Most Read

We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then…

Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics

Today, Lee Seo-hyun returned as the top executive at Samsung C&T, which officially announced her as the head of its Strategic Planning Division.
Her return to Samsung C&T might not just be a simple comeback – it could be seen as a setup for some big changes within the company.
Considering Samsung C&T’s Value-up Momentum, aligning with Lee Seo-hyun’s return, we must position for potential price impact, focusing on portfolio streamlining.

Koito Mfg – Stock Over-Pops on New MTMP/Buyback; There Will Be Overhang

With a new Medium-Term Management Plan and a buyback, the stock was cheap as of Thursday’s close. It was less cheap after it went limit up +25% on Friday.
That put it in the camp of “it may go up more but probably not a lot”. It has told you about big divs and buybacks.
But model it up and they need to do more buybacks. Both to meet share price gains and the needs of legions of potential cross-holders looking to sell.

Last Week in Event SPACE: Lawson, Samsonite, Socionext, ZOZO

Lawson Inc (2651 JP)‘s Tender Offer is still too cheap. It is also a somewhat non-transparent and unfair process. And it does not adhere to the METI Fair M&A Guidelines.
Samsonite (1910 HK)‘s pursuit of a dual listing (primary or secondary?) appears to be put the buyout on the backburner. For now.
Socionext (6526 JP) and ZOZO Inc (3092 JP) have a large part of the Max Real World Float to displace. Neither of those two names are outlandishly expensive.

Samsung C&T: Why Is Lee Seo-Hyun Returning as the President?

On 29 March, it was reported that Lee Seo-Hyun has been appointed as the President of Samsung C&T (028260 KS), returning to the company after more than five years.
Lee Seo-Hyun is the third child of the late Samsung Chairman Lee Kun-Hee. She will be in charge of the overall strategic planning of Samsung C&T.
Many investors will likely to question this move, since they may question her ability to make strategic decisions that are in the best interests of all the minority investors.

A/H Premium Tracker (To 28 Mar 2024): Liquid AH Premia Still Very Wide

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND’s consecutive buying streak ended on Monday, and a new buying streak started Tuesday. NORTHBOUND net bought the dip. Last week’s (double long) choice Longyuan Power was up 5.24%.
Narrow AH premia narrowed some. Wider AH premia saw Hs outperform. There is a LOT of spread left in this market. 7 recommendations this week.

HD Hyundai Marine Solutions IPO: The Investment Case

HD Hyundai Marine Solution (443060 KS), the ship after-service subsidiary of HD Hyundai (267250 KS), aims to raise up to US$550 million.
The international book-building will run from 8 to 22 April, while the domestic book will open from 16 to 22 April. Pricing will be announced on 24 April.
The investment case rests on solid top-line growth, a healthy order book, rising margins, cash generation, and modest leverage.

Taiwan Dual-Listings Monitor: TSMC Continues Falling from Extreme Level; CHT at Unusual Discount

By Vincent Fernando, CFA

TSMC: +11.8% Premium — Falling Closer to Its Historical Range
ASE: +9.2% Premium; Further Breakdown Could Indicate Return to Previous Trading Range
CHT: -1.8% Discount — Good Level to Long the Spread

Updated Tool (31Mar24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”

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

Merger Arb Mondays (01 Apr) – SciClone, IntelliCentrics, CIMC Vehicles, Lawson, Roland DG, MMA

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: Sciclone Pharmaceuticals (6600 HK), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Southern Cross Media (SXL AU), China Traditional Chinese Medicine (570 HK), QV Equities.
Lowest spreads: Tietto Minerals Ltd (TIE AU), Roland DG Corp (6789 JP), Chilled & Frozen Logistics Holdings (9099 JP), Pact Group Holdings (PGH AU), Mma Offshore (MRM AU).

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Mar 31

Most Read: ZOZO Inc, Shenzhen New Industries Biomedical Engineering-A, Samsung C&T, NIFTY Index, PDD Holdings, Lawson Inc, Roland DG Corp, Tencent, Toyota Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics
EQD | Is the NIFTY’s Rally Halting?
Asia Ex-Japan Funds: Extremes in Positioning & Momentum
(Mostly) Asia-Pac M&A:MMA, Boral, Orecorp, Probiotec, CPMC, CIMC Vehicle, Roland DG, Welbe, SciClone
Weekly Deals Digest (31 Mar) – Roland DG, Lawson, SciClone, Probiotec, MMA Offshore, Bharti Hexacom
HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy
Denso’s Big Multi-Year Toyota Industries (6201) Selldown

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

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

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up

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

Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics

Today, Lee Seo-hyun returned as the top executive at Samsung C&T, which officially announced her as the head of its Strategic Planning Division.
Her return to Samsung C&T might not just be a simple comeback – it could be seen as a setup for some big changes within the company.
Considering Samsung C&T’s Value-up Momentum, aligning with Lee Seo-hyun’s return, we must position for potential price impact, focusing on portfolio streamlining.

EQD | Is the NIFTY’s Rally Halting?

By Nico Rosti

The NIFTY Index has been rallying for months, but in the last few weeks there has been a considerable slow down in its rising pace.
Currently the index is at a point where it could pull back this coming week, based on our MRM patterns reading.
A possible alternative scenario would be a continuation of the rally for a total of 4-5 weeks up in a row.

Asia Ex-Japan Funds: Extremes in Positioning & Momentum

By Steven Holden

This report identifies stocks at the extremes of their positioning or momentum ranges within our Asia Ex-Japan fund universe.
We have pinpointed eight stocks either at their historical positioning extremes or undergoing significant changes in fund ownership, providing detailed ownership profiles for each.
Pinduoduo Inc and UltraTech Cement make gains, Sunny Optical sees ownership drift south, New Oriental Education moves off the lows.

(Mostly) Asia-Pac M&A:MMA, Boral, Orecorp, Probiotec, CPMC, CIMC Vehicle, Roland DG, Welbe, SciClone

I tally 53 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed this week on Smartkarma: MMA Offshore (MRM AU)‘s Scheme with Singapore’s Cyan Renewables; and Sciclone Pharmaceuticals (6600 HK)‘s Scheme.
Key updates took place on: Boral (BLD AU), Orecorp (ORR AU), Lawson Inc (2651 JP), CPMC (906 HK), CIMC Vehicle (1839 HK), Roland DG (6789 JP), and Welbe (6556 JP).

Weekly Deals Digest (31 Mar) – Roland DG, Lawson, SciClone, Probiotec, MMA Offshore, Bharti Hexacom

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: Bharti Hexacom (6597372Z IN) and Lianlian DigiTech (2104619D CH) IPOs.
Event-Driven developments: Lawson Inc (2651 JP), Roland DG Corp (6789 JP), Sciclone Pharmaceuticals (6600 HK), CIMC Vehicle Group Co Ltd (1839 HK), HKBN Ltd (1310 HK), Probiotec Ltd (PBP AU).

HK Connect SOUTHBOUND Flows (To 28 Mar 2024); Strong Net Buying on Tencent, Telcos, and Energy

A shares were down on the week, but rallied Thursday and Friday.
Net SOUTHBOUND buying was +HK8.5bn after $57bn the two weeks before. SOUTHBOUND ended its consecutive net daily buy streak Monday, then started buying again.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week. Again.

Denso’s Big Multi-Year Toyota Industries (6201) Selldown

We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then…

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
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✓ Company Analytics and News
✓ Events & Webinars

Mar 30

Most Read: Shenzhen New Industries Biomedical Engineering-A, ZOZO Inc, Socionext, Fast Retailing, Rakuten Bank , Samsung C&T, Angel Robotics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
March 2024 Nikkei 225 Rebal – Socionext, Disco and a Consumer Goods Stock (Ryohin Keikaku?) To ADD
Fast Retailing: Earnings Preview
Rakuten Bank (5838 JP) Stands Out from the Other Asian Digital Banks
Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics
Hong Kong Buybacks Weekly (Mar 29th): Tencent, Aia, CK Asset
Introducing a Data Source for Korean Local Institutions’ Interests
End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

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

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up

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

March 2024 Nikkei 225 Rebal – Socionext, Disco and a Consumer Goods Stock (Ryohin Keikaku?) To ADD

In March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split I suggested Socionext (6526 JP) needed a stock split to get in.
Today after the close, Socionext reported H1, guided up full-year earnings (still too conservative), raised its div, and announced a 5:1 stock split for Jan1 2024.
DISCO Corp (6146 JP) is now likely to be a top 75, which leaves the question of which Consumer Goods stock would likely be added.

Fast Retailing: Earnings Preview

By Oshadhi Kumarasiri

While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.

Rakuten Bank (5838 JP) Stands Out from the Other Asian Digital Banks

By Victor Galliano

Despite Rakuten Bank shares’ re-rating, we believe it remains attractive, with its strong balance sheet and its low cost base with undemanding valuations compared to its Asian digital banking peers
Rakuten Bank is well positioned to benefit from the negative interest rate policy exit in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio
It continues to leverage off the Rakuten Group eco-system, as a low cost source of new customers; nearly a third of clients use Rakuten Bank as their primary Japanese bank

Lee Seo-Hyun’s Unexpected Return: Implications for Samsung’s Conglomerate Dynamics

Today, Lee Seo-hyun returned as the top executive at Samsung C&T, which officially announced her as the head of its Strategic Planning Division.
Her return to Samsung C&T might not just be a simple comeback – it could be seen as a setup for some big changes within the company.
Considering Samsung C&T’s Value-up Momentum, aligning with Lee Seo-hyun’s return, we must position for potential price impact, focusing on portfolio streamlining.

Hong Kong Buybacks Weekly (Mar 29th): Tencent, Aia, CK Asset

By Ke Yan, CFA, FRM

We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Mar 29th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), CK Asset (1113 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Dongyue (189 HK), AIA (1299 HK).

Introducing a Data Source for Korean Local Institutions’ Interests

Recent trends in the most viewed local brokerage research reports by Korean institutions, compiled by FnGuide, offer insights into current investor interests.
Notable resurgence in local institution interest in the semiconductor sector, especially with the temporal gap until May when the Value-up momentum materializes, notably evident in the AI semiconductor rally companies.
Local institutions typically follow stocks of their interest with a slight lag. This suggests potential positive flows in the listed semiconductor companies until the Value-up momentum solidifies in May.

End of Mandatory Lock-Up Periods for 46 Companies in Korea in April 2024

We discuss the end of the mandatory lock-up periods for 46 stocks in Korea in April 2024, among which 6 are in KOSPI and 40 are in KOSDAQ.
These 46 stocks on average could be subject to further selling pressures in April and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in April include APR, Angel Robotics, and Samhyun.

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✓ Events & Webinars

Mar 29

Most Read: ZOZO Inc, Lawson Inc, Alteogen Inc, Koito Manufacturing, CPMC Holdings, HD Hyundai Marine Solution , Sciclone Pharmaceuticals, RENOVA Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
Alteogen: Block Deal Sale of About 3% of Shares
Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned
CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid
Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation
SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80
Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco
HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures
Ohayo Japan | S&P Hits Record: Japan Passes Budget

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.

Alteogen: Block Deal Sale of About 3% of Shares

On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale.
The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won.
This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
As Toyota Group’s leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block.
Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.

CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid

On the 6th Dec 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China (NCSSF).
A decent premium (32.1%), presumed rubber-stamped regulatory approvals, and a 50% acceptance condition with 29.7% in the bag – this Offer looked done. Then ORG announced a possible competing proposal.
Nearly four months have elapsed and details on ORG’s Offer remain unknown. SASAC/NCSSF chip away at reg approvals. Shares are down 2.6% from its recent peak. That makes sense.

Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation

Valuation controversy arises from comparing HD Hyundai Marine Solution, a ship AS specialist, with diverse global companies, leading to a target market cap of ₩5T.
HD KSOE’s inclusion worsens the valuation controversy. Applying HD KSOE’s last year PER without adjusting for a significant one-off profit seems to inflate HD Hyundai Marine Solution’s PER.
Currently, major local IPO funds see HD Hyundai Marine’s valuation nearing ₩4T as excessive, despite the industry’s revival and potential growth in eco-friendly ship conversions, impacting the upcoming bookbuilding process.

SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80

Sciclone Pharmaceuticals (6600 HK) disclosed a scheme privatisation offer from GL Capital at HK$18.80 per share, a 33.9% premium to the undisturbed price (HK$14.04 on 15 March).
The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The Bank of China, which holds a blocking stake, should be supportive.
The offer price has been declared final. It is reasonable, aligning with the all-time high and the IPO price. This is a done deal.

Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents, adjusted every year in August.
We look at the rankings of the potential ADDs/DELs every month for the next rebal, based on most recent trading data.
Every month we provide trade suggestions. The last three months have seen market-neutral returns of +3.0%, +6.5%, +3.2% respectively for the one-month periods. A new trade is suggested below.

HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures

By Ethan Aw

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In this note, we talk about the company’s historical performance.

Ohayo Japan | S&P Hits Record: Japan Passes Budget

By Mark Chadwick

US Market Wrap: S&P 500 hits record, Dow inches higher; tech stocks lag.
Japan Budget: Parliament passes ¥112 trillion budget, emphasizing defense spending, inflation mitigation, and earthquake recovery.
Stocks Update: Mercari introduces Eco Mercari Delivery; Kubota’s construction equipment business grows; Mitsubishi Electric expands digital workforce.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Mar 28

Most Read: ZOZO Inc, Fast Retailing, Shenzhen New Industries Biomedical Engineering-A, Kokusai Electric , HD Hyundai Marine Solution , Lawson Inc, Alteogen Inc, CIMC Vehicle Group Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Fast Retailing (9983) – Now At Double Downweight Levels
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
HD Hyundai Marine Solution IPO Preview
KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
Alteogen: Block Deal Sale of About 3% of Shares
Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches
Fast Retailing: Earnings Preview
CIMC (1839 HK): 18th April Shareholder Vote

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Fast Retailing (9983) – Now At Double Downweight Levels

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

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

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

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.

HD Hyundai Marine Solution IPO Preview

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.

Alteogen: Block Deal Sale of About 3% of Shares

On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale.
The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won.
This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches

Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share.
The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range.
Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms.

Fast Retailing: Earnings Preview

By Oshadhi Kumarasiri

While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.

CIMC (1839 HK): 18th April Shareholder Vote

On the 11th March, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a firm Offer at HK$7.50/H-share from its major shareholder, CIMC Group. Terms are final.
CIMC Group holds 74.24% of the H-shares and will abstain from voting at the H-share class meeting. 14.21% of the remaining 25.76% H-shares have given irrevocables supporting the Offer.
The Circular is now out. The shareholder vote is the 18th April. Payment is the 13th May, IF unconditional on the first close. This looks done.

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Mar 27

Most Read: ZOZO Inc, Shenzhen New Industries Biomedical Engineering-A, Kokusai Electric , HD Hyundai Marine Solution , Globalwafers, Shinhan Financial, China Motor, Roland DG Corp, Hana Tour Service and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
HD Hyundai Marine Solution IPO Preview
Globalwafers GDR Offering – Coming to Market Earlier than Anticipated
Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large
Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way
Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

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

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.

HD Hyundai Marine Solution IPO Preview

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

Globalwafers GDR Offering – Coming to Market Earlier than Anticipated

By Ethan Aw

Globalwafers (6488 TT) is looking to raise up to US$681m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
The deal is a somewhat large one to digest at 20.2 days of three month ADV and the proceeds will be used to purchase raw materials overseas.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large

By Sumeet Singh

BNP Paribas (BNP FP) is looking to raise around US$680m via selling 3.5% of its stake in Shinhan Financial (055550 KS).
This will be the fourth selldown for the stock since the start of the year. It will also be the largest one of the lot, so far.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way

In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
I currently see 5 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
The estimate for one-way flow in June 2024 is US$1.22bn.

Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game

In response to Roland DG Corp (6789 JP) request, on 22 March, Taiyo said it was considering a revised offer. However, Taiyo has since remained silent.
Despite discussions with Brother Industries (6448 JP), the Board have not been able to eliminate dis-synergies concerns. The Board has left the decision to accept the Taiyo offer to shareholders.
While the Board is trying to dissuade Brother, Brother will take its offer directly to shareholders if the Taiyo offer fails. Taiyo’s behaviour suggests a reluctance to bump.

Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas

After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares).
The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons.

HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.

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Mar 26

Most Read: ZOZO Inc, HKBN Ltd, Mma Offshore, APM Human Services Internation, Samsonite, Xiaomi Corp, HD Hyundai , Tata Consultancy Svcs, SillaJen Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners
Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM
Samsonite (1910 HK): Dual-Listing Musings
China Consumption Weekly (25 Mar 2024): Xiaomi, Alibaba, Xpeng, Maoyan, JD Health, JD.com
HD Hyundai Marine Solution IPO Preview
ECM Weekly (25th Mar 2024) – TCS, Akeso, Coforge, ABSL, Tokio Marine, Trial, Migao, Mixue, Reddit
SillaJen Rights Offering Worth 34% of Outstanding Shares

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update

ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners

Marine and subsea services provider MMA Offshore (MRM AU) has entered into a Scheme with Singapore’s Cyan Renewables.
Cyan, wholly-owned by Seraya Partners, is offering A$2.60/share in cash, a 11% premium to last close and a 31% premium to the 90-day VWAP.
MMA shareholder approval and FIRB are the key conditions. This Offer will tentatively complete mid-late July.

Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: APM Human Services Internation (APM AU), Chilled & Frozen Logistics Holdings (9099 JP), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU).
Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).

Samsonite (1910 HK): Dual-Listing Musings

It seems like every week, Bloomberg reports a HK-listed company weighing privatisation options. HKBN (1310 HK), ESR (1821 HK), and Samsonite (1910 HK) have all been rumoured of late.
Last Friday, Samsonite announced it was focused on pursuing the listing of its shares on a second exchange.
No preferred exchange was mentioned. Nor whether the goal is to secure a dual primary listing, or a secondary listing. A buyout, for now, appears to be on the backburner.

China Consumption Weekly (25 Mar 2024): Xiaomi, Alibaba, Xpeng, Maoyan, JD Health, JD.com

By Ming Lu

Xiaomi released healthy financial results inspite of the shrinking market.
Alibaba Freshippo founder, Mr. Hou, retired from his role as the CEO of Freshippo.
JD began to provide aftermarket service to BYD, the largest new energy vehicle producer.

HD Hyundai Marine Solution IPO Preview

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

ECM Weekly (25th Mar 2024) – TCS, Akeso, Coforge, ABSL, Tokio Marine, Trial, Migao, Mixue, Reddit

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Trial Holdings (5882 JP) ended up doing better than we expected, while Hong Kong finally got its first US$100m+ listing for the year.
For placements, India was again at the forefront, this time with a not-so-pleasant results of Tata Consultancy Svcs (TCS IN).

SillaJen Rights Offering Worth 34% of Outstanding Shares

On 22 March, SillaJen Inc (215600 KS) announced that it will conduct a rights offering worth about 129 billion won for R&D and financials improvement.
The rights offering size is 34.5 million shares, representing 34% of total outstanding shares. The expected rights offering price is 3,750 won which is 26% lower than current price.
We would not subscribe to this rights offering and we remain negative on the company.

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Mar 25

Most Read: TSE Tokyo Price Index TOPIX, Rakuten Bank , Chilled & Frozen Logistics Holdings, Fast Retailing, Tencent, ZOZO Inc, HKBN Ltd, China Longyuan Power, APM Human Services Internation and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions
Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS
Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Last Week in Event SPACE: Fast Retailing, Giordano, C&F Logistics, Swire, Japan’s Big Dividend
HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides
Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS

The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Last Week in Event SPACE: Fast Retailing, Giordano, C&F Logistics, Swire, Japan’s Big Dividend

The trade of being short Fast Retailing (9983 JP) vs Nikkei 225 or Sector Basket is fundamentally slightly short Nikkei 225 froth.
Giordano (709 HK)‘s SGM will likely pivot off how the shareholders under Halcyon Securities vote. Digging a little deeper as to who these shareholders are, provides some (not-altogether) surprising results.
AZ-Com Maruwa Holdings (9090 JP) intends to launch a Tender Offer on Chilled & Frozen Logistics Holdings (9099 JP) without having contacted C&F first. A HOSTILE deal. Yum!

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

A shares were down small on the week. Larger caps down more. H-shares down more after a hard Friday.
Net SOUTHBOUND buying was +HK35.8bn after $21.4bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week.

Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update

ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND a net buyer every day since the end of Chinese New Year. Still. NORTHBOUND a huge net seller this week, but net buyers in size (RMB +86bn) over 8wks.
For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: APM Human Services Internation (APM AU), Chilled & Frozen Logistics Holdings (9099 JP), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU).
Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).

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Mar 24

Most Read: Yankuang Energy Group, Shenzhen New Industries Biomedical Engineering-A, ZOZO Inc, Nikkei 225, PDD Holdings, HLB Life Science, JSR Corp, Shinko Electric Industries, HKBN Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….
[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears
HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won
(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR
Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin
Japan Weekly | Real Estate Inflates; Nidec Benefits from AI
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

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

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

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

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up

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

EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….

By Nico Rosti

The Nikkei 225 INDEX has been rallying for >3 months, rising more than 28%. Is it too much, too fast?
Short-Term, if we look at the Market Reversal Matrix’s SHORT WEEKLY model for the index, it looks like it could either reverse within a couple of weeks, or stall.
Look for the ~41000 resistance area to place SHORT or hedge your LONG positions.

[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears

By Ying Pan

PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;
We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;
We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;

HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won

On 21 March, HLB Life Science announced a rights offering capital raise worth 150 billion won.
The expected rights offering price is 13,630 won (32% lower than current price of 19,930 won) and there are 11 million shares in this rights offering (10% of outstanding shares).
HLB Inc (028300 KS) is the largest controlling shareholder of HLB Life Science (067630 KS) with an 18.7% stake in the company.

(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR

I tally 52 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed this week on Smartkarma: IntelliCentrics Global Holding (6819 HK) disposal/winding-up/special dividend arb; and Chilled & Frozen Logistics Holdings (9099 JP)‘s hostile Offer.
Key updates took place on: Boral Ltd (BLD AU), Orecorp Ltd (ORR AU), Link Administration (LNK AU), and JSR Corp (4185 JP).

Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin

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: Lianlian DigiTech (2104619D CH) launches a US$78 million IPO.
Event-Driven developments: Chilled & Frozen Logistics Holdings (9099 JP), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), IntelliCentrics Global Holding (6819 HK), Sciclone Pharmaceuticals (6600 HK).

Japan Weekly | Real Estate Inflates; Nidec Benefits from AI

By Mark Chadwick

The Nikkei and Topix indexes surged by 5.63% and 5.33% reaching all-time highs
Real Estate majors were the biggest movers in Japan. Beneficiaries of higher inflation and continuation of easy monetary policy
Nidec is reinventing itself again. EV traction motors will remain a core driver, but investors can now get excited by the AI thematic

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

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Mar 23

Most Read: ZOZO Inc, Shenzhen New Industries Biomedical Engineering-A, Korea Stock Exchange Kospi Index, Samsonite, ISC Co Ltd, Chilled & Frozen Logistics Holdings, James Hardie Industries Plc, Link Administration, GoTo Gojek Tokopedia Tbk PT and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS
Samsonite (1910 HK): Leader Of The Pack
Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out
Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
Link Admin (LNK AU): 24th April Shareholder Vote
GoTo Gojek Tokopedia (GOTO IJ) – Warming Up the New Engines of Growth

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

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

Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.

Samsonite (1910 HK): Leader Of The Pack

Luggage maker Samsonite (1910 HK) is up 11.8% today, as I type, after Bloomberg reported it is working with advisers as it studies possibilities, including going private.
With the reopening of China and the ongoing recovery in travel globally, Samsonite’s net sales improved markedly across all regions. 1H23 profit gained 185.3% versus 1H22.
FY23 figures should be out in the middle of next month.

Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out

Will there be changes in April’s rebalancing? With two weeks left, two names are likely. Wonik IPS may be replaced by ISC Co Ltd, given a ₩150B market cap difference.
In the previous rebalancing, constituent changes had a notable price impact. Despite a passive flow impact of +1.0x ADTV, HPSP and EO Technics saw about a 15% 3-day return.
Wonik IPS is estimated to receive -4.0x ADTV, while ISC is expected to receive +1.0x ADTV. This is also quite similar to the previous rebalancing.

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Link Admin (LNK AU): 24th April Shareholder Vote