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Jul 19
0

Most Read: Aisin , Hygeia Healthcare Group, Kokusai Electric , KT Corp, Honda Motor, Samson Holding, Huafa Property Services Group, Thai Beverage, Advanced Info Service, Capitol Health and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Toyota Group Cross-Holding Structure Primer – Holdings, Unwind Progress, Buyback Policies, Etc
  • Hong Kong: Stocks Facing the Passive Boot in August
  • Kokusai Electric Placement Updates – Misbehaving
  • Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level
  • Big Honda (7267) Offering – Flow Timing Matters
  • Samson (531 HK): MBO Via A Scheme
  • Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote
  • Thai Bev (THBEV SP): Exits Property, Boosts F&N Stake. Deal Valuation Seem Excessive
  • GULF/INTUCH Merger & ADVANC/THCOM VTO’s
  • Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)

Toyota Group Cross-Holding Structure Primer – Holdings, Unwind Progress, Buyback Policies, Etc

By Travis Lundy

  • Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
  • It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
  • Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.

Hong Kong: Stocks Facing the Passive Boot in August

By Brian Freitas

  • There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
  • The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
  • There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.

Kokusai Electric Placement Updates – Misbehaving

By Sumeet Singh

  • KKR and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, via selling approximately 22.3% of Kokusai Electric (6525 JP). 
  • We have looked at the lockup expiry and deal dynamics in our earlier notes.
  • In this note, we talk about share price performance since then.

Reasons Why KT’s Foreign Room Is Likely to Fall Below the 3.75% Cutoff Level

By Sanghyun Park

  • KT’s foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.
  • Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT’s 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.
  • Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.

Big Honda (7267) Offering – Flow Timing Matters

By Travis Lundy

  • The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail – 80% of the book – is now. The price today closed at ¥1,665/share. 
  • The Offering has follow-on “non-discretionary” demand which is non-negligible. It is worth understanding the amounts and timing.
  • The lockups and non-discretionary demand, along with Honda’s relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.

Samson (531 HK): MBO Via A Scheme

By David Blennerhassett

  • Furniture trader Samson Holding (531 HK) has announced a Scheme from Shan Huei Kuo, Samson’s Chairman. 
  • The Cancellation price is $0.48, a 50% to last close. The premium is more pronounced if going back a month. The price is final.
  • This looks done. But Samson is an illiquid micro cap.

Huafa Property Services (982 HK): Wide Spread Ahead of the 28 August Vote

By Arun George

  • Huafa Property Services Group (982 HK)’s IFA opines that Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’s HK$0.29 privatisation offer is fair and reasonable. The vote is on 28 August. 
  • Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. The offer price is final.
  • No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the gross/annualised spread is 9.4%/52.5%. 

Thai Bev (THBEV SP): Exits Property, Boosts F&N Stake. Deal Valuation Seem Excessive

By Devi Subhakesan

  • Thai Beverage(THBEV SP)  has proposed a share swap-deal with a promoter company to acquire additional stake in FraserAnd Neave(FNN SP)  in exchange for Frasers Property at negotiated valuations, not market prices.
  • Post-Completion of the swap deal with the promoter-owned entity, which requires shareholder approval, Thai Bev will hold a 69.6% stake in F&N and no stake in Fraser Property (FPL).
  • If the stake swap were valued at yesterday’s closing share prices, it would imply a drop in the total stake value for Thai Bev after the proposed deal.

GULF/INTUCH Merger & ADVANC/THCOM VTO’s

By Brian Freitas

Capitol Health (CAJ AU): Binding Merger with Integral Diagnostics (IDX AU)

By Arun George

  • Capitol Health (CAJ AU) has entered a binding merger proposal with Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
  • The transaction will require approval from the ACCC and Capitol shareholders. Due to the minimal geographic overlap, ACCC clearance should be forthcoming.
  • The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 8.0%. 

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Jul 18
0

Most Read: Honda Motor, Hygeia Healthcare Group, Intouch Holdings, Red 5 Ltd, Hyundai Motor India , Timee Inc, Hyundai Glovis, SK Innovation, Koito Manufacturing and more

By | Daily Briefs, Most Read

In today’s briefing:

  • The Honda (7267) Offering – Much Easier Than It Looks
  • Hong Kong: Stocks Facing the Passive Boot in August
  • Cascading Takeunders for INTUCH, ADVANC, and THCOM as GULF TB Seeks To “Restructure”
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to September
  • Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out
  • Timee IPO: Forecasts and Valuation
  • Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”
  • GULF-INTUCH Amalgamation
  • SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio
  • Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.

The Honda (7267) Offering – Much Easier Than It Looks

By Travis Lundy

  • At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others. 
  • We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. 
  • It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

Hong Kong: Stocks Facing the Passive Boot in August

By Brian Freitas

  • There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
  • The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
  • There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.

Cascading Takeunders for INTUCH, ADVANC, and THCOM as GULF TB Seeks To “Restructure”

By Travis Lundy

S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to September

By Brian Freitas

  • With nearly 80% of the review period complete, there could be 28 adds/deletes across the S&P/ASX family of indices in September.
  • There is a lot of stocks for passive trackers to trade on the index changes with the largest impacts on the potential changes to the S&P/ASX 200 (AS51 INDEX). 
  • The potential adds have outperformed the potential deletions by a LOT over the last few months and continued positioning could lead to further gains.

Hyundai Motor India Pre-IPO – Peer Comparison – Doesn’t Stand Out

By Sumeet Singh

  • Hyundai Motor (005380 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
  • HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
  • In our previous note, we looked at the company’s past performance. In this note, we undertake a peer comparison.

Timee IPO: Forecasts and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Timee has set an indicative IPO price range of ¥1,350-1,450 per share and will raise US$280m (at the midpoint) where existing shareholders will sell down part of their ownership.
  • We expect Timee’s earnings to grow as the company is still in its early stages and with further growth in scale, we expect Timee’s margins to continue to expand further.
  • Our analysis shows that Timee Inc (215A JP) IPO is valued attractively as the company has better-than-peer margin profile which suggests that there is further upside to implied valuation multiples.

Trading Opportunities Arising from the Enactment of The “Doosan Bobcat Prevention Law”

By Sanghyun Park

  • Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
  • Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
  • We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.

GULF-INTUCH Amalgamation

By Waraporn Wiboonkanarak

  • The amalgamation will entail the ratios for allocations of shares in the NewCo to the shareholders of GULF and INTUCH as detailed below.
  • The amalgamation process and the establishment of the NewCo are expected to be completed in 2Q25.
  • The restructuring is aimed at reducing duplication in the shareholding structure and facilitating growth opportunities in the energy, infrastructure, and digital businesses.

SK Innovation & SK E&S Merger Official Disclosure: Unexpected Merger Ratio

By Sanghyun Park

  • The merger ratio, not as unfavorable to SK Innovation as feared, shows SK Group acting cautiously amid political and regulatory scrutiny.
  • SK Inc.’s stake will drop to mid-60s; the 1.2x merger ratio for SK E&S could positively affect SK Innovation’s stock price short-term.
  • Persuading KKR is crucial. SK E&S won’t convert ₩3T in RCPS or grant appraisal rights, potentially leading KKR to consider litigation, a significant risk to the merger.

Koito Mfg (7276) Bounces The Same as It Bounced in March On the Same News – An Echo? Meh Again.

By Travis Lundy

  • An interview in the Nikkei of Koito Manufacturing (7276 JP) CFO Takahito OTAKE offered the comment that Koito Mfg expected a shareholder return of 130% a year through March 2029.
  • The stock popped 19% after lunch on that comment, then fell back to end up 5.0%.
  • This is the same pop as we saw end-March. Then it was +24.6% and it stayed up the next day. Same reason for the pop. This was an echo.

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Jul 17
0

Most Read: China Traditional Chinese Medicine, TIS, Doosan Robotics , Honda Motor, Samson Holding, Gigabyte Technology, PC Partner and more

By | Daily Briefs, Most Read

In today’s briefing:

  • China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
  • China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
  • Japan – Yet Another Big Round of Passive Selling Expected in August
  • Doosan Group: Index Implications of the Corporate Restructuring
  • The Honda (7267) Offering – Much Easier Than It Looks
  • Honda (7267 JP): The Current Playbook
  • Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48
  • Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction
  • Gigabyte GDRs Early Look – While Core Segment Has Slowed, Had Benefited from the AI Server Wave
  • Further “SGX Listing & HKEx Withdrawal” Musings

China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress

By Xinyao (Criss) Wang

  • The slow progress of privatization is related to recent high-level changes in CNPGC. Decisions on SOE deals with “strategic purpose” require careful considerations, not based on “one leader’s personal preferences”.
  • Based on public information, we cannot find convincing reason to prove that CNPGC has changed its mind.There’re rumors that China TCM’s privatization is still considered important project on the agenda.
  • China TCM’s has strong fundamentals to support valuation. If there is no announcement, the privatization process is expected to proceed as usual, and we continue to wait for the voting.  

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

By Arun George

  • China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
  • The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
  • The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.

Japan – Yet Another Big Round of Passive Selling Expected in August

By Brian Freitas

  • There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
  • The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
  • Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

Doosan Group: Index Implications of the Corporate Restructuring

By Brian Freitas

The Honda (7267) Offering – Much Easier Than It Looks

By Travis Lundy

  • At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others. 
  • We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. 
  • It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

Honda (7267 JP): The Current Playbook

By Arun George

  • Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
  • The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

Samson Holding (531 HK): Chairman’s Scheme Privatisation at HK$0.48

By Arun George

  • Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively. 
  • The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
  • The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.

Honda Motor Placement – Past Large Deals Analysis – Could Do with a Bit More Correction

By Sumeet Singh

  • A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP).
  • The possibility of such a selldown was flagged by Reuters prior to the deal launch.
  • In our earlier note, we spoke about the deal dynamics. In this note, we talk about the updates since then.

Gigabyte GDRs Early Look – While Core Segment Has Slowed, Had Benefited from the AI Server Wave

By Clarence Chu

  • Gigabyte Technology (2376 TT) is looking to raise up to US$350m in its upcoming GDR offering. The firm is also looking to raise another US$300m via convertible bonds.
  • In late Jun 2024, Gigabyte announced that it had received its shareholder’s approval to issue between 32-38m common shares via a GDR offering. 
  • Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Further “SGX Listing & HKEx Withdrawal” Musings

By David Blennerhassett

  • Back on the 18th June, personal computer parts and accessories play PC Partner (1263 HK)  announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
  • This development was discussed in PC Partner (1263 HK) Muses SGX Listing & HKEx Withdrawal.  PC Partner subsequently announced a privatisation would not accompany any proposed withdrawal (should it happens).
  • My recent discussions with SFC confirms this is possible. And there was a recent precedent. But there may be caveats.

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Jul 16
0

Most Read: ASICS Corp, China Traditional Chinese Medicine, MMG, Eoptolink Technology , TIS, Korea Stock Exchange KOSPI 200, Legend Biotech Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress
  • HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
  • Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying
  • ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact
  • China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears
  • MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
  • CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown
  • Japan – Yet Another Big Round of Passive Selling Expected in August
  • Recently Observed Market Flow Movements Related to Korea’s Value-Up Initiatives
  • Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

China TCM (570.HK) Update – Behind The Share Price Plunge and Prospects for Privatization Progress

By Xinyao (Criss) Wang

  • The slow progress of privatization is related to recent high-level changes in CNPGC. Decisions on SOE deals with “strategic purpose” require careful considerations, not based on “one leader’s personal preferences”.
  • Based on public information, we cannot find convincing reason to prove that CNPGC has changed its mind.There’re rumors that China TCM’s privatization is still considered important project on the agenda.
  • China TCM’s has strong fundamentals to support valuation. If there is no announcement, the privatization process is expected to proceed as usual, and we continue to wait for the voting.  

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

By Travis Lundy

  • Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance. 
  • As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big. 
  • The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

Asics (7936 JP): Huge Forecast Revision to Offset Limited Passive Buying

By Brian Freitas

  • 15 shareholders are looking to sell between 73.9-85m shares (US$1.2bn-US$1.38bn) of ASICS Corp (7936 JP) in a secondary offering that will likely be priced on 23 July.
  • ASICS Corp (7936 JP) has also announced a huge upward revision to its sales and profit forecasts with EPS expected to increase 61% from earlier estimates.
  • Passive buying will be extremely limited in the short-term with the downward pressure offset to a large extent by the sales and earnings revisions.

ASICS Placement – Needs to Correct, but Watch Out for the Revision Impact

By Sumeet Singh

  • A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
  • For the two large banks, this will be a cleanup of their cross-shareholding.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

China Traditional Chinese Medicine (570 HK): Update Provides Fodder for Bulls and Bears

By Arun George

  • China Traditional Chinese Medicine (570 HK)’s monthly update provides ammunition to both the bulls and bears. Since falling on no news on 26 June, the spread has widened to 31.8%. 
  • The bull view is that while the timelines are delayed, the privatisation remains on track as the update shows ongoing progress in satisfying the pre-condition. 
  • The bear view is that progress remains glacial, as the consortium wants to withdraw from a binding offer by failing to satisfy the pre-condition before the long stop date.

MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion

By Travis Lundy

  • Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
  • The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
  • The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.

CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown

By Brian Freitas

  • There could be 18 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 5 spots.
  • We estimate one-way turnover of 3.3% at the rebalance leading to a one-way trade of CNY 22.07bn (US$3bn). There are a lot of stocks with multiple days ADV to trade.
  • The potential adds have outperformed the potential deletes. There were ETF inflows last week amid a short selling crackdown as the Third Plenum kicks off.

Japan – Yet Another Big Round of Passive Selling Expected in August

By Brian Freitas

  • There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in August.
  • The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
  • Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

Recently Observed Market Flow Movements Related to Korea’s Value-Up Initiatives

By Sanghyun Park

  • Nine companies disclosed value-up plans, with four official and five pending disclosures. Initially, these announcements boosted stock prices, but long-term correlations were inconclusive. Yet, shareholder returns notably rose in H1.
  • NPS increased stakes in three of the nine recently announced value-up companies. They share traits in value-up trading (large caps & low PBR), potentially guiding our strategy as NPS enters.
  • BlackRock’s Hong Kong branch has recently engaged with six Korean asset management firms for potential entrustment of its Asian fund’s Korean investment portion, focusing on the value-up policy.

Legend Biotech (LEGN US): Takeover Interest – Possible but Tough to Pull Off

By Arun George

  • Legend Biotech Corp (LEGN US) shares increased 12% on Friday as a Street Insider report claimed it received takeover interest and hired Centerview Partners to help review the offer.
  • Genscript Biotech (1548 HK), the largest shareholder, shares rose 25%. Genscript responsded that it is not aware of any reasons for these share price movements and any inside information.
  • The chances for an offer are low as the offeror would face several hurdles. Nevertheless, without an offer, the upcoming CARVYKTI commercial production in 2H24 will support the share price.   

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Jul 15
0

Most Read: ASICS Corp, China Traditional Chinese Medicine, MMG, Hyundai Motor India , POSCO Holdings, Timee Inc, Eoptolink Technology , CK Infrastructure Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
  • ASICS (7936 JP): A US$1.4 Billion Secondary Offering
  • Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex
  • MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion
  • Hyundai Motor India IPO: The Bull Case
  • POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won
  • MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up
  • Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex
  • CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown
  • CK Infra (1038 HK): London Calling

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

By Travis Lundy

  • Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance. 
  • As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big. 
  • The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

ASICS (7936 JP): A US$1.4 Billion Secondary Offering

By Arun George

  • ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
  • Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
  • Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).

Merger Arb Mondays (15 Jul) – China TCM, Canvest, Henlius, Hollysys, Second Chance, Anasarda, Rex

By Arun George

MMG (1208) – Rights Results Show High Take-Up, Small Unhedged Portion

By Travis Lundy

  • Friday post-close, MMG (1208 HK) released the results of its Rights Offering. 3.4654bn Rights Shares at HK$2.62 saw 98.18% take-up. New Rights Shares officially start trading on 16 July.
  • The other 1.82% (63.1mm Rights Shares) saw 6.383bn excess Rights Shares applications. EAFs were allocated evenly, so applicants got 0.99% of what they bid for, but hey, free money?
  • The new Rights Shares are expected to commence trading on 16 July. Even better, there was good fundamental news out late Sunday which should add to the general wellbeing.

Hyundai Motor India IPO: The Bull Case

By Arun George

  • Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion. 
  • HMIL is India’s second largest passenger vehicle manufacturer, as measured by domestic passenger vehicle sales. It serves as Hyundai’s production and export hub for emerging markets.
  • The bull case rests on a strong market position, premiumisation-led growth, top-quartile operating and FCF margin profile. 

POSCO Holdings: Announces Shares Buyback and Cancellation of Nearly 2 Trillion Won

By Douglas Kim

  • POSCO Holdings (005490 KS) announced a major shareholder return policy to buyback and cancel nearly 2 trillion won worth of treasury shares from 2024 to 2026. 
  • The company will cancel 5.25 million treasury shares representing 6.2% of outstanding shares (about 1.9 trillion won). It will also repurchase and cancel additional 100 billion won of shares.
  • POSCO Holdings has taken a major initiative to provide greater returns to its shareholders and this should have a positive impact on its share price. 

MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up

By Rikki Malik

  • While there may be still be some overhang once the rights shares start trading, this is a good entry point
  • Applications for 6.4 Billion excess rights shares received from 11 applications
  • Rights shares will start trading on Tuesday 16th of July

Weekly Deals Digest (14 Jul) – Timee, ASICS, Honda, Kokusai, Sanil, Canvest, Henlius, HKTV, Rex

By Arun George

CSI300 Index Rebalance Preview: 18 Changes in Dec; Third Plenum; ETF Inflows; Short Sell Crackdown

By Brian Freitas

  • There could be 18 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 5 spots.
  • We estimate one-way turnover of 3.3% at the rebalance leading to a one-way trade of CNY 22.07bn (US$3bn). There are a lot of stocks with multiple days ADV to trade.
  • The potential adds have outperformed the potential deletes. There were ETF inflows last week amid a short selling crackdown as the Third Plenum kicks off.

CK Infra (1038 HK): London Calling

By David Blennerhassett

  • CK Infrastructure Holdings (1038 HK), 75.67%-held by CK Hutchison Holdings (1 HK), announced it is considering a second listing on an overseas stock exchange, such as London.
  • A UK-listing makes perfect sense. In excess of 90% of CKI’s FY23 profit was sourced from businesses outside Asia, with ~50% from its UK ops.
  • The wording in the announcement is unclear – a dual primary listing, or a secondary listing? The LSE is also undergoing a listing regime change, effective 29th July.

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Jul 14
0

Most Read: Daidoh Ltd, ASICS Corp, Doosan Bobcat Inc, Hyundai Motor India , Kokusai Electric , Altium Ltd, Korea Stock Exchange KOSPI 200, MMG and more

By | Daily Briefs, Most Read

In today’s briefing:

  • JAPAN ACTIVISM:  Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬
  • HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
  • ASICS (7936 JP): A US$1.4 Billion Secondary Offering
  • Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?
  • ASICS (7936) | Obadele Thompson or Usain Bolt?
  • Hyundai Motor India IPO: The Bull Case
  • Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric
  • (Mostly) Asia-Pac M&A: Second Chance Properties, Shinsung Tongsang, Rex Minerals, Canvest, Altium
  • EQD | KOSPI 200 Sell-Off Could Accelerate This Week, But It’s A BUY
  • MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up

JAPAN ACTIVISM:  Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬

By Travis Lundy

  • Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
  • ¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
  • Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too. 

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

By Travis Lundy

  • Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance. 
  • As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big. 
  • The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

ASICS (7936 JP): A US$1.4 Billion Secondary Offering

By Arun George

  • ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
  • Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
  • Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).

Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?

By Douglas Kim

  • On 11 July, the Doosan Group announced a major business structure reorganization, including the delisting of Doosan Bobcat Inc (241560 KS).
  • In our view (over the next 3-6 months), these transactions appear to be value-destroying for Doosan Bobcat and Doosan Enerbility minority shareholders but positive for Doosan Robotics shareholders.
  • Doosan Robotics plans to acquire the remaining 54% stake in Doosan Bobcat through a tender offer. Once Doosan Robotics fully owns Doosan Bobcat, its shares will be delisted.

ASICS (7936) | Obadele Thompson or Usain Bolt?

By Mark Chadwick

  • ASICS is revising up its full year forecasts, now expecting sales to reach a record ¥660 billion , up 15.7% year-over-year. There is a strong currency tail wind. 
  • Still “you gotta be in it to win it..”  ASICS is currently crushing it, while Nike flounders
  • A large secondary offering will likely hit the share price in the short term; there are two key risks…but it could be a good opportunity to buy. 

Hyundai Motor India IPO: The Bull Case

By Arun George

  • Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion. 
  • HMIL is India’s second largest passenger vehicle manufacturer, as measured by domestic passenger vehicle sales. It serves as Hyundai’s production and export hub for emerging markets.
  • The bull case rests on a strong market position, premiumisation-led growth, top-quartile operating and FCF margin profile. 

Last Week in Event SPACE: Toyota, Asia Cement, Hanwha Corp, Kokusai Electric, Keisei Electric

By David Blennerhassett

  • The Toyota Group cross-holding ecosystem is in flux. They started with a small announcement by Aisin (7259 JP) but moves have come fast and furious.
  • Apparently minorities are grumbling to the SFC about the low-balled Offer for Asia Cement China (743 HK). And for good reason. The best course of action? Vote against the Scheme.
  • Hanwha Corporation (000880 KS) is trading at a steep NAV discount. And the controlling family is making  a partial Offer to gain majority control. 

(Mostly) Asia-Pac M&A: Second Chance Properties, Shinsung Tongsang, Rex Minerals, Canvest, Altium

By David Blennerhassett

EQD | KOSPI 200 Sell-Off Could Accelerate This Week, But It’s A BUY

By Nico Rosti

  • The KOSPI 200 INDEX started a modest pullback and is entering a BUY area, but it could fall further this coming week, caution is advised.
  • The support levels to buy are between 383-371, this coming week.
  • Alternatively buy the Close, if the WEEKLY Close is negative, next Friday.

MMG Limited (1208.HK) Rights Issue – 98.18% Taken Up

By Rikki Malik

  • While there may be still be some overhang once the rights shares start trading, this is a good entry point
  • Applications for 6.4 Billion excess rights shares received from 11 applications
  • Rights shares will start trading on Tuesday 16th of July

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Jul 13
0

Most Read: Ryohin Keikaku, Fast Retailing, Doosan Robotics , Keisei Electric Railway Co, Daidoh Ltd, Shanghai Henlius Biotech , Pacific Smiles, ASICS Corp, Doosan Bobcat Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Sep24 Nikkei 225 Rebal – Now 1 ADD, 1 DELETE; Fastie+TEL Still Where the Fun Is
  • Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
  • Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
  • [JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
  • JAPAN ACTIVISM:  Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬
  • Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
  • Henlius (2696 HK): Here Comes The Scrip Option
  • Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!
  • HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking
  • Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?

Sep24 Nikkei 225 Rebal – Now 1 ADD, 1 DELETE; Fastie+TEL Still Where the Fun Is

By Travis Lundy

Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data

By Travis Lundy

  • Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
  • Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact. 
  • New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

By Sanghyun Park

  • The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
  • The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
  • Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

By Travis Lundy

  • A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
  • But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
  • I expect the ask needs to change, and the agenda item needs to be difficult to be against. 

JAPAN ACTIVISM:  Activists Sell ALL Their Daidoh (3205) In One Day. Oops 😬

By Travis Lundy

  • Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
  • ¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
  • Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too. 

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

By Arun George

  • Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion. 
  • Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
  • The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC. 

Henlius (2696 HK): Here Comes The Scrip Option

By David Blennerhassett

Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!

By David Blennerhassett

  • After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share. 
  • The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
  • The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.

HUGE Asics (7936) Offering – Big Guidance Boost at ATH So Feed the Ducks When They Are Quacking

By Travis Lundy

  • Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance. 
  • As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big. 
  • The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

Reorganization of the Doosan Group: Why Delist Doosan Bobcat (Jewel of Doosan Group)?

By Douglas Kim

  • On 11 July, the Doosan Group announced a major business structure reorganization, including the delisting of Doosan Bobcat Inc (241560 KS).
  • In our view (over the next 3-6 months), these transactions appear to be value-destroying for Doosan Bobcat and Doosan Enerbility minority shareholders but positive for Doosan Robotics shareholders.
  • Doosan Robotics plans to acquire the remaining 54% stake in Doosan Bobcat through a tender offer. Once Doosan Robotics fully owns Doosan Bobcat, its shares will be delisted.

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Jul 12
0

Most Read: Kokusai Electric , Doosan Robotics , Linklogis, Fast Retailing, Canvest Environmental Protection Group, Keisei Electric Railway Co, Netmarble , Puig Brands , Shanghai Henlius Biotech and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
  • Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
  • Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes
  • Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
  • Canvest (1381 HK): Evaluating A Privatisation
  • [JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
  • Fast Retailing (9983) | Q3 Masterclass
  • Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat
  • Puig Brands Joins the IBEX35
  • Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO

By Travis Lundy

  • Today post-close we got confirmation of yesterday’s Reuters scoop of a secondary selldown on Kokusai Electric (6525 JP) after the stock fell 7.2% in heavy volume.
  • KKR HKE LP and KSP Kokusai LLC (Koch) will together sell 52.5mm shares plus another 7.8mm+ in the greenshoe. Split is 50/50 domestic/international. 
  • This is 60+mm shares against 51mm shares held by non-passive holders ex-Capital (who has been selling). It’s a lot of stock at a high price.

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

By Sanghyun Park

  • The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
  • The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
  • Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes

By Brian Freitas

  • The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.
  • There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
  • Capping will result in passives buying Kuaishou Technology (1024 HK) and JD.com (9618 HK) while selling Meituan (3690 HK) and Tencent (700 HK).

Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data

By Travis Lundy

  • Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
  • Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact. 
  • New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

Canvest (1381 HK): Evaluating A Privatisation

By David Blennerhassett

  • Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%. 
  • There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
  • But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

By Travis Lundy

  • A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
  • But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
  • I expect the ask needs to change, and the agenda item needs to be difficult to be against. 

Fast Retailing (9983) | Q3 Masterclass

By Mark Chadwick

  • Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations. 
  • Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19% 
  • Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium

Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat

By Sanghyun Park

  • This block deal has an unusual PSR (price swap return) contract at ₩58,200, the July 10th closing price, likely preventing Netmarble’s typical stock price correction today.
  • In 2022, a similar-sized local PSR transaction involved Doosan Bobcat Inc, with 9.9 million shares and a PSR swap price of ₩37,500.
  • As for Doosan Bobcat, the stock initially dropped but rebounded near the PSR swap price, prompting local brokerages, focused on PSR fee income, to sell rather than realize capital gains.

Puig Brands Joins the IBEX35

By Jesus Rodriguez Aguilar

  • The Technical Advisory Committee (CAT) in an extraordinary meeting adds Puig Brands (PUIG SM) to the IBEX 35 index and removes Melia Hotels International Sa (MEL SM).
  • Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.
  • Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

By Arun George

  • Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion. 
  • Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
  • The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC. 

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Jul 11
0

Most Read: Asia Cement China, Ryohin Keikaku, Kokusai Electric , Posco Future M, Wiwynn Corp, Hong Kong Television Network and more

By | Daily Briefs, Most Read

In today’s briefing:

  • KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?
  • Asia Cement (743 HK): $3.22/Share Offer – Really?
  • Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes
  • Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
  • Kokusai Electric (6525 JP): Placement, Buyback & Index Flows
  • Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering
  • KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It
  • Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong
  • HKTV (1137 HK)’s Low-Balled Buyback Gets The Nod
  • Kokusai Electric (6525 JP): A US$2.0 Billion Secondary Offering

KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?

By Travis Lundy

  • Today, a Reuters article came out saying that KKR would sell down half its 43% stake in Kokusai Electric (6525 JP) according to “two people familiar with the matter.”
  • The article also said Kokusai Electric would buy back shares. Kokusai responded with a TDNET release saying “we did not release this info but we are considering various capital policies.
  • It pays to look at the Shareholder Structure as it stands. This is bigger than it looks. 

Asia Cement (743 HK): $3.22/Share Offer – Really?

By David Blennerhassett

  • After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected. 
  • Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
  • Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.  

Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes

By Brian Freitas

  • The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
  • Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.
  • Fast Retailing (9983 JP)‘s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.

Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO

By Travis Lundy

  • Today post-close we got confirmation of yesterday’s Reuters scoop of a secondary selldown on Kokusai Electric (6525 JP) after the stock fell 7.2% in heavy volume.
  • KKR HKE LP and KSP Kokusai LLC (Koch) will together sell 52.5mm shares plus another 7.8mm+ in the greenshoe. Split is 50/50 domestic/international. 
  • This is 60+mm shares against 51mm shares held by non-passive holders ex-Capital (who has been selling). It’s a lot of stock at a high price.

Kokusai Electric (6525 JP): Placement, Buyback & Index Flows

By Brian Freitas

  • KKR and KSP Kokusai will offer 52.51m-60.38m shares (US$1.76bn-2bn) of Kokusai Electric (6525 JP) in a secondary offering that will likely be priced on 22 July.
  • Kokusai Electric (6525 JP) will also buy back up to JPY 18bn of its shares. At the last close, that is 3.33m shares (1.2x ADV).
  • Trackers of one global index will buy stock at the time of settlement of the shares. The (much) bigger buying will come at the end of August.

Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering

By Arun George

  • Reuters reported that KKR & Co (KKR US), the largest Kokusai Electric (6525 JP) shareholder, plans to sell about half of its 43% stake, worth around JPY300 billion.
  • As Kokusai’s shares are trading at 3.2x the IPO price of JPY1,840, KKR would be tempted to reduce its stake further. The 180-day IPO lock-up period expired on 22 April.
  • Kokusai anticipates a return to growth and margin improvement. However, Kokusai trades at a material premium to peer multiples and is fully priced. 

KRX New Deal Index Rebalance Preview: Lots of Change; Shift Up Listing Adds to It

By Brian Freitas

Wiwynn GDR Offering – US$1.45bn Dilutive Offering, but Momentum Has Been Very Strong

By Clarence Chu

  • Wiwynn Corp (6669 TT) is looking to raise around US$850m in its global depository receipts (GDRs) offering.
  • Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.
  • In this note, we run the deal through our ECM framework and comment on deal dynamics.

HKTV (1137 HK)’s Low-Balled Buyback Gets The Nod

By David Blennerhassett

  • Back in May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a mediocre 20.8% premium to undisturbed.
  • The thrust of the Offer was to lift co-founder Ricky Wong’s stake to 51.55% from 45.75%.  But that required independent shareholders approving a whitewash waiver not to make a MGO.
  • I didn’t expect shareholder pushback. And there wasn’t. Tendering closes on the 23rd July. Keep an eye on CCASS movements. Shares gained 4.7% yesterday prior to the EGM outcome. Mmm.

Kokusai Electric (6525 JP): A US$2.0 Billion Secondary Offering

By Arun George

  • Kokusai Electric (6525 JP) has announced a secondary offering of up to 60.4 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY326 billion (US$2.0 billion).
  • The secondary offering facilitates KKR and KSP Kokusai Investments’ ability to crystallise substantial IPO gains—the shares are trading at 3.2x the IPO price of JPY1,840.
  • Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 22 and 24 July (likely 22 July).

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Jul 10
0

Most Read: Kokusai Electric , Aisin , Recruit Holdings, Hanwha Corporation, Asia Cement China, Ryohin Keikaku, Kelun Biotech, Korea Stock Exchange Kospi Index and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Kokusai Electric IPO Lock-Up – KKR Will Be Tempted by the US$2.7bn Release but Might Have to Wait
  • KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?
  • Toyota Group Cross-Holding Structure Primer – Holdings, Unwind Progress, Buyback Policies, Etc
  • Recruit (6098 JP) – BIG Headline Buyback But Disappointing if That Is Best Use Of Cash
  • StubWorld: Hanwha Corp’s Steep Discount & Tender Offer
  • Asia Cement China (743.HK) – Investors Are Facing the Dilemma of Low-Priced Privatization
  • Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes
  • Kelun-Biotech IPO Lock-Up Expiry – Strong Performance Leaves Pre-IPO Investors with Large Gains
  • Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering
  • Details of Block Deal Pre-Disclosure Rule Disclosed: Cancellation Risk from 30% Price Correction

Kokusai Electric IPO Lock-Up – KKR Will Be Tempted by the US$2.7bn Release but Might Have to Wait

By Sumeet Singh

  • KKR raised around US$730m via selling some stake in Kokusai Electric (6525 JP) Japan IPO in Sep 2023. Its remaining stake will be released from its IPO linked lockup soon.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

KKR To Sell a 20-22% Stake in Kokusai Electric (6525)?

By Travis Lundy

  • Today, a Reuters article came out saying that KKR would sell down half its 43% stake in Kokusai Electric (6525 JP) according to “two people familiar with the matter.”
  • The article also said Kokusai Electric would buy back shares. Kokusai responded with a TDNET release saying “we did not release this info but we are considering various capital policies.
  • It pays to look at the Shareholder Structure as it stands. This is bigger than it looks. 

Toyota Group Cross-Holding Structure Primer – Holdings, Unwind Progress, Buyback Policies, Etc

By Travis Lundy

  • Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
  • It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
  • Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.

Recruit (6098 JP) – BIG Headline Buyback But Disappointing if That Is Best Use Of Cash

By Travis Lundy

  • Last December, Recruit Holdings (6098 JP) announced a ¥200bn buyback which sounded big but with lots of cross-holders, wasn’t huge. The stock is up 80% in 6+ months since.
  • Today, the company announced a new buyback of ¥600bn. This is very aggressive, and at 25x EBITDA and 40x PER, is probably due to demand to sell. 
  • Crossholders now hold ¥2trln which is three-plus times this buyback. And if the price were to rise 10% a year for 3yrs, it would be four times.

StubWorld: Hanwha Corp’s Steep Discount & Tender Offer

By David Blennerhassett

  • With Hanwha Corporation (000880 KS) trading around a one-year low NAV discount, the Hanwha Group has made a Tender Offer for 8% of shares outstanding at ₩30,000/share.
  • Preceding my comments on Hanwha 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%.

Asia Cement China (743.HK) – Investors Are Facing the Dilemma of Low-Priced Privatization

By Xinyao (Criss) Wang

  • Many minority shareholders have lodged complaints against ACC with the SFC, since unfair privatization price damages the ecology of the entire market.It depends on whether the SFC will take action.
  • The failure of privatization does not necessarily mean better returns for investors. On the contrary, it may result in greater losses. ACC can have other ways “hollow out” the Company.
  • Arbitrageurs can choose to bet on a second privatization (with higher Offer Price) and also on the potential dividends, but the prerequisite is that the management choose to “act honorably”.

Nikkei 225 Index Rebalance Preview (Sep 2024): Potential Adds/Deletes, Capping & Funding Changes

By Brian Freitas

  • The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
  • Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.
  • Fast Retailing (9983 JP)‘s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.

Kelun-Biotech IPO Lock-Up Expiry – Strong Performance Leaves Pre-IPO Investors with Large Gains

By Sumeet Singh

  • Kelun Biotech (KB) raised around US$170m in its IPO in July 2023, the lockup on its pre-IPO shareholders is set to expire soon.
  • KB is a China-based integrated innovative biopharmaceutical company. It has accumulated more than ten years of experience in antibody drug conjugates (ADC) development.
  • In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

Kokusai Electric (6525 JP): Rumoured KKR US$1.8 Billion Secondary Offering

By Arun George

  • Reuters reported that KKR & Co (KKR US), the largest Kokusai Electric (6525 JP) shareholder, plans to sell about half of its 43% stake, worth around JPY300 billion.
  • As Kokusai’s shares are trading at 3.2x the IPO price of JPY1,840, KKR would be tempted to reduce its stake further. The 180-day IPO lock-up period expired on 22 April.
  • Kokusai anticipates a return to growth and margin improvement. However, Kokusai trades at a material premium to peer multiples and is fully priced. 

Details of Block Deal Pre-Disclosure Rule Disclosed: Cancellation Risk from 30% Price Correction

By Sanghyun Park

  • Today’s press release unveils details on new flow trading events in Korea’s local market from the second half of this year, highlighting two key points.
  • Firstly, the disclosure rule starts with block deals from August 23rd. Secondly, a 30% or greater stock price correction on disclosure day may cancel the transaction plan.
  • This highlights the need to consider cancellation risks in pre-disclosure positions and design setups with consideration for the potential for reverse flows as stock prices approach 30% corrections.

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