Most Read

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

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.

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Sep 26

Most Read: Shanghai Shenzhen CSI 300 Inde, Kioxia Holdings , Samsung Electronics, Huafa Property Services Group, Huchems Fine Chemical, Korea Zinc, Tokyo Metro, Tohokushinsha Film and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

China’s [Maybe] Biggish [Quasi?] Bazooka
Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason
Korea Exchange Announces The Korea Value Up Index
Huafa Props (982 HK): A Quick Word On Voting
Crunching Passive Impact Numbers for KRX Value-Up Index Names, Based on KRX’s Free-Float Rate Data
MBK Raises Tender Prices: ₩750,000 for Korea Zinc & ₩25,000 for Young Poong Precision
Tokyo Metro IPO – The Positives – Quasi-Monopoly Status
MBK Raises Tender Offer Price on Korea Zinc by 13.6% to 750,000 Won
Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
Tokyo Metro (9023 JP) IPO: The Bear Case

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.

Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason

By Neil Campling

Significant peer price performance declines leaves IPO valuation stretched, the desired discount multiple to attract interest has suddenly become a premium
Investor interest in memory semiconductors, AI derivative stocks has cooled
Peer price sell-offs are extreme but could quickly change, reflecting the highly cyclical nature of the sector

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.

Huafa Props (982 HK): A Quick Word On Voting

Huafa Property (982 HK) shareholders overwhelmingly approved (99.52% [of shares present and/or via proxy] FOR; 0.48% AGAINST) the Scheme yesterday. This part was expected. The headcount test was less certain.
The final headcount tally, on a look-through basis into HKSCC Nominees by CCASS Participants, was 111 FOR, 14 AGAINST. Again, a pretty clear pass.
Normally a Scheme Vote, if approved, wouldn’t warrant a full note. But when the headcount test is involved, it is worthwhile understanding the mechanics.

Crunching Passive Impact Numbers for KRX Value-Up Index Names, Based on KRX’s Free-Float Rate Data

KRX 300 hit 1 trillion won AUM fast, but with local pensions more aggressive, the value-up’s early AUM could top 1 trillion, hitting up to 3 trillion in six months.
Hanjin KAL, S1 Corp, Hyundai Elevator, Nice Info, and Huchems are set for strong price action. The financial sector also stands out, seeing the biggest impact compared to other sectors.
Small caps under 1 trillion won see little passive impact, but solid plays exist under 3 trillion, so splitting large and small caps won’t limit target options much.

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.

Tokyo Metro IPO – The Positives – Quasi-Monopoly Status

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its upcoming 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.
In this note, we talk about the positive aspects of the deal.

MBK Raises Tender Offer Price on Korea Zinc by 13.6% to 750,000 Won

MBK announced that it will raise the tender offer prices on Korea Zinc by 13.6% to 750,000 won and Young Poong Precision by 25% to 25,000 won.
If 100% of the 3,024,881 shares of Korea Zinc tender offer is completed, at the revised tender offer price of 750,000 won, this would be 2.27 trillion won in amount.
In term of probabilities, we would put a 80-85% probability that MBK/Jang family successfully completes the tender offers and takes over the controlling stakes of these two companies.

Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses

3D Investment Partners bought 5% of Tohokushinsha Film (2329 JP) by Mar-2023. A year later they had 17+%. 3D proposed changes. In July, 3D proposed a takeover, asking for DD.
Tohokushinsha responded to the proposals, then offered due diligence to 3D based on terms set by a Special Committee. 3D did not want those strict DD terms.
Yesterday, Tohokushinsha said “Fine.” The stock today fell 10% today. This is not a stalemate, but it means 3D may start to play harder.

Tokyo Metro (9023 JP) IPO: The Bear Case

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.
In Tokyo Metro (9023 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 mid-tier revenue growth, low revenue diversification, the highest leverage among peers and a sizeable post-IPO share overhang.

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Sep 25

Most Read: Samsung Kodex Banks ETF, Advantest Corp, Tokyo Metro, SK Inc, Korea Zinc, Woori Financial Group , Shanghai Shenzhen CSI 300 Inde, Samsung Electronics, Kioxia Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents
The Biggish Sep 2024 “Thursday-Friday Trade”
Tokyo Metro (9023 JP) IPO: The Bull Case
Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp
What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?
All the Scoop on the Korea Value-Up Index
China’s [Maybe] Biggish [Quasi?] Bazooka
Korea Exchange Announces The Korea Value Up Index
Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason
Korea Value Up Index – Surprising Inclusions and Exclusions

KRX Value-Up Index Will Have Two Separate Indices, Excellent & Promising, With 150 Constituents

KRX plans to launch the Value-Up Index as two separate indices: the “Excellent Value-Up Index” and the “Promising Value-Up Index.”
The universe will include 150 constituents from KOSPI 200 and KOSDAQ 150. Allocation between indices is undecided, with sector limits on number and weight confirmed.
The key indicators (ROE, PBR, shareholder return rate) remain unchanged. The Promising Index’s weights are undisclosed, but the Excellent Index favors financial and automotive stocks.

The Biggish Sep 2024 “Thursday-Friday Trade”

Every year it’s the same trade. This year it is Thursday and Friday. There is some funkiness to Monday too.
There is meaningful directional buying on one day, which then kind of gets stretched a bit. This year, circumstances suggest high confidence buying should be at the top end.
This year, because circumstances, I expect the trade is a lot larger than last year. I’d say ¥1.6trln.

Tokyo Metro (9023 JP) IPO: The Bull Case

Tokyo Metro (TKYMETRO 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.
Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government.
The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout.

Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp

The new 100% mandatory tender offer rule could push buyers to lower premiums for major shareholders, potentially increasing hostile takeover attempts as costs get shared with minority shareholders.
It looks like MBK is eyeing this situation as a chance to redefine their strategy. This really shows how serious MBK is about the Korea Zinc deal.
Watch for top-tier assets available via hostile takeovers, particularly companies like SK Inc and Lotte Corp, where low shareholder stakes may lead to management conflicts.

What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?

In this insight, we discuss three particular allies that could help the Choi family that have been highlighted by the local media including Hanwha, KIS, and Softbank.
The Hanwha Group is one of the largest shareholders of Korea Zinc. In addition, Hanwha Group Vice Chairman Kim Dong-Kwan has a close relationship with Korea Zinc Chairman Choi Yoon-Beom.
Korea Zinc is planning to hold an important press conference on the 24 September to reveal its position on the tender offer of Korea Zinc shares by MBK.

All the Scoop on the Korea Value-Up Index

The index focuses on qualitative factors like capital efficiency and shareholder returns, but efforts to impose sector balance may have overextended its market benchmark role.
Some companies not fitting the ‘value-up’ narrative got included, while market favorites were sidelined by sector rankings, which is puzzling given the index’s original goal.
Still, with rebalancing cut down to once a year, we should expect the flow impact on the index names to hit harder than initially thought compared to their sector peers.

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.

Tech: Japan’s Biggest IPO in 6 Years, Kioxia, Is Off. Here Is the Likely Reason

By Neil Campling

Significant peer price performance declines leaves IPO valuation stretched, the desired discount multiple to attract interest has suddenly become a premium
Investor interest in memory semiconductors, AI derivative stocks has cooled
Peer price sell-offs are extreme but could quickly change, reflecting the highly cyclical nature of the sector

Korea Value Up Index – Surprising Inclusions and Exclusions

There are some major surprises (both inclusions and exclusions) in the Korea Value Up index.
In particular, the telecom sector (SK Telecom and KT) and large cap holding companies (Samsung C&T and LG Corp) are surprising exclusions in the index.
There are many surprising inclusions in the Korea Value Up Index. We provide 30 companies are surprising inclusions in the Korea Value Up Index (19 KOSDAQ and 11 KOSPI listed).

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Sep 24

Most Read: Korea Zinc, Tokyo Metro, Advantest Corp, HLB Therapeutics , Xiamen Amoytop Biotech Co Ltd, Rightmove PLC, SK Inc, Sino American Silicon Products and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
Tokyo Metro (9023 JP): IPO Listing & Fast-Entry Approved
The Biggish Sep 2024 “Thursday-Friday Trade”
KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
REA’s Improved Terms For Rightmove
Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp
Tokyo Metro (9023 JP) IPO: The Bull Case
Sino-American Silicon GDR Offering – Relatively Large One to Digest, Although Discount Is Attractive
What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price

MBK is watching for a 1 million share trading volume, as that may prompt neutral institutional investors to sell rather than participate in the tender, triggering a price hike.
MBK may raise the tender price to ₩900,000, a 35% jump, with a local pension fund CIO suggesting it’s the sweet spot for participation.
MBK believes securing the minimum target would give them 44% voting rights, enough to push their proposals, indicating they’ll go all-in for that 7% stake in this first attempt.

Tokyo Metro (9023 JP): IPO Listing & Fast-Entry Approved

By Dimitris Ioannidis

Tokyo Metro (TKYMETRO JP) is scheduled to go public on 23 October 2024 with an IPO valuation of ~$4.4bn and a float market cap of ~$2.2bn.
Fast-Entry for the one Global Index is expected at the close of 29 October 2024 with forecasted demand of ~17.4m shares and ~$133m.
Quarterly inclusion at the May 2025 review has a higher probability with a slight price rally or an elevated IPO offering price. Forecasted demand is ~23.2m shares and ~$177m.

The Biggish Sep 2024 “Thursday-Friday Trade”

Every year it’s the same trade. This year it is Thursday and Friday. There is some funkiness to Monday too.
There is meaningful directional buying on one day, which then kind of gets stretched a bit. This year, circumstances suggest high confidence buying should be at the top end.
This year, because circumstances, I expect the trade is a lot larger than last year. I’d say ¥1.6trln.

KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical

HLB Therapeutics (115450 KS) will replace Jeisys Medical (287410 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) next week.
Passive trackers will need to buy 1.8 days of ADV in HLB Therapeutics (115450 KS) and sell over 4 days of ADV in Jeisys Medical (287410 KS).
Recent ad hoc inclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) have jumped post announcement of index inclusion but have sold off after the inclusion.

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.

REA’s Improved Terms For Rightmove

Rightmove PLC (RMV LN), UK’s largest real estate portal, has twice rejected REA Group Ltd (REA AU) cash/scrip non-binding Offers this month.
REA has upped terms to 341 pence + 0.0422 new REA shares per Rightmove share, or 770p/share, a 39% premium. If completed, Rightmove’s shareholders would own ~20.1% of the MergeCo.
Thrice rejected? I think Rightmove should engage. REA also has until the 30th September to make a formal Offer. Or walk away.

Why MBK’s Move into Local Hostile Takeover Scene Matters: Focus on SK Inc and Lotte Corp

The new 100% mandatory tender offer rule could push buyers to lower premiums for major shareholders, potentially increasing hostile takeover attempts as costs get shared with minority shareholders.
It looks like MBK is eyeing this situation as a chance to redefine their strategy. This really shows how serious MBK is about the Korea Zinc deal.
Watch for top-tier assets available via hostile takeovers, particularly companies like SK Inc and Lotte Corp, where low shareholder stakes may lead to management conflicts.

Tokyo Metro (9023 JP) IPO: The Bull Case

Tokyo Metro (TKYMETRO 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.
Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government.
The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout.

Sino-American Silicon GDR Offering – Relatively Large One to Digest, Although Discount Is Attractive

By Clarence Chu

Sino American Silicon Products (5483 TT) is looking to raise US$287m in its GDRs offering. Proceeds will be used to purchase overseas raw materials, repay bank loans and purchase machinery.
Similar to previous GDR listings, the deal has had a long drawn out approval process. Thus, the deal is a very well flagged one.
The deal is a relatively large one to digest at 15.7 days of the stock’s three month ADV.

What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?

In this insight, we discuss three particular allies that could help the Choi family that have been highlighted by the local media including Hanwha, KIS, and Softbank.
The Hanwha Group is one of the largest shareholders of Korea Zinc. In addition, Hanwha Group Vice Chairman Kim Dong-Kwan has a close relationship with Korea Zinc Chairman Choi Yoon-Beom.
Korea Zinc is planning to hold an important press conference on the 24 September to reveal its position on the tender offer of Korea Zinc shares by MBK.

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✓ Company Analytics and News
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Sep 23

Most Read: Korea Zinc, Samsung KODEX Samsung Group ETF, Seven & I Holdings, HLB Therapeutics , Shanghai Henlius Biotech , Xiamen Amoytop Biotech Co Ltd, Taiwan Semiconductor (TSMC), Kokusai Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
Details of MBK’s Four Major Concerns on Management of Korea Zinc
Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF
Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?
Last Week in Event SPACE: Shin Kong Financial, Swire Pac, Seven & I, Korea Zinc
KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum
STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
TSMC (2330.TT; TSM.US): 4Q24 Outlook Is Around 10% QoQ Upside.
Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price

MBK is watching for a 1 million share trading volume, as that may prompt neutral institutional investors to sell rather than participate in the tender, triggering a price hike.
MBK may raise the tender price to ₩900,000, a 35% jump, with a local pension fund CIO suggesting it’s the sweet spot for participation.
MBK believes securing the minimum target would give them 44% voting rights, enough to push their proposals, indicating they’ll go all-in for that 7% stake in this first attempt.

Details of MBK’s Four Major Concerns on Management of Korea Zinc

In this insight, we discuss in detail MBK’s four major concerns on the management of Korea Zinc.
We believe that MBK has legitimate concerns on especially the three factors including poor investments, deteriorating profitability, and increase in equity capital/disposal of treasury shares.
If and when the 2 trillion won+ is raised, then it could lead to another tender offer and the four concerns highlighted in this insight become much more important.

Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF

This KODEX Samsung Group ETF sees 30% AUM outflows pre-rebalancing, with the same chunk flowing back in after, especially noticeable during December.
Over three years, local brokers sold stock baskets before rebalancing, causing notable price impacts. During this time, Samsung affiliates in the ETF delivered 3-4% returns.
ChatGPT said:ChatGPTThis isn’t typical NAV arbitrage; it’s likely an unhedged play. Nonetheless, given the consistent price impact and accessible stock futures, it’s worth considering.

Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?

Jeisys Medical’s getting booted from the KOSDAQ 150, and HLB Therapeutics is stepping in as the new addition. This change will officially hit the book on Wednesday, September 25.
HLB Therapeutics, with a ₩0.70T market cap and 87% float, is set for a 0.51% weight in KOSDAQ 150, triggering over 2 million shares in passive buying: 3.26x 30-day ADTV.
With today’s after-hours volume spike in HLB Therapeutics, we’re likely to see some price action from early movers spilling into Monday’s open, similar to what we saw with Webzen.

Last Week in Event SPACE: Shin Kong Financial, Swire Pac, Seven & I, Korea Zinc

Stay long Shin Kong Financial Holding (2888 TT) and buy more, or get long. CTBC Financial Holding (2891 TT) may make a better run at it, and may even bump.
It’s a hard to be bearish Swire Pacific (A) (19 HK) at 0.34x P/B. Yet the Hong Kong property market remains a challenging space. To put it mildly.
Seven & I Holdings (3382 JP) saw breathless news articles suggesting a foreign takeover became more difficult. Not really.

KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical

HLB Therapeutics (115450 KS) will replace Jeisys Medical (287410 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) next week.
Passive trackers will need to buy 1.8 days of ADV in HLB Therapeutics (115450 KS) and sell over 4 days of ADV in Jeisys Medical (287410 KS).
Recent ad hoc inclusions to the KOSDAQ 150 Index (KOSDQ150 INDEX) have jumped post announcement of index inclusion but have sold off after the inclusion.

Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum

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), Shinko Electric Industries (6967 JP), Greatview Aseptic Packaging (468 HK), Shanghai Henlius Biotech (2696 HK), China Traditional Chinese Medicine (570 HK).
Lowest spreads: Tohokushinsha Film (2329 JP), Dyna Mac Holdings (DMHL SP), Fuji Soft Inc (9749 JP), Trancom Co Ltd (9058 JP), Seven & I Holdings (3382 JP).

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.

TSMC (2330.TT; TSM.US): 4Q24 Outlook Is Around 10% QoQ Upside.

By Patrick Liao

We anticipate that the upcoming 4Q24 will likely see a ~10% quarter-over-quarter (QoQ) upside.
Among TSMC’s top clients are companies from the US, Taiwan, and Japan.
Recently, we have heard that TSMC is reducing wafer quotations by about ~10% for 28nm and below, in order to adapt to the current environment.

Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity

By Scott Foster

Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management’s guidance looks conservative.
KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.
The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.

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Sep 22

Most Read: Midea Group Co Ltd A, China Shipbuilding Industry Group Power, Ventia, Auckland Intl Airport, Fuji Soft Inc, Korea Zinc, Samsung KODEX Samsung Group ETF, Hang Seng Index and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
Auckland Airport (AIA NZ) Placement: Index Impact
Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower
Details of MBK’s Four Major Concerns on Management of Korea Zinc
Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF
Japan Weekly | Rate Cuts Ignite Rally
EQD | HSI September Rally: What’s Next?

Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry

Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.

Midea Group (300 HK): IPO Open Now; Upcoming Index Flows

The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.

CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar

There could be 17 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 3 spots.
We estimate one-way turnover of 2.9% at the rebalance leading to a one-way trade of CNY 21.96bn (US$3.1bn). There are 22 stocks with over 3x ADV to trade.
Impact on the stocks has increased as creations in ETFs linked to the CSI 300 Index continue. That flow will reverse from the deletions in the next few months.

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.

Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower

Yesterday, KKR amended its plans to take over Fuji Soft Inc (9749 JP) by creating a Two-Tender Scheme, effectively lowering the threshold for eventual success through clearly coercive tactics.
3D (23.46%) and Farallon (9.22%) had already tendered. Contractual terms make it difficult (not impossible) to withdraw. Assuming it goes through, KKR has 32.68%, quasi-negative control.
This revised structure is clearly abusive of minorities and NOT the deal Fuji Soft signed. This should cause Fuji Soft to Change their Opinion. Shareholder (and Bain) Pressure would help.

Details of MBK’s Four Major Concerns on Management of Korea Zinc

In this insight, we discuss in detail MBK’s four major concerns on the management of Korea Zinc.
We believe that MBK has legitimate concerns on especially the three factors including poor investments, deteriorating profitability, and increase in equity capital/disposal of treasury shares.
If and when the 2 trillion won+ is raised, then it could lead to another tender offer and the four concerns highlighted in this insight become much more important.

Unique Rebalancing Pattern & Unique Trading Angle of the KODEX Samsung Group ETF

This KODEX Samsung Group ETF sees 30% AUM outflows pre-rebalancing, with the same chunk flowing back in after, especially noticeable during December.
Over three years, local brokers sold stock baskets before rebalancing, causing notable price impacts. During this time, Samsung affiliates in the ETF delivered 3-4% returns.
ChatGPT said:ChatGPTThis isn’t typical NAV arbitrage; it’s likely an unhedged play. Nonetheless, given the consistent price impact and accessible stock futures, it’s worth considering.

Japan Weekly | Rate Cuts Ignite Rally

By Mark Chadwick

The Federal Reserve made a pivotal move last week, cutting its policy rate by 0.5%—the first rate cut in four years and larger than the typical reduction
Japanese stocks rallied strongly this week, with the Nikkei gaining 3.1% and the Topix rising 2.8%, as the yen weakened by more than 2 yen to 143 per dollar.
Rotation into economically sensitive areas like machinery and chemicals – KHI, Resonac, and Fujikura all out performed

EQD | HSI September Rally: What’s Next?

By Nico Rosti

We continue our coverage of the Hang Seng Index : in our previous insight we theorized a continuation of the rally in September.
So far the index is following the path outlined (pullback, then rally). What is going to happen in the next few weeks, if September closes up?
Broadly speaking we see a potential continuation of the rally in October, but there may be some resistance in the short-term.

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Sep 21

Most Read: Yancoal Australia, Exedy Corp, Tokyo Metro, CELSYS, Elan Corp, Fuji Soft Inc, Korea Zinc, HLB Therapeutics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID
Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
TOPIX Inclusions: Who Is Ready (September 2024)
M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower
Young Poong Precision (036560 KS) Also Now Trading Through Terms
Details of MBK’s Four Major Concerns on Management of Korea Zinc
Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?

S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed

There are 2 changes for the S&P/ASX100 Index, 3 changes for the S&P/ASX 200 (AS51 INDEX) and 16 adds/ 8 deletes for the S&P/ASX300 Index.
The two big surprises are the inclusion of Guzman Y Gomez (GYG AU) and Yancoal Australia (YAL AU) in the S&P/ASX 200 (AS51 INDEX) and S&P/ASX300 Index.
The adds to the indices have outperformed the deletes over the last few months and there could be profit-taking in the next few days.

[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run

In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP) . The market dropped. But that was the opportunity.
On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.” It’s up 21.5% since (the day after). Peers are down 15-20%.
The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There’s LOTS of cash left.

Tokyo Metro IPO Early Look – Could Raise Around US$2bn While Still Recovering from COVID

Tokyo Metro (TKYMETRO JP)’s shareholders, the Japanese and Tokyo Metropolitan Governments, could look to raise up to US$2bn by selling half of their stake via an IPO.
Tokyo Metro is one of the two metro network operators in the Tokyo region. It operates nine subway lines.
In this note, we take an early look at the possible listing.

Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender

KKR has rejigged its Fuji Soft Inc (9749 JP) tender offer into a two-stage offer at an unchanged JPY8,800 price. The first stage has no minimum acceptance condition.
The first stage is designed to facilitate KKR’s acquisition of 3D and Farallon shares, which have tendered and will not withdraw their tenders without KKR’s consent.
By securing 3D/Farallon’s shares, KKR has effectively blocked a Bain tender offer. Bain could launch a partial offer but it would be constrained by the tradeable share ratio criteria.

TOPIX Inclusions: Who Is Ready (September 2024)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
SUNWELS Co (9229 JP) and Macbee Planet (7095 JP) moved to the Prime market in July 2024 and their TOPIX Inclusion events took place at the end of August 2024.
We currently have CELSYS (3663 JP), Japan Eyewear Holdings (5889 JP), and Core Concept Technologies Inc (4371 JP) in our TOPIX Inclusions pre-event watchlist.

M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)

M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH.
There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily.

Fuji Soft (9749) – As Bain Prepares to Go Higher, KKR Goes Lower

Yesterday, KKR amended its plans to take over Fuji Soft Inc (9749 JP) by creating a Two-Tender Scheme, effectively lowering the threshold for eventual success through clearly coercive tactics.
3D (23.46%) and Farallon (9.22%) had already tendered. Contractual terms make it difficult (not impossible) to withdraw. Assuming it goes through, KKR has 32.68%, quasi-negative control.
This revised structure is clearly abusive of minorities and NOT the deal Fuji Soft signed. This should cause Fuji Soft to Change their Opinion. Shareholder (and Bain) Pressure would help.

Young Poong Precision (036560 KS) Also Now Trading Through Terms

On the 13th September, MBK joined Young Poong (000670 KS) in seeking control of Korea Zinc (010130 KS) via Partial Tender Offers for KZ and Young Poong Precision (036560 KS).
This situation has been canvassed by analysts here at Smartkarma; with increasing expectation the Choi family makes a counterbid.
This insight analyses the fair value of YPP. No matter how you slice it, the Offer Price is punchy. Perhaps not punchier enough.

Details of MBK’s Four Major Concerns on Management of Korea Zinc

In this insight, we discuss in detail MBK’s four major concerns on the management of Korea Zinc.
We believe that MBK has legitimate concerns on especially the three factors including poor investments, deteriorating profitability, and increase in equity capital/disposal of treasury shares.
If and when the 2 trillion won+ is raised, then it could lead to another tender offer and the four concerns highlighted in this insight become much more important.

Will New KOSDAQ 150 Member HLB Therapeutics Show Webzen-Like Price Moves?

Jeisys Medical’s getting booted from the KOSDAQ 150, and HLB Therapeutics is stepping in as the new addition. This change will officially hit the book on Wednesday, September 25.
HLB Therapeutics, with a ₩0.70T market cap and 87% float, is set for a 0.51% weight in KOSDAQ 150, triggering over 2 million shares in passive buying: 3.26x 30-day ADTV.
With today’s after-hours volume spike in HLB Therapeutics, we’re likely to see some price action from early movers spilling into Monday’s open, similar to what we saw with Webzen.

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Sep 20

Most Read: Dongwon Industries, Fuji Soft Inc, Samsung Fire & Marine Insurance, Elan Corp, Swire Pacific (A), Korea Zinc, Kuaishou Technology, Intuitive Machines and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible
Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender
Why Samsung Fire Is Shaping Up to Be the Hottest Dividend Play Ahead of the Value-Up Disclosure
M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)
StubWorld: Swire Trading “Cheap” As Cathay Squares Government Debt
Elan Corporation (6099 JP): M3 (2413 JP)’s Partial Tender Offer
Korea Investment Securities to Step up as the White Knight for Choi Family at Korea Zinc
Kuaishou Placement – US$480m Secondary Block Deal a Small One to Digest
Intuitive Machines (LUNR): Poised for Lunar Leadership with Major NASA Contract!
Digging into the News Flow on KIS Jumping in as the White Knight for Choi in the Korea Zinc Deal

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
We expect up to four ADDs and five DELs for the KOSPI 200 index during this index rebal event based on the latest available data. And we have a trade.

Fuji Soft (9749 JP): Checkmate as KKR Switches to a Two-Stage Tender

KKR has rejigged its Fuji Soft Inc (9749 JP) tender offer into a two-stage offer at an unchanged JPY8,800 price. The first stage has no minimum acceptance condition.
The first stage is designed to facilitate KKR’s acquisition of 3D and Farallon shares, which have tendered and will not withdraw their tenders without KKR’s consent.
By securing 3D/Farallon’s shares, KKR has effectively blocked a Bain tender offer. Bain could launch a partial offer but it would be constrained by the tradeable share ratio criteria.

Why Samsung Fire Is Shaping Up to Be the Hottest Dividend Play Ahead of the Value-Up Disclosure

With the 15% ownership cap complicating buybacks, Samsung Fire’s more likely to roll out a dividend-focused value-up play instead.
They’ve flagged a mix of shareholder returns and investments, but the big question is how much will be funneled into returns this year.
If Samsung Fire hits a 50% shareholder return this year, DPS could jump to ₩23,000–₩25,000 with a 6.5% yield, potentially boosting the stock price by 20–30%.

M3 (2413 JP) Launches Partial Offer To Take Control of Elan (6099 JP)

M3 Inc (2413 JP) will buy 50.1-55.0% of Elan Corp (6099 JP). Three principals+family have agreed to tender 50.1%. The premium is not huge. This is not an ATH.
There will be synergies. I am a little surprised by the deal+price (CEO is young, why sell so cheaply so early?) but it should be good for the TargetCo.
There are possible post-tender complications on a high participation rate. I expect those can be cured relatively easily.

StubWorld: Swire Trading “Cheap” As Cathay Squares Government Debt

Swire Pacific (19 HK) is coming up “cheap” on my monitor vs. Swire Properties (1972 HK) and Cathay Pacific (293 HK), after Cathay settles its Hong Kong government tab.
Preceding my comments on Swire and Cathay 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%.

Elan Corporation (6099 JP): M3 (2413 JP)’s Partial Tender Offer

Elan Corp (6099 JP) announced a partial tender offer and capital and business agreement with M3 Inc (2413 JP). M3 aims to make Elan a consolidated subsidiary.
The offer is for a minimum of 30.4 million (50.10% ownership ratio) and a maximum of 33.3 million shares (55.00% ownership ratio) at JPY1,040, 24.0% premium to the undisturbed price.
Irrevocable from tendering shareholders will satisfy the minimum acceptance condition. The offer is unremarkable, suggesting a final proration materially above the minimum of 56.07%.

Korea Investment Securities to Step up as the White Knight for Choi Family at Korea Zinc

Hankyung Business Daily reported that Korea Investment Securities (KIS) is in a serious discussion with the Choi family of Korea Zinc to step up as a white knight.
KIS/Choi family are considering a plan to launch a counterbid against Jang family and MBK by investing around 2 trillion won+ along with other private equity funds.
It is probable that tender offer price of Korea Zinc could be raised by 15-25% due to a likely counterbid and current price trading 7% higher than tender offer price.

Kuaishou Placement – US$480m Secondary Block Deal a Small One to Digest

By Clarence Chu

DCM Investments is looking to raise US$484m via selling its remaining stake in Kuaishou Technology (1024 HK).
While the current block deal isn’t entirely well flagged per se, it appears that DCM has since been trimming its stake on the open market.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Intuitive Machines (LUNR): Poised for Lunar Leadership with Major NASA Contract!

By Baptista Research

Intuitive Machines is at the forefront of space exploration, specializing in lunar services and infrastructure, with a strong reliance on governmental contracts such as NASA.
The company’s recent $4.82 billion Near Space Network contract with NASA solidifies its standing as a critical player in the burgeoning space economy.
Intuitive Machines is uniquely positioned in the market with its lunar lander capabilities, data transmission services, and autonomous lunar operations.

Digging into the News Flow on KIS Jumping in as the White Knight for Choi in the Korea Zinc Deal

The key issue is if KIS can form a consortium. PEFs are saying the timeline is too tight and are concerned about the unclear exit strategy.
To make this work, PEFs need Choi’s 15.65% Korea Zinc stake as collateral, but much of it is already tied up, limiting cash-raising potential.
They’ll likely continue to leak news to boost the price and buy time. But this will also push MBK to sweeten their offer sooner.

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Sep 19

Most Read: Midea Group Co Ltd A, Ventia, Trancom Co Ltd, Korea Zinc, China Traditional Chinese Medicine, HK inno.N, Shin Kong Financial Holding, K Bank, Auswide Bank, Dongwon Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event
TCM (570 HK): Inching Towards Regulatory Sign-Off
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
Competition to Take Over Shin Kong (2888 TT) – CTBC in a Bit of a A Sticky Wicket, Wot?
K Bank IPO – The Positives – Fast Growth
MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted
Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible

Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry

Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.

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.

Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid

Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.

Trading Insights from Today’s Dramatic Developments in the Korea Zinc Event

As of today, it’s clear Choi is struggling to secure white knights, pushing him to double down on political lobbying to stay in the game.
Choi’s aiming for the National Pension Service’s 7.57% voting rights, but with its legal neutrality, the chances of it caving to political pressure are slim.
MBK’s statement today shows confidence that Choi won’t get Fair Trade Commission approval, and that, like Hanwha and LG, Hyundai Motor won’t back him either.

TCM (570 HK): Inching Towards Regulatory Sign-Off

In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications.
Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged.
The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.

Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index

KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.

Competition to Take Over Shin Kong (2888 TT) – CTBC in a Bit of a A Sticky Wicket, Wot?

In late August, Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) agreed to merge in what appeared to be a hastily papered deal discussed here.
CTBC Financial Holding (2891 TT) put forth its own proposal at a big premium. Shin Kong traded up. Both deals need FSC approval. Taishin’s deal has a vote 9 October.
Taishin recently upped terms. And now the FSC has said “no” to CTBC’s proposal. But it’s weird. It’s not “NO”; more like, “not this.” Bit of a sticky wicket here.

K Bank IPO – The Positives – Fast Growth

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 this note, we talk about the positive aspects of the deal.

MyState (MYS AU)/Auswide (ABA AU): Consolidation Warranted

Back on the 19th August, MyState Ltd (MYS AU), Tasmania’s biggest bank, entered into a merger agreement by way of a Scheme with Queensland-based Auswide Bank (ABA AU).
Under the terms, MyState will issue 1.112 new shares for every share held by Auswide shareholders, with MyState/Auswide investors holding 65.9%/34.1% ownership in the combined group.
This is done and is expected to be wrapped up in December. Today is the last day of trading for Auswide cum-FY24 final dividend.

Quiddity Leaderboard KOSPI 200 Dec 24: Up to 4 ADDs & 5 DELs Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
We expect up to four ADDs and five DELs for the KOSPI 200 index during this index rebal event based on the latest available data. And we have a trade.

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Sep 18

Most Read: Midea Group Co Ltd A, Trancom Co Ltd, Platinum Asset Management, Ventia, China Traditional Chinese Medicine, HK inno.N, Pacific Smiles and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term
Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid
Platinum (PTM AU): Regal’s Indicative Offer
ASX100/ASX200 Index: Replacement Candidates for Virgin Money (VUK AU)
TCM (570 HK): Inching Towards Regulatory Sign-Off
Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index
Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300
Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer

Midea Group (300 HK): IPO Open Now; Upcoming Index Flows

The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.

Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry

Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.

Midea A/H Listing – Strong Demand for Quality Asset, Index Flows Could Help in the near Term

Midea Group Co Ltd A (000333 CH) raised around US$4.6bn in its H-share listing (including over-allocation), after the deal was upsized.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the deal background in our previous notes. In this note, we talk about the trading dynamics.

Trancom (9058) – Another Bain MBO Done Too Cheaply Where “Activist” Dalton Rolls In To The Bid

Logistics takeovers are hot this year. Any cutting-edge-of-efficiencies business in the space is likely to get a look. Trancom Co Ltd (9058 JP) is one.
But while logistics assets put into bidding competition like Alps Logistics and Chilled & Frozen get high EV/EBITDA multiples, MBO transactions without competition get done too cheaply.
Here again, an “Value Activist” “selling into the bid” to reinvest in the levered back end (at the takeover price). That tells you this deal is being done too cheaply.

Platinum (PTM AU): Regal’s Indicative Offer

Platinum Asset Management (PTM AU) has confirmed, and is “considering the merits” of an unsolicited confidential, non-binding, indicative proposal from Regal Partners (RPL AU).
Regal has offered, by way of a Scheme, 0.274 Regal shares for every Platinum share. A $0.24/share special dividend is permitted, and added. Regal holds an estimated 5.1% stake.
With funds under management down 27% yoy, a merger with Regal is just the tonic for Platinum’s long-suffering investors. Founder Kerr Neilson, holding 21.7%, will have the final say.

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.

TCM (570 HK): Inching Towards Regulatory Sign-Off

In its latest monthly update, China Traditional Chinese Medicine (570 HK) fleshes out the latest on the various PRC regulatory applications.
Comparing the two most recent monthly updates side-by-side, apart from modifying the documentation for the MOC and NDRC process; the SAMR filing has been formally accepted, as previously flagged.
The upshot? These regulatory approvals will be secured. The key question is whether this can take place before the 18th October pre-condition long stop date. Or an extension is required.

Korea Value-Up Index Drops on the 24th: Hunt for the Winners in the KOSDAQ Global Index

KOSDAQ stocks are expected to make up 10-15% of the Value-Up Index, with 10-15 names benefiting. Even with smaller passive funds, the impact on these stocks could be significant.
KOSDAQ Global Index criteria overlap with the Value-Up Index, and KRX’s push suggests many KOSDAQ Global stocks will also appear in the Value-Up Index.
In the past 30 days, the KOSDAQ Global Index dropped 5.14%, but 5 of the top 10 gainers either announced value-ups or received value-up picks from brokers.

Trancom (9058 JP): Bain-Sponsored MBO at JPY10,300

Trancom Co Ltd (9058 JP) recommended a Bain-sponsored MBO at JPY10,300, a 40.5% and 42.9% premium to the last close and undisturbed price, respectively.
The offer represents an all-time high but is lower than the midpoint of the IFA’s DCF valuation range and implies multiples below precedent transaction multiples.
While the Dalton irrevocable has a counteroffer clause, Mr Takebe (the largest shareholder) does not. Therefore, there is a low probability of a competing bidder emerging.

Pacific Smiles (PSQ AU): Genesis’ Off-Market A$1.90/Share Offer