Most Read

Hyundai Motor India is getting ready to complete its IPO in 2H 2024. Hyundai Motor India plans to offer up to 142.2 million shares (17.5% stake) to investors.
Hyundai Motor (005380 KS) currently owns a 100% stake in Hyundai Motor India. The IPO of Hyundai Motor India could raise as much as US$3 billion.
If Hyundai Motor India (HMI) is valued at US$25 billion and HMC sells a 17.5% stake in the company, HMC’s remaining stake in HMI would be worth nearly US$21 billion.

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase

In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
Friday they announced the Offering. Today shares fell 8+%. This is now cheap.

Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share

15 weeks ago, a specialised media outlet suggested Teijin Ltd (3401 JP) was in process to sell its stake in Infocom Corp (4348 JP).
I caught up later, after the stock had run up significantly, but writing bullishly here and here. Since then, the stock is up another 33-35%.
Today we finally got the announced deal. Blackstone will buy the stock at a valuation of ¥280bn, paying ¥6,060/share for the minority stake, and buying back Teijin’s stake at ¥4,340/share.

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context

Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.

Webtoon Entertainment (WBTN US) IPO: Valuation Insights

Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.

L’Occitane (973.HK) – The Privatization Is About to Succeed

So far, about 49.8% of disinterested shares from Irrevocable Undertakings/Non-binding Letters of Support would accept the Share Offer. Success is within reach based on a “good enough” privatization price.
The Share Alternative is mainly aimed at investors who are hoping for the future re-listing of L’Occitane in the overseas markets – They can still get a vantage point.
However, re-listing seems still distant/uncertain. The value of Rollover Shares in the future remains uncertain. Investors would face risks if they choose the Share Alternative. The Cash Alternative is preferred.

L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump

In a long-awaited development, L’Occitane (973 HK) announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip).
This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).

KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co

Paradise Co Ltd (034230 KS) will move from the KOSDAQ Market to the KOSPI Market from the open of trading on 24 June.
E&D Co Ltd (101360 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 21 June to replace Paradise Co Ltd (034230 KS).
Paradise Co Ltd (034230 KS) belongs to the Consumer Discretionary sector and there is a possibility of inclusion to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.

Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer

Following months of press speculation, Infocom Corp (4348 JP) announced a Blackstone (BX US) tender offer at JPY6,060 per share, a 177.3% premium to the undisturbed price.
After the share consolidation, Infocom will repurchase Teijin Ltd (3401 JP)’s stake at a share repurchase price of JPY4,231. The process is expected to be completed in early October.
The offer is a knockout bid helped by auction. This is a done deal with payment commencing from 7 August. At the last close, the gross spread was 0.5%.

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Jun 18

Most Read: L’Occitane, Great Eastern Holdings, Hyundai Motor India , Exedy Corp, Hengdeli Holdings, XPeng , New Oriental Education & Techn, Kagome Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

L’Occitane (973 HK): Who Owns What, And When
Great Eastern (GE SP): Inching Towards Suspension
L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional
Hyundai Motor India IPO: Key Facts and Financials at a Glance
Exedy Corp (7278 JP): Murakami Becomes a Substantial Shareholder
Hengdeli Holdings (3389 HK): Negative EV Play Halted
Quiddity Leaderboard HSTECH Sep 24: No Changes but US$425mn One-Way Flows Due to Capping
Quiddity Leaderboard HSCEI Sep 24: Two Changes Possible; US$256mn One-Way
Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

L’Occitane (973 HK): Who Owns What, And When

A fortnight ago, I sought access to L’Occitane (973 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under Chapter 571, s329 of the Securities and Futures Ordinance.
This is the same register I discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM; and one also used by proxy solicitors.
The register confirms what has been long rumoured about a certain shareholder activist. It is also informative for what isn’t present.

Great Eastern (GE SP): Inching Towards Suspension

Back on the 10th May, OCBC (OCBC SP) made a voluntary unconditional general Offer for the 11.56% in life/non-life insurer Great Eastern Holdings (GE SP) not held.
At a 36.9% premium to last close, the S$25.60/share Offer Price appeared fair. Yet GE has consistently traded through terms, potentially as someone seeks to block delisting, and negotiate terms.
OCBC has now declared terms final. The IFA says “not fair, but reasonable” – and recommends shareholders accept the Offer. GE will be suspended at the close of the Offer.

L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

L’Occitane (973 HK) announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.
The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer.
Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).

Hyundai Motor India IPO: Key Facts and Financials at a Glance

By Devi Subhakesan

Hyundai Motor India’s proposed IPO is an offer for sale by its parent, Hyundai Motor Company, Korea, and reported to raise USD3 billion, potentially making it India’s largest IPO ever.
Hyundai Motor India’s sales growth has been driven by strong domestic and export sales, both in volume and unit realisation.
With SUVs now making up 62% of Hyundai Motor India’s domestic volumes, up from 45% in FY2021, the shift towards premium models has boosted profit margins.

Exedy Corp (7278 JP): Murakami Becomes a Substantial Shareholder

Murakami’s entity, City Index Eleventh, and daughter reported a 5.46% position in Exedy Corp (7278 JP). The shares purchases began two days after the Aisin (7259 JP) secondary offering.
Murakami’s average buy-in price is JPY2,607.30 per share, 2.3% higher than the recent secondary offering price of JPY2,549.
Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents suggest the latter.

Hengdeli Holdings (3389 HK): Negative EV Play Halted

Watch accessory play Hengdeli Holdings (3389 HK) is currently suspended pursuant to the Takeovers Code.
Potentially founder Zhang Yuping (holding 17%), CEO Tony Cheung (16%) and/or Swatch Group (UHR SW) (9.94%) may table an Offer. My money is on Zhang.
This is a very illiquid name. What is interesting is that Hengdeli has net cash of HK$1.3bn – as at 31 December 2023 – against a market cap of HK$0.59bn.

Quiddity Leaderboard HSTECH Sep 24: No Changes but US$425mn One-Way Flows Due to Capping

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the September 2024 index rebal event.
We do not see any index changes in September 2024 but there could be one-way flows of US$425mn due to capping.

Quiddity Leaderboard HSCEI Sep 24: Two Changes Possible; US$256mn One-Way

By Janaghan Jeyakumar, CFA

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in September 2024.
Based on the current data, I see two ADDs and two DELs.

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase

In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
Friday they announced the Offering. Today shares fell 8+%. This is now cheap.

Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

In the past several days, the South Korean Presidential Office has announced that it is pushing for a comprehensive inheritance tax reforms.
Although the Presidential Office mentioned it is pushing to reduce highest inheritance tax rates from 60% to 30%, the more likely scenario is to reduce this rate to about 50%.
The lump sum personal deduction of 500 million won or inheritance tax which has been maintained for nearly 27 years could be doubled to about 1 billion won or more.

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Jun 17

Most Read: Fancl Corp, Keisei Electric Railway Co, Samsung C&T, Great Eastern Holdings, Lynas Corp Ltd, Red 5 Ltd, Webtoon Entertainment, Taiwan Semiconductor (TSMC) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii
Unexpected Inheritance Tax Rate Reduction Included in July Tax Reform: Impact on Value-Up Trading
Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair
Merger Arb Mondays (17 Jun) – Fancl, Tatsuta, A8, China TCM, GAPack, CPMC, Malaysia Airports, Bapcor
MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes
MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$400m
Webtoon Entertainment (WBTN US) IPO: The Bear Case
TSMC (2330.TT; TSM.US): CoWoS Demand Continues to Increase in 2024.
Ohayo Japan | A Quieter Week Ahead

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

The Palliser/Keisei Electric Railway Co (9009 JP) is an unconvincing trade. Avoid being long Keisei vs Oriental Land (4661 JP) except in short-term impact events. Avoid the drift trade also.
On the subject of activism, keep an eye on China Merchants China Direct Investments (133 HK)‘s 20th June AGM. If Kan’s re-election is rejected, this stock should gain more momentum.
A Sigma Healthcare (SIG AU)/Chemist Warehouse merger carried regulatory risk. And now the ACCC has raised a raft of concerns.

Unexpected Inheritance Tax Rate Reduction Included in July Tax Reform: Impact on Value-Up Trading

Senior Presidential Secretary said this morning that a tax reform, including reducing inheritance tax rates to the OECD average, will be disclosed in late July with the tax reform plan.
Stocks sensitive to reduced inheritance tax, notably Hyundai Motor Group subsidiaries like Hyundai Glovis and Hyundai Motor, could see significant attention amid governance restructuring efforts under Chung Eui-sun.
Retroactive application and its extent may impact markets, potentially affecting groups like Samsung, influencing diverse investment strategies based on specifics.

Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair

Great Eastern Holdings (GE SP) IFA opines that the OCBC (OCBC SP) S$25.60 offer is NOT fair but reasonable as it is below the valuation range of S$28.87-S$36.19 per share.
In response, OCBC declared the price final, and the final closing date is 12 July. Great Eastern will likely breach free float requirements and be suspended when the offer closes.
The offer will likely follow the Boustead Projects/Boustead Singapore blueprint, where SGX RegCo eventually (took seven months) enabled dissenters to receive a fair offer with a 24% uplift.

Merger Arb Mondays (17 Jun) – Fancl, Tatsuta, A8, China TCM, GAPack, CPMC, Malaysia Airports, Bapcor

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: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Fancl Corp (4921 JP), Asia Cement China (743 HK), Ansarada Group Ltd (AND AU).
Lowest spreads: Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP).

MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes

Core Lithium Ltd (CXO AU) and Piedmont Lithium (PLL US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close on 21 June.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 6.4% and in a one-way trade of US$28m.
The largest inflows will be in Sociedad Quimica y Minera de Chile (SQM US), Pilbara Minerals (PLS AU), Arcadium Lithium (ALTM US), Lithium Americas (LAC US) and Sigma Lithium (SGML).

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$400m

There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in June but there are a lot of float and capping changes.
Estimated one-way turnover is 3.9% resulting in a round-trip trade of US$418m. There are 17 stocks with over 1x ADV to trade from passive trackers.
The largest inflows are expected in Cia de Minas Buenaventura SAA (BVN US), Equinox Gold (EQX US) and Red 5 Ltd (RED AU).

Webtoon Entertainment (WBTN US) IPO: The Bear Case

Webtoon Entertainment (WBTN US), a global storytelling platform, seeks to raise up to US$500 million through a Nasdaq IPO.
In Webtoon Entertainment 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 declining organic revenue, declining Korean paying ratio, a peaking Japan growth driver, optimistic market sizing, and unsustainable low marketing spending.

TSMC (2330.TT; TSM.US): CoWoS Demand Continues to Increase in 2024.

By Patrick Liao

The yearly growth target could approach 25% YoY in 2024.
TSMC’s CoWoS demand continues to rise, with capacity expected to increase by approximately another 5% in 2024.
TSMC’s stock price has risen by 55% in Taiwan and by 66.3% in US markets this year. We believe it has the potential to continue increasing further.

Ohayo Japan | A Quieter Week Ahead

By Mark Chadwick

Hopes of easing inflation supported a weekly rise of 1.6% for the S&P 500 and 3.2% for the Nasdaq.
Sakana AI, founded in July 2023 by ex-Google researchers and a former Japanese official, is set to raise $125 million at a $1.1 billion valuation, becoming Japan’s fastest unicorn
Kirin Holdings plans to acquire additional shares of FANCL Corporation through a tender offer and share warrants to make FANCL a wholly-owned subsidiary

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Jun 16

Most Read: Fancl Corp, Enchem, Great Eastern Holdings, Jeisys Medical, Abacus Storage King, Lynas Corp Ltd, NVIDIA Corp, Sun Corp, Keisei Electric Railway Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
Block Deal Sale of 3.6% Shares of Enchem
Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair
(Mostly) Asia-Pac M&A: Fancl, Jeisys Medical, A8 New Media, Bapcor, Helios Techno,Tatsuta Electric
MV Australia A-REITs Index Rebalance: Abacus Storage King Deleted (Finally!)
MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes
MV US Listed Semiconductor 25 Index Rebalance: US$1bn to Sell in NVIDIA
Weekly Deals Digest (16 Jun) – Sun Corp, Fancl, Tatsuta, Great Eastern, A8, Webtoon, Shift Up
Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price.
The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light.

Block Deal Sale of 3.6% Shares of Enchem

After the market close on 14 June, it was reported that Woori PE/other investors will be selling 705,384 shares of Enchem in a block deal, representing 3.6% of outstanding shares.
The block deal discount rate ranges from 6.9% to 8.92%, resulting in potential block deal sale price of 270,500 won to 276,500 won.
We would not subscribe to this block deal and we are concerned about the valuations of Enchem after a sharp share price appreciation this year.

Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair

Great Eastern Holdings (GE SP) IFA opines that the OCBC (OCBC SP) S$25.60 offer is NOT fair but reasonable as it is below the valuation range of S$28.87-S$36.19 per share.
In response, OCBC declared the price final, and the final closing date is 12 July. Great Eastern will likely breach free float requirements and be suspended when the offer closes.
The offer will likely follow the Boustead Projects/Boustead Singapore blueprint, where SGX RegCo eventually (took seven months) enabled dissenters to receive a fair offer with a 24% uplift.

(Mostly) Asia-Pac M&A: Fancl, Jeisys Medical, A8 New Media, Bapcor, Helios Techno,Tatsuta Electric

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals discussed this week: Fancl (4921 JP)‘s Tender offer, A8 New Media (800 HK)‘s Scheme, and Jeisys Medical (287410 KS)‘s delisting offer. Bain also approached Bapcor (BAP AU).
Key updates took place on: Sigma Healthcare (SIG AU), Alumina (AWC AU), Greatview Aseptic Packaging (468 HK), Helios Techno (6927 JP), and Tatsuta Electric Wire & Cable (5809 JP).

MV Australia A-REITs Index Rebalance: Abacus Storage King Deleted (Finally!)

Abacus Storage King (ASK AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in June. There are float changes and capping changes too.
Estimated one-way turnover is 3.33% and will result in a one-way trade of A$19m. There are a couple of stocks with over 1x ADV to trade.
There has been a recent spike in shorts on Abacus Storage King (ASK AU) but passive selling will be larger than the short interest.

MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes

Core Lithium Ltd (CXO AU) and Piedmont Lithium (PLL US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close on 21 June.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 6.4% and in a one-way trade of US$28m.
The largest inflows will be in Sociedad Quimica y Minera de Chile (SQM US), Pilbara Minerals (PLS AU), Arcadium Lithium (ALTM US), Lithium Americas (LAC US) and Sigma Lithium (SGML).

MV US Listed Semiconductor 25 Index Rebalance: US$1bn to Sell in NVIDIA

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in June but there are a lot of float and capping changes.
There is US$1bn to sell in NVIDIA Corp (NVDA US) while there will be passive buying in Advanced Micro Devices (AMD US) and Intel Corp (INTC US).
The selling in NVIDIA Corp (NVDA US) will offset part of the potential passive buying from Technology Select Sector SPDR (XLK US) and other similar ETFs.

Weekly Deals Digest (16 Jun) – Sun Corp, Fancl, Tatsuta, Great Eastern, A8, Webtoon, Shift Up

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
Event-Driven developments: Sun Corp (6736 JP), Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), A8 New Media (800 HK), Bapcor.

Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

The Palliser/Keisei Electric Railway Co (9009 JP) is an unconvincing trade. Avoid being long Keisei vs Oriental Land (4661 JP) except in short-term impact events. Avoid the drift trade also.
On the subject of activism, keep an eye on China Merchants China Direct Investments (133 HK)‘s 20th June AGM. If Kan’s re-election is rejected, this stock should gain more momentum.
A Sigma Healthcare (SIG AU)/Chemist Warehouse merger carried regulatory risk. And now the ACCC has raised a raft of concerns.

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Jun 15

Most Read: Hyundai Mobis, EcoPro Materials, Shift Up, Fancl Corp, Helios Techno Holding, Webtoon Entertainment, Shiseido Company, Enchem and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group
Another Block Deal Sale of Ecopro Materials
Shift Up IPO – Refiling and Other Updates, Not Ranked at the Top Anymore
Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Clarifying BRV’s Post-Block Deal Lockup Conditions Involving Ecopro Materials
Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value
Webtoon Entertainment Pre-IPO – Peer Comparison – Relatively Small in Operating Scale as a Platform
Shiseido (4911 JP): Brainstorming For Potential Buyers
Block Deal Sale of 3.6% Shares of Enchem

The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group

Early this morning, rumors spread that Hyundai’s honorary chairman Chung Mong-koo was hospitalized and died, causing stock prices to surge, but Hyundai denied this news.
Control of Hyundai hinges on increasing the stake in Mobis. Chung Eui-sun aims to keep Mobis’s stock low, but Chung Mong-koo’s health complicates timing and strategy.
Mobis’s trading point depends on Chung Mong-koo’s health. Three scenarios: he’s healthy, critically ill, or deceased. Current rumors’ price impacts are unlikely to subside soon.

Another Block Deal Sale of Ecopro Materials

Shares of EcoPro Materials are down 16% today to 112,300 won, due to another block deal sale of by BRV Capital in the after hours trading on 13 June.
After the second block deal sale on 14 June, BRV’s stake declined further from 21.2% to 18.2%.
This block deal sale at a big discount is likely to raise overhang concerns about further block deal sales by BRV Capital in the coming months/years.

Shift Up IPO – Refiling and Other Updates, Not Ranked at the Top Anymore

By Sumeet Singh

Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
We have looked at the company’s performance, undertaken a peer comparison and talked about valuations in our past notes. In this note, we talk about the refiling and other updates.

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price.
The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light.

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Clarifying BRV’s Post-Block Deal Lockup Conditions Involving Ecopro Materials

In Korea, the lockup period for block deals is set by the seller and underwriters, not by law, and can be adjusted if both parties agree.
BRV obtained consent from Goldman, UBS, and KB for a second block deal after assessing that many initial buyers had sold their shares.
Understanding this lockup structure provides key insights into predicting when the next block deal might occur.

Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value

Today at noon JST, Rs Technologies (3445 JP) released an announcement on TDNet, “Our policy regarding the tender offer for Helios Techno Holding Co., Ltd. shares”
In it, they indicated that the price offered – ¥825/share – is a price which “fully returns to general shareholders the increased enterprise value that will result from [transaction] synergies.”
They acknowledge the market price is trading higher than the TOB Price, but say they have no plans to raise the Tender Offer Price. So now what? It depends.

Webtoon Entertainment Pre-IPO – Peer Comparison – Relatively Small in Operating Scale as a Platform

By Ethan Aw

Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
In our previous note, we talked about the company’s historical performance. In this note, we undertake a peer comparison.

Shiseido (4911 JP): Brainstorming For Potential Buyers

By Steve Zhou, CFA

Today, according to public news, Kirin Holdings will launch a tender offer for Fancl Corp (4921 JP) at a likely 30% premium.
The beauty industry is historically ripe with M&A deals. It is not hard to see why, as the global beauty sector trades at a hefty valuation multiple.
In this insight, we brainstorm for potential buyers of Shiseido Company (4911 JP) and analyze the viability of such.

Block Deal Sale of 3.6% Shares of Enchem

After the market close on 14 June, it was reported that Woori PE/other investors will be selling 705,384 shares of Enchem in a block deal, representing 3.6% of outstanding shares.
The block deal discount rate ranges from 6.9% to 8.92%, resulting in potential block deal sale price of 270,500 won to 276,500 won.
We would not subscribe to this block deal and we are concerned about the valuations of Enchem after a sharp share price appreciation this year.

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Jun 14

Most Read: Yunnan Aluminium Co Ltd A, Apple , Korea Stock Exchange Kospi Index, SK Telecom, A8 New Media, Bharat Heavy Electricals, Sigma Healthcare, Taiwan Semiconductor (TSMC) – ADR, Chow Tai Fook Jewellery and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade
Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows
Specifics of Korea’s Official Short-Selling Regulations, Announced This Morning
Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia
A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.
Ban on Short Selling Stocks in Korea Extended Until March 2025
NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive
Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues
Taiwan Dual-Listings Monitor: TSMC Historically Extreme Premium Continues; CHT at Short Level Again
Chow Tai Fook (1929 HK): Disappointed

CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade

There are 12 changes for the CSI 300 Index (SHSZ300 INDEX) and 50 changes for the CSI Smallcap 500 Index (SH000905 INDEX) in June. Most changes were expected.
There are a lot of stocks with over 1 day of ADV to trade. The round-trip trade in June is estimated to be US$5bn.
The adds have outperformed the deletes for both indices but the return profile of a long adds/ short deletes trade for the CSI500 Index is a lot smoother.

Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows

The Technology Select Sector SPDR (XLK US) ETF tracks the Technology Select Sector Index and has an AUM of over US$70bn.
NVIDIA Corp (NVDA US) has broken through the US$3tn market cap barrier and is very close to Apple (AAPL US) in terms of free float market cap.
If NVIDIA ranks higher than Apple on free float market cap at the close on Friday, there could be huge inflows to NVIDIA and outflows from Apple a week later.

Specifics of Korea’s Official Short-Selling Regulations, Announced This Morning

Limiting extensions to four times after a 90-day repayment and mandating repayment after 12 months increases short-selling costs. The revision omits limits on position-holding cycles, disappointing retail investors.
Today’s release did not set a timeline for short-selling resumption. The ruling party has requested it after March 2025, with key officials present suggesting next year March resumption.
Regarding the electronic system implementation, core content aligns with the draft, but newly revealed institution numbers add a new perspective. Uncertainties remain on integrating overseas stock borrowing into the system.

Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

On 12 June, SK Telecom (017670 KS) confirmed that its affiliate Sapeon plans to merge with its competitor Rebellions by end of this year.
Sapeon and Rebellions’ largest global competitor is Nvidia. A key aim of the merger is to challenge Nvidia and try to take away its global dominance in AI chips.
If the combined Sapeon and Rebellion can take away just 1% market share resulting in 1% of Nvidia’s market cap, this would suggest valuation of US$31 billion.

A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.

Following a suspension on the 28th May, property rental play A8 New Media (800 HK) has now announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
The Cancellation price is $0.36, a whopping 162.77% to last close. The price is final.
This is a done deal. But A8 is an illiquid micro cap.

Ban on Short Selling Stocks in Korea Extended Until March 2025

On 13 June, the Korean government announced that it will extend a ban on short selling stocks in Korea until end of March 2025.
For now, the government has not given a 100% go-ahead on the end of the ban on short selling stocks starting 1 April 2025.
However, in our view, the government is likely to allow short selling stocks in Korea once again, sometime in 2Q 2025.

NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive

With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues

Back on the 11th December 2023, pharmacy distributor Sigma Healthcare (SIG AU) announced a “transformational merger” – in effect a reverse takeover – with mega chain Chemist Warehouse (CWG).
In Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover I flagged pushback from ACCC; but on balance thought the merger should still get up.
Travis Lundy struck a more tentative tone in Sigma Healthcare: ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe… Rightfully so it seems. The ACCC has now raised competition concerns.

Taiwan Dual-Listings Monitor: TSMC Historically Extreme Premium Continues; CHT at Short Level Again

By Vincent Fernando, CFA

TSMC: +21.3% Premium; Trading at New +15-25% Range This Year
ASE: +12.7% Premium; We Continue to View 14%+ as Fresh Short Level
CHT: +1.2% Premium; Good Level to Short Relative to History

Chow Tai Fook (1929 HK): Disappointed

By Osbert Tang, CFA

Chow Tai Fook Jewellery (1929 HK) reported a weaker-than-expected FY24 net profit. Despite having HK$2.2bn net cash, the lack of a special dividend is even more disappointing.
Surge in unrealised loss on gold loans and a YoY contraction in margin have contributed to the poor 2H24 result. Apr-May operating figures showed a deteriorated operating environment.
Lacking a special dividend, CTF no longer looks attractive at the current level. Overoptimistic FY25 and FY26 consensus forecasts mean earnings downgrade pressure.

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Jun 13

Most Read: Keisei Electric Railway Co, Helios Techno Holding, Tatsuta Electric Wire & Cable, Sciclone Pharmaceuticals, Judo Capital, A8 New Media, Mao Geping Cosmetics, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
In Court Today With Segantii
Helios Techno Holding (6927) TOB – Today Could Be The Day
Tatsuta Electric (5809 JP) Crunch Time = Bump Time?
Sciclone Pharmaceuticals (6600.HK) Privatization Update – Some “Unstable Factors” During Voting
ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light
Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump
A8 New Media (800 HK): A Scheme with a 162% Takeover Premium
Mao Geping Cosmetics Pre-IPO – Riding on the Founder’s Reputation
Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?

In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness.

In Court Today With Segantii

Although this note does not encapsulate a trade idea, the fallout from the Capital Management Limited’s (Segantii) insider dealing case has impacted certain event trades, as the fund winds down.
On the 2nd May, the SFC commenced criminal proceedings against Segantii, its founder/ director/CIO Simon Sadler, and former trader Daniel La Rocca.
In the Eastern Magistrates’ Court this morning, we heard the prosecution’s request to transfer the case to the District Court.

Helios Techno Holding (6927) TOB – Today Could Be The Day

Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

Tatsuta Electric (5809 JP) Crunch Time = Bump Time?

ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different.
The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement.

Sciclone Pharmaceuticals (6600.HK) Privatization Update – Some “Unstable Factors” During Voting

Some shareholders have confirmed to be acting in concert at the Court Meeting, but long-term investors may vote against the privatization because they are not satisfied with the Cancellation Price.
The success rate of SciClone’s privatization is lower than that of China TCM and L’Occitane. If fails, there’s a high probability that the share price will fall back to HK$14/share.
The current share price cannot provide decent returns. Together with exchange rate risk, potential failure risks, etc., there’s no need for investors to take risks at this share price level.

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump

18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.
The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.

A8 New Media (800 HK): A Scheme with a 162% Takeover Premium

A8 New Media (800 HK) disclosed a Cayman scheme privatisation offer from Mr Liu Xiaosong (Founder, Chairman, CEO) at HK$0.36 per share, a 162.8% premium to the last close price.
The massive premium is unsurprising, as A8’s EV has been negative since April 2023 due to headwinds from the weak Chinese leasing sector and uncertainty about cash use.
The high takeover premium, no shareholder holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small-cap illiquid stock.

Mao Geping Cosmetics Pre-IPO – Riding on the Founder’s Reputation

By Sumeet Singh

Mao Geping Cosmetics is looking to raise around US$300m in its upcoming Hong Kong IPO.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
In this note, we look at the company’s past performance.

Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

On 12 June, SK Telecom (017670 KS) confirmed that its affiliate Sapeon plans to merge with its competitor Rebellions by end of this year.
Sapeon and Rebellions’ largest global competitor is Nvidia. A key aim of the merger is to challenge Nvidia and try to take away its global dominance in AI chips.
If the combined Sapeon and Rebellion can take away just 1% market share resulting in 1% of Nvidia’s market cap, this would suggest valuation of US$31 billion.

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Jun 12

Most Read: LG Energy Solution, Sun Corp, Keisei Electric Railway Co, Jeisys Medical, CPMC Holdings, Korea Stock Exchange KOSPI 200, Medical Data Vision, Atour Lifestyle Holdings, Aozora Bank Ltd, Judo Capital and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer
[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
Jeisys Medical (287410 KS): Archimed’s Delisting Offer
CPMC Holdings (906.HK) – ORG Can’t Afford to Lose, But Baosteel Is a Step Ahead
Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions
Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market
Atour Lifestyle Holdings Placement – Well Flagged Deal, past Selldowns Have Done Well
Daiwa to Buy More Aozora (8304) Shares – Murakami-San Escapes
ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea.
In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks.

Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer

True Wind has launched a hostile partial tender offer for Sun Corp (6736 JP) for a minimum (3.8m) and maximum (4.2m) shares at JPY4,400, 19.2% premium to the undisturbed price.
The offer was prompted by frustration with the Board’s lack of urgency in closing the disparity between Sun Corp’s market cap and the value of its Cellebrite DI (CLBT US) stake.
The Board has three options: do nothing (low probability), find a white knight bidder (high probability), or commit to selling/distributing its Cellebrite stake (medium probability).

[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?

In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness.

Jeisys Medical (287410 KS): Archimed’s Delisting Offer

Aesthetic laser maker Jeisys Medical (287410 KS) has announced French PE outfit Archimed SAS is seeking to delist the company.
Archimed intends to acquire 72% of Jeisys at ₩13,000, a 20.82% premium to undisturbed. Archimed has also inked agreements with founders/directors for 26.44%, taking its possible % acquisition to 98.44%.
A Korean medical device maker – not another Eoflow (294090 KS)?! Jeisys did face a patent infringement case from Syneron Medical (ELOS US) in 2018; but since resolved.

CPMC Holdings (906.HK) – ORG Can’t Afford to Lose, But Baosteel Is a Step Ahead

Baosteel’s SOE background helps bring more advantages- This deal is a consolidation of assets under SASAC, which may involve some strategic intent at national level. Baosteel has an upper hand.
ORG cannot afford to fail considering the strategic significance of CMPC for ORG. Major shareholder of CPMC Zhang Wei has picked ORG side, making it maintain the hope of winning.
For arbitrageurs, the good news is CPMC would be acquired by either Changping Industrial or ORG, with high certainty.Baosteel is also worth watching since it could be a new leader.

Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions

The government will announce short selling improvements Thursday. A leaked detail includes limiting 90-day short position extensions.
Limiting the 90-day short position holding period may ease local investor concerns, but it could shrink the short selling market, potentially affecting overseas fund outflows.
Resuming short selling in early July may bring new flow patterns due to temporary distortions from mandatory repayment within 90 days and limitations on position extensions, increasing price impacts.

Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market

Today after the close, SBI Holdings (8473 JP) – which currently owns 32.4% of Medical Data Vision (3902 JP) – announced it would buy another 1.91mm shares over 7mos.
This market purchase would lift them to ~37.4% by year-end. Interestingly, they plan to go through the one-third level without a Tender Offer. But their buying history hasn’t been great.
SBI bought 20% in 2020. It fell by half. They bought another 5%. Then it dropped 50%, so they bought another 5%. Now -25% so they are buying another 5%.

Atour Lifestyle Holdings Placement – Well Flagged Deal, past Selldowns Have Done Well

By Sumeet Singh

Legend Capital (LC), one of the principal shareholders of Atour Lifestyle Holdings (ATAT US), is looking to raise around US$168m through a secondary selldown.
This will be the third selldown by Legend Capital in just over a year’s time. Hence, the deal is well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.

Daiwa to Buy More Aozora (8304) Shares – Murakami-San Escapes

In February, Aozora Bank Ltd (8304 JP) extended its writedowns and the shares fell sharply. By end-Feb, we found out Japanese activist Murakami-san had bought shares.
I didn’t see the endgame. The pump worked, but he didn’t dump. Then Aozora got Daiwa to be a lead investor through a 3rd party share allotment, diluting Murakami-san.
Last week we got news the FSA had approved the Daiwa transaction. Yesterday, we got news the Murakami Group would sell its whole stake to Daiwa.

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

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Jun 11

Most Read: SK Bioscience , Sun Corp, Nan Ya Printed Circuit Board, Asia Cement China, LG Energy Solution, Siemens Ltd, Jeisys Medical, Wisetech Global, Asia Vital Components and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Block Deal Prospects Arising from SK Group’s Corporate Reshuffle
Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: One Surprise as Round-Trip Trade Hits US$2.3bn
Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer
NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff
Tender Offer of Jeisys Medical by Archimed Group
S&P/ASX Index Rebalance (June 2024): Changes, Flows, Impact, Shorts & Positioning
Taiwan Top 50 ETF Rebalance: Asia Vital Components to Replace Chang Hwa Commercial Bank

Block Deal Prospects Arising from SK Group’s Corporate Reshuffle

The declining appeal of the separator business prompts SK to seek buyers for SKIET through block deals amid financial pressures. The first deal is anticipated despite recent stock price drops.
SK Ecoplant looks to sell its 37.6% stake in SK Oceanplant. Negotiations stall over the former major shareholder’s 20% stake, prompting consideration of a block deal.
SK Bioscience, under SK Discovery, faces possible sale amid SK’s bio company reshuffle. SK Chemicals may bring SK Biopharm under its wing to help SK Inc focus on semiconductors/batteries.

Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor

Sun Corp (6736 JP) for years has been a play on its investment holding in Cellebrite DI (CLBT US), brought to market in a $2.4bn SPAC deal announced 30Aug2021.
The SPAC entity was an entity called TWC Tech Holdings II Corp (TWC = “True Wind Capital”). The next day, Cellebrite DI (CLBT US) was born, trading up to US$11.00+.
Sun Corp (6736 JP)‘s value realisation path had begun. Today, a True Winds entity announced a Partial Tender Offer – unsolicited, unannounced previously – on Sun Corp, for 19.0%.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: One Surprise as Round-Trip Trade Hits US$2.3bn

There are 5 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June with implementation taking place from 21-27 June.
The constituent changes and capping changes result in an estimated one-way turnover of 12.8% and in a one-way trade of TWD 37.2bn (US$1.15bn).
The changes are in line with our forecasts with one exception. Uni President Enterprises (1216 TT) was not added and Yulon Finance (9941 TT) was added instead.

Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price

Since the China/Taiwan situation looks increasingly tense, Xu Xudong/Far Eastern Group may be eager to privatize ACC considering geopolitical conflicts and political risks. Its business is subject to strict regulation.
HK$3.22 Offer Price is disappointing, but the privatization isn’t completely impossible (The headcount does not apply now). A certain number of investors are still willing to accept the Offer Price.
For arbitrageurs, the return looks not bad. However, considering the high uncertainties/failure risks, we still advise investors to be cautious. HK$2.5/share is a price point worth participating in.

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea.
In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks.

Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer

True Wind has launched a hostile partial tender offer for Sun Corp (6736 JP) for a minimum (3.8m) and maximum (4.2m) shares at JPY4,400, 19.2% premium to the undisturbed price.
The offer was prompted by frustration with the Board’s lack of urgency in closing the disparity between Sun Corp’s market cap and the value of its Cellebrite DI (CLBT US) stake.
The Board has three options: do nothing (low probability), find a white knight bidder (high probability), or commit to selling/distributing its Cellebrite stake (medium probability).

NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff

There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.

Tender Offer of Jeisys Medical by Archimed Group

On 10 June, it was announced that France’s Archimed Group is conducting a tender offer of 55.72 million shares of Jeisys Medical (287410 KS) (72% of outstanding shares).
The tender offer period will run from 10 June to 22 July. The tender offer price is 13,000 won.
Archimed also signed a contract to purchase the entire stake (23.2%) held by Kang Don-Hwan (Chairman of Jeisys Medical) and (3.2%) held by a Director Myung-Hoon Lee.

S&P/ASX Index Rebalance (June 2024): Changes, Flows, Impact, Shorts & Positioning

There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, and no regular changes for the S&P/ASX200 INDEX in June.
The surprise inclusion of Wisetech Global (WTC AU) means that positioning is likely to be lower than the passive buying and there could be a move higher in the stock.
There will be one adhoc inclusion to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June following Cie De Saint-Gobain (SGO FP)’s acquisition of CSR Ltd (CSR AU).

Taiwan Top 50 ETF Rebalance: Asia Vital Components to Replace Chang Hwa Commercial Bank

Asia Vital Components (3017 TT) will replace Chang Hwa Commercial Bank (2801 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 21 June.
Asia Vital Components (3017 TT) was added to a global index at the end of May and the stock has dropped nearly 25% from its highs.
Asia Vital Components (3017) trades at a much higher forward PE compared to its peers while Chang Hwa Commercial Bank (2801) trades at a lower PB compared to its peers.

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Jun 10

Most Read: SK Square , KKR & Co, Yanolja, CPMC Holdings, Greatview Aseptic Packaging, Jeisys Medical, Genex Power Ltd, Far Eastern New Century, China Oilfield Services H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix
S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks
Initial Thoughts on the Yanolja IPO
Game On As ORG Lobs Competing Offer For CPMC (906 HK)
Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
Japan Weekly | JMDC, Sanrio, Lasertec, Hakuhodo
Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders
Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent
Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas
A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix

Regardless of the divorce proceedings, SK still urgently needs SK Inc’s stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.
SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.
SK Inc’s involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.

S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks

There are 3 changes for the S&P 500 INDEX, 7 changes for the S&P Midcap400 Index and 13 changes for the S&P SmallCap600 Index at the June rebalance.
There is huge size to trade in KKR & Co (KKR US) and Crowdstrike Holdings (CRWD US) and both stocks were up big in the after-hours market.
There has been positioning in some stocks recently but stocks including KKR & Co, RB Global and Texas Pacific Land could see further positioning in the next week.

Initial Thoughts on the Yanolja IPO

Yanolja is getting ready to complete its IPO in the US in the next several months. Softbank invested about US$1.7 billion in Yanolja in 2021.
The valuation of Yanolja could be between US$7 billion to US$9 billion. The company could raise nearly US$400 million in this IPO.
Overall, we are concerned about the valuations of Yanolja if indeed the bankers push ahead with the IPO at the valuation range of US$7 billion to US$9 billion.

Game On As ORG Lobs Competing Offer For CPMC (906 HK)

After six months had elapsed, and CPMC Holdings (906 HK)‘s Offeror just needing SAMR/SAFE clearance before launching a firm bid, a competing Offer from ORG Technology (002701 CH) appeared unlikely.
Yet in a surprise move, ORG has made a pre-conditional (NDRC, SAFE, MoC, SAMR, and shareholder approval) Offer at HK$7.21/share, a 4.9% premium to the ongoing SASAC/NCSSF Offer.
ORG’s pre-con Offer also has a 50% acceptance condition. ORG and concert parties have 24.43%. And Zhang Wei (22.01%) has given has an irrevocable. Directors have 0.87%. Intriguing situation.

Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys

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: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK).
Lowest spreads: Alumina Ltd (AWC AU), Great Eastern Holdings (GE SP), Pact Group Holdings (PGH AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), QV Equities Ltd (QVE AU).

Japan Weekly | JMDC, Sanrio, Lasertec, Hakuhodo

By Mark Chadwick

Global markets retained their positive momentum as weak U.S. economic data renewed concerns about the growth outlook.
Next week is set to be eventful, with the FOMC and Bank of Japan meetings on the agenda. The FOMC, expected to maintain policy rates, might offer few surprises.
Oil prices, after a five-day decline, rebounded as OPEC+ extended production cuts through 2025.

Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders

Archimed aims to acquire 72% of Jeisys Medical’s shares, totaling 55,724,838 shares. The tender offer runs from the 10th of this month to the 22nd of the following month.
If tendered shares fall short of the 18,013,879 minimum, Archimed refrains from purchases. If exceeded, Archimed buys all, eliminating allocation risk.
With over 70% substantial volume and a large portion held by local retail investors, surpassing the 26% threshold seems feasible.

Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable.
The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power’s offer or launched a competing offer.
Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.

Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas

By Janaghan Jeyakumar, CFA

The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 7th June 2024.
While the T50 and T100 index changes were perfectly in line with our expectations there were some surprises among the TDIV index changes.
In this insight, we take a look at Quiddity’s final flow expectations for the June 2024 index rebal event and potential trade ideas based on the flow dynamics.

A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win