breaking It Down from an Arb Trading Play
Merger Arb Mondays (30 Sep) – Canvest, Henlius, CPMC, Xingda, Fuji Soft, Capitol, Dyna-Mac
Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb
FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC
Tender Offer and Taking Private of Shinsegae E&C by E Mart
EQD / NSE Vol Update / Vols Bogged Down by Holiday Shortened Week in Spite of Upcoming Event Risks

Emart’s Tender Offer for Shinsegae Construction: Arb Trading Angles

E Mart Inc is launching a tender offer for 27.33% of Shinsegae Eng & Construction, offering ₩18,300 per share, a 14% premium, from September 30 to October 29.
This tender’s got zero cancellation or proration risk since they’re all in to buy every share tendered. That makes it a prime event for close spread tracking and trading opportunities.
Emart needs 95% of Shinsegae Construction’s shares to delist, requiring 22% of the remaining 27%. If they can’t get it, a stock swap with Emart shares is likely.

FujiSoft (9749) – Somewhat Inexplicable Renewed Opinion of Fairness on KKR Tender

On the 19th of September, KKR amended the terms and Scheme/Structure of its Tender Offer for Fuji Soft Inc (9749 JP). I thought the new terms coercive.
On the 26th, FujiSoft decided there had been no change detrimental to general shareholders. On the 27th, KKR amended the Tender Offer Registration Statement to reflect FSI’s revised Opinion.
That means Bain needs to change FSI’s mind or come out with a big number before the end of the First Tender, leaving lots of stock for Round Two.

Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts

Taishin Financial Holding (2887 TT) has raised its bid for Shin Kong Financial Holding (2888 TT) and CTBC Financial Holding (2891 TT) has dropped its bid after FSC rejection.
Shin Kong’s Board approved the revised (25% higher) Taishin bid. Shares in Shin Kong fell sharply on the FSC rejection of the CTBC bid.
Taishin’s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.

Best Outright and Pair Trades for an Ishiba-Led LDP

By Andrew Jackson

Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm.
The Market will be quick to rotate out of names which spiked into Friday’s close on expectation for a Sanae Takaichi win in the LDP election.
Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market.

Kumyang’s Capital Raise Drop: Breaking It Down from an Arb Trading Play

Kumyang’s major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.
Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.
Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang’s stock futures have solid liquidity, making it a prime arb trading setup.

Merger Arb Mondays (30 Sep) – Canvest, Henlius, CPMC, Xingda, Fuji Soft, Capitol, Dyna-Mac

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: Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), China Traditional Chinese Medicine (570 HK).
Lowest spreads: Dyna Mac Holdings (DMHL SP), Seven & I Holdings (3382 JP), Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Descente Ltd (8114 JP).

Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb

Tokyo Metro (9023 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.
At the reported indicative IPO price of JPY 1100/share, Tokyo Metro (9023 JP) will be valued at JPY 639.1bn (US$4.49bn).
The stock should be added to one global index on 29 October, to the TOPIX INDEX on 28 November, while another global index inclusion will need to wait till February.

FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC

Today is the last trading day in the review period for the October rebalance of the FnGuide Semiconductor Top10 Index.
Wonik Ips (240810 KS) is a high probability add and ISC Co Ltd (095340 KS) is a high probability delete. This will reverse the changes from the April rebalance.
Passive trackers will need to buy over 3.5x ADV in Wonik Ips (240810 KS) and sell nearly 2x ADV in ISC Co Ltd (095340 KS).

Tender Offer and Taking Private of Shinsegae E&C by E Mart

E Mart Inc (139480 KS) is conducting a tender offer of 27.33% of Shinsegae Eng & Construction (034300 KS) (2,126,611 shares) and trying to take the company private afterwards.
The tender offer price is 18,300 won, which is 14% higher than the closing price on Friday (27 September).
Tender offer is likely to result in higher price of Shinsegae E&C in the near term but it could be difficult for E Mart to take it private this year.

EQD / NSE Vol Update / Vols Bogged Down by Holiday Shortened Week in Spite of Upcoming Event Risks

By Sankalp Singh

Nifty50 IVs have finally cracked below 11.0% levels – in spite of upcoming event-risks. Moves lower have been exacerbated by the holiday shortened week.
Vol-Regime Model has switched to “Low & Down” vol-state in Nifty50. Tactical implications: Short Vega exposure less favourable going forward.
Risk premia selloff has driven Vol Term-Structure deeper into Contango. Smile & Skew characteristics have compressed in congruence with lower IVs.

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Sep 29

Most Read: Ventia, Auckland Intl Airport, Xiamen Amoytop Biotech Co Ltd, Apple , K Bank, Kum Yang , Fuji Soft Inc, New World Development, Nikkei 225, DFI Retail Group Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
Auckland Airport (AIA NZ) Placement: Index Impact
STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
Apple (AAPL): Berkshire’s Sell-Off Triggers $37bn Demand from S&P 500
K Bank IPO (279570 KS): Index Inclusion Timeline
Kumyang’s Capital Raise Drop: Breaking It Down from an Arb Trading Play
(Mostly) Asia-Pac M&A: Dyna Mac, Platinum Asset, Fuji Soft, JTower, Arvida, Korea Zinc, Sun Art
NWD 17 HK: Kitchen Sink Results, Overhang Removed, the BEST Stock to BUY in New Rate Cut Cycle
EQD | The Nikkei At The Top
Last Week in Event SPACE: DFI/JD.com/Yonghui, Alibaba/Sun Art, New World Development, Austal

ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)

Following its acquisition by Nationwide, Virgin Money UK Plc (VUK AU) is scheduled to stop trading on the ASX Ltd (ASX AU) after market close on 25 September.
Virgin Money UK Plc (VUK AU) is a member of the S&P/ASX100 Index and S&P/ASX 200 (AS51 INDEX) and there will be adhoc inclusions at the close on 25 September.
There are a couple of stocks vying for inclusion in each index and the next couple of days will determine which ones make it.

Auckland Airport (AIA NZ) Placement: Index Impact

Auckland Intl Airport (AIA NZ) has announced an underwritten placement of NZ$1.2bn and a non-underwritten retail offer to raise NZ$200m.
The stock is trading near the low end of its range over the last few years and the 7% discount from the last close should attract investor interest.
We estimate passive trackers will need to buy around 13.5% of the placement shares coinciding with the settlement date on 20 September.

STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?

90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.

Apple (AAPL): Berkshire’s Sell-Off Triggers $37bn Demand from S&P 500

By Dimitris Ioannidis

Free float is forecasted to increase from ~94% to 100% in S&P 500 and other US and Global indices after Berkshire halved its stake in Apple (AAPL US) .
Forecasted demand from S&P 500 and S&P TMI is 164.2m shares, $37.1bn and 3.0 ADV at the close of 20 September 2024.
Materialization of the free float increase is uncertain due to debatable strategic shareholder classification. ETF ratios and current free float improve the confidence of the forecast.

K Bank IPO (279570 KS): Index Inclusion Timeline

K Bank (279570 KS) is looking to raise up to KRW 984bn (US$738m), valuing the company at KRW 5tn (US$3.75bn) at the top end of the IPO price range.
Close peer KakaoBank (323410 KS) and regional peer SBI Sumishin Net Bank (7163 JP) have been trading lower recently and the IPO could price lower than the top end.
The change in KOSPI2 INDEX Fast Entry rules will leave the stock out of the index till June 2025. Inclusion in global indices will have to wait a while too.

Kumyang’s Capital Raise Drop: Breaking It Down from an Arb Trading Play

Kumyang’s major shareholders are backing the capital raise, committing ₩160B of the ₩450B total. We’re also likely to see some robust price support for the stock rights in early phases.
Institutional investors still make up about 10% of the SO, with around 8% being active players. These guys could easily start dumping stock rights in bulk.
Retail holds nearly 50% of the SO, increasing volatility and boosting chances for arb spreads. Kumyang’s stock futures have solid liquidity, making it a prime arb trading setup.

(Mostly) Asia-Pac M&A: Dyna Mac, Platinum Asset, Fuji Soft, JTower, Arvida, Korea Zinc, Sun Art

I tally 39 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed on Smartkarma this week: Xingda International (1899 HK) and NSL Ltd (NSL SP). Sun Art Retail (6808 HK) also susppended due to the Takeovers Code.
Key updates took place on: Dyna Mac Holdings (DMHL SP), Platinum Asset Management (PTM AU), Fuji Soft (9749 JP), JTower (4485 JP), Arvida (ARV NZ), and Korea Zinc (010130 KS).

NWD 17 HK: Kitchen Sink Results, Overhang Removed, the BEST Stock to BUY in New Rate Cut Cycle

By Jacob Cheng

NWD reported HKD20bn loss attributable to shareholders. There is no dividend declared. However, we view this as kitchen sink. The stock rallied 22% on Friday
CEO Adrian Cheng stepped down and COO Eric Ma, former Secretary for Development for HK, is the new CEO. This represents a shift from family business to professional management
As Fed initiated new rate cut cycle, NWD will benefit most given high gearing. With macro backdrop in U.S. and China, NWD is the Best stock to buy now

EQD | The Nikkei At The Top

By Nico Rosti

The last 2 weeks’ upswing in the Nikkei 225 INDEX does not change our view: it is WEEKLY overbought and October is a coin flip according to our seasonal models.
The index could rise further at this point, herd behavior may force investors to pile up into the rally, but our models say rising well past 40k will be hard.
A pullback is not necessarily a great occasion to buy, as already explained in our previous insight, the N225’s trend does not look good, at the moment.

Last Week in Event SPACE: DFI/JD.com/Yonghui, Alibaba/Sun Art, New World Development, Austal

Hypermarket reshuffles as JD.com (9618 HK) and DFI Retail (DFI SP) exit Yonghui Superstores (601933 CH); and Alibaba Group (9988 HK) potentially exits Sun Art Retail (6808 HK).
Evidently the influence of a younger hip third-generation tycoon-scion wasn’t the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
MBK bumps the Tender Offer prices for Korea Zinc (010130 KS) by 13.6% to ₩750,000 and Young Poong Precision (036560 KS) by 25% to ₩25,000. What with the Choi’s do?

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Sep 28

Most Read: Shanghai Shenzhen CSI 300 Inde, Samsung Electronics, Shanghai Electric Group Company, NTPC Ltd, KB Financial, K Bank, Sun Art Retail, Apollo Global Management , New World Development, Korea Zinc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China’s [Maybe] Biggish [Quasi?] Bazooka
Korea Exchange Announces The Korea Value Up Index
Quiddity Leaderboard CSI 300/500 Dec 24: Massive Increase in AUMs Causes Flow Expectations to Soar
NIFTY Indices: Flows (Post Capping) At the Close Tomorrow; Round-Trip US$3.3bn
A Special Rebalancing Of Korea Value-Up Index Is Likely in December 2024
K Bank IPO (279570 KS): Index Inclusion Timeline
Sun Art Retail (6808 HK): COFCO Offer?
Quiddity Leaderboard S&P 500 Dec 24: Two ADDs (One Biggie), Two DELs, Possible Big Intrareview Moves
New World Dev (17 HK): Board Games
Latest Forecast for Korea Zinc’s Tendering Rate

China’s [Maybe] Biggish [Quasi?] Bazooka

Today, in a press conference held jointly by the Governor of the PBOC, the Director of the Financial Regulatory Bureau, and Chairman of the CSRC, China announced market stimulus measures.
The PBOC will cut RRR 50bp, the 7-day repo rate 20bp, guide effective mortgage rate cuts, and lower minimum down payments on second homes. There are other commercial RE measures.
Three major stock market measures were announced. A RMB500bn collateral swap programme, PBOC backing RMB300bn bank loans for corps to buy stocks, and a Plan to increase Central Huijin investments.

Korea Exchange Announces The Korea Value Up Index

Korea Exchange announced the long awaited Korea Value Up Index (“K Value Up Index”) (composed of 100 stocks) today.
Korea Exchange used a 5-step screening process to select the 100 companies in this index including market cap, profitability, shareholder returns, market evaluation, and capital efficiency.
This Value Up index is part of the bigger “Corporate Value Up ” program in Korea. These efforts to improve Korea’s corporate governance policies is a marathon, not a sprint.

Quiddity Leaderboard CSI 300/500 Dec 24: Massive Increase in AUMs Causes Flow Expectations to Soar

By Janaghan Jeyakumar, CFA

CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
Since our last insight in August, there has been a sharp increase in reported AUMs tracking CSI 300 and CSI 500. This has caused our flow expectations to rise sharply.

NIFTY Indices: Flows (Post Capping) At the Close Tomorrow; Round-Trip US$3.3bn

The NIFTY Index, Nifty Next 50 Index, NSE Nifty Bank Index, CNXIT Index, Nifty Midcap 150 Index, Nifty100 Low Volatility30 Index and the CPSE ETF rebalance at the close tomorrow.
The round-trip trade across the indices is US$3.3bn and there are 13 stocks with over 1 day of ADV to trade from passive trackers.
Stocks with the largest inflows are Trent, Bharat Electronics, Canara Bank, Bharat Heavy Electricals, Oil & Natural Gas Corp, Coal India, Hindustan Aeronautics and InterGlobe Aviation.

A Special Rebalancing Of Korea Value-Up Index Is Likely in December 2024

On 26 September, the Korea Exchange announced that it is considering a “special rebalancing” of the Korea Value-Up Index in December 2024.
In our view, the probability of this special rebalancing occurring by the end of this year is high at about 85%+.
If there is a special rebalancing, KB Financial, Hana Financial, Samsung Life Insurance, SK Telecom, and KT could be considered the top candidates for inclusion.

K Bank IPO (279570 KS): Index Inclusion Timeline

K Bank (279570 KS) is looking to raise up to KRW 984bn (US$738m), valuing the company at KRW 5tn (US$3.75bn) at the top end of the IPO price range.
Close peer KakaoBank (323410 KS) and regional peer SBI Sumishin Net Bank (7163 JP) have been trading lower recently and the IPO could price lower than the top end.
The change in KOSPI2 INDEX Fast Entry rules will leave the stock out of the index till June 2025. Inclusion in global indices will have to wait a while too.

Sun Art Retail (6808 HK): COFCO Offer?

Alibaba Group Holding (9988 HK)-backed hypermarket play Sun Art Retail (6808) is currently suspended pursuant to the Takeovers Code.
Reportedly, SASAC-backed COFCO Group may acquire Alibaba’s 78.7% stake. Sun Art’s shares are up 45% since the middle of the month.
Alibaba exiting – if true – follows JD.com (9618 HK) (and DFI Retail Group Holdings (DFI SP)) selling their respective stakes in Yonghui Superstores Co., (601933 CH) earlier this week.

Quiddity Leaderboard S&P 500 Dec 24: Two ADDs (One Biggie), Two DELs, Possible Big Intrareview Moves

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.
In this insight, we take a look at the upcoming constituent changes in the run up to the December 2024 index rebal event.
We expect two regular changes in December 2024. There are also several live spin-off and M&A events which could trigger intra-review index changes in the late-2024/early-2025.

New World Dev (17 HK): Board Games

Evidently the influence of a younger hip third-generation tycoon-scion was not the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
As widely expected, Adrian Cheng is stepping down as NWD’s CEO, to be replaced by Eric Ma, Hong Kong’s former secretary for development.
NWD will also sell the rights to provide property management services under the K11 brand to Adrian; and potentially sell its stake in Kai Tak Sports Park to its parent.

Latest Forecast for Korea Zinc’s Tendering Rate

Overseas institutions might tender around 4%, locals about 6%, giving a realistic max of 10%. MBK may struggle to even reach that minimum of 7%.
Mirae Asset and Samsung Life, holding the largest portion of the targetable stakes, hinted they’ll participate in the tender but won’t tender all their shares.
Allocation risk for the tender is minimal, but cancellation risk remains. MBK may barely exceed the 7% minimum, making predictions tough and reducing chances of a post-tender stock price drop.

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Sep 27

Most Read: Shanghai Shenzhen CSI 300 Inde, Fuji Soft Inc, NTPC Ltd, KB Financial, Korea Zinc, Monolithic Power Systems, Inc, Apollo Global Management and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China’s [Maybe] Biggish [Quasi?] Bazooka
MBK Raises Tender Prices: ₩750,000 for Korea Zinc & ₩25,000 for Young Poong Precision
Fuji Soft (9749) – Possible Issues with New KKR Amended Terms
NIFTY Indices: Flows (Post Capping) At the Close Tomorrow; Round-Trip US$3.3bn
Lowdown from KRX’s Emergency Presser on the Value-Up Index Today
A Special Rebalancing Of Korea Value-Up Index Is Likely in December 2024
Fuji Soft (9749 JP): KKR on the Home Stretch as Bain Dithers
MBK Bumps Offers For Both Korea Zinc and Young Poong Precision
Nasdaq-100 December 2024 Forecasts: Monolithic Power & AppLovin It; Dollar Tree Needs Watering
Quiddity Leaderboard S&P 500 Dec 24: Two ADDs (One Biggie), Two DELs, Possible Big Intrareview Moves

China’s [Maybe] Biggish [Quasi?] Bazooka

Today, in a press conference held jointly by the Governor of the PBOC, the Director of the Financial Regulatory Bureau, and Chairman of the CSRC, China announced market stimulus measures.
The PBOC will cut RRR 50bp, the 7-day repo rate 20bp, guide effective mortgage rate cuts, and lower minimum down payments on second homes. There are other commercial RE measures.
Three major stock market measures were announced. A RMB500bn collateral swap programme, PBOC backing RMB300bn bank loans for corps to buy stocks, and a Plan to increase Central Huijin investments.

MBK Raises Tender Prices: ₩750,000 for Korea Zinc & ₩25,000 for Young Poong Precision

Hankyung reports MBK will raise Korea Zinc’s tender offer to ₩750,000 (14%) and Young Poong Precision’s to ₩25,000 (25%) before today’s market opens.
Hankyung and Maeil are top sources for market scoops, so it’s almost certain MBK leaked the tender price hike ahead of today’s trading.
MBK leaves Choi just five trading days to respond. Korea Zinc plans to raise ₩400 billion, but it’s still not enough for a counter-bid.

Fuji Soft (9749) – Possible Issues with New KKR Amended Terms

On 8 August, KKR and Fuji Soft Inc (9749 JP) announced a Tender Offer for the company. It was, at the time, an intention to do so. KKR needed approvals.
Fuji Soft had KKR terms, and timing, and approved them. KKR then changed the terms and timing. Now on the 19th, they changed the terms again.
This puts Fuji Soft in a kind of quandary. It’s important to think about why and what that leads to.

NIFTY Indices: Flows (Post Capping) At the Close Tomorrow; Round-Trip US$3.3bn

The NIFTY Index, Nifty Next 50 Index, NSE Nifty Bank Index, CNXIT Index, Nifty Midcap 150 Index, Nifty100 Low Volatility30 Index and the CPSE ETF rebalance at the close tomorrow.
The round-trip trade across the indices is US$3.3bn and there are 13 stocks with over 1 day of ADV to trade from passive trackers.
Stocks with the largest inflows are Trent, Bharat Electronics, Canara Bank, Bharat Heavy Electricals, Oil & Natural Gas Corp, Coal India, Hindustan Aeronautics and InterGlobe Aviation.

Lowdown from KRX’s Emergency Presser on the Value-Up Index Today

KRX faces challenges balancing the Value-Up Index as a benchmark while ensuring real disclosures, but passive inflows remain steady with local pension funds still interested.
KRX’s potential December mini rebalancing increases uncertainty but may just lead to minor tweaks, adding KB and Hana while removing a few stocks from Communication Services.
The Value-Up Index resembles the KOSPI 200, using 30-40% GICS stocks and KOSDAQ 150, which may spark trading strategies focused on performance gaps within sectors.

A Special Rebalancing Of Korea Value-Up Index Is Likely in December 2024

On 26 September, the Korea Exchange announced that it is considering a “special rebalancing” of the Korea Value-Up Index in December 2024.
In our view, the probability of this special rebalancing occurring by the end of this year is high at about 85%+.
If there is a special rebalancing, KB Financial, Hana Financial, Samsung Life Insurance, SK Telecom, and KT could be considered the top candidates for inclusion.

Fuji Soft (9749 JP): KKR on the Home Stretch as Bain Dithers

The Fuji Soft Inc (9749 JP) Board has recommended KKR’s first tender offer (JPY8,800). The Board will announce its view on the second tender offer on launch.
The Board sounded out Bain’s progress on a binding proposal and 3D and Farallon’s on their irrevocable. The absence of a Bain binding proposal immensely helped the Board’s decision.
Bain has likely left it too late. With a higher offer, Bain could force a recommendation change and hope KKR is shamed into cancelling 3D and Farallon’s irrevocable.

MBK Bumps Offers For Both Korea Zinc and Young Poong Precision

MBK Partners has increased the Tender Offer prices for Korea Zinc (010130 KS) by 13.6% to ₩750,000 and Young Poong Precision (036560 KS) by 25% to ₩25,000.
All other terms remain the same. IF MBK secures the maximum 14.61% in KZ, this will be Korea’s largest-ever Tender Offer.
MBK made a public offering correction announcement today. The Choi family now has 5 business days in which to respond with a counteroffer.

Nasdaq-100 December 2024 Forecasts: Monolithic Power & AppLovin It; Dollar Tree Needs Watering

By Dimitris Ioannidis

Monolithic Power Systems (MPWR US) is a direct addition followed by AppLovin (APP US) which is a conditional addition but close to be direct. Demand is ~$1.8bn and ~3.5 ADV.
Dollar Tree Inc (DLTR US) is a direct deletion with the highest exclusion probability as it is ranked above the exit rank of 125.
Super Micro Computer (SMCI US) , ARM Holdings (ARM US) and Moderna (MRNA US) are amongst the prioritized constituents preventing eligible candidates from entering the index.

Quiddity Leaderboard S&P 500 Dec 24: Two ADDs (One Biggie), Two DELs, Possible Big Intrareview Moves