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Most Read

Jan 31
0

Most Read: Benefit One Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

By Arun George

  • Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
  • The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
  • The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high. 

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Jan 30
0

Most Read: Hyundai Steel and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Identifying Specific Implementation Plans for Korea’s Low-PBR Improvement Policy

Identifying Specific Implementation Plans for Korea’s Low-PBR Improvement Policy

By Sanghyun Park

  • The Korean government has introduced policies ahead of April’s elections, with a recent notable announcement addressing the “Korea Discount” by enhancing low PBR stock valuations.
  • A leading proposal involves creating an index of low PBR companies. There are hints of listing ETFs tracking this index, with potential directives compelling pension funds to invest.
  • Identifying early inclusions is vital. High-likelihood candidates are low PBR large caps with maintained earnings, dividends/share buyback potential, including Hyundai Dept, E-Mart, Hyundai Steel, IBK, Korean Re, & DL E&C.

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Jan 29
0

Most Read: Ping An Insurance (H) and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal

Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal

By Brian Freitas

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Jan 28
0

Most Read: Jiangsu Zhongtian Technologies Co, Ltd., Prudential and more

By | Daily Briefs, Most Read

In today’s briefing:

  • CSI300 Index Rebalance Preview: A Dozen Changes for June
  • APAC Insurers Series (#4): How We See the 3 Insurance Stocks in 2024

CSI300 Index Rebalance Preview: A Dozen Changes for June

By Brian Freitas

  • With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
  • We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
  • There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.

APAC Insurers Series (#4): How We See the 3 Insurance Stocks in 2024

By Alec Tseung

  • PICC P&C’s Q3 underwriting profitability deteriorated due to typhoon/catastrophe-related losses in both motor and non-motor business.
  • Samsung Life’s new business growth momentum continued in Q3’23; new business CSM margin slightly improved QoQ.
  • Prudential disclosed limited details in its Q3 results but we can see the growth trend of new business volume and profits continuing in the quarter.

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Jan 26
0

Most Read: Shanghai RAAS Blood Products C and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Haier Group to Buy $1.8B Stake in Shanghai RAAS from Grifols – A New Chapter Begins

Haier Group to Buy $1.8B Stake in Shanghai RAAS from Grifols – A New Chapter Begins

By Xinyao (Criss) Wang

  • Geopolitical risks have led to foreign companies planning to withdraw from China.It’s also difficult to allow foreign companies to control China’s core strategic assets.So, Grifols and RAAS’ “breakup” is inevitable.
  • This acquisition is an important milestone in the development of Haier’s big health industry. RAAS’s valuation also has room to rise further after being acquire by Haier due to synergies.
  • In the case of slowing growth in the home appliance market, this is a wise move for Haier.However, potential goodwill impairment in GDS is a risk for Haier/RAAS and investors.

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Jan 25
0

Most Read: Kasumigaseki Capital and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Kasumigaseki Capital (3498 JP) – An Offering Worth Examining

Kasumigaseki Capital (3498 JP) – An Offering Worth Examining

By Travis Lundy

  • Kasumigaseki Capital is a small cap consulting real estate speculator/developer. They have an interesting, aggressive model. People will recognise the model from pre-GFC but this one is structured better.
  • The company had planned explosive growth and in October, brought growth plans forward and guidance way up. Now there is an offering to fund that growth. 
  • It appears to also be an offering to get a very large short position out of a risk of potential squeeze. For that, I expect this goes smoothly.

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Jan 24
0

Most Read: Mitsubishi UFJ Financial (MUFG), Kunlun Tech and more

By | Daily Briefs, Most Read

In today’s briefing:

  • TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
  • CSI500 Index Rebalance Preview: High Turnover & Big Flow

TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool

By Travis Lundy

  • A few days ago, 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】
  • That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy. 
  • Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better. 

CSI500 Index Rebalance Preview: High Turnover & Big Flow

By Brian Freitas

  • With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
  • There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
  • The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.

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Jan 23
0

Most Read: Shinko Electric Industries, Furuya Metal, Ping An Insurance (H), Mitsubishi UFJ Financial (MUFG), Jiangsu Zhongtian Technologies Co, Ltd., Asmedia Technology, T&K Toka Co Ltd, L&F Co Ltd, Kunlun Tech , Amer Sports and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain
  • Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang
  • Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal
  • TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
  • CSI300 Index Rebalance Preview: A Dozen Changes for June
  • ASMedia Placement – Momentum Has Been Strong, but an Overhang Exists
  • T&K TOKA (4636 JP): Bletcherous Bain Bump Doesn’t Even Reach Blandiloquent – Another Offensive Deal
  • KOSDAQ150 Adhoc Index Rebalance: Seronics to Replace L&F
  • CSI500 Index Rebalance Preview: High Turnover & Big Flow
  • Amer Sports (AS US) IPO: Valuation Insights

Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain

By Travis Lundy

  • The JIC Deal for Shinko Electric Industries (6967 JP) started trading wide when announced five weeks ago. It is still at 9% for perhaps 9 months.
  • There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
  • 5 weeks ago, there was more positioning risk than fundamental risk. But now main comp Ibiden has outperformed Shinko by 17%. Gap risk is fundamentally lower now. Bump risk exists.

Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang

By Janaghan Jeyakumar, CFA

  • On 16th November 2023, Tokyo-based Industrial-use precious metal products manufacturer Furuya Metal (7826 JP) announced they would be moving from TSE Standard to TSE Prime on 6th December 2023.
  • This move would trigger a TOPIX Index Inclusion event at the end of January 2024 which would require all the TOPIX-tracking passive funds to buy shares in the company.
  • The company also launched an offering in conjunction with the TSE Prime announcement. In this insight, we take a look at the flow dynamics of the upcoming TOPIX Inclusion event.

Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal

By Brian Freitas

TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool

By Travis Lundy

  • A few days ago, 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】
  • That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy. 
  • Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better. 

CSI300 Index Rebalance Preview: A Dozen Changes for June

By Brian Freitas

  • With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
  • We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
  • There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.

ASMedia Placement – Momentum Has Been Strong, but an Overhang Exists

By Clarence Chu

  • WT Microelectronics (3036 TT) is looking to raise US$256m from selling half of its stake in Asmedia Technology (5269 TT).
  • The deal wouldn’t be a very large one to process at just 3.4 days of ASMedia’s ADV.
  • Although, the selldown doesn’t appear to be particularly well flagged. The remaining WT Microelectronics’ stake will also create an overhang on ASMedia’s share price as well.

T&K TOKA (4636 JP): Bletcherous Bain Bump Doesn’t Even Reach Blandiloquent – Another Offensive Deal

By Travis Lundy

  • I expected a blandiloquent but bletcherous bump from Bain. Discussed in T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain. We got bletcherous. 
  • But at a mere ¥10 uplift to ¥1,410, we did not get blandiloquent. That’s insulting. But as suggested in the first piece, there was NAVF Risk. And we got it. 
  • NAVF agreed to sell its 24+% to Bain at ¥1,410 in return for being able to buy 15% of the bidco, fully-levered (i.e. they roll in at minimal cost). 

KOSDAQ150 Adhoc Index Rebalance: Seronics to Replace L&F

By Brian Freitas

  • L&F Co Ltd (066970 KS) will move from the KOSDAQ Market to the KOSPI Market on 29 January. That means KOSDAQ 150 Index deletion at the close on 26 January.
  • As the highest ranked non-constituent from the Information Technology sector at the December rebalance, Seronics Co Ltd (042600 KS) will be added to the index.
  • Short interest on L&F Co (066970 KS) is 1.8m shares (KRW 364bn; 4.98% of shares outstanding; 7.24% of float; 2.4x ADV). There could be recalls from passives and forced covering.

CSI500 Index Rebalance Preview: High Turnover & Big Flow

By Brian Freitas

  • With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
  • There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
  • The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.

Amer Sports (AS US) IPO: Valuation Insights

By Arun George

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Jan 22
0

Most Read: Shinko Electric Industries, Denso Corp, Budweiser Brewing APAC , Ping An Insurance (H), JSR Corp, Benefit One Inc, Activia Properties, Korea Stock Exchange KOSPI 200, Ganfeng Lithium and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain
  • The Hunt for the Japanese Laggards, Here Are 47 Attractive Companies
  • Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC
  • Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal
  • Merger Arb Mondays (22 Jan) – JSR, Benefit One, T&K Toka, Guppy’s, Genetron, Weiqiao, Probiotec
  • Last Week in Event SPACE: Benefit One, China Unicom, Zhejiang Expressway/ Zheshang Sec, Hollysys
  • Activia Properties (3279) – Short-Term Higher-Impact Buyback on Better Fundamental Results
  • Ohayo Japan | Stocks Surge; Japan’s Seven-Year Streak of Prosperity
  • KRX Introduces Market Orders for Single Stock Futures: Potential Trading Impacts
  • A/H Premium Tracker (To 19 Jan 2024):  Hs Shellacked Vs As. Near Multi-Year High Average AH Premia

Shinko Electric (6967) Takeover:  Changing Break/Gap Risk as Comps Gain

By Travis Lundy

  • The JIC Deal for Shinko Electric Industries (6967 JP) started trading wide when announced five weeks ago. It is still at 9% for perhaps 9 months.
  • There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
  • 5 weeks ago, there was more positioning risk than fundamental risk. But now main comp Ibiden has outperformed Shinko by 17%. Gap risk is fundamentally lower now. Bump risk exists.

The Hunt for the Japanese Laggards, Here Are 47 Attractive Companies

By Mohshin Aziz

  • Tokyo Stock Exchange (TSE) has published the list of companies that are conscious of stock capital and share price; this will be a recurring monthly feat 
  • The initial compliance rate is encouraging and should continue to grow as peer pressure is relentless and doing nothing is not an option. The shake-up is happening  
  • We narrow down a list of companies that are the most compelling laggard opportunities based on their low price to book ratio (PBR) and strong balance sheet  

Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC

By Brian Freitas

  • The review period for a global index commenced last week and will run through this week as well.
  • The announcement of the changes for the LQ45 Index should be announced in the coming week and will be implemented at the close on 31 January.
  • Huge inflows to CSI 300 Index trackers during the week while there was a big outflow from Tracker Fund of Hong Kong (2800 HK). 

Ping An A/​H Premium: Blow Out Could Lead to Sharp Reversal

By Brian Freitas

Merger Arb Mondays (22 Jan) – JSR, Benefit One, T&K Toka, Guppy’s, Genetron, Weiqiao, Probiotec

By Arun George

Last Week in Event SPACE: Benefit One, China Unicom, Zhejiang Expressway/ Zheshang Sec, Hollysys

By David Blennerhassett

Activia Properties (3279) – Short-Term Higher-Impact Buyback on Better Fundamental Results

By Travis Lundy

  • Activia Properties (3279 JP) announced results Wednesday. Higher DPU on better rental income looks to continue next period, but an asset disposal will produce some drag ahead.
  • Activia Properties also announced a buyback of 10% of ADV for the next four months.
  • The REIT is slightly cheap to peers. Yield spread to JGBs is high which is good. It needs to be 10% higher to restart accretive equity offerings.

Ohayo Japan | Stocks Surge; Japan’s Seven-Year Streak of Prosperity

By Mark Chadwick

  • Last week, stocks surged, propelling the S&P 500 and Dow Jones to record highs. Positive economic data and consumer sentiment overshadowed a decline in existing home sales.
  • This week, CB meetings in the eurozone, Canada, and BoJ (Tues) will shape market expectations. US earnings will further contribute to a dynamic week.
  • Japan’s equity market remains popular, but divergence from the PMI output index raises concerns of overheating. A flash PMI (Wed) report will provide insight into Japan’s growth conditions.

KRX Introduces Market Orders for Single Stock Futures: Potential Trading Impacts

By Sanghyun Park

  • KRX notified local brokerages last week about allowing market orders for single stock futures (SSF) from April. Currently, 192 SSFs are listed.
  • Anticipating short-term effects, heightened frequency and impact of erroneous orders may cause spot market confusion. KRX plans real-time bid disclosure for SSFs to prevent price distortions.
  • Nonetheless, we will likely observe SSF price volatility surges. Real-time bid exposure could exacerbate volatility due to premature information revelation. Preemptive position setups considering these factors are advised.

A/H Premium Tracker (To 19 Jan 2024):  Hs Shellacked Vs As. Near Multi-Year High Average AH Premia

By Travis Lundy

  • 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. But that didn’t help. 
  • SOUTHBOUND flows were bigly positive and NORTHBOUND flows a large net sell. Nevertheless AH Premia had their best week in ages as HK large caps, mid-caps, small-caps got shellacked.
  • Now at new 52wk wides on A premia. Now within 3% of 5+ year highs.

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Jan 21
0

Most Read: Douzone Bizon, Shriram Finance , Posco DX, LS Materials , Softbank Group, Minsheng Education, GUPPY’s Inc, Budweiser Brewing APAC , Weiqiao Textile Co, Genetron Holdings Ltd and more

By | Daily Briefs, Most Read

In today’s briefing:

  • KRX New Deal Index Rebalance Preview: Changes with Flow & Impact
  • NIFTY50 Index Rebalance Preview: One Change, Maybe Two, Low Probability of Three
  • KOSPI200 Index Rebalance Preview: Four Potential Changes in June
  • KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
  • Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward
  • Asian Dividend Gems: Minsheng Education
  • GUPPY’s (5127 JP): Medley (4480 JP) Tender Offer at JPY3,250
  • Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Genetron, Guppy, Weiqiao Textile, Taisho Pharma, T&K Toka
  • Genetron (GTH US): Wide Spread Ahead of the 21 February Vote

KRX New Deal Index Rebalance Preview: Changes with Flow & Impact

By Brian Freitas

NIFTY50 Index Rebalance Preview: One Change, Maybe Two, Low Probability of Three

By Brian Freitas

KOSPI200 Index Rebalance Preview: Four Potential Changes in June

By Brian Freitas

  • Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
  • The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
  • There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

By Brian Freitas

Softbank (9984 JP): Big Fat NAV Discount, but Headwinds Outweigh Tailwinds Going Forward

By Victor Galliano

  • SoftBank group’s headline NAV discount is over 50%, factoring in the T-Mobile shares windfall at December-end
  • SoftBank Corp is looking to IPO digital payments company PayPay, which should also be a positive driver for SoftBank Group shares going forward, but only a marginal one
  • Arm shares have been defying gravity, but we see downside risk going forward, as well as questions over SVF1 and SVF2 private company valuations; and the threat of JPY appreciation

Asian Dividend Gems: Minsheng Education

By Douglas Kim

  • Minsheng Education (1569 HK) is a highly undervalued Chinese education stock with high dividend yields. Market cap of the company has declined by nearly 90% from Jun 2018 to today. 
  • Minsheng Education’s dividend yield averaged 5.1% from 2020 to 2022. Estimated dividend yield is 14.6% in 2023.   
  • Minsheng Education mainly provides educational services in China. The company is one of the leaders of China’s private higher education industry.

GUPPY’s (5127 JP): Medley (4480 JP) Tender Offer at JPY3,250

By Arun George

  • GUPPY’s Inc (5127 JP) has recommended Medley (4480 JP)’s tender offer of JPY3,250 per share, an 81.0% premium to the undisturbed price (19 January). 
  • 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 10.19% ownership ratio. 
  • Despite the premium, the offer is light vs the IFA DCF valuation. Based on the irrevocables, the minimum acceptance condition requires a 23.4% minority acceptance rate, which is achievable. 

Index Rebalance & ETF Flow Recap: ASX, KS200, KQ150, HSIII, STTF, L&F, Costa Group, Japan, Bud APAC

By Brian Freitas

  • The review period for a global index commenced last week and will run through this week as well.
  • The announcement of the changes for the LQ45 Index should be announced in the coming week and will be implemented at the close on 31 January.
  • Huge inflows to CSI 300 Index trackers during the week while there was a big outflow from Tracker Fund of Hong Kong (2800 HK). 

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Genetron, Guppy, Weiqiao Textile, Taisho Pharma, T&K Toka

By David Blennerhassett

Genetron (GTH US): Wide Spread Ahead of the 21 February Vote

By Arun George

  • Genetron Holdings Ltd (GTH US) shareholders will vote on the consortium’s US$4.08 per ADS offer on 21 February. The offer is light in comparison to historical trading ranges.
  • Completion is conditional on shareholder approval, dissenting shareholders representing less than 15% of outstanding shares and regulatory approvals (NDRC, MoC and SAFE). 
  • Despite the light offer, the completion conditions should be met. At the last close price and end of March completion, the gross and annualised spread is 7.7% and 45.5%, respectively.

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