Most Read

The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

Roland DG (6789) – Tender Offer by Taiyo Partners – Nice Premium But Too Cheap

Taiyo Pacific Partners took the original parent company (Roland Corp (7944 JP) of Roland DG Corp (6789 JP) private in 2014. It was re-listed in 2020.
Roland DG is one of the world’s leading large format digital printer manufacturers. They also make some interesting medical devices and systemic tools, and 3D milling/printing/engraving/photo impact machines.
This TOB is at a 30.1% premium. Almost a 10yr high. But it is not expensive. And even if TPP has 20%, there is a LOT of float left over.

Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float

There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

Tesla Sold A Whopping One Car in January in South Korea

By Douglas Kim

Tesla Motors (TSLA US) sold one car in January 2024 in South Korea. In comparison, Tesla sold 1,022 vehicles in December 2023 and 13,885 units in 2023.
The key reason for the sharp plunge in vehicle sales in January has been due to the government’s slashing EV subsidies for vehicles with Chinese LFP based batteries.
Furthermore, many consumers avoided buying Tesla vehicles in January as they waited for the government’s announcements of new EV subsidies.

Screen Holdings (7735 JP): Positioning & Potential Passive Buying

SCREEN Holdings (7735 JP) could be added to a global index at the end of the month and there will be a lot of buying in the stock.
There is a fair bit of positioning for the potential passive buying and there will be supply in the stock.
However, the stock trades cheaper than its peers and a correction could provide an opportunity for long-term investors to enter the stock.

Weekly Deals Digest (11 Feb) – Lawson, Benefit One, Welbe, China TCM, L’Occitane, Hollysys

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: Ola Electric (1700674D IN) and FirstCry (0172540D IN) IPOs.
Event-Driven developments: Benefit One Inc (2412 JP), Lawson Inc (2651 JP), Welbe Inc (6556 JP), China Traditional Chinese Medicine (570 HK), L’Occitane (973 HK), Hollysys Automation Technologies (HOLI US).

Last Week in Event SPACE: Mitsui Fudosan/Oriental Land, Giordano, JSR, Pasona, Lawson, L’Occitane

Apparently Elliott is requesting Mitsui Fudosan (8801 JP) conduct a very large buyback and to sell down its stake in Oriental Land (4661 JP).
Some 17 months after the Cheng Family failed to secure 50%+ of Giordano International (709 HK), the family are now calling an SGM to install friendly directors.
TheLawson (2651 JP) deal is not terribly surprising. It’s not terribly surprising that it is being done cheaply. It IS being done too cheaply. This is bumpable by force.

Asics (7936) | Slow Out of the Blocks

By Mark Chadwick

Asics absolutely smashed the last MTP; this year they have a more measured approach
Full-Year OP guidance for FY24 is a little shy of street expectations, but this should not impact the share price
Asics has a decent runway for growth ahead and will benefit from channel mix improvements. The stock remains undervalued relative to peers

Welbe (6556 JP) – MBO by Polaris

On Thursday after the close, an entity tied to Polaris Capital announced an MBO of Welbe Inc (6556 JP). (Note this is Welbe not Welby Inc (4438 JP)).
The MBO by Tender Offer is set at ¥1,089/share is at a 29.952% premium to Thursday’s last trade. Coincidentally. It is well below where it traded 3-5 years ago.
If large domestic financial investors want a bump, we might see some fun, but I expect there is enough ownership willing to tender to get this over the hump.

Quiddity Leaderboard ASX Mar 24: Five ASX 200 Changes Possible Including One Surprise

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the March 2024 index review.
I expect one change for ASX 20, one change for ASX 100, and five changes for ASX 200 including a surprise deletion due to long term suspension of a stock.
The official index changes will be announced after the close on Friday 1st March 2024.

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Feb 11

Most Read: Chandra Asri Petrochemical, Jiangsu Hoperun Software, Suzhou Novosense Microelectron, Renesas Electronics, DISCO Corp, Semiconductor Manufacturing International Corp (SMIC), ASICS Corp, Infosys Ltd, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45 Index Rebalance: Four Changes for Each Index
ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow
STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact
Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45
Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
Where Are We In the Global Liquidity Cycle?
China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon
Asics (7936) | Slow Out of the Blocks
Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float
Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings

IDX30/LQ45 Index Rebalance: Four Changes for Each Index

There are 4 changes each for the IDX30 Index and the LQ45 Index at the upcoming rebalance to be implemented at the close on 31 January.
The largest passive inflows are expected in Indofood CBP Sukses (ICBP IJ), Merdeka Battery Materials (MBMA IJ), Indah Kiat Pulp & Paper (INKP IJ) and Pertamina Geothermal Energy (PGEO IJ).
With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Names Increases Flow

Nearly halfway through the review period, we forecast 7 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
Some of the potential changes will also have passive flows from the CSI 500 Index trackers at the same time as the ChiNext Index rebalance.
The potential inclusions and deletions have slipped over the last couple of months along with the ChiNext Index, but the potential inclusions have outperformed as the deletions have dropped more.

STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact

The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.
The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.

Index Rebalance & ETF Flow Recap: CSI300, CSI500, SSE50, ChiNext, KOSPI200, Renesas, IDX30/LQ45

The review period for the NIFTY family of indices, Nikkei 225, STAR50, the KRX New Deal Index and a global index ends on 31 January.
The January rebalance of the IDX30 and LQ45 indices will be implemented at the close of trading on 31 January.
There have been huge inflows into the CSI 300 Index ETFs for another week. This will increase the impact on the index changes at the next rebalance.

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

Where Are We In the Global Liquidity Cycle?

By Michael J. Howell

January 2024 another strong month for Global Liquidity which hits US$171.7 trillion
US Fed and China’s PBoC are in the forefront of adding liquidity
Global Liquidity Cycle trough in October 2022. Next peak late-2025

China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon

By William Keating

Both SMIC & Hua Hong reported Q423 earnings in line with expectations and both guided Q124 flat to slightly down. SMIC expects FY24 mid single digit growth YoY.
The downturn has exposed inherent weakness in China’s Semi Foundry segment relative to peers as exemplified by the significant GM disparity
China’s two leading semi foundries have ~80% domestic dependence. Right now, that’s a headwind

Asics (7936) | Slow Out of the Blocks

By Mark Chadwick

Asics absolutely smashed the last MTP; this year they have a more measured approach
Full-Year OP guidance for FY24 is a little shy of street expectations, but this should not impact the share price
Asics has a decent runway for growth ahead and will benefit from channel mix improvements. The stock remains undervalued relative to peers

Index Rebalance & ETF Flow Recap: STAR100, NEXT50, LowVol30, KOSPI200, TW50, NWD, ITC, India Float

There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings

By Aki Matsumoto

There are 167 companies of 1,784 companies in Metrical Universe (12/2023) with major shareholders holding over 50% stake, and 605 companies with major shareholders holding between 20% and 50% stake.
TSE has requests listed parent companies, listed subsidiaries, and affiliates to disclose the significance of parent-subsidiary (affiliates) listings. This will further increase pressure for the dissolution of parent-subsidiary (affiliates) listings.
Hitachi’s transformation into value-creating company, which once spawned numerous listed subsidiaries, has been a success story since it began full-fledged “selection and concentration” process through the dissolution of parent-subsidiary listings.

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Feb 10

Most Read: DISCO Corp, Shanghai Shenzhen CSI 300 Inde, Benefit One Inc, Pacific Metals, ITC Ltd, Woori Financial Group , Korea Stock Exchange KOSPI 200, Pasona Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive
China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up
Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small
Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San
JAPAN ACTIVISM: Murakami-San Does a Rug-Pull on Pac Metals (5541)…. Again
ITC Ltd (ITC IN): Impact of BAT’s Potential Stake Sale
Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer
Investigating Potential Block Deals Involving Korea’s Financial Holding Companies
Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March
Get Your Pasona (2168 JP) Rump For Free

Index Rebalance & ETF Flow Recap: N225, ASX, STAR50, NIFTY50, KRX New Deal, UOL SP, Korea Passive

The review period for a global index and a bunch of local indices ended last week. The announcement of the changes will be made in 1 week to 4 weeks.
Strike Energy (STX AU) will replace Costa Group Holdings (CGC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 8 February.
The inflows to mainland China ETFs continue for another week. There were big inflows to iShares India ETF (INDA US) and Ishares India Small-Cap (SMIN US).

China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up

Nearly US$37bn has flowed into mainland China listed ETFs since 2 January and could be driven by the National Team supporting the market. Central Huijin has announced their ETF buying.
Most of the inflows have been focused on large cap indices including CSI 300, SSE50, CSI 500, CSI 1000, ChiNext, STAR50 and Chinext50 indices.
While the inflows were initially focused on the CSI 300, there has been a diversification recently with big inflows to the SSE50, CSI 500, CSI 1000 and ChiNext indices.

Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small

Post-Close, the Nikkei carried a breathless headline that Dai Ichi Life Insurance (8750 JP) had agreed a deal for Pasona Group (2168 JP)‘s stake in Benefit One Inc (2412 JP).
Not long afterwards, TDNet Filings provided Benefit One results, a change to BeneOne’s Opinion on the M3 Offer, and Board Resolution to Support/Recommend DIL’s TOB, now at ¥2,173 and ¥1,526/share.
Looks like a done deal. And this will also likely delay the start of the DIL Bid to 26-28 February timeframe.

Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San

Today, Dai Ichi Life Insurance (8750 JP) announced a TOB for Benefit One Inc (2412 JP) having agreed a deal with Pasona Group (2168 JP) to sell into a buyback.
Pasona will get ¥1,526/share, and having agreed, it announced the expected special profit to be booked in the FY to 31 May 2024.
At ¥113.6bn on a consolidated basis (¥122.3bn on parent), less ¥1.165bn of associated costs, that’s ¥112.4bn at the lower end. That’s ¥2,870/share. Then there’s the rest of the business.

JAPAN ACTIVISM: Murakami-San Does a Rug-Pull on Pac Metals (5541)…. Again

A couple of weeks ago I wrote here about noted activist Murakami-san and his new 5+% position in Pacific Metals (5541 JP). I warned it might be a rug pull.
It turns out, from subsequent filings, that it may have been a rug pull. This isn’t the first time. It isn’t even the first time on this stock.
That said, there are goings on here, and it pays to watch them.

ITC Ltd (ITC IN): Impact of BAT’s Potential Stake Sale

British American Tobacco (BATS LN) owns 29.03% of ITC Ltd (ITC IN) and could sell a portion of its stake. But BAT will hold at least 25% of the company.
British American Tobacco (BATS LN) paring its stake could also lead to SUUTI gradually reducing its own holding in the company.
Any stake sales would not result in buying from global passive trackers while there will be small buying from local index trackers. Increased float could pressure the stock.

Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer

Benefit One Inc (2412 JP) has recommended Dai Ichi Life Insurance (8750 JP)’s revised offer of JPY2,173, a 2.4% and 90.1% premium to the previous offer and undisturbed price, respectively.
The Board and Pasona Group (2168 JP) secured the highest price. M3 Inc (2413 JP) tabled an alternative proposal but Pasona had concerns about the plan’s tax treatment.
Based on the irrevocables, the minimum acceptance condition requires a 31.6% minority acceptance rate, achievable due to the high premium and the competitive bidding process.

Investigating Potential Block Deals Involving Korea’s Financial Holding Companies

Stake sales by Affinity and Bearing PE are attractive due to the absence of special partnerships with Shinhan Financial Group, indicating favorable exit potential at current stock prices.
KB Financial draws attention due to Carlyle’s ₩240B EB investment in 2020. Carlyle can now convert to shares at ₩48,000/share, yielding 37.08%.
Woori Financial is intriguing. IMM PE and Eugene PE hold stakes, investing ₩450B and ₩386B respectively. Their yields are 32.55% and 10.45% respectively. No constraints on divestment.

Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to four changes in the KOSPI 200 index in the run up to the June 2024 index rebal event including an intra-review fast entry change.

Get Your Pasona (2168 JP) Rump For Free

Dai Ichi (8750 JP) agreed with Pasona (2168 JP) for Pasona to sell its shares back to Benefit One (2412 JP) in a buyback after Dai-Ichi’s Tender Offer for Benefit.
This process gives Pasona a tax advantage versus selling into a Tender Offer at the same price.
What does Pasona take home? ~¥2,822/share versus its last price of ¥2,733/share. Then you have stubs ops (conservatively worth up to ~¥1,960/share) and Pasona’s stake in Bewith (9216 JP) (~¥360/share).

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Feb 09

Most Read: L’Occitane, Shanghai Shenzhen CSI 300 Inde, Benefit One Inc, Pasona Group, China Traditional Chinese Medicine, Woori Financial Group , Korea Stock Exchange KOSPI 200, Thai Credit Bank PCL, Welbe Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

L’Occitane (973 HK): Here We Go Again
China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up
Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small
Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San
TCM (570 HK): We’ve Been Here Before
Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer
Investigating Potential Block Deals Involving Korea’s Financial Holding Companies
Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March
Thai Credit Bank IPO Trading – Half the Deal Already Spoken For, the Other Half Should Be Liquid
Welbe (6556 JP): Polaris Capital-Backed MBO Tender Offer at JPY1,089

L’Occitane (973 HK): Here We Go Again

From 2018 onward, French beauty retailer L’Occitane (973 HK) has apparently drawn interest from the likes of Advent International and its controlling shareholder Chairman Reinold Geiger – amongst others.
There is substance to these “Offers” – Geiger confirmed in August 2023 he was contemplating a conditional voluntary general Offer. He holds 72.65% of shares out according to the HKEx.
The latest news, with no definitive source, is that Blackstone is mulling the possibility of teaming up with Geiger on a buyout.

China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up

Nearly US$37bn has flowed into mainland China listed ETFs since 2 January and could be driven by the National Team supporting the market. Central Huijin has announced their ETF buying.
Most of the inflows have been focused on large cap indices including CSI 300, SSE50, CSI 500, CSI 1000, ChiNext, STAR50 and Chinext50 indices.
While the inflows were initially focused on the CSI 300, there has been a diversification recently with big inflows to the SSE50, CSI 500, CSI 1000 and ChiNext indices.

Dai-Ichi Life for Benefit One (2412) – We Have a Deal! Bumped Small

Post-Close, the Nikkei carried a breathless headline that Dai Ichi Life Insurance (8750 JP) had agreed a deal for Pasona Group (2168 JP)‘s stake in Benefit One Inc (2412 JP).
Not long afterwards, TDNet Filings provided Benefit One results, a change to BeneOne’s Opinion on the M3 Offer, and Board Resolution to Support/Recommend DIL’s TOB, now at ¥2,173 and ¥1,526/share.
Looks like a done deal. And this will also likely delay the start of the DIL Bid to 26-28 February timeframe.

Pasona (2168) – Less Wrong Than Before But How Wrong Still Depends on Nambu-San

Today, Dai Ichi Life Insurance (8750 JP) announced a TOB for Benefit One Inc (2412 JP) having agreed a deal with Pasona Group (2168 JP) to sell into a buyback.
Pasona will get ¥1,526/share, and having agreed, it announced the expected special profit to be booked in the FY to 31 May 2024.
At ¥113.6bn on a consolidated basis (¥122.3bn on parent), less ¥1.165bn of associated costs, that’s ¥112.4bn at the lower end. That’s ¥2,870/share. Then there’s the rest of the business.

TCM (570 HK): We’ve Been Here Before

China Traditional Chinese Medicine (570 HK) (“TCM”) is the traditional Chinese medicine arm of SASAC-managed China National Pharmaceutical Group Corporation (CNPGC), one of the largest healthcare groups in China.
By my reckoning, TCM has fielded three Offers in the past decade, all from Sinopharm Hongkong, an indirect wholly-owned subsidiary of CNPGC and TCM’s major shareholder.
TCM was suspended “pursuant to the Code on Takeovers and Mergers” earlier today. The Real McCoy? A no-deal again from CNPGC/Sinopharm? And why didn’t the last Offers complete?

Benefit One (2412 JP): Dai-Ichi Life (8750 JP) Prevails with a JPY2,173 Offer

Benefit One Inc (2412 JP) has recommended Dai Ichi Life Insurance (8750 JP)’s revised offer of JPY2,173, a 2.4% and 90.1% premium to the previous offer and undisturbed price, respectively.
The Board and Pasona Group (2168 JP) secured the highest price. M3 Inc (2413 JP) tabled an alternative proposal but Pasona had concerns about the plan’s tax treatment.
Based on the irrevocables, the minimum acceptance condition requires a 31.6% minority acceptance rate, achievable due to the high premium and the competitive bidding process.

Investigating Potential Block Deals Involving Korea’s Financial Holding Companies

Stake sales by Affinity and Bearing PE are attractive due to the absence of special partnerships with Shinhan Financial Group, indicating favorable exit potential at current stock prices.
KB Financial draws attention due to Carlyle’s ₩240B EB investment in 2020. Carlyle can now convert to shares at ₩48,000/share, yielding 37.08%.
Woori Financial is intriguing. IMM PE and Eugene PE hold stakes, investing ₩450B and ₩386B respectively. Their yields are 32.55% and 10.45% respectively. No constraints on divestment.

Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to four changes in the KOSPI 200 index in the run up to the June 2024 index rebal event including an intra-review fast entry change.

Thai Credit Bank IPO Trading – Half the Deal Already Spoken For, the Other Half Should Be Liquid

By Clarence Chu

Thai Credit Bank PCL (3674238Z TB) raised around US$281m in its Thailand IPO.
TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
We had looked at the firm’s past performance and shared our thoughts on TCB’s valuation in earlier notes. In this note, we will look at the trading dynamics.

Welbe (6556 JP): Polaris Capital-Backed MBO Tender Offer at JPY1,089

Welbe Inc (6556 JP) has recommended a Polaris Capital-sponsored MBO tender offer of JPY1,089 per share, a 30.0% premium to the undisturbed price (8 February).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 46.67% ownership ratio.
Based on the irrevocables, the minimum acceptance condition requires a 30.1% minority acceptance rate. While a knockout offer, the acceptance condition is achievable.

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Feb 08

Most Read: Budweiser Brewing APAC , Lawson Inc, L’Occitane, Nissan Motor, New World Development, Korea Stock Exchange KOSPI 200, China Traditional Chinese Medicine and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang
The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private
Lawson & KDDI: Not Just Because Japanese E-Commerce Is an Omnichannel Model
L’Occitane (973 HK): Here We Go Again
Nissan’s Renault Led Selldown Updates – Lack of Ampere Listing Brings Back the US$4bn Overhang
New World Development (17 HK): Stock Trading Cheap as Passive Selling Nears
An Optimal Way to Sourcing and Screening Data for Low PBR Theme Stocks in Korea
Quiddity Primer for KOSPI 200 Index Rebal Events (2024)
China Traditional Chinese Med (570 HK): Third Time’s the Charm as Sinopharm Revives Its Interest?
China Traditional Chinese Medicine (570.HK) – Will This Privatization Rumor Come True ?

Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang

Budweiser Brewing APAC (1876 HK) has seen investors run for the hills over the last year. The halving of the stock price could mean deletion from passive portfolios.
Other Hong Kong listed brewers, China Resources Beer Holdings (291 HK) and Tsingtao Brewery Co Ltd H (168 HK) have been beaten down too and have underperformed their Asian peers.
The deletion from passive portfolios could provide a buying opportunity in Budweiser Brewing APAC (1876 HK) at the end of February (or earlier if the stock drops due to positioning).

The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private

Today, just before the close, the Nikkei sprung a headline saying KDDI Corp (9433 JP) would take over Lawson Inc (2651 JP). The stock immediately headed to limit up.
Post-Close, details emerged. KDDI will buy the 50% that MitCorp does not own, this will become a 50/50 JV. TOB launch at ¥10,360 will be in April. Squeezeout in September.
This appears to be the Next Step in Lawson’s Big Boots Adventure. The premium is too light. The price is too low. And that is not counting the synergies.

Lawson & KDDI: Not Just Because Japanese E-Commerce Is an Omnichannel Model

By Michael Causton

KDDI’s agreement with Lawson and Mitsubishi to make a tender offer for the convenience store chain is a game-changer for what has become a slow growth convenience store sector.
There are myriad potential synergies across e-commerce, new store types and also the promising new revenue stream of retail media. Lawson may be worth more than KDDI’s offer suggests.
And while Lawson may be behind Seven Eleven and Familymart, on some KPIs, like HQ revenues, it is No. 1 and also matches Seven Eleven on same-store sales.

L’Occitane (973 HK): Here We Go Again

From 2018 onward, French beauty retailer L’Occitane (973 HK) has apparently drawn interest from the likes of Advent International and its controlling shareholder Chairman Reinold Geiger – amongst others.
There is substance to these “Offers” – Geiger confirmed in August 2023 he was contemplating a conditional voluntary general Offer. He holds 72.65% of shares out according to the HKEx.
The latest news, with no definitive source, is that Blackstone is mulling the possibility of teaming up with Geiger on a buyout.

Nissan’s Renault Led Selldown Updates – Lack of Ampere Listing Brings Back the US$4bn Overhang

By Sumeet Singh

One year ago we looked at the arrangement between Nissan (7201 JP) and Renault (RNO FP) regarding their relationship, which left Renault with a 28% Nissan stake to be sold.
Since then, Renault has undertaken one selldown but its recent announcement of Ampere’s listing cancellation once again raises the possibility of a further selldown of Nissan’s stake by Renault.
In this note, we talk about the updates since our previous note and the impact of the Ampere listing delay.

New World Development (17 HK): Stock Trading Cheap as Passive Selling Nears

New World Development (17 HK) stock has continued to drop and the decrease in market cap should result in selling from passive trackers at the end of the month.
New World Development (17 HK) has underperformed its peers and now trades at cheaper valuations on most parameters.
Passive trackers will need to sell over 100m shares of New World Development. That could provide liquidity for investors that see value and for shorts to cover their positions.

An Optimal Way to Sourcing and Screening Data for Low PBR Theme Stocks in Korea

We can use KRX to access PER, PBR, and dividend yield. However, except for PER, the data, being based on the most recent information, limits its usefulness for proactive positions.
So, we should look into FnGuide, which aggregates and provides exclusive consensus data. This website also requires payment for access.
However, FnGuide provides some data for free, including PBR. Therefore, we can make use of this within the scope of its free offerings.

Quiddity Primer for KOSPI 200 Index Rebal Events (2024)

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
KOSPI 200 is also used as the underlying index for various financial products such as ETPs, ELS, index funds, and futures/options.
In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of KOSPI 200 index rebalance baskets.

China Traditional Chinese Med (570 HK): Third Time’s the Charm as Sinopharm Revives Its Interest?

Bloomberg reports that Sinopharm is reviving its interest in privatising China Traditional Chinese Medicine (570 HK)/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.
Sinopharm’s best bet is to partner with Ping An Insurance Group of (601318 CH) and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.
Due to Sinopharm’s previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.

China Traditional Chinese Medicine (570.HK) – Will This Privatization Rumor Come True ?

By Xinyao (Criss) Wang

We once again heard privatization rumor of China TCM, but China TCM denied it at this stage. We still recommend investors to remain vigilant until receive definite official announcement.
One important background of privatization is the integration of SOE carried out in recent years. We do not rule out the possibility that Taiji Group would drive this privatization.
It may not be an optimal time for the proposal of privatization by major shareholders. Other shareholders may not want to give up high-quality stocks, which makes privatization challenging.

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Feb 07

Most Read: Mitsui Fudosan, Lawson Inc, Infosys Ltd, Giordano International, Oriental Land, Hainan Jinpan Smart Technology, L’Occitane, Silver Lake Resources, Power Finance and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)
The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private
India: Free Float Changes & Passive Flows in February
Lawson (2651 JP): KDDI Corp (9433 JP) Pre-Conditional Tender Offer at JPY10,360
Cheng Family Seeks Board Control Of Giordano (709 HK)
Oriental Land: A Storm Brewing from Activist Coalition
STAR100 Index Rebalance Preview: High Risk/Return Trade Setup
L’Occitane (973 HK): Blackstone Pondering an Offer
Red 5/Silver Lake: US$1.5bn Aussie Gold Merger
NIFTY NEXT50 Index Rebalance Preview: Potential Adds Continue to Run

JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)

The FT carries an article this AM saying Elliott Management have built a stake in Mitsui Fudosan (8801 JP) and has asked it to undertake measures to increase ROE.
Measures requested apparently include a very large buyback and a demand the company sell down its stake in Oriental Land (4661 JP). The article is worth reading.
Shares are up sharply on this news. The fund was in the news last year about this time regarding Dai Nippon Printing (7912 JP). I’d expect more noise to come.

The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private

Today, just before the close, the Nikkei sprung a headline saying KDDI Corp (9433 JP) would take over Lawson Inc (2651 JP). The stock immediately headed to limit up.
Post-Close, details emerged. KDDI will buy the 50% that MitCorp does not own, this will become a 50/50 JV. TOB launch at ¥10,360 will be in April. Squeezeout in September.
This appears to be the Next Step in Lawson’s Big Boots Adventure. The premium is too light. The price is too low. And that is not counting the synergies.

India: Free Float Changes & Passive Flows in February

Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-December.
The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
There are 15 stocks that could have passive inflows from global trackers while 9 could see passive outflows in February.

Lawson (2651 JP): KDDI Corp (9433 JP) Pre-Conditional Tender Offer at JPY10,360

Lawson Inc (2651 JP) has recommended a pre-conditional tender offer from KDDI Corp (9433 JP) at JPY10,360 per share, an 18.8% premium to the undisturbed (5 February).
The pre-conditions relate to regulatory approvals in Japan, China, South Korea, and the EU. The offer is expected to start in April, suggesting no significant issues, particularly with SAMR approval.
Based on the irrevocables, the minimum acceptance condition requires a 30.2% minority acceptance rate, achievable as the offer represents an all-time high.

Cheng Family Seeks Board Control Of Giordano (709 HK)

Some 17 months after the Cheng Family failed to secure 50%+ of Giordano International (709 HK), the family are now calling an SGM to install friendly directors.
Sino Wealth, a Cheng family’s vehicle with 24.06% of shares, has requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus appoint three other NEDs/INEDs.
If this were to come to pass, the family would have (almost) effective control of the board. The vote will be close. And David Webb is now below 5%.

Oriental Land: A Storm Brewing from Activist Coalition

By Oshadhi Kumarasiri

Activist investor, Elliott Management has acquired over a 2% stake in Mitsui Fudosan (8801 JP) and is urging it to sell its 6% stake in Oriental Land (4661 JP).
Elliott appears to have identified the path of least resistance, as Mitsui Fudosan had already indicated a willingness to sell its Oriental Land shares last year.
If Elliott’s campaign proves successful, it will inadvertently benefit Palliser, which is currently challenging Keisei Electric Railway Co (9009 JP) with a similar proposal.

STAR100 Index Rebalance Preview: High Risk/Return Trade Setup

The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
There are 10 stocks in inclusion zone and 11 in deletion zone. There should be 10 changes since that is the cap for the maximum changes at a single rebalance.
The potential adds and deletes are down between 37-47% over the last 6 months and a long/short trade could provide superior risk-adjusted returns.

L’Occitane (973 HK): Blackstone Pondering an Offer

Bloomberg reports that L’Occitane (973 HK) draws takeover interest from Blackstone (BX US), which is considering partnering with Chairman and largest shareholder Reinold Geiger.
Blackstone needs an attractive takeover premium due to the presence of significant disinterested shareholders (Mr. Geiger and Acatis KVG).
Shareholders will be wary of the latest rumour due to Mr Geiger’s aborted offer on 4 September 2023. Nevertheless, the valuation is undemanding compared to peer multiples.

Red 5/Silver Lake: US$1.5bn Aussie Gold Merger

Aussie gold miners Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a “merger of equals” via a Scheme of Arrangement.
Red is offering 3.434 new shares for every SLR share, and will hold ~51.7% of the merged entity, with SLR shareholders holding the remaining 48.3%.
This has the unanimous backing of both boards. Yet SLR appears to be given short shrift on the merger ratio. Plus SLR holds ~11.9% of shares out in Red.

NIFTY NEXT50 Index Rebalance Preview: Potential Adds Continue to Run

With the review period for the March rebalance complete, there could be 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 28.6bn. Four inclusions will have over 1x ADV to buy; five deletions will have 2.5x+ ADV to sell.
The potential adds have outperformed the potential deletes by 28.6% over the last month. With positioning from a rebalance perspective mostly done, gradually unwind over the next few weeks.

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Feb 06

Most Read: JSR Corp, Korea Stock Exchange Kospi Index, Mitsui Fudosan, BayCurrent Consulting , Red 5 Ltd, Isetan Mitsukoshi Holdings Ltd, Alchip Technologies, SK Innovation, CELSYS, Infosys Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria
Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch
JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)
Japan – Increasing Shorts on Some Interesting** Stocks
RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)
Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
Taiwan Top 50 ETF Rebalance Preview: Short Covering Drives Alchip (3661 TT) Higher
SK Innovation: Announces Share Cancellation of Nearly 4.92 Million Shares
TOPIX Inclusions: Who Is Ready (Feb 2024)
India: Free Float Changes & Passive Flows in February

JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria

JSR Corp (4185 JP) announced 2 February on its website that the Research Foundation for the State University of New York (“RF SUNY”) filed suit against JSR subsidiary Inpria 25 January.
JSR claims no wrongdoing. A court order from the US District Court for the Northern District of New York denied RF SUNY’s request for a hearing by 5 February.
This may put a short-term damper on sentiment in the name, and I expect the JICC people have been working on this for a week.

Korea’s Short Selling Ban to Stay, Likely Until EquiLend-Korean Version Launch

Local market information indicates potential collaboration between KRX, FSS, and KSD to create a Korean EquiLend, aiming to centralize the stock lending channel.
Unprecedented globally, President Yoon aims to centralize short selling. The challenge lies in mandating foreign investors to use Korea’s platform, necessitating a complex legal framework.
Despite the difficulty, local authorities are compelled to pursue this initiative, raising the likelihood of a Korean EquiLend. Developing strategic plans in response is imperative.

JAPAN ACTIVISM: Activist Elliott Takes on Mitsui Fudosan (8801)

The FT carries an article this AM saying Elliott Management have built a stake in Mitsui Fudosan (8801 JP) and has asked it to undertake measures to increase ROE.
Measures requested apparently include a very large buyback and a demand the company sell down its stake in Oriental Land (4661 JP). The article is worth reading.
Shares are up sharply on this news. The fund was in the news last year about this time regarding Dai Nippon Printing (7912 JP). I’d expect more noise to come.

Japan – Increasing Shorts on Some Interesting** Stocks

There are some Japanese stocks that have dropped in price even as the broader market has powered higher. That could lead to the stocks being deleted from global portfolios.
The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
BayCurrent Consulting (6532 JP) is a dark horse for inclusion in the Nikkei 225 (NKY INDEX) in March and this deletion could take the stock lower before the Nikkei 225 announcement.

RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)

Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a Merger of Equals that would create a mid-tier gold company.
Red 5 will acquire 100% of the shares in Silver Lake Resources and Silver Lake shareholders will receive 3.434 RED5 shares for each Silver Lake share held.
The swap ratio is near the bottom of the historical price range of the stocks and it is no wonder that Silver Lake Resources (SLR AU) is being sold today.

Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback

Isetan Mitsukoshi Holdings Ltd (3099 JP) on Friday announced Q3 results, a huge hike in H2 dividend (from ¥12/share guided to ¥20/share newly guided), and a buyback.
9mo Revenues were up 9.4%yoy (after +16.7% the previous year), OP +66.7%, and Net Profits +59.0%yoy through three quarters. Full-year Revenues, OP, and NP were all revised up slightly.
The buyback is for up to 11mm shares, spending up to ¥15bn over the next 8 weeks. Looking at details of the shareholder structure is worthwhile.

Taiwan Top 50 ETF Rebalance Preview: Short Covering Drives Alchip (3661 TT) Higher

Alchip Technologies (3661 TT) could replace Feng Tay Enterprise (9910 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the March rebalance.
Alchip is trading 330% higher from a year ago and this inclusion will come on the heels of the stock being added to global indices in second half of 2023.
Short interest in Alchip Technologies (3661 TT) has more than halved over the last week and the stock price has moved higher.

SK Innovation: Announces Share Cancellation of Nearly 4.92 Million Shares

By Douglas Kim

On 5 February, SK Innovation (096770 KS) announced a large-scale shares cancellation of 4.92 million shares, representing 4.9% of outstanding shares.
This is the first ever large scale shares cancellation for SK Innovation since it was first established in 2011.
All in all, despite the company’s disappointing results in 2023, the large scale share cancellation should help to support SK Innovation’s share price in the coming weeks.

TOPIX Inclusions: Who Is Ready (Feb 2024)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
The TOPIX Inclusion events of Visional (4194 JP) and Furuya Metal (7826 JP) took place at the end of January and the price performances were mostly in line with expectations.
Currently, there are no upcoming TOPIX Inclusion events that have been announced officially but there are couple of pre-event names that should be on your watchlist.

India: Free Float Changes & Passive Flows in February