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Dec 11
0

Most Read: Benefit One Inc, Outsourcing Inc, Visional , Kinross Gold Corp, DISCO Corp, Albemarle Corp, Taiwan Semiconductor (TSMC) – ADR and more

By | Daily Briefs, Most Read

In today’s briefing:

  • New Benefit One Deal Recalculated, More Benefit for All, Less for One
  • Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price
  • Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755
  • TOPIX Inclusions: Who Is Ready (Dec 2023)
  • MVIS Global Junior Gold Miners Index Rebalance: Few Large Weight Changes
  • Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank
  • MVIS Global Rare Earth/​​​​​Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added
  • MVIS US Listed Semiconductor 25 Index Rebalance: TSMC Is the Big Sell
  • Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction
  • Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low

New Benefit One Deal Recalculated, More Benefit for All, Less for One

By Travis Lundy

  • The deal from Dai-Ichi Life for Benefit One Inc (2412 JP) appears language I did not get the first time around. The JPY 1800/share price is a proposed combined value.
  • The deal would then lower the TOB price to Pasona, and share the benefits from that lower price to Benefit One minorities. 
  • That suggests more upside to Benefit One than I originally thought, and less upside (but still a chunk) to Pasona.

Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price

By Arun George

  • Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) has a total value of JPY285,733 million (JPY1,800 per share).
  • The offer structure is that Pasona Group (2168 JP) will receive JPY1,800 less TOB tax benefits. Minorities will receive JPY1,800 plus the proportionate share of Pasona’s TOB tax benefits. 
  • Our estimated minority offer price is JPY2,086 per share, which is 15.9% higher than the JPY1,800 floor price and 9.1% higher than the last close price.

Outsourcing (2427 JP): Bain-Backed Preconditional MBO Tender Offer at JPY1,755

By Arun George

  • Outsourcing Inc (2427 JP) has recommended a Bain-backed preconditional MBO tender offer of JPY1,755 per share, a 52.1% premium to the undisturbed (8 December). 
  • The offer is light vs. peer and historical multiples and opportunistically takes advantage of the 20% price fall due to the disclosure of employment adjustment subsidies issues on 1 August. 
  • Based on the irrevocables, the minimum acceptance condition requires a 61.9% minority acceptance rate. The acceptance rate could prove challenging. The tender offer is to start by late January 2024. 

TOPIX Inclusions: Who Is Ready (Dec 2023)

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.
  • One of our TOPIX Inclusion Pre-event names Visional (4194 JP) confirmed it has received approval to move to the Prime Market in December 2023.
  • Currently, we are expecting one TOPIX Inclusion at the end of December 2023 and two more at the end of January 2024 (including Visional). 

MVIS Global Junior Gold Miners Index Rebalance: Few Large Weight Changes

By Brian Freitas

  • There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in December, but there are float and capping changes for some stocks.
  • Estimated one-way turnover is 2.8% and that leads to a one-way trade of US$122m.
  • There are 13 stocks with over US$5m to trade from passive trackers, though the impact is not very big on the stocks.

Index Rebalance & ETF Flow Recap: NKY, TW Div+, ASX200, NZX50, Mom30, Top10EW, MVW, Rakuten Bank

By Brian Freitas

  • There were a lot of rebalance implementations in China on Friday, plus a few upcoming index changes that were announced during the week.
  • There are a lot of implementations this week, with KOSPI 200 and KOSDAQ 150 on Thursday and then others across a bunch of countries on Friday.
  • There were big inflows to Tracker Fund of Hong Kong (2800 HK) during the week taking units outstanding to a new high. ETF inflows continue even as the market drops.

MVIS Global Rare Earth/​​​​​Strategic Metals Index Rebalance: Albermarle (ALB US) Finally Added

By Brian Freitas

  • Albemarle Corp (ALB US) will replace ioneer (INR AU) in the VanEck Rare Earth/Strategic Me (REMX US) at the close on 15 December.
  • Constituent changes, float changes and capping changes result in an estimated one-way turnover is 13.4% and in a one-way trade of US$50m.
  • The mainland China stocks in the index have been the biggest laggards and this rebalance will reduce their weight in the index significantly.

MVIS US Listed Semiconductor 25 Index Rebalance: TSMC Is the Big Sell

By Brian Freitas

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

By David Blennerhassett

Bain Deal for Outsourcing (2427): Cheeky, Opportunistic, Too Low

By Travis Lundy

  • On Friday 8 December, Bain announced an MBO with Outsourcing Inc (2427 JP) Chair Haruhiko Doi to take the company private at a 51% premium. Looks good at first glance.
  • It is, however, an offer at ~6.6x Management Forecast derived Dec 2024 EBITDA. This for a top player in a fast-growing market where Street/mgmt both see up-and-to-the-right results from here. 
  • This is a delayed start (late-Jan) for regulatory approvals. It is too cheap. It is blockable. But Doi-san is young at 64yrs old and he could come back years later.

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Dec 10
0

Most Read: Uber Technologies , AMP Ltd, NTPC Ltd, Kia Corp, Bharat Heavy Electricals, Benefit One Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
  • New Benefit One Deal Recalculated, More Benefit for All, Less for One
  • S&P500 Index Rebalance: Calling an UBER
  • Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX
  • MVIS Australia Equal Weight Index Rebalance Preview: Stocks Close to Deletion Zone
  • NIFTY200 Momentum30 Index Rebalance Preview: 58% Turnover & Strong Momentum
  • FnGuide Top10 Equal Weight Index Rebalance Preview: Kia Corp Could Replace Posco Future M
  • NIFTY200 Momentum30 Index Rebalance: 18 Changes a Side, 58% Turnover, Momentum Intact
  • Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price
  • Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3

By Travis Lundy

New Benefit One Deal Recalculated, More Benefit for All, Less for One

By Travis Lundy

  • The deal from Dai-Ichi Life for Benefit One Inc (2412 JP) appears language I did not get the first time around. The JPY 1800/share price is a proposed combined value.
  • The deal would then lower the TOB price to Pasona, and share the benefits from that lower price to Benefit One minorities. 
  • That suggests more upside to Benefit One than I originally thought, and less upside (but still a chunk) to Pasona.

S&P500 Index Rebalance: Calling an UBER

By Brian Freitas

Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX

By Brian Freitas

  • The announcement of the inclusion of Uber Technologies (UBER US) in the S&P 500 INDEX was a big one last week. There were announcements for some other indices too.
  • There are many indices in China that will be rebalanced at the close on Friday, the biggest being the CSI 300, CSI 500, STAR50, SSE50 and KWEB US.
  • Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.

MVIS Australia Equal Weight Index Rebalance Preview: Stocks Close to Deletion Zone

By Brian Freitas

  • AMP Ltd (AMP AU) and A2 Milk Co Ltd (A2M AU) could be deleted as the lowest ranked current index constituents.
  • There are three other stocks that are close to the deletion threshold and a change in the free float could result in the stocks being deleted.
  • With the exception of A2 Milk Co Ltd (A2M AU), shorts have been increasing on nearly all the potential and close deletions.

NIFTY200 Momentum30 Index Rebalance Preview: 58% Turnover & Strong Momentum

By Brian Freitas

  • There could be 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December.
  • If all changes are on expected lines, one-way turnover is estimated at 58.2% and that will result in a one-way trade of INR 20bn (US$240m).
  • Since July, the potential adds to the index have outperformed the index and the potential deletes by a big margin. Momentum could keep the outperformance going till implementation date.

FnGuide Top10 Equal Weight Index Rebalance Preview: Kia Corp Could Replace Posco Future M

By Brian Freitas

NIFTY200 Momentum30 Index Rebalance: 18 Changes a Side, 58% Turnover, Momentum Intact

By Brian Freitas

  • There are 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December. We had forecast all the index changes.
  • Estimated one-way turnover is 57.7% resulting in a one-way trade of INR 21.75bn (US$261m). 8 stocks have over 1x ADV to trade; 21 stocks have atleast 0.5x ADV to trade.
  • The adds have continued to outperform the deletes and the index and there could be further outperformance heading into year-end and buying from passive trackers.

Benefit One (2412 JP): Thoughts on the Potential Minority Offer Price

By Arun George

  • Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) has a total value of JPY285,733 million (JPY1,800 per share).
  • The offer structure is that Pasona Group (2168 JP) will receive JPY1,800 less TOB tax benefits. Minorities will receive JPY1,800 plus the proportionate share of Pasona’s TOB tax benefits. 
  • Our estimated minority offer price is JPY2,086 per share, which is 15.9% higher than the JPY1,800 floor price and 9.1% higher than the last close price.

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

By David Blennerhassett

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Dec 09
0

Most Read: Benefit One Inc, Kokusai Electric , K Car , EcoPro Materials, Pasona Group, LG CNS, Bharat Heavy Electricals, Kasumigaseki Capital, REPT BATTERO Energy and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
  • New Benefit One Deal Recalculated, More Benefit for All, Less for One
  • TOPIX Inclusions: Who Is Ready (Nov 2023)
  • Ecopro Materials KOSPI 200 Fast Entry Assessment: With K Car as the Outgoing Constituent
  • Ecopro Materials: Overshooting Share Price and Upcoming End of Lockup in December
  • Pasona Is Up Bigly. More To Come
  • 2024 Major IPOs Pipeline in Korea
  • NIFTY200 Momentum30 Index Rebalance: 18 Changes a Side, 58% Turnover, Momentum Intact
  • Kasumigaseki Capital (3498 JP) – An Offering Worth Examining
  • REPT BATTERO Energy IPO – Fastest Growth, Lowest Margins, No Valuation Discount

Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3

By Travis Lundy

New Benefit One Deal Recalculated, More Benefit for All, Less for One

By Travis Lundy

  • The deal from Dai-Ichi Life for Benefit One Inc (2412 JP) appears language I did not get the first time around. The JPY 1800/share price is a proposed combined value.
  • The deal would then lower the TOB price to Pasona, and share the benefits from that lower price to Benefit One minorities. 
  • That suggests more upside to Benefit One than I originally thought, and less upside (but still a chunk) to Pasona.

TOPIX Inclusions: Who Is Ready (Nov 2023)

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.
  • Our main pre-event candidate CELSYS (3663 JP) has outperformed TOPIX by ~12.6% since 1 Sep (when it was highlighted) and 6 Nov 2023.
  • There are three TOPIX Inclusion events confirmed for the end of November and two other interesting pre-event names we are closely monitoring.

Ecopro Materials KOSPI 200 Fast Entry Assessment: With K Car as the Outgoing Constituent

By Sanghyun Park

  • The fast entry screening spans from November 17th to December 7th. Given its current market cap, we should anticipate the potential success of fast entry.
  • The implementation date will coincide with the effective day of the December rebalancing, which is December 15th. There are precedents of successfully achieving fast entry with such a tight schedule.
  • The setup will be challenging due to the short selling ban. Nevertheless, with an existing position, there may be value in a market timing approach.

Ecopro Materials: Overshooting Share Price and Upcoming End of Lockup in December

By Douglas Kim

  • In this insight, we discuss the upcoming end of lockup in December for Ecopro Materials and why we believe Ecopro Materials’ share price will be much lower in 6-12 months. 
  • A combination of the potential inclusion in KOSPI Fast Entry plus the temporary ban on short selling of stocks in Korea has helped to push up Ecopro Materials’ share price.
  • However, despite this sharp share price run-up, we think the risk-reward is horrible on this stock in terms of bigger downside risk in the next 6-12 months. 

Pasona Is Up Bigly. More To Come

By David Blennerhassett

  • After M3 Inc (2413 JP) announced an intention to buy 51.16%-55.00% of Benefit One Inc (2412 JP) via a partial Tender Offer at ¥1,600, Pasona Group (2168 JP) took off. 
  • Now Dai Ichi Life Insurance (8750 JP) has countered with an unsolicited ¥1,800/share Offer  of Equity Value; TOB followed by a Benefit One buyback to mop up Pasona’s stake.
  • The big news is how tax would be applied under Dai Ichi’s deal structure, which should see Pasona’s net proceeds significantly exceed those under M3’s Offer. 

2024 Major IPOs Pipeline in Korea

By Douglas Kim

  • This is our 9th “Annual Edition of the Major Korean IPOs Pipeline Preview” at Smartkarma.
  • This insight will feature 50 of the biggest potential IPOs in Korea in 2024.
  • These 50 IPOs in Korea are likely to represent more than 80% of all capital raised through IPOs in Korea next year.

NIFTY200 Momentum30 Index Rebalance: 18 Changes a Side, 58% Turnover, Momentum Intact

By Brian Freitas

  • There are 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December. We had forecast all the index changes.
  • Estimated one-way turnover is 57.7% resulting in a one-way trade of INR 21.75bn (US$261m). 8 stocks have over 1x ADV to trade; 21 stocks have atleast 0.5x ADV to trade.
  • The adds have continued to outperform the deletes and the index and there could be further outperformance heading into year-end and buying from passive trackers.

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.

REPT BATTERO Energy IPO – Fastest Growth, Lowest Margins, No Valuation Discount

By Sumeet Singh

  • REPT BATTERO Energy is looking to raise around US$300m in its Hong Kong IPO.
  • REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
  • We have looked at the company’s past performance in our previous notes. In this note, we talk about valuations.

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Dec 08
0

Most Read: Benefit One Inc, Rakuten Bank , Pasona Group, Hygon Information Technology C, Mini Kospi 200 Futures, Denso Corp, O S Co Ltd, Perpetual Ltd, Zhongsheng Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3
  • Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
  • New Deal for Benefit One (2168) Could Mean Lots More Money for Pasona (2168)
  • China: Consolidated Flows at the Close Tomorrow
  • Benefit One (2412 JP): Dai-Ichi Life Counters M3 with a Privatisation Offer
  • KOSPI 200 Futures Calendar Spread Trading: Latest on Year-End Dividend Record Date Changes
  • Denso Corp Placement – Not Quite Shaping up for a Win Yet
  • Hankyu Hanshin Takeout of OS Corp
  • Oh, The Irony! Perpetual Rejects Soul Patts’ “Fair” Offer
  • Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions

Dai-Ichi Life (8750) Proposes a Full Takeover of Benefit One (2412), Overbidding M3

By Travis Lundy

Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock

By Brian Freitas

  • Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
  • The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
  • There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.

New Deal for Benefit One (2168) Could Mean Lots More Money for Pasona (2168)

By Travis Lundy

  • Today, Dai Ichi Life Insurance (8750 JP)  announced a proposed counter/over-bid for Benefit One Inc (2412 JP). ¥1800/share for minorities and a better (undefined) outcome for Pasona Group (2168 JP). 
  • This throws the cat amongst the pigeons as it is unsolicited, for 100% not just to get Pasona’s stake, and it will require Benefit One recommend or not.
  • For Pasona, this deal structure would likely increase the net result from the stake sale, possibly substantially so. It’s in the details. 

China: Consolidated Flows at the Close Tomorrow

By Brian Freitas

  • Local indices in China including the CSI 300 Index, CSI 500 Index, STAR50 Index and SSE50 Index will rebalance at the close tomorrow.
  • There are many changes for the indices and there are stocks that are adds and/or deletes from multiple indices which results in cumulative or offsetting flows.
  • We estimate turnover at the close tomorrow in China will be around US$7.5bn with big impact on a lot of stocks.

Benefit One (2412 JP): Dai-Ichi Life Counters M3 with a Privatisation Offer

By Arun George

  • Dai Ichi Life Insurance (8750 JP)‘s pre-conditional tender offer for Benefit One Inc (2412 JP) is JPY1,800 (floor price) + share of Pasona Group (2168 JP)’s TOB tax benefits.
  • The pre-conditions relate to the Board recommendation, Pasona support, and M3 Inc (2413 JP) offer not completing its partial offer. The tender offer starts in mid-January 2024 (20 business days).
  • While the Dai-ichi Life offer is light, M3’s engagement in a bidding war is low. The proposed minimum acceptance condition (15.51% ownership ratio) requires a 32% minority acceptance rate.

KOSPI 200 Futures Calendar Spread Trading: Latest on Year-End Dividend Record Date Changes

By Sanghyun Park

  • It would be prudent to anticipate that a considerable portion of these 636 companies will indeed adjust their dividend record dates, effective from this year’s year-end dividends.
  • One notable setup gaining attention is calendar spread trading for the KOSPI 200 futures in anticipation of an upward trend in the KOSPI 200 futures market towards the year’s end.
  • This entails buying the near-month and selling the far-month, liquidating when the price difference reverts. Traders pay attention to potential far-month divergence due to the shift in dividend record dates.

Denso Corp Placement – Not Quite Shaping up for a Win Yet

By Sumeet Singh

  • On 28th Nov 2023, Toyota (7203 JP) announced that it would sell around 9.4% of Denso (6902 JP) in order to reduce its cross-shareholding. 
  • Since then the shares haven’t corrected by much, as compared to prior large secondary deals.
  • We have covered the deal background in our earlier notes. In this note, we talk about deal dynamics, as compared to prior deals.

Hankyu Hanshin Takeout of OS Corp

By Travis Lundy

  • The flip-side of the Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV. is the Hankyu-Hanshin deal to buy OS Corp (9637).
  • Tokyo-Based Toho buys out Kansai-based Hankyu-Hanshin’s stake in Tokyo-based Rakutenchi. HH buys out Toho’s stake in Kobe-based OS Corp. This is a “TOB Swap”. HH owns 21.7% of Toho too.
  • Like Rakutenchi, it is being done at a PBR higher than 1, but a decent discount to NAV. But this one is horribly, horribly illiquid (1,000 shs/day) 

Oh, The Irony! Perpetual Rejects Soul Patts’ “Fair” Offer

By David Blennerhassett

  • Yesterday, Washington H. Soul Pattinson and Co. Ltd (SOL AU) made a $3bn scrip offer Aussie-listed equities manager Perpetual Ltd (PPT AU).
  • Under the indicative terms, PPT shareholders receive one-third of the Offer in SOL shares, and two-thirds in PPT’s asset management arm via an in-specie spin-off.
  • PPT rejected the proposal as it undervalues PPT, its corporate trust and wealth management businesses; and it offers SOL shares as consideration. But the Offer is not without merit.

Quiddity HSCEI Mar 24 Rebalance: Same Rankings; Same Questions

By Janaghan Jeyakumar, CFA

  • The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
  • In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in March 2024.
  • Based on the current data, I see only one low-conviction ADD and one low-conviction DEL.

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Dec 07
0

Most Read: Rakuten Bank , Ryohin Keikaku, Swire Pacific (B), Harmonic Drive Systems, Swire Pacific (A), Tokyo Rakutenchi and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
  • Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount
  • Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Other Changes
  • Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback
  • Toyota To Sell Harmonic Drive (6324 JP) Shares in Overseas Offering
  • Rakuten Bank Placement – Was Expected at Some Point, Current Timing Seems Opportunistic
  • Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock
  • StubWorld: Swire’s Latest Buyback
  • Harmonic Drive Placement – Cleanup Share Sale Will Remove the Overhang
  • Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.

Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup

By Sumeet Singh

  • Rakuten Bank (5838 JP) (RB),  the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
  • RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

Rakuten Bank (5838 JP) Overnight Offering at a Fat Discount

By Travis Lundy

  • After the close today, Rakuten Group (4755 JP) announced the sale of 25.5mm shares of Rakuten Bank (5838 JP), right as the IPO lockup was reaching its expiry. Expected.
  • Pricing is 6-7 Dec (pre-Tokyo open 7 Dec), delivery 11 Dec 2023. Indicative price range is 8.5-12.5% discount for a deal of US$425mm or so.
  • In an interesting technical detail, this will take Rakuten below 50%. There is some near-term index demand, some in April, some next October. Rheos could be more overhang.

Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Other Changes

By Brian Freitas

  • The review period for the Nikkei 225 (NKY INDEX) March rebalance ends end January. There could be three changes at the rebalance with sector balance in focus.
  • Depending on the changes, passives trackers will need to buy 2.4-22.5x ADV (10-24% of real float) on the inclusions and sell between 3.5-42.5x ADV on the deletions.
  • Fast Retailing (9983 JP) capping, Nitori Holdings (9843 JP) increase in PAF, a big funding trade, and potentially new stocks being added in two-steps. 

Swire (19 HK / 87 HK) Announces NEW, Bigger, Better Buyback

By Travis Lundy

  • Yesterday afternoon, Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) announced a new buyback program. The last one was announced August 2022 and ran until the AGM.
  • That was HK$4bn. In the meantime the company paid an HK$8.12 special div on the Swire As (14%) in September (on top of the HK$1.20 regular div). 
  • Now they have announced a new HK$6bn buyback buying both A Shares and B shares. Details, index impact, historical B/A trading patterns, etc, below.

Toyota To Sell Harmonic Drive (6324 JP) Shares in Overseas Offering

By Travis Lundy

  • Today, Toyota Motor (7203 JP) announced it would sell 4.379mm shares (4.55%) of Harmonic Drive Systems (6324 JP) in an overseas placement. 
  • This is not so big as it is emblematic, adding to the recent news on Toyota unwinds.
  • Harmonic Drive is heavily held by foreign institutions. This is a foreigners-only deal. But it will need to be absorbed by that group too. 

Rakuten Bank Placement – Was Expected at Some Point, Current Timing Seems Opportunistic

By Sumeet Singh

  • Rakuten Group (4755 JP) aims to raise US$430m via selling around 14.6% of Rakuten Bank (5838 JP). 
  • RB is the largest internet bank in Japan, by number of accounts. As of Sep 23, it had 14.3m deposit accounts with a total deposit base of JPY9.5tn.
  • In this note, we will talk about the deal dynamics and updates since our last note.

Rakuten Bank (5838 JP) Placement: Index Inclusion Will Absorb Some Stock

By Brian Freitas

  • Rakuten Group (4755 JP) is looking to sell 25.5m shares of Rakuten Bank (5838 JP) via a secondary offering at a discount of between 8.7%-12.3%.
  • The offering will raise a maximum of US$433m and Rakuten Group (4755 JP) will use the funds to reduce its interest-bearing debt by the early repayment of its bonds.
  • There will be limited passive buying at the time of settlement of the stock but there is an index inclusion coming up that will result in passives buying.

StubWorld: Swire’s Latest Buyback

By David Blennerhassett

Harmonic Drive Placement – Cleanup Share Sale Will Remove the Overhang

By Clarence Chu

  • Toyota Motor (7203 JP) is looking to raise US$116m from selling its entire stake in Harmonic Drive Systems (6324 JP).
  • Toyota Motors has indicated over the past one-two weeks that it will be looking to sell/trim its stakes in various entities as part of its exit from its multiple cross-holdings.
  • While the deal would be a relatively large one to digest at 10 days of ADV, Toyota Motors will be selling its entire stake, clearing the overhang.

Toho Takeout of Rakutenchi – Buying a Real Estate Portfolio at a 50% Premium but 0.7x NAV.

By Travis Lundy

  • Yesterday, Tokyo Rakutenchi (8842 JP)‘s #1 shareholder Toho Co Ltd (9602 JP) agreed to buy out the rest of Tokyo Rakutenchi from its #2 and #3 shareholders and minorities.
  • The Takeover Price is a 51% premium. Which is nice. But the asset is a real estate portfolio, and it was sold as a company, not a real estate portfolio.
  • The revaluation surplus to market value for the real estate assets is more than net equity, so Takeover PBR >1.0, but Price/NAV of the takeover is 0.7x, without synergies included. 

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Dec 06
0

Most Read: Eoflow, IJTT Co., Ltd., Benefit One Inc, Weiqiao Textile Co, AMP Ltd, Ps Mitsubishi Construction, Ryohin Keikaku, Chindata Group, Hankook & Company and more

By | Daily Briefs, Most Read

In today’s briefing:

  • EOFlow (Further) Tests Investor Patience
  • IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book
  • Benefit One (2412) – Pro-Ration Expectations Update
  • Weiqiao Textile (2698 HK)’s Pre-Conditional Merger By Absorption
  • MVIS Australia Equal Weight Index Rebalance Preview: Stocks Close to Deletion Zone
  • P.S.Mitsubishi Contruction (1871 JP) – Pro-Ration Expectations Update
  • EOFLOW/Medtronic Tender: Appeals Brief Is All Bark, No Bite
  • Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Other Changes
  • Dissenters Mobilise As Chindata (CD US)’s Shareholders Approve Bain’s Offer
  • Navigating the Potential of Hankook & Company’s Revised Tender Offer

EOFlow (Further) Tests Investor Patience

By David Blennerhassett

  • Back on the 25 May, when Medtronic Plc (MDT US) enter into a SPA with EOFlow (294090 KS)‘s CEO, with a follow-on Tender Offer, the whole construct looked pretty clean.
  • Then in August Insulet Corp (PODD US) launched its lawsuit, which in hindsight, should have been expected. Then earlier this month, news surfaced concerning a stock-backed loan to the CEO.
  • Now the CEO is selling, presumably to repay his collateralized loan. Shares are down 38% since the resumption of trading, and are now at a whopping 122% spread to terms. 

IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book

By Travis Lundy

  • A Fund named Mirai Creation Fund, investing in five “fields” “vital to the future” (“intelligent technologies”, robotics, hydrogen-economy, electrification, and “new materials”) will buy out casting/forging mainstay IJTT. 
  • The look and feel of this fund screams “lead me to the future”, so of course, the buy-out is being done with 26% equity, 74% debt. Levered is good.
  • That’s to buy at 0.46x PBR. Equity check is 12% of net assets. The Board says “yes” because it will lead to “improvement of corporate value”. Unfortunately, not for shareholders. 

Benefit One (2412) – Pro-Ration Expectations Update

By Travis Lundy

  • Since the announcement of the Benefit One Inc (2412 JP) partial offer, the stock has traded 16+mm shares in the market, which is about 40% of Real World Float.
  • Some of that has been traded multiple times. Looking only at that data would suggest a higher pro-ration, but I expect there is other data one must take into account.
  • Benefit One shares are currently trading at a level suggesting either lower participation OR higher back-end despite the earnings guidance downgrade at announcement.

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

By David Blennerhassett

  • 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. 

MVIS Australia Equal Weight Index Rebalance Preview: Stocks Close to Deletion Zone

By Brian Freitas

  • AMP Ltd (AMP AU) and A2 Milk Co Ltd (A2M AU) could be deleted as the lowest ranked current index constituents.
  • There are three other stocks that are close to the deletion threshold and a change in the free float could result in the stocks being deleted.
  • With the exception of A2 Milk Co Ltd (A2M AU), shorts have been increasing on nearly all the potential and close deletions.

P.S.Mitsubishi Contruction (1871 JP) – Pro-Ration Expectations Update

By Travis Lundy

  • The Partial Offer launched last month by Taisei Corp (1801 JP) to take a 50.2% stake in Ps Mitsubishi Construction (1871 JP) ends at the beginning of next week.
  • This hasn’t been a very “exciting” trade. Small, boring sector. One big company selling to another. But it has traded cheap. However, volume has been high. 
  • Volume has been so high it causes me to revisit my pro-ration expectations, so I have updated estimates and tables below.

EOFLOW/Medtronic Tender: Appeals Brief Is All Bark, No Bite

By Arun George

  • Eoflow (294090 KS) filed a 117-page appeal against the amended preliminary injunction (PI), sparking a 16% share price rally. Insulet Corp (PODD US) is required to respond by 14 December.
  • Eoflow argues that the Massachusetts District Court committed legal errors. However, Eoflow’s arguments are rehashed from those that the district court has already dismissed with balanced counterarguments. 
  • The appeal is Eoflow’s last roll of the dice. Eoflow’s appeal brief worryingly notes that the PI profoundly imperils both the Medtronic transaction and its status as a going concern.

Nikkei 225 Index Rebalance Preview (Mar 2024): Update on Ranking, Capping, Funding & Other Changes

By Brian Freitas

  • The review period for the Nikkei 225 (NKY INDEX) March rebalance ends end January. There could be three changes at the rebalance with sector balance in focus.
  • Depending on the changes, passives trackers will need to buy 2.4-22.5x ADV (10-24% of real float) on the inclusions and sell between 3.5-42.5x ADV on the deletions.
  • Fast Retailing (9983 JP) capping, Nitori Holdings (9843 JP) increase in PAF, a big funding trade, and potentially new stocks being added in two-steps. 

Dissenters Mobilise As Chindata (CD US)’s Shareholders Approve Bain’s Offer

By David Blennerhassett

  • Back on the 11 August, Chinese data center provider Chindata Group (CD US) and major shareholder Bain Capital entered into a definitive agreement at US$8.60/ADS.
  • The EGM was held yesterday, the 4 December, and the merger was approved by 97.75% of the total votes cast. No specific PRC regulatory approval is needed for this merger. 
  • All good right? Not quite. There’s still the nagging issue involving 22.79% of shares out objecting to the deal, exceeding the 12% dissenting threshold, a condition to the merger. 

Navigating the Potential of Hankook & Company’s Revised Tender Offer

By Sanghyun Park

  • With the price almost 10% above ₩20,000, it’s practically fair to regard MBK’s tender offer as effectively canceled, raising the question of the proxy battle’s potential continuation.
  • There is a significant likelihood that MBK has prepared a next-phase plan involving an upward adjustment of the offering price, considering the tight situation of successfully securing the target volume.
  • Essentially, there’s a high likelihood that the situation will resemble the earlier battle between HYBE and Kakao Corp over S.M. Entertainment Co at the start of this year.

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Dec 05
0

Most Read: Fast Retailing, Uber Technologies , Samsung KODEX Top5Plus Total Return ETF, Benefit One Inc, Helia Group , Cheng Shin Rubber Ind Co., Ltd., Gentrack, NTPC Ltd, Nexon, Great Wall Motor and more

By | Daily Briefs, Most Read

In today’s briefing:

  • March 2024 Nikkei 225 Rebal – Socionext, Disco, and a Consumer Goods Stock to ADD and ¥1trn To Trade
  • S&P500 Index Rebalance: Calling an UBER
  • Investigating Arbitrage Trading Potential to Exploit ETF Tracking Error Widening in Korea
  • Benefit One (2412) – Pro-Ration Expectations Update
  • S&P/​​​​ASX 200 Index Rebalance (Dec 2023): There Is Positioning but Probably Not Enough
  • Yuanta/​P-Shares Taiwan Div+ ETF Rebalance: Changes Lead to Huge Turnover
  • S&P/NZX 50 Index Rebalance: Two High Impact Changes Coming Up
  • NIFTY200 Momentum30 Index Rebalance Preview: 58% Turnover & Strong Momentum
  • Korean Government Launches a Tender Offer to Sell a 29.3% Stake in NXC Corp for US$3.6 Billion
  • A/H Premium Tracker (To 1 Dec 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold

March 2024 Nikkei 225 Rebal – Socionext, Disco, and a Consumer Goods Stock to ADD and ¥1trn To Trade

By Travis Lundy

  • Minimal 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) AND funkiness with Fast Retailing (9983) to consider. We are right on the threshold. The question is whether it gets “help” in January.

S&P500 Index Rebalance: Calling an UBER

By Brian Freitas

Investigating Arbitrage Trading Potential to Exploit ETF Tracking Error Widening in Korea

By Sanghyun Park

  • Korea’s financial authorities prompted LPs to refrain from providing liquidity to ETFs through short-selling. This has resulted in a significant increase in both the frequency and magnitude of tracking errors.
  • Therefore, it’s time to actively explore this from an arbitrage trading standpoint. ETF arbitrage involves straightforward steps: purchasing and redeeming ETFs, followed by selling the underlying shares in the market.
  • The focus should be particularly directed towards sector ETFs that include a select few large-cap stocks carrying single-stock futures.

Benefit One (2412) – Pro-Ration Expectations Update

By Travis Lundy

  • Since the announcement of the Benefit One Inc (2412 JP) partial offer, the stock has traded 16+mm shares in the market, which is about 40% of Real World Float.
  • Some of that has been traded multiple times. Looking only at that data would suggest a higher pro-ration, but I expect there is other data one must take into account.
  • Benefit One shares are currently trading at a level suggesting either lower participation OR higher back-end despite the earnings guidance downgrade at announcement.

S&P/​​​​ASX 200 Index Rebalance (Dec 2023): There Is Positioning but Probably Not Enough

By Brian Freitas

  • There are 3 changes for the S&P/ASX 200 (AS51 INDEX) that will be implemented at the close on 15 December. One name is a relative surprise.
  • There will be 8-15 days of ADV to buy on the inclusions and there will be 12-18 days of ADV to sell on the deletions.
  • Cumulative excess volume and changes in short interest indicate there will be positioning in most stocks. But it may not yet be enough to cover the passive trade.

Yuanta/​P-Shares Taiwan Div+ ETF Rebalance: Changes Lead to Huge Turnover

By Brian Freitas

  • There are 5 adds and 4 deletes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December with implementation taking place from 15-21 December.
  • The constituent changes and capping changes result in an estimated one-way turnover of 16.1% resulting in a one-way trade of US$1.26bn.
  • There will be positioning in a lot of the adds/deletes and the real action could be in the other stocks with capping and/or funding flows.

S&P/NZX 50 Index Rebalance: Two High Impact Changes Coming Up

By Brian Freitas

NIFTY200 Momentum30 Index Rebalance Preview: 58% Turnover & Strong Momentum

By Brian Freitas

  • There could be 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December.
  • If all changes are on expected lines, one-way turnover is estimated at 58.2% and that will result in a one-way trade of INR 20bn (US$240m).
  • Since July, the potential adds to the index have outperformed the index and the potential deletes by a big margin. Momentum could keep the outperformance going till implementation date.

Korean Government Launches a Tender Offer to Sell a 29.3% Stake in NXC Corp for US$3.6 Billion

By Douglas Kim

  • On 4 December, the South Korean government announced that it will launch a tender offer to sell a 29.3% stake in NXC Corp for about US$3.6 billion.
  • The two daughters of ex-Chairman Kim Jung-Ju handed over a 29.3% stake in NXC Corp to the Korean government as payment-in-kind in May 2023 to pay for inheritance taxes.
  • The tender offer sale of the Korean government’s 29.3% stake in NXC Corp (worth nearly 4.7 trillion won) is a positive catalyst for Nexon (3659 JP).

A/H Premium Tracker (To 1 Dec 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold

By Travis Lundy

  • The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • Hs with H/A pairs under-perform their As on average by 220+bp. Liquid HK H/A Pairs saw H/As -244bp. H/A Pair intracorrelation is up and A premia continue to trend better.
  • SOUTHBOUND and NORTHBOUND were net buys overall but Hs had a VERY BAD WEEK vs their A-Shares where pairs were concerned.

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Dec 04
0

Most Read: Taisho Pharmaceutical Holdin, Cosmo Energy Holdings , Uber Technologies , Fast Retailing, Helia Group , Cheng Shin Rubber Ind Co., Ltd., Kia Corp, Samsung KODEX Top5Plus Total Return ETF and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Japan Activism:  Japan Catalyst Fund Calls Out Taisho Pharma Committee on MBO Price
  • Mischief Managed! Iwatani Corp (8088) Buys Out Murakami-San’s Cosmo Energy Stake
  • S&P500 Index Rebalance: Calling an UBER
  • March 2024 Nikkei 225 Rebal – Socionext, Disco, and a Consumer Goods Stock to ADD and ¥1trn To Trade
  • Taisho Pharmaceutical (4581 JP): Japan Catalyst Pushes for a Bump
  • S&P/​​​​ASX 200 Index Rebalance (Dec 2023): There Is Positioning but Probably Not Enough
  • Yuanta/​P-Shares Taiwan Div+ ETF Rebalance: Changes Lead to Huge Turnover
  • FnGuide Top10 Equal Weight Index Rebalance Preview: Kia Corp Could Replace Posco Future M
  • Investigating Arbitrage Trading Potential to Exploit ETF Tracking Error Widening in Korea
  • Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX

Japan Activism:  Japan Catalyst Fund Calls Out Taisho Pharma Committee on MBO Price

By Travis Lundy

  • Japan Catalyst Fund is a relatively young effort in the Japan “engagement activism” space, having been founded by Monex Group in September 2019. Total assets remain apparently small.
  • Championed by Monex Group founder Oki Matsumoto, despite small AUM, the fund has decent access. As of end-October, Taisho Pharmaceutical Holdings (4581 JP) was #5 and 5.26%. Now it’s #2.
  • Friday, they released a statement about the MBO. It isn’t a barn-burner, but the stock has traded through terms since announcement at a too-low price. And nobody else has commented.

Mischief Managed! Iwatani Corp (8088) Buys Out Murakami-San’s Cosmo Energy Stake

By Travis Lundy

  • The question of how Murakami-san would get out of his stake in Cosmo Energy Holdings (5021 JP) was always a biggie. He likes to sell stock in tender offer buybacks.
  • Cosmo wasn’t going to do that for him. They promised dividends and a high payout ratio, but that left the question was how he was going to get out. 
  • A semi-obvious solution was to find a corporate partner to buy his stake and today, Iwatani Corp (8088 JP) announced that it had bought 19.86% of Murakami-san’s 20.01% holding.

S&P500 Index Rebalance: Calling an UBER

By Brian Freitas

March 2024 Nikkei 225 Rebal – Socionext, Disco, and a Consumer Goods Stock to ADD and ¥1trn To Trade

By Travis Lundy

  • Minimal 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) AND funkiness with Fast Retailing (9983) to consider. We are right on the threshold. The question is whether it gets “help” in January.

Taisho Pharmaceutical (4581 JP): Japan Catalyst Pushes for a Bump

By Arun George

  • Japan Catalyst’s press release supports the idea of a Taisho Pharmaceutical Holdin (4581 JP) MBO but not the proposed offer price as it implies a P/B less than 1.0x.
  • The press release is a discovery exercise encouraging other like-minded shareholders to show their hand. The shares are trading marginally above the JPY8,620 offer.
  • While justifiable, a bump is unlikely due to the lack of a substantial activist shareholder, irrevocables, no competing bid and the offer’s 55.5% premium to the undisturbed price.

S&P/​​​​ASX 200 Index Rebalance (Dec 2023): There Is Positioning but Probably Not Enough

By Brian Freitas

  • There are 3 changes for the S&P/ASX 200 (AS51 INDEX) that will be implemented at the close on 15 December. One name is a relative surprise.
  • There will be 8-15 days of ADV to buy on the inclusions and there will be 12-18 days of ADV to sell on the deletions.
  • Cumulative excess volume and changes in short interest indicate there will be positioning in most stocks. But it may not yet be enough to cover the passive trade.

Yuanta/​P-Shares Taiwan Div+ ETF Rebalance: Changes Lead to Huge Turnover

By Brian Freitas

  • There are 5 adds and 4 deletes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December with implementation taking place from 15-21 December.
  • The constituent changes and capping changes result in an estimated one-way turnover of 16.1% resulting in a one-way trade of US$1.26bn.
  • There will be positioning in a lot of the adds/deletes and the real action could be in the other stocks with capping and/or funding flows.

FnGuide Top10 Equal Weight Index Rebalance Preview: Kia Corp Could Replace Posco Future M

By Brian Freitas

Investigating Arbitrage Trading Potential to Exploit ETF Tracking Error Widening in Korea

By Sanghyun Park

  • Korea’s financial authorities prompted LPs to refrain from providing liquidity to ETFs through short-selling. This has resulted in a significant increase in both the frequency and magnitude of tracking errors.
  • Therefore, it’s time to actively explore this from an arbitrage trading standpoint. ETF arbitrage involves straightforward steps: purchasing and redeeming ETFs, followed by selling the underlying shares in the market.
  • The focus should be particularly directed towards sector ETFs that include a select few large-cap stocks carrying single-stock futures.

Index Rebalance & ETF Flow Recap: KWEB, CSI300/500, STAR50, SSE50, ChiNext, SET50, Chips, Denso, SPX

By Brian Freitas

  • The announcement of the inclusion of Uber Technologies (UBER US) in the S&P 500 INDEX was a big one last week. There were announcements for some other indices too.
  • There are many indices in China that will be rebalanced at the close on Friday, the biggest being the CSI 300, CSI 500, STAR50, SSE50 and KWEB US.
  • Relatively quiet in ETF world with net inflows to China focused ETFs and net outflows for Japan.

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Dec 03
0

Most Read: Zhongjin Gold Corp A, Shanxi Meijin Energy Co, Ltd., Hygon Information Technology C, Eoptolink Technology , KCE Electronics PCL, Uber Technologies , Taisho Pharmaceutical Holdin, China Tourism Group Duty Free Corp Ltd, Cosmo Energy Holdings and more

By | Daily Briefs, Most Read

In today’s briefing:

  • CSI300 Index Rebalance: 14 Changes & A Few Surprises
  • CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes
  • CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
  • ChiNext/​​ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
  • SET50 Index Rebalance Preview: KCE Could Replace TIDLOR
  • S&P500 Index Rebalance: Calling an UBER
  • Japan Activism:  Japan Catalyst Fund Calls Out Taisho Pharma Committee on MBO Price
  • [Blue Lotus Daily]: XPEV/NIO/BYD/TSLA LI/Geely/ACMR/ MU/NVDA/981.HK/1810.HK/000660.KS
  • 2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees
  • Mischief Managed! Iwatani Corp (8088) Buys Out Murakami-San’s Cosmo Energy Stake

CSI300 Index Rebalance: 14 Changes & A Few Surprises

By Brian Freitas

  • There are 14 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 8 December.
  • While most changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used their discretion.
  • The adds outperformed the deletes in the first half of the year with performance staying stable over the second half of the year. Position for outperformance ahead of implementation.

CSI500 Index Rebalance: 50 Changes a Side; Adds Gaining Ground on Deletes

By Brian Freitas

  • There are 50 changes a side for the CSI Smallcap 500 Index at the upcoming rebalance that will be implemented at the close of trading on 8 December.
  • There are 15 stocks that overlap between the CSI 300 Index and the CSI Smallcap 500 Index and there will be opposing flows from passive trackers.
  • One way turnover at the rebalance is estimated at 9.56% leading to a one-way trade of CNY 6.04bn. Industrials and Information Technology gain index spots while Materials and Financial lose.

CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon

By Brian Freitas

  • There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.
  • This is yet another index inclusion for Hygon Information Technology C (688041 CH) – the stock continues to move higher on expected passive buying over the next two weeks.
  • Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.

ChiNext/​​ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now

By Brian Freitas

  • There will be 6 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 8 December.
  • There is a lot of overlap between the adds and deletes across both indices with the one-way trade across both indices estimated to be CNY 2.4bn.
  • The adds and deletes have drifted lower over the last few months. However, the adds have outperformed the deletes significantly in the last month.

SET50 Index Rebalance Preview: KCE Could Replace TIDLOR

By Brian Freitas

S&P500 Index Rebalance: Calling an UBER

By Brian Freitas

Japan Activism:  Japan Catalyst Fund Calls Out Taisho Pharma Committee on MBO Price

By Travis Lundy

  • Japan Catalyst Fund is a relatively young effort in the Japan “engagement activism” space, having been founded by Monex Group in September 2019. Total assets remain apparently small.
  • Championed by Monex Group founder Oki Matsumoto, despite small AUM, the fund has decent access. As of end-October, Taisho Pharmaceutical Holdings (4581 JP) was #5 and 5.26%. Now it’s #2.
  • Friday, they released a statement about the MBO. It isn’t a barn-burner, but the stock has traded through terms since announcement at a too-low price. And nobody else has commented.

[Blue Lotus Daily]: XPEV/NIO/BYD/TSLA LI/Geely/ACMR/ MU/NVDA/981.HK/1810.HK/000660.KS

By Eric Wen

  • XPEV/NIO/BYD/TSLA: Luxeed S7 officially launched, price lowered by RMB 8,200 (-)
  • NIO: Geely and NIO enter into strategic cooperation agreement for battery swapping (+)
  • ACMR/ MU/ NVDA/ 981.HK/ 1810.HK/ 000660.KS: CXMT launches first domestic LPDDR5 RAM (+/+/+/-/-/-)

2024 High Conviction: China Tourism Group (601888 CH, BUY, TP:CNY106): See the Forest for the Trees

By Mohshin Aziz

  • China stock market despair has brought down  China Tourism Group Duty Free Corp Ltd (601888 CH) to its lowest forward valuation in the past ten years   
  • Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins 
  • Using the company’s lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)  

Mischief Managed! Iwatani Corp (8088) Buys Out Murakami-San’s Cosmo Energy Stake

By Travis Lundy

  • The question of how Murakami-san would get out of his stake in Cosmo Energy Holdings (5021 JP) was always a biggie. He likes to sell stock in tender offer buybacks.
  • Cosmo wasn’t going to do that for him. They promised dividends and a high payout ratio, but that left the question was how he was going to get out. 
  • A semi-obvious solution was to find a corporate partner to buy his stake and today, Iwatani Corp (8088 JP) announced that it had bought 19.86% of Murakami-san’s 20.01% holding.

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Dec 02
0

Most Read: Teco Electric & Machinery, Helia Group , Zhongjin Gold Corp A, Amman Mineral Internasional, Ito En Ltd Preferred Shares, REPT BATTERO Energy, KCE Electronics PCL, Greatview Aseptic Packaging, Taisho Pharmaceutical Holdin, Sun Hung Kai Properties and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: 18% One-Way Turnover & US$2.74bn Trade
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Big Impact; A Week From Announcement
  • CSI300 Index Rebalance: 14 Changes & A Few Surprises
  • Amman Mineral (AMMN IJ): Potential Passive Inflows Coming Up Soon
  • Itoen Pref (25935 JP) – Big Discount, Big Buyback, No Big Governance Change
  • REPT BATTERO Energy Pre-IPO – The Positives – Has Scaled Rapidly
  • SET50 Index Rebalance Preview: KCE Could Replace TIDLOR
  • GAPack (468 HK): Unpacking XJF’s Move To Send The Board Packing
  • (Mostly) Asia M&A, Nov 2023: Taisho Pharma, CIMC Vehicle, CMIC, Japan Best Rescue, Shidax
  • HK CEO & Director Dealings (1 Dec 2023): Kwoks Still Buying SHK; Co-Founder Selling Akeso

Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: 18% One-Way Turnover & US$2.74bn Trade

By Brian Freitas

  • Using data from the close on 20 November, there could be 6 adds and 5 deletes to the Yuanta/​P-Shares Taiwan Dividend Plus ETF in December.
  • There will also be capping and funding flows that will lead to a one-way turnover of 17.8% and a one-way trade of US$1.37bn.
  • There are 16 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1-day ADV to trade.

S&P/​​​​​​​​​ASX Index Rebalance Preview: Big Impact; A Week From Announcement

By Brian Freitas

  • There could be 3 changes for the S&P/ASX 200 (AS51 INDEX) in December. There are unlikely to be any changes for indices higher up the hierarchy.
  • Passive trackers will need to buy between 7-11 days of ADV in the inclusions while the impact on the deletions will be larger at between 11-23 days of ADV.
  • Short interest has decreased on the potential inclusions and increased on the potential deletions. There is significant pre-positioning on some of the stocks.

CSI300 Index Rebalance: 14 Changes & A Few Surprises

By Brian Freitas

  • There are 14 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) at the upcoming rebalance that will be implemented at the close of trading on 8 December.
  • While most changes are in line with forecasts, there are some stocks that have not been added or deleted as the index committee has used their discretion.
  • The adds outperformed the deletes in the first half of the year with performance staying stable over the second half of the year. Position for outperformance ahead of implementation.

Amman Mineral (AMMN IJ): Potential Passive Inflows Coming Up Soon

By Brian Freitas

  • Amman Mineral Internasional (AMMN IJ) listed on the Main Board of the IDX in July by raising US$715m in the largest Indonesia IPO for the year.
  • The stock did not get Fast Entry to any of the local or global indices given the low float, but there could be multiple index inclusions in the near future.
  • The stock is up 3x from its IPO price and there could be supply from some of the investors that got in at the offering price.

Itoen Pref (25935 JP) – Big Discount, Big Buyback, No Big Governance Change

By Travis Lundy

  • This is always a tough subject, but every now and then I throw myself on the mercy of the ho-humming crowd and write about the Ito En Prefs (25935 JP).
  • No strong catalyst. Limited capacity for strongly better governance. Even less apparent corporate interest in good governance. 
  • But we have a mini-catalyst, and it has been a while, and I think there IS a good way to think about this stock, so here’s another crack at it.

REPT BATTERO Energy Pre-IPO – The Positives – Has Scaled Rapidly

By Sumeet Singh

  • REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. 
  • REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. 
  • In this note, we will talk about the positive aspects of the deal.

SET50 Index Rebalance Preview: KCE Could Replace TIDLOR

By Brian Freitas

GAPack (468 HK): Unpacking XJF’s Move To Send The Board Packing

By David Blennerhassett

  • Back on the 27 January 2023, Jardine Matheson (JM SP) entered an agreement with Shandong Xinjufeng (301296 CH) (XJF) to sell its 28.22% stake in GAPack (468 HK). 
  • That sale completed in September.  Last week, XJF requisitioned an EGM to consider appointing five new (& friendly) directors, all-but taking control of the board. 
  • CEO and founder Jeff Bi holds 9.65%. The question is: what are his options?

(Mostly) Asia M&A, Nov 2023: Taisho Pharma, CIMC Vehicle, CMIC, Japan Best Rescue, Shidax

By David Blennerhassett

  • For the month of November 2023, 16 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$13bn.
  • The average premium for the new deals announced (or first discussed) in November was 41%. The average YTD is 38% (97 deals).
  • This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

HK CEO & Director Dealings (1 Dec 2023): Kwoks Still Buying SHK; Co-Founder Selling Akeso

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
  • The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK) and Akeso Biopharma Inc (9926 HK).

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

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