Most Read

The review period for the March rebalance ends on 31 January, the changes will be announced early March and implemented at the close of trading on 14 March.
There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. There are two changes for the BBIG Index.
There will be big flow on Ecopro BM (247540 KS) and Posco Future M (003670 KS) and big impact on Douzone Bizon (012510 KS) and DearU (376300 KS).

March 2024 Nikkei 225 Rebal: Socionext, Disco, and a Consumer Goods Stock, Still

No changes in the rankings since last time. Socionext (6526), Disco (6146), and a Consumer Goods stock (Zozo (3092) top-ranked, Ryohin Keikaku (7453) a better choice) are ADDs.
The DELETEs are still Takara Holdings (2531), Pacific Metals (5541), Sumitomo Osaka Cement (5232) with a dark horse candidate in Hitachi Zosen (7004) to replace Takara.
There is the upweight to Nitori (9843) but now less funkiness with Fast Retailing (9983). But it will continue being an interesting Nikkei 225 influence (for years to come).

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).

Why Is APR IPO Getting Delayed?

APR announced it will delay its IPO. Now, APR’s book building has been postponed to 2 to 8 February. The IPO price range remains the same.
The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.
Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers’ valuation range (200,000 won).

44% of Korean Stocks Are Trading Below Book Value – FSC Wants to Improve This (Following Japan)

FSC Chairman Kim Joo-hyun mentioned that too many companies in Korea are trading below book value and the FSC plans to implement changes to improve upon this issue.
According to Korea Exchange, 1,111 companies out of total listed in KOSPI and KOSDAQ in Korea (2,538) are trading at below 1x book value (PBR) (liquidation value).
According to the Capital Group, about 39% of companies in the TOPIX trade below book value, compared to just 5% for companies in the S&P 500 Index.

2024 High Conviction: TSMC (2330 TT) Is Perfectly Poised for Revenue and FCF Growth Acceleration

By Wium Malan, CFA

TSMC looks set for a significant recovery in top-line growth in 2024F, driven by continued faster-than-expected demand for its 3nm volume production leading to significantly improved overall ASP.
This should be supported by a concurrent improvement in the inventory cycle at major clients, helping recover TSMC’s utilisation back to historic norms.
Lower capital intensity, improving internal inventory levels, and accelerating top-line growth should all combine to drive record levels of Free Cash Flow generation during 2024F.

TSMC. Roaring Into Year Of The Dragon

By William Keating

Q423 revenues of $19.62 billion, at the high end of guidance, up 13.8% QoQ and down 1.5% YoY. Net profit margin of 38.2% results in net income of ~$7.5 billion.
FY23 revenues of $69.3 billion, down 8.7% YoY, only the second such down year since 2005
Bullish FY24 forecast for >20% YoY growth sends share price soaring in overnight trading.

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

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.

Genetron Holdings (GTH US): Clear Diagnosis

Back on the 11th October 2023, Genetron Holdings Ltd (GTH US), a precision oncology platform, entered into a definitive take-private transaction, at $4.08/ADS, a 15% premium to undisturbed.
The EGM for shareholders to vote on the transaction will be held on the 21 February. The record date is the 9 Feb.
This merger requires approval from at least two-thirds of the votes cast, and 59.7% are supportive. Trading at a gross spread of 7.7%. This is a clean deal.

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

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.

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Jan 19

Most Read: Fujitsu General, Douzone Bizon, Taiwan Semiconductor (TSMC), Budweiser Brewing APAC , Emperador, Taiwan Semiconductor (TSMC) – ADR, EcoPro Materials, Irc Ltd, APR and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue
KRX New Deal Index Rebalance Preview: Changes with Flow & Impact
What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors
Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang
STTF Rebalance Preview: One Potential Change in March
TSMC Results Make Buy Story Even More Clear; Strong 2024E Guidance & Reiterates Multi-Year Growth
KOSPI Size Indices – The Outperformance Continues
Spotting Position Patterns: TIGER Battery ETF January Review & KODEX ETF’s March Rebalancing
IRC (1029 HK)’s MBO’s MGO: Still An Avoid
Why Is APR IPO Getting Delayed?

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue

In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

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

The review period for the March rebalance ends on 31 January, the changes will be announced early March and implemented at the close of trading on 14 March.
There is one change currently for each of the Secondary Battery, Bio, Internet and Game indices. There are two changes for the BBIG Index.
There will be big flow on Ecopro BM (247540 KS) and Posco Future M (003670 KS) and big impact on Douzone Bizon (012510 KS) and DearU (376300 KS).

What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors

By Andrew Lu

TSMC expects 2024 semi sector in recovery with 20-25% y/y growth itself, driven by AI customers. By controlling capex, more rooms to raise dividends but no growth for equipment vendors.
Faster ramp on N3, likely N3E, N3P than competitor’s. TSMC expects 3nm from 6% of sales in 3Q23, 12.7% in 4Q23 to 15% in 2024, 3x y/y increase in 2024.
TSMC reports a nearly 30% q/q drop on IOT and consumer IC demand and sees weakness on 12″ mature technology despite better demand 8″ specialty technology.

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).

STTF Rebalance Preview: One Potential Change in March

Emperador (EMI SP) currently fails the liquidity test and could be removed from the SPDR Straits Times Index ETF (STTF SP) in March.
Frasers Centrepoint Trust (FCT SP) is currently the highest ranked non-constituent and could be added to the ETF. FCT has a 6% higher market cap compared to Olam (OLG SP).
We estimate trackers will need to buy 5 days of ADV in Frasers Centrepoint Trust (FCT SP) and sell over 37 days of ADV in Emperador (EMI SP).

TSMC Results Make Buy Story Even More Clear; Strong 2024E Guidance & Reiterates Multi-Year Growth

By Vincent Fernando, CFA

TSMC reported 4Q23 results at the upper end of its guidance. More importantly, the company guided for low/mid 20% 2024E sales growth and reiterated an expected 15-20% multi-year CAGR.
The company provided optimistic guidance for the overall semiconductor industry, forecasting 10% growth in 2024E. TSMC expects to grow much faster than the industry, however.
TSMC is one of our Structural Longs; our NT$760 target implies 29% upside. The latest results make TSMC’s Buy case even more clear, in our view.

KOSPI Size Indices – The Outperformance Continues

The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We currently see 3 migrations from MidCap to LargeCap, 3 new adds to LargeCap, 6 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

Spotting Position Patterns: TIGER Battery ETF January Review & KODEX ETF’s March Rebalancing

TIGER ETF (305540) rebalanced on January 11th, with Ecopro Materials correcting by 4%, contrasting a 20% surge from Jan 8-10. TIGER recorded net purchases aligning with a 2% inclusion weight.
Preemptive positions by local hedge funds were observed from Jan 8-10, closing on the 11th. Despite a KOSPI decline and minimal sector movement, Ecopro Materials exhibited this unusual price pattern.
Observing this pattern implies a potential recurrence during the March rebalancing of KODEX ETF. Notably, local hedge funds may initiate similar preemptive positions. We should consider this in position setup.

IRC (1029 HK)’s MBO’s MGO: Still An Avoid

Back on the 1st November, Nikolai Levitskii, Russian iron-ore play IRC (1029 HK)‘s chairman and largest shareholder, acquired 4.72% of shares out, lifting his stake above 30%, triggering an MGO.
The Offer is conditional on Levitskii holding more than 50% of shares out. His intention is to maintain IRC’s listing. At the first close, he held 35.77% (5.16% had tendered).
The current spread is 9.2%. MIC, with 16.67% of shares out, has yet to tender. Nor do I expect them to. Plus IRC is on the OFAC sanction list. Avoid.

Why Is APR IPO Getting Delayed?

APR announced it will delay its IPO. Now, APR’s book building has been postponed to 2 to 8 February. The IPO price range remains the same.
The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.
Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers’ valuation range (200,000 won).

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Jan 18

Most Read: Weiqiao Textile Co, Benefit One Inc, LS Materials , Flowing Cloud Technology, Anycolor , Alibaba (ADR), Yamae Group Holdings, Emperador and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Weiqiao Textile (2698 HK)’s Pre-Conditional Merger By Absorption
Benefit One (2412): The Plot Thickens
KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud
TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)
44% of Korean Stocks Are Trading Below Book Value – FSC Wants to Improve This (Following Japan)
Aequitas 2024 Asia IPO Pipeline – US ADRs
Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong
Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake
STTF Rebalance Preview: One Potential Change in March

Weiqiao Textile (2698 HK)’s Pre-Conditional Merger By Absorption

After shares were suspended on the 27 November, Weiqiao Textile Co (2698 HK) has now announced a pre-conditional privatisation at HK$3.50 per H-share.
This Offer, from its parent, is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
The Offer Price is a premium to last close is a hefty 104.68%. and around a six-year high. This is done.

Benefit One (2412): The Plot Thickens

Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.

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

With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.

Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud

The review cutoff date for the March rebalance of the HSIII was 29 December. The changes will be announced on 16 February and become effective after the close 1 March.
We see a high probability of Zx Inc replacing Flowing Cloud Technology (6610 HK) in the index. There is a lower probability of 4Paradigm (6682 HK) replacing CMGE Tech (302 HK).
Capping will result in passives buying Meituan (3690 HK) and selling Tencent (700 HK), Kuaishou Technology (1024 HK), JD.com (9618 HK) and Alibaba Group Holding (9988 HK).

TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)

Late last week, the TSE announced the changes in FFW for companies which have FY-end in the calendar Q2. Changes at 30 Jan close also include Phased Weighting Changes.
There are two additions and 61 upweights (including net effect of PWR/PWIs). There are 456 down-weights with two-way flows of about US$1bn. There is a tiny funding trade.
Visional (4194 JP) and Furuya Metal (7826 JP) are the two adds. Other large dollar upweights are Asahi Intecc (7747 JP) and Anycolor (5032 JP).

44% of Korean Stocks Are Trading Below Book Value – FSC Wants to Improve This (Following Japan)

FSC Chairman Kim Joo-hyun mentioned that too many companies in Korea are trading below book value and the FSC plans to implement changes to improve upon this issue.
According to Korea Exchange, 1,111 companies out of total listed in KOSPI and KOSDAQ in Korea (2,538) are trading at below 1x book value (PBR) (liquidation value).
According to the Capital Group, about 39% of companies in the TOPIX trade below book value, compared to just 5% for companies in the S&P 500 Index.

Aequitas 2024 Asia IPO Pipeline – US ADRs

In this note, we will look at the Asia Pacific IPO pipeline for 2024, following up with US ADRs, after having looked at HK, India, Japan and Korea earlier.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong

Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake

Weiqiao Textile Co (2698 HK)’s offer pre-condition is satisfied. Prudence has increased its shareholding to 3.39% of the outstanding shares (9.79% of H Shares), marginally short of a blocking stake.
The HK$3.50 offer has been declared final, which rules out a bump. Therefore, Prudence’s strategy could be to play the gross spread or to block the deal.
The Shandong Luoxin Pharmaceutical (8058 HK) precedent supports the gross spread play view. However, unlike the precedent, Prudence is marginally short of a blocking stake in Weiqiao Textile.

STTF Rebalance Preview: One Potential Change in March

Emperador (EMI SP) currently fails the liquidity test and could be removed from the SPDR Straits Times Index ETF (STTF SP) in March.
Frasers Centrepoint Trust (FCT SP) is currently the highest ranked non-constituent and could be added to the ETF. FCT has a 6% higher market cap compared to Olam (OLG SP).
We estimate trackers will need to buy 5 days of ADV in Frasers Centrepoint Trust (FCT SP) and sell over 37 days of ADV in Emperador (EMI SP).

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Jan 17

Most Read: Tongcheng Travel Holdings , Alchip Technologies, Newmont , Benefit One Inc, Suzhou Novosense Microelectron, L&F Co Ltd, Hyundai Motor, LS Materials and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
Alchip Technologies GDRs Early Look – Another Well Flagged GDR Issuance in the Pipeline
S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont
Benefit One (2412): The Plot Thickens
Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas
L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?
40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea
Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year
Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)

Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK).

Alchip Technologies GDRs Early Look – Another Well Flagged GDR Issuance in the Pipeline

Alchip Technologies (3661 TT) is looking to raise around US$375m in its upcoming global deposit receipts (GDRs) offering.
Similar to previous GDR listings, the deal is a very well flagged one, with a drawn out process of regulatory/approval loops the firm has to jump through up till issuance.
Based on its board’s approval to issue up to 4m new shares in its GDR offering, the deal is a relatively small one at just 5.4% of Alchip’s current mcap.

S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont

With over 80% of the review period complete, there could be 26 adds/deletes across the S&P/ASX family of indices in March.
The largest flow will be on Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
There will be 1.2-38 days of ADV to buy in the inclusions while the impact on the deletions will range between 1-21 days of ADV.

Benefit One (2412): The Plot Thickens

Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.

Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
I currently expect three changes for the STAR 50 index in March 2024.

L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?

Posco DX (022100 KS) rallied 50% following approval of its application to transfer from the KOSDAQ to the KOSPI market. Then the stock dropped 20% following completion of the transfer.
With L&F Co Ltd (066970 KS) applying for a section transfer a couple of weeks after Posco DX (022100 KS), approval could be imminent.
L&F Co Ltd (066970 KS) is up 46% since the start of November, but the stock has performed in line with the average of its peers.

40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea

K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.

Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year

Alchip Technologies (3661 TT) is looking to raise US$415m in its GDR offering. As per the firm, the proceeds from the GDR offering will be used to purchase raw materials.
Offering 3.7m GDRs, the deal wouldn’t be a very large one for the firm to digest at just 1.6 days of its three month ADV.
The deal is very well flagged one and momentum on the stock has been very strong.

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

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.

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

With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.

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Jan 16

Most Read: Posco DX, Zhejiang Expressway Co H, Newmont , Suzhou Novosense Microelectron, PT Avia Avian, L&F Co Ltd, China Mobile, TRYT , Porton Pharma Solutions, Fila Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KOSPI200 Index Rebalance Preview: Four Potential Changes in June
Zhejiang Expressway (576 HK): Life In The (Too) Fast Lane
S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont
Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas
PT Avia Avian (AVIA IJ) – A More Glossy Future
L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?
A/H Premium Tracker (To 12 Jan 2024): STAY Long Hs Vs As: Premia Still Wide, Huge High-Div SOE Perf
TRYT Lock-Up – 60% of Outstanding to Be Released, Baring Would Have to Exit Sooner or Later
Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Double Impacts for Some Names
Insiders Are Buying Shares In These Korean Companies in January 2024

KOSPI200 Index Rebalance Preview: Four Potential Changes in June

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.

Zhejiang Expressway (576 HK): Life In The (Too) Fast Lane

On the 6 November 2023, Zhejiang Expressway Co H (576 HK) announced its rights offering on both its H-Shares and its A-Shares, previously mooted on 23 May.
The rights were discussed by Travis Lundy in Zhejiang Expressway (576 HK) Rights Offering – The Dynamics May Be Interesting. He liked the stock. That was a good call.
The current implied stub – net of Expressway’s 40.3% look-through stake in Zheshang Securities (601878 CH) – is back to pre-Covid levels. I’d be looking to unwind the stub here.

S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont

With over 80% of the review period complete, there could be 26 adds/deletes across the S&P/ASX family of indices in March.
The largest flow will be on Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
There will be 1.2-38 days of ADV to buy in the inclusions while the impact on the deletions will range between 1-21 days of ADV.

Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
I currently expect three changes for the STAR 50 index in March 2024.

PT Avia Avian (AVIA IJ) – A More Glossy Future

By Angus Mackintosh

Avia Avian (AVIA IJ) is Indonesia’s largest paint manufacturer with a strong track record, selling a wide range of architectural solutions products, with a countrywide distribution network.
The company continues to add to its product portfolio by adding more affordable products to cater for consumers trading down due to inflationary pressures depressing disposable incomes.
Avia Avian continues to add to its distribution network and has introduced express delivery that allows retailers to take more products but less inventory. Valuations are attractive with supportive dividends.

L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?

Posco DX (022100 KS) rallied 50% following approval of its application to transfer from the KOSDAQ to the KOSPI market. Then the stock dropped 20% following completion of the transfer.
With L&F Co Ltd (066970 KS) applying for a section transfer a couple of weeks after Posco DX (022100 KS), approval could be imminent.
L&F Co Ltd (066970 KS) is up 46% since the start of November, but the stock has performed in line with the average of its peers.

A/H Premium Tracker (To 12 Jan 2024): STAY Long Hs Vs As: Premia Still Wide, Huge High-Div SOE Perf

The New and Better (5mos old) 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 flows were net negative (ETFs negative, high-div SOEs positive) and NORTHBOUND flows a small net sell. AH premia rose slightly on average. Especially at narrow premia.
STILL time to go long Hs vs As for the new year. 52wk wide discounts were just four weeks ago. Wide A/H premia in renewables space look vulnerable.

TRYT Lock-Up – 60% of Outstanding to Be Released, Baring Would Have to Exit Sooner or Later

TRYT (9164 JP) was listed on the TSE on 22nd July 2023. The IPO had been a 100% secondary offering.
TRYT offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
Coming up for six-month lockup is the sole pre-IPO investor who had sold some of its stake earlier in the IPO.

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Double Impacts for Some Names

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

Insiders Are Buying Shares In These Korean Companies in January 2024

We provide a list of four companies including Fila Holdings, Kolmar BNH, KG Mobility, and Hanwha Galleria where the insiders have been buying shares of their own companies.
These four stocks are up on average 5.6% in the past one month, outperforming KOSPI which is down 1.6% in the same period.
Insiders at Fila Holdings are probably increasing their stakes to capitalize on the price discrepancy as Fila Holdings’ 51% stake in Acushnet is 39% more than its current market cap.

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Jan 15

Most Read: Fuji Soft Inc, Open House, BYD Electronics, Shinko Electric Industries, Nikkei 225, Posco DX, Samsung Electronics, Strike Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far
Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light
Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao
EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?
KOSPI200 Index Rebalance Preview: Four Potential Changes in June
ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead
Costa Group (CGC AU): Potential ASX200 Replacements

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds.
A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022.
A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far

After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation.
The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…

Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light

Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK).
Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US).

Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao

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 – Hollysys Automation Technologies (HOLI US), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Probiotec Ltd (PBP AU), Irc Ltd (1029 HK), Orecorp Ltd (ORR AU).
Lowest spreads – Tietto Minerals Ltd (TIE AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Benesse Holdings (9783 JP), Taisho Pharmaceutical Holdin (4581 JP).

EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?

By Nico Rosti

The Nikkei 225 INDEX experienced a 1-week explosive rally, last week, reaching nearly +6.6% higher than the previous week’s Close.
The index is now very overbought, can it continue to rise next week? and and how much higher can it go?
Go SHORT in the 36000-38350 price area, but the trade is not without risk.

KOSPI200 Index Rebalance Preview: Four Potential Changes in June

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.

ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance

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, a number of large filings over the holidays is somewhat positive for 2024 prospects.
On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.

Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead

By Mark Chadwick

In the upcoming week, market focus includes U.S. retail sales, bank earnings, Davos discussions on global economic challenges, China’s GDP figures, and volatile oil prices amid geopolitical tensions.
Fujitsu faces scrutiny in Britain regarding potential compensation for post office operators falsely accused of embezzlement due to glitches in its accounting system from the 1990s into the 2010s.
Yaskawa’s 9M financials show a 6% YoY net profit decline at 34bn yen. Motors and robotics, witnessed profit growth despite Chinese economic uncertainties. Orders may be bottoming

Costa Group (CGC AU): Potential ASX200 Replacements

The Scheme Meeting for PSP’s acquisition of Costa Group Holdings (CGC AU) will be held on 30 January and Costa Group could stop trading after the close on 8 February.
Strike Energy (STX AU), SiteMinder (SDR AU) and Audinate (AD8 AU) are potential inclusions to the S&P/ASX 200 (AS51 INDEX) at an ad hoc rebalance.
For the stocks that are not added at the ad hoc rebalance, there is a very high probability of S&P/ASX 200 (AS51 INDEX) inclusion at the March rebalance.

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Jan 14

Most Read: WuXi XDC Cayman , Posco DX, Shriram Finance , Zhongsheng Group, Wipro Ltd, Fujitsu Ltd, Fuji Soft Inc, Taiwan Semiconductor (TSMC) – ADR, Genting Singapore, BYD Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK
HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot
Fujitsu (6702 JP): Horizon Scandal Blows Up
Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
TSMC Finishes 2023 With A Flourish
Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024
Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March

We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.

HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time

Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot

Over a third of the way through the review period of the June rebalance, we see one potential index change with Wipro Ltd (WPRO IN) in deletion zone.
There are a bunch of stocks that could be added to the index as a replacement and price changes over the rest of the review period are important.
Passive trackers will need to trade over 1x ADV and over 7x of delivery volume on the index changes, so there will be decent impact on the stocks.

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds.
A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022.
A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

TSMC Finishes 2023 With A Flourish

By William Keating

Q423 revenues amounted to NT$625,529. In US$ terms, using TSMC’s projected exchange rate of 32, this translates to $19.55 billion, a ~13% increase QoQ, and a 2% decrease YoY.
FY 2023 revenues amounted to NT$2,161.74 billion, down 4.5% YoY. In US$ terms, this amounted to $69.1 billion, an 8.8% decrease YoY and the first such YoY decrease since 2009
While we foresee Q124 revenues being down 5-10% QoQ, we expect full year 2024 revenues to grow in the range of 5-10% YoY.

Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024

By Howard J Klein

Parent Genting Berhad Malaysia flagship properties doing well but many of its global holdings spur questions about asset allocation strategy.
Genting Singapore, its integrated resort property Sentosa presents a strong buy story not only because it is undervalued here but because its prospects post covid are strong.
GB’s US footprint by contrast poses questions about the hurdle rate of those huge investments to date given the intense competitive pressures in mature gaming markets.

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK).
Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US).

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Jan 13

Most Read: Daiwa House Reit Investment, Inabata & Co, Wipro Ltd, Bank Of Japan, Fast Retailing, Orecorp Ltd, KB Financial, Fujitsu Ltd, Benesse Holdings, Samsung Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan – Increasing Shorts on Some Interesting Stocks
Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical
SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot
Aequitas Japan IPOs + Placements Broker Performance 2023
Fast Retailing: 1QFY24 Earnings
OreCorp (ORR AU): Musings On The Minimum Bid Price
An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024
Fujitsu (6702 JP): Horizon Scandal Blows Up
Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches
Aequitas Korea IPOs + Placements Broker Performance 2023

Japan – Increasing Shorts on Some Interesting Stocks

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
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.
Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical

On Friday after the close, Inabata & Co (8098 JP) announced Sumitomo Chemical (4005 JP) would sell down a large stake in a ~$200mm secondary equity offering.
Mizuho Bank’s Retirement Benefit Trust account sells down too. Sumitomo Chem will keep 10+% and other crossholders remain.
This is “big” at 80 days of ADV with limited early index demand, but a 10% fall would make this cheap enough to buy vs Peers.

SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot

Over a third of the way through the review period of the June rebalance, we see one potential index change with Wipro Ltd (WPRO IN) in deletion zone.
There are a bunch of stocks that could be added to the index as a replacement and price changes over the rest of the review period are important.
Passive trackers will need to trade over 1x ADV and over 7x of delivery volume on the index changes, so there will be decent impact on the stocks.

Aequitas Japan IPOs + Placements Broker Performance 2023

By Ethan Aw

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

Fast Retailing: 1QFY24 Earnings

By Oshadhi Kumarasiri

Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

OreCorp (ORR AU): Musings On The Minimum Bid Price

On the 27 Dec, to circumvent Perseus (PRU AU)‘s 19.9% dissenting vote, Orecorp (ORR AU) and Silvercorp (SVM CN) agreed to an off-market takeover, on the same terms.
That Offer – A$0.19 in cash and 0.0967 new Silvercorp shares – opened on the 3 January.
Silvercorp paid ~A$0.51/share, on-market, just prior to the Offer. OreCorp is currently trading ~A$0.51-$0.52/share. Is there any legal obligation to set a minimum floor price of A$0.51/share?

An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024

The local media have started to provide some concrete figures of the amount of losses related to HSCEI related ELS products sold by major Korean banks and securities firms.
If HSCEI continues to remain at about 5,450 to the end of March 2024, the total losses could rise to nearly 1.6 trillion won, impacting more than 45,000 investors.
Concerns about HSCEI index related ELS losses have negatively impacted both the major Korean banks and securities companies in Korea in the past 1-2 months.

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.

Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches

When the announcement for an MBO for Benesse Holdings (9783 JP) was made in November, they suggested it would take 3 months for approvals to launch. SAMR announced approval Wednesday.
Japan approval should be (or have been) easy. One might expect this deal to launch prior to “early February”. The stock is trading through terms…. but…
A reminder that this stock is TOO CHEAP. Bad management means low expectations means a decent premium still ends up at too low a price vs management’s own forecasts.

Aequitas Korea IPOs + Placements Broker Performance 2023

By Ethan Aw

In this note, we will take a look at broker performance for Korea IPOs and placements in 2023.
The following dataset includes all Korean IPOs and placements above US$100m, which amounted to a total of seven deals. Given the small number of deals, we’ll keep the note short.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

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Jan 12

Most Read: Samsung Electronics, Daiwa House Reit Investment, Lasertec Corp, Bank Of Japan, IJTT Co., Ltd., Taisho Pharmaceutical Holdin, Shanghai Rural Commercial Bank, Fast Retailing, InterGlobe Aviation Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
Japan – Increasing Shorts on Some Interesting Stocks
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Aequitas Japan IPOs + Placements Broker Performance 2023
IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer
Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close
Quiddity Leaderboard CSI 300/500 Jun 24: Some Changes in Rankings; US$2.3bn One-Way
Fast Retailing: 1QFY24 Earnings
Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns
Fast Retailing (9983) | Another Stylish Quarter

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes

Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.

Japan – Increasing Shorts on Some Interesting Stocks

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
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.
Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Aequitas Japan IPOs + Placements Broker Performance 2023

By Ethan Aw

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer

In IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book I laid it out like it was. It needed a bump.
It got a bump (IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively) to ¥850/share. From 0.46x PBR it got bumped to 0.48x PBR. For a cash-rich company.
Taking out net cash and securities, paying off deferred tax assets and UPBOs the deal is at 0.41x operating asset book for minorities. Still offensive. Beyond negligent.

Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close

Taisho Pharmaceutical Holdin (4581 JP)’s MBO JPY8,620 offer closes on 15 January. Since announcing the offer, the shares have traded above terms for 21 out of the 30 trading days.
Japan Catalyst has called the offer’s P/B of 0.85x too low. While shares trading above terms does not guarantee that the tender fails, it does increase the risk of failure.
The offeror has no compelling reason to bump as other activists have not publicly supported Japan Catalyst, the high 55.5% premium to undisturbed price and an achievable minority acceptance rate.

Quiddity Leaderboard CSI 300/500 Jun 24: Some Changes in Rankings; US$2.3bn One-Way

CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in June 2024.
Since my December 2023 insight, a couple of names have left the CSI 300 Expected ADDs basket and have been replaced by two other names.

Fast Retailing: 1QFY24 Earnings

By Oshadhi Kumarasiri

Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 25%+ stake will be released from lock-up tomorrow.
He had earlier stated his intention to pare down his stake. He has sold shares in Sep 2022, Feb 2023 and Aug 2023.
In this note, we will talk about the lockup dynamics and possible placement.

Fast Retailing (9983) | Another Stylish Quarter

By Mark Chadwick

We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin.
Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.

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Jan 11

Most Read: Samsung Electronics, Visional , Taisho Pharmaceutical Holdin, China Everbright Bank Co A, Lasertec Corp, Pacific Textiles, Alibaba (ADR), Korea Stock Exchange KOSPI 200 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better
TOPIX Inclusions: Who Is Ready (Jan 2024)
Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped
Offshore China ETFs Rebalance Preview: Two Changes Expected in March
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market
Pacific Textiles (1382 HK): Material Benefits
Aequitas 2024 Asia IPO Pipeline – Hong Kong
A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes

Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS)
The deal appears to be somewhat well flagged, however, the timing could have been much better.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

TOPIX Inclusions: Who Is Ready (Jan 2024)

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.
Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
There are couple of other pre-event names that we have been tracking for the past few months.

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

Offshore China ETFs Rebalance Preview: Two Changes Expected in March

Based on the close of 8 January, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in March.
Shaanxi Coal Industry (601225 CH) and China Everbright Bank Co A (601818 CH) could replace Bank Of Ningbo Co Ltd A (002142 CH) and Aier Eye Hospital Group (300015 CH).
The impact of passive trading will be higher on the inclusions compared to the deletions. Then there are cash and carry positions that will be rebalanced, adding to flow.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market

MUFG Bank and Mitsubishi UFJ Trust and Banking are looking to raise around US$425m from selling their respective stakes in Lasertec Corp (6920 JP).
Given the strong momentum on the stock, combined with the wave of shareholders ending their cross-shareholdings in Japan, we would argue that the deal is somewhat expected.
Despite the remaining overhang on the stock, the deal would be easily digested by the market as well, representing just 0.14 days of the firm’s three month ADV.

Pacific Textiles (1382 HK): Material Benefits

Back in June 2017, Toray Industries (3402 JP) acquired a 28.03% stake in Pacific Textiles (1382 HK) (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.
Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC.
Relatively inexpensive, high digit yield and M&A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for Weiqiao (2698 HK) and David Webb taking a 5% stake.

Aequitas 2024 Asia IPO Pipeline – Hong Kong

In this note, we will take a look at the Asia Pacific IPO pipeline for 2024, starting with Hong Kong.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea