Most Read

Back in February, Newmont Proposes Taking Newcrest Back Into The Fold. Newmont bumped, there was due dili, then Newcrest Backs Newmont’s US$19bn Offer in May.
More recently, we have Newcrest: Shareholder Vote On 13th Oct, with a prescribed schedule. That makes things fun.
There will be considerable movement of shares, and that will mean opportunity. Both up and down. I see US$3bn to buy, then A$1.5bn or more to sell a bit later.

JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)

Results for the Omron Corp (6645 JP) Partial Tender Offer for JMDC (4483 JP) are out.
The Pro-Ration was 51.63%, at the lower end of my initial estimate of 50-58% range, and at the higher end of my revised range (42-56%).
The pro-ration, the nature of the shapes (technical term) tendered, and what that suggests for Noritsu Koki’s position suggests the back end could be more squeezy than not.

WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: 45% Turnover & US$2.5bn to Trade

The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
The October rebalance will result in a one-way turnover of ~45% and in a one-way trade of US$1.24bn. There are ~300 stocks with over 1 day of ADV to trade.
With only 4 trading days to implementation, there could be large moves on stocks with large flows and impact over the next few days.

Shinko Electric (6967) – Waiting for a Package

Shinko Electric Industries (6967 JP) has been on the block. 2nd Round Bids were apparently due last month, but with “Economic Security” considerations, one wonders if that stretches a bit.
The stock is now at the low end of its range vs Ibiden, and the timing is right for a deal which could give it a pop.
A “split price” takeover seems reasonable as a structure. I expect upside. Still.

POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

Posco DX (022100 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
Based on history, the approval for the transfer and the listing change could take place in the next two months.
That means a deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) and inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX). But the timeline is important.

WisdomTree Emerging Markets High Dividend Index Rebalance: Huge Turnover & Trade Next Week

The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
The October rebalance will result in a one-way turnover of ~37% and in a one-way trade of US$926m. There are 92 stocks with over 1 day of ADV to trade.
In Asia, the largest buy flows are expected on Astra International (ASII IJ) and the largest sell flows on POSCO Holdings (005490 KS).

Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem

Fast Retailing (9983 JP) today announced better than guided results, and 10% revenue growth, 18% OP growth to August 2024. NP is light, but still well higher than street consensus.
At 10.37% Nikkei 225 weight, it is still above the target for 31 July 2024. If it does not underperform Nikkei 225 between now and then, US$2bn to sell end-Sep24.
If people like the growthiness, that can be absorbed. But if the stock were to go up 10% vs Nikkei, there’d be US$2bn, then maybe another US$2bn to sell.

NWS Holding (659 HK): Offer Opens with NWD Vote on 2 November

Nws Holdings (659 HK)’s IFA opines that the conditional voluntary general offer from the Cheng family is fair and reasonable. The offer + 2H dividend is HK$9.46 per share.
The key condition is (majority vote) approval by independent NWD shareholders (EGM on 2 November). The timetable is designed such that the shareholders will also receive the NWS final dividend.
NWD has a high but declining AGM minority participation rate. Retail forums suggest support for the transaction. On balance, we believe that this deal gets up.

Korea Finally Offers Reliable Data Channel on Companies with Improved Dividend Procedures

The Obligatory Corporate Governance Report Disclosure System will stand as the only source for furnishing trustworthy data on the proportion of listed companies that have genuinely adopted enhanced dividend procedures.
From a dividend strategy perspective, the companies of primary interest for strategic trading are predominantly those falling under the scope of this disclosure obligation.
Next year, it’s anticipated that with dependable data, we will have the means to craft dividend strategies aimed at this specific group.

Zomato Lock-Up – A US$240m+ Softbank Linked Lockup Release

In Aug 2022, Zomato (ZOMATO IN) completed the acquisition of 91% of Blinkit’s outstanding shares via issuing its own shares. These shares were released from their lockup in Aug 2023.
Softbank then sold a part of its stake in Aug 2023, the rest of its stake will come out of lockup soon.
In this note, we will talk about the lock-up dynamics and recent updates.

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Oct 12

Most Read: Liontown Resources, Kenedix Office Investment Co, Li Auto , JMDC , Eoflow , Rakuten Bank , Kokusai Electric , Posco DX and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Liontown Resources (LTR AU): Passive Selling on Lower Float
Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)
EOFlow’s Suspension Is Not (All) Negative
Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
EOFLOW/Medtronic Tender: On Life Support
Eoflow: Temporary Trading Suspension
Kokusai Electric IPO: Lower Price Range Is Reasonable
POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

Liontown Resources (LTR AU): Passive Selling on Lower Float

Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.

Kenedix Merger: Significant Passive Inflows Expected in Three Weeks

The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.

HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December

With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
Capping changes will result in a one-way turnover of 2.16% and that will result in a round-trip trade of US$556m.
The impact of capping changes has doubled over the last month and there will be more changes from now till the official capping is done on 28 November.

JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)

Results for the Omron Corp (6645 JP) Partial Tender Offer for JMDC (4483 JP) are out.
The Pro-Ration was 51.63%, at the lower end of my initial estimate of 50-58% range, and at the higher end of my revised range (42-56%).
The pro-ration, the nature of the shapes (technical term) tendered, and what that suggests for Noritsu Koki’s position suggests the back end could be more squeezy than not.

EOFlow’s Suspension Is Not (All) Negative

On the 6th of October, a US district court judge entered a preliminary injunction (PI) against EOFlow (294090 KS), pending a trial. This development should have been expected.
Less expected was the suspension of EOFlow shares today, and the cessation of sales globally.
The latter measure appears extreme, noting the PI addresses only sales in the US, which EOFlow is not permitted anyway, without FDA approval. There’s clearly more than meets the eye.

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

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.

EOFLOW/Medtronic Tender: On Life Support

In reaction to the preliminary injunction, Eoflow (294090 KS) shares were suspended as it is reviewing whether it is subject to a substantive review for KOSDAQ listing eligibility.
Medtronic Plc (MDT US) is in an unprecedented situation of potentially acquiring a company whose shares are suspended, has a preliminary injunction against it and exposure to possible liabilities.
Medtronic could have prevented this development by reaffirming its commitment to the deal. The transaction is on increasingly shaky grounds, which is reflected in the 38.2% gross spread.

Eoflow: Temporary Trading Suspension

On 10 October, the Korea Exchange announced a temporary suspension of trading of Eoflow (294090 KS) shares starting 11 October.
Eoflow decided at its board of directors meeting the previous day (10th) to suspend production and sales of Eoflow patches until the outcome of the lawsuit is resolved.
In this insight, we provide various scenario analysis including the worst case, best case, and in-between cases of the Eoflow M&A tender offer process.

Kokusai Electric IPO: Lower Price Range Is Reasonable

Kokusai Electric (6525 JP) has trimmed its IPO price from JPY1,890 to JPY1,830-1,840 per share to raise up to US$727 million. The IPO price will be determined on 16 October.
We previously discussed the IPO in Kokusai Electric IPO: The Bull Case, Kokusai Electric IPO: The Bear Case and Kokusai Electric IPO: Valuation Insights.
Our base-case DCF valuation is JPY2,058 per share. Peers have modestly re-rated, and a lower IPO price range helps increase the IPO’s attractiveness.

POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

Posco DX (022100 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
Based on history, the approval for the transfer and the listing change could take place in the next two months.
That means a deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) and inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX). But the timeline is important.

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Oct 11

Most Read: Japan Post Bank, SK Telecom, Kokusai Electric , Nws Holdings, Origin Energy, Li Auto , Kenedix Office Investment Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie
Korea – Positioning in Stocks That Could Have Global Passive Flows
Kokusai Electric IPO – Weaker Demand Than We Expected
NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie …
Origin/Brookfield: ACCC Rubber Stamped. Now Shareholders Will Have Their Say
Kokusai Electric IPO – Not Wholly Convinced, One Needs to Look past the Cycle
TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights
HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump

October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie

The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it’s $11.3bn a side.
As discussed in Japan Post Bank (7182) – The October TOPIX FFW Adjustment, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.
There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.

Korea – Positioning in Stocks That Could Have Global Passive Flows

Posco DX (022100), Kum Yang (001570), SK Telecom (017670), Lotte Energy Materials (020150), Kakao Games (293490), Pan Ocean (028670), BGF retail (282330), Netmarble (251270) have been on investors/traders radars recently.
There could be liquidity events in some of the stocks next month as passive index trackers look to buy/sell the stocks.
Foreign investors have sold Lotte Energy Materials (020150 KS), Kakao Games (293490 KS), Pan Ocean (028670 KS) and Netmarble (251270 KS) while buying BGF retail (282330 KS).

Kokusai Electric IPO – Weaker Demand Than We Expected

By Mio Kato

Kokusai Electric announced its pricing range today, setting it rather tightly at ¥1,830-1,840.
This is slightly below the initial indicative price of ¥1,890 pointing to modest demand.
That is a rather more tepid response than we initially expected given that this is the first sizable offering in some time.

NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie …

Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for New World (17 HK)‘s 60.88%-held NWS (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed.
The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS’ final dividend ex-date. That’s worth exploring further.

Origin/Brookfield: ACCC Rubber Stamped. Now Shareholders Will Have Their Say

Brookfield Asset Management/MidOcean Energy’s tilt for Origin Energy (ORG AU), faced two major hurdles.
The first was ACCC approval. Not just over competition issues, but also the perceived/apparent public benefit from Brookfield’s future commitment to renewable generation. ACCC has now cleared the transaction.
The second is currying favour with shareholders, several of whom, including AustralianSuper (13.68% stake), reckon the Offer is substantially below long-term value. This needs a bump.

Kokusai Electric IPO – Not Wholly Convinced, One Needs to Look past the Cycle

KKR is looking to raise around US$730m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In our previous notes we have looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuations.

TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights

At the October rebalance, Free Float Weight (FFW) will be reduced on 284 stocks and increased on 458 stocks. 43 stocks will be removed from Phased Weight Reduction.
Estimated one-way turnover is 1.77% resulting in a one-way trade of ¥1.45tn. 364 stocks have over 4 days ADV to trade, 97 stocks have over 8 days ADV to trade.
Over the last 6 months, the stocks with inflows (>US$25m) have outperformed the stocks with outflows (>US$25m) with most of the outperformance coming in the last three months.

HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December

With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
Capping changes will result in a one-way turnover of 2.16% and that will result in a round-trip trade of US$556m.
The impact of capping changes has doubled over the last month and there will be more changes from now till the official capping is done on 28 November.

Kenedix Merger: Significant Passive Inflows Expected in Three Weeks

The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.

Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump

The ACCC has approved Brookfield/EIG’s proposed acquisition of Origin Energy (ORG AU). The Brookfield/EIG offer is A$5.78 and US$2.19 per share, worth A$8.83 at the last close.
The bidders now face the challenge of convincing shareholders to accept the offer and avoid incurring ticking fees. The scheme booklet will be despatched in the coming weeks.
Several shareholders have justifiably argued that the offer is light. Our SoTP valuation is A$9.46 per share, 7.1% above the implied offer price of A$8.83.

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Oct 10

Most Read: Inageya Co Ltd, Liontown Resources, Japan Post Bank, HDFC Bank (ADR), Eoflow , Kokusai Electric , SK Telecom, EcoPro Materials, CELSYS, Daesang Corporation and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
Liontown Resources (LTR AU): Passive Selling on Lower Float
October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie
HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium
Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys
ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu
Korea – Positioning in Stocks That Could Have Global Passive Flows
Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety
TOPIX Inclusions: Who Is Ready (Oct 2023)
Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

Liontown Resources (LTR AU): Passive Selling on Lower Float

Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.

October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie

The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it’s $11.3bn a side.
As discussed in Japan Post Bank (7182) – The October TOPIX FFW Adjustment, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.
There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.

HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium

Foreign shareholding in HDFC Bank (HDFCB IN) has dropped to 59% and the HDFC Bank (ADR) (HDB US) premium to the local line has dropped to 7%.
HDFC Bank (HDFCB IN) has underperformed its peers and the local indices on expectations of lower NIMs and higher NPAs.
There will be passive buying in HDFC Bank in December and March. Further passive buying will require foreign room to increase above 25% which will first require foreign investor selling.

Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys

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 – Haitong International Securities Group (665 HK), 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), IMAX China Holding (1970 HK), BPLANT.
Lowest spreads – Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Seiko Pmc Corp (4963 JP).

ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu

Aequitas Reserach puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, Doosan Robotics (454910 KS) lived up to its hype, while JSW Infrastructure continued India’s strong run.
In the placement space, IDFC First Bank Limited (IDFCBK IN) launched its well flagged QIP, while CALB Group (3931 HK)‘s shareholders were released from their IPO lockup.

Korea – Positioning in Stocks That Could Have Global Passive Flows

Posco DX (022100), Kum Yang (001570), SK Telecom (017670), Lotte Energy Materials (020150), Kakao Games (293490), Pan Ocean (028670), BGF retail (282330), Netmarble (251270) have been on investors/traders radars recently.
There could be liquidity events in some of the stocks next month as passive index trackers look to buy/sell the stocks.
Foreign investors have sold Lotte Energy Materials (020150 KS), Kakao Games (293490 KS), Pan Ocean (028670 KS) and Netmarble (251270 KS) while buying BGF retail (282330 KS).

Ecopro Materials IPO – Thoughts on Valuation – Needs a Margin of Safety

By Ethan Aw

EcoPro Materials (ECO123 KS) is looking to raise up to US$500m in its Korean IPO.
Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
In our previous note, we covered the company’s performance and undertook a peer comparison. In this note, we will share our thoughts on valuation.

TOPIX Inclusions: Who Is Ready (Oct 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.
Since my last insight, CellSource (4880 JP) and Kasumigaseki Capital (3498 JP) have confirmed they will move to TSE Prime which means they will be included in TOPIX at end-November.
FP Partner (7388 JP) and I-NE (4933 JP) will get included in TOPIX at the end of October.

Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing

Posco DX’s KOSPI 200 fast entry effective date will likely coincide with the December regular rebalancing date.
We should focus on the ad-hoc change deletion as we can expect more pronounced price impact near the effective date due to lower chances of premature exposure than regular reviews.
The following three candidates are screened: K Car, Daesang Corporation, and Shinsegae International. They are all likely to exhibit a significant passive impact (x ADTV).

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Oct 09

Most Read: Eoflow , Haitong International Securities Group, Inageya Co Ltd, Nws Holdings, Liontown Resources, Cheng Shin Rubber Ind Co., Ltd., Kokusai Electric , HDFC Bank (ADR), Li Auto and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick
Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
NWS Holding (659 HK): Pre-Condition Satisfied
Liontown Resources (LTR AU): Passive Selling on Lower Float
Index Rebalance & ETF Flow Recap: Taiwan Div+, Nifty50, Cainiao IPO, Delta Electronics
Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys
ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu
HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium
Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem

The US judge has proposed a preliminary injunction which prevents Eoflow (294090 KS) from using Insulet Corp (PODD US)’s trade secrets and disclosing them to any third party.
Eoflow and other defendants must respond by 5 October. The court hearing is set for 16 October. The potential trial is to be discussed in Spring of 2024.
Medtronic Plc (MDT US) faces a difficult choice. If the injunction is enforced, Medtronic would acquire a ring-fenced asset exposed to potential court-determined liabilities.

Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick

When Haitong International Securities Group (665 HK) was suspended on the 27 September, a punchy premium was expected if controlling shareholder Haitong Securities Co (600837 CH) was launching an Offer.
And that is what we got: a $1.52/share Offer, by way of a Scheme, and a 114% premium to last close. Terms have been declared final.
This is a pre-conditional Offer, requiring approvals from approvals from Shanghai SASAC, CSRC, NDRC, and the Shanghai branch of the PBOC.

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

NWS Holding (659 HK): Pre-Condition Satisfied

The pre-condition for the Nws Holdings (659 HK) voluntary general offer from the Cheng family is satisfied. The total offer (HK$9.15 + 2H dividend) is HK$9.46 per share.
The key condition is (majority vote) approval by independent NWD shareholders. NWD’s share price decline and dependency on NWS earnings/cash flow support a NO vote.
A reasonable offer which reduces NWD’s gearing, results in a special dividend and helps reduce the holding company discount supports the YES vote. We think that the YES vote prevails.

Liontown Resources (LTR AU): Passive Selling on Lower Float

Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.

Index Rebalance & ETF Flow Recap: Taiwan Div+, Nifty50, Cainiao IPO, Delta Electronics

The Philippines Stock Exchange PSEi Index (PCOMP INDEX) rebalance was implemented last week and there were interesting moves at the close on implementation day.
The focus this week will be on pre-positioning for a global index rebalance where the review period commences next week.
Units outstanding on iShares Emerging Markets (EMXC US) are at a new high while there continue to be redemptions in iShares Emerging Markets (EEM US).

Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys

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 – Haitong International Securities Group (665 HK), 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), IMAX China Holding (1970 HK), BPLANT.
Lowest spreads – Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Seiko Pmc Corp (4963 JP).

ECM Weekly (8th Oct 2023) – Kokusai, J&T Global, Doosan, Cainiao, Ecopro, UBox, JSW Infra, Seibu

Aequitas Reserach puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
In the IPO space, Doosan Robotics (454910 KS) lived up to its hype, while JSW Infrastructure continued India’s strong run.
In the placement space, IDFC First Bank Limited (IDFCBK IN) launched its well flagged QIP, while CALB Group (3931 HK)‘s shareholders were released from their IPO lockup.

HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium

Foreign shareholding in HDFC Bank (HDFCB IN) has dropped to 59% and the HDFC Bank (ADR) (HDB US) premium to the local line has dropped to 7%.
HDFC Bank (HDFCB IN) has underperformed its peers and the local indices on expectations of lower NIMs and higher NPAs.
There will be passive buying in HDFC Bank in December and March. Further passive buying will require foreign room to increase above 25% which will first require foreign investor selling.

Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI

By Janaghan Jeyakumar, CFA

In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2023.
The index changes for the December 2023 rebalance will be announced in mid-November (17 Nov) and implemented in early-December (with effect from 4 Dec).
Although the Hang Seng index has a highly subjective constituent selection process and index changes are somewhat unpredictable, we will continue sharing our thoughts for each quarterly review.

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Oct 08

Most Read: Samsonite, Keep Inc, Boss Resources, Brilliance China Automotive, Eoflow , Inageya Co Ltd, SK Innovation, Haitong International Securities Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December
HSCI Index Rebalance Preview: Low Probability Add in December
S&P/ASX Index Rebalance Preview: Changes from Now to December
Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, CSI500, STAR50, FnGuide Top10
EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition
Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer
SK Innovation – Why It Hasn’t Worked
Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52
Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick

Hang Seng Index Rebalance Preview: Foreign Companies Eligible from December

The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.

HSCI Index Rebalance Preview: Low Probability Add in December

There have only been 7 new listings on the HKEX (388 HK) in the third quarter of the year so far.
Of those stocks, only Keep Inc (3650 HK) has a chance of being added to the Hang Seng Composite Index in December and then into Southbound Stock Connect.
Keep Inc (3650 HK) is the largest online fitness platform in China and the name recognition could bring in substantial flows via Southbound Stock Connect.

S&P/ASX Index Rebalance Preview: Changes from Now to December

Privatisations could lead to two/three S&P/ASX 200 (AS51 INDEX) constituents being delisted in October/November and that means ad hoc inclusions to maintain the number of constituents at 200.
Then there could be one change for the S&P/ASX 20 Index and two changes for the S&P/ASX 200 (AS51 INDEX) at the regular rebalance in December.
The impact on the potential adds/deletes for the S&P/ASX 200 (AS51 INDEX) is high at between 7.5-23 days of ADV to trade from passive trackers.

Index Rebalance & ETF Flow Recap: HSCEI, HSTECH, CSI500, STAR50, FnGuide Top10

It was a busy Friday with a bunch of indices rebalancing at the close and big volumes trading on a lot of stocks.
Brilliance China Automotive (1114 HK) had a good week with the stock rallying on Thursday and Friday on huge volumes amid expectations of upcoming passive buying.
A quiet week for ETFs with mainland China ETFs seeing some outflows after the huge inflows over the last couple of months.

EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition

After Insulet Corp (PODD US) lodged a lawsuit against EOFlow (294090 KS), Flex, inter alia, on the 3rd August, the judge has thrice extended the temporary restraining order.
But the big (ger) news is that a preliminary injunction comes into force today. Shares are down 2.5% as I type.
This latest development should have been expected. And put simply: a proposed preliminary injunction doesn’t prevent Medtronic Plc (MDT US) from acquiring EOFlow.

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer

Aeon Co Ltd (8267 JP) has announced a partial tender offer for Inageya Co Ltd (8182 JP) to make it a consolidated subsidiary. Aeon flagged this intention on 25 April.
The tender offer is for a maximum of 15.7 million shares (33.78% ownership ratio) at JPY1,610, a 23.2% premium to the undisturbed price. There is no minimum acceptance condition.
The offer price is reasonable. Longer-term, Aeon aims to make Inageya a wholly-owned subsidiary of United Super Markets (3222 JP) by November 2024.

SK Innovation – Why It Hasn’t Worked

By Ken S. Kim

Has SK Innovation raised enough money for its longer term ambitions?
What is the stock pricing in that is not apparent on the balance sheet?
It seems really given their capex outlet, dilutive cap raising is the only solution

Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52

Haitong International Securities Group (665 HK) announced a pre-conditional privatisation offer from Haitong Securities Co Ltd (H) (6837 HK), the controlling shareholder, at HK$1.52, a 114.1% premium to the undisturbed price.
The pre-condition related to regulatory approvals are a formality as Haitong Securities’ largest shareholder is the Shanghai SASAC. The offer price is final.
The key conditions are approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and headcount test. The highest HKEx takeover premium in a year facilitates approval.

Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick

When Haitong International Securities Group (665 HK) was suspended on the 27 September, a punchy premium was expected if controlling shareholder Haitong Securities Co (600837 CH) was launching an Offer.
And that is what we got: a $1.52/share Offer, by way of a Scheme, and a 114% premium to last close. Terms have been declared final.
This is a pre-conditional Offer, requiring approvals from approvals from Shanghai SASAC, CSRC, NDRC, and the Shanghai branch of the PBOC.

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Oct 07

Most Read: Newcrest Mining, Taiwan Secom, JMDC , People’s Insurance (PICC), POSCO Holdings, Boustead Plantations, Eoflow , Inageya Co Ltd, Eo Technics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Newcrest-Newmont Merger: Fancy Index Shenanigans
Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade
JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)
EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
PICC’s (1339 HK) Lifetime Low Implied Stub
Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights
Boustead Plantations (BPLANT MK): LTAT Emerges as a White Knight
EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition
Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
Long Short Flow Trading Opportunity: TIGER Semicon Top 10 ETF Rebalancing Next Friday

Newcrest-Newmont Merger: Fancy Index Shenanigans

Back in February, Newmont Proposes Taking Newcrest Back Into The Fold. Newmont bumped, there was due dili, then Newcrest Backs Newmont’s US$19bn Offer in May.
More recently, we have Newcrest: Shareholder Vote On 13th Oct, with a prescribed schedule. That makes things fun.
There will be considerable movement of shares, and that will mean opportunity. Both up and down. I see US$3bn to buy, then A$1.5bn or more to sell a bit later.

Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade

Using data from the close on 28 September, 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 19.8% and a one-way trade of US$1.36bn.
There are 15 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.

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)

When this was launched, it traded more a fair bit on the first day, but then more volume traded than I expected. This could mean a couple of things.
Re-Reading the original doc leaves nuances. The change in management responsibilities this past summer make some holders less certain. It’s complicated.
There have been several blocks traded, and a large short instantiated. And if one has a more conservative estimate at a higher top-end participation, the back end gets uglier.

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem

The US judge has proposed a preliminary injunction which prevents Eoflow (294090 KS) from using Insulet Corp (PODD US)’s trade secrets and disclosing them to any third party.
Eoflow and other defendants must respond by 5 October. The court hearing is set for 16 October. The potential trial is to be discussed in Spring of 2024.
Medtronic Plc (MDT US) faces a difficult choice. If the injunction is enforced, Medtronic would acquire a ring-fenced asset exposed to potential court-determined liabilities.

PICC’s (1339 HK) Lifetime Low Implied Stub

People’s Insurance (PICC) (1339 HK) is currently trading at an all-time low implied stub.
Stripping out PICC’s 68.98% stake in PICC Property & Casualty H (2328 HK), the market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
PICC is outperforming the HSI. It’s just that PICC P&C is on a hot streak, possibly driven (pun intended) by EV insurance.

Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights

KRX approved the listing of ACE POSCO Group Focus. This fund mirrors the performance of the FnGuide POSCO Group Focus Index. KRX will announce the listing date next week.
This index encompasses 6 Posco affiliates and 4 non-Posco stocks. The top 3 constituents, each assigned a 25% weight, are POSCO Holdings, Posco International, and Posco Future M.
We should explore various long-short setups for stocks within the local battery sector (long Posco affiliates and short others), starting with the listing of this ACE POSCO Group Focus ETF.

Boustead Plantations (BPLANT MK): LTAT Emerges as a White Knight

Boustead Plantations (BPLANT MK) shares have been on a rollercoaster ride. As Kuala Lumpur Kepong (KLK MK) pulls its offer, LTAT has emerged as an unlikely white knight.
LTAT aims to launch a general offer at RM1.55 per share, in line with KLK’s aborted MGO price. The government will backstop LTAT’s funding for the offer.
LTAT is vague on approvals and timing. Regulatory approvals should be a formality as LTAT is the Armed Forces pension fund. At the last close, the gross spread was 10.7%.

EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition

After Insulet Corp (PODD US) lodged a lawsuit against EOFlow (294090 KS), Flex, inter alia, on the 3rd August, the judge has thrice extended the temporary restraining order.
But the big (ger) news is that a preliminary injunction comes into force today. Shares are down 2.5% as I type.
This latest development should have been expected. And put simply: a proposed preliminary injunction doesn’t prevent Medtronic Plc (MDT US) from acquiring EOFlow.

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

Long Short Flow Trading Opportunity: TIGER Semicon Top 10 ETF Rebalancing Next Friday

LX Semicon and Tokai Carbon Korea will be excluded, and these two positions will be filled by Eo Technics and either HPSP or ISC Co Ltd.
The effective date is October 16th, and the rebalancing trading by the TIGER ETF occurs towards the closing (likely to start around 2 p.m.) on Friday, October 13th.
The practical setup would entail an EO Technics-TCK Long Short pair. For a more aggressive strategy, we could explore the inclusion of HPSP in this setup.

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Oct 06

Most Read: Boustead Plantations, Doosan Robotics, JMDC , Eoflow , Kokusai Electric , People’s Insurance (PICC), CALB Group , Fast Retailing, POSCO Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

BPlant/KLK: This Is Getting (Even More) Political
Doosan Robotics (454910 KS): Listing & Index Inclusion Timeline
JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)
EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
Kokusai Electric Pre-IPO – Thoughts on Valuation
PICC’s (1339 HK) Lifetime Low Implied Stub
Eoflow: Ozempic and Wegovy Reducing Need for Disposable Insulin Injection Devices + Ongoing Lawsuit?
CALB IPO Lock-Up – US$2.6bn Lockup Release but Mostly SOE Owned
FAST RETAIL (9983) | 3 Reasons Why Guidance Could Miss
Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights

BPlant/KLK: This Is Getting (Even More) Political

On the 24 August, Kuala Lumpur Kepong (KLK MK) entered an agreement with Boustead Holdings (BHB), Boustead Plantations (BPLANT MK)‘s largest shareholder, to acquire a 33% plus 1 share stake.
Upon the completion of the agreement, KLK – together with BHB and LTAT – would make a Mandatory Offer for BPlant. The Offer Price would be RM1.55/share, a lifetime high
It all looked pretty straightforward. However the BHB/LTAT agreement has twice been delayed. This may still get done. But there remain a number of political kinks to be ironed out.

Doosan Robotics (454910 KS): Listing & Index Inclusion Timeline

Doosan Robotics (454910 KS) is principally engaged in the manufacture and sale of industrial robots.
Doosan Robotics has raised KRW 421bn (US$311m) in its IPO, valuing the company at KRW 1,685bn (US$1.245bn). Float at listing will vary from 6%-21% depending on index provider.
Inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) and other global indices will take place between Feb (possibly May) and June next year.

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)

When this was launched, it traded more a fair bit on the first day, but then more volume traded than I expected. This could mean a couple of things.
Re-Reading the original doc leaves nuances. The change in management responsibilities this past summer make some holders less certain. It’s complicated.
There have been several blocks traded, and a large short instantiated. And if one has a more conservative estimate at a higher top-end participation, the back end gets uglier.

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem

The US judge has proposed a preliminary injunction which prevents Eoflow (294090 KS) from using Insulet Corp (PODD US)’s trade secrets and disclosing them to any third party.
Eoflow and other defendants must respond by 5 October. The court hearing is set for 16 October. The potential trial is to be discussed in Spring of 2024.
Medtronic Plc (MDT US) faces a difficult choice. If the injunction is enforced, Medtronic would acquire a ring-fenced asset exposed to potential court-determined liabilities.

Kokusai Electric Pre-IPO – Thoughts on Valuation

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In our previous notes we have looked at the company’s past performance and undertaken a peer comparison. In this note, we talk about valuations.

PICC’s (1339 HK) Lifetime Low Implied Stub

People’s Insurance (PICC) (1339 HK) is currently trading at an all-time low implied stub.
Stripping out PICC’s 68.98% stake in PICC Property & Casualty H (2328 HK), the market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
PICC is outperforming the HSI. It’s just that PICC P&C is on a hot streak, possibly driven (pun intended) by EV insurance.

Eoflow: Ozempic and Wegovy Reducing Need for Disposable Insulin Injection Devices + Ongoing Lawsuit?

Eoflow’s share price has dropped 27% lower than the proposed tender offer price of 30,000 won. Two major factors have negatively impacted Eoflow (294090 KS)’s share price.
First, in September 2023, there were new data that suggested that popular weight loss drugs including Ozempic and Wegovy could reduce the need for insulin injections with patients with diabetes.
Second, the ongoing lawsuit by Insulet continues to remain a major headache. Eoflow is not a KISS (“Keep It Simple Stupid”) stock.

CALB IPO Lock-Up – US$2.6bn Lockup Release but Mostly SOE Owned

CALB Group (3931 HK) raised around US$1.2bn in its Hong Kong IPO in Oct 2022. The lockup on its pre-IPO shareholders will expire tomorrow.
CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products in China.
In this note, we will talk about the lock-up dynamics and updates since our last note.

FAST RETAIL (9983) | 3 Reasons Why Guidance Could Miss

By Mark Chadwick

Fast Retail Full-Year Expectations: Anticipate strong FY results, but potential FY8/24 guidance headwinds include weather impacts and yen weakness.
Management Guidance Risks: The key risk would seem to be China outlook; Japan/Europe’s heatwave impact on fall season; potential for gross margin pressures.
Valuation: Despite growth prospects, concerns over cyclicality and valuation relative to peers persist.

Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights

KRX approved the listing of ACE POSCO Group Focus. This fund mirrors the performance of the FnGuide POSCO Group Focus Index. KRX will announce the listing date next week.
This index encompasses 6 Posco affiliates and 4 non-Posco stocks. The top 3 constituents, each assigned a 25% weight, are POSCO Holdings, Posco International, and Posco Future M.
We should explore various long-short setups for stocks within the local battery sector (long Posco affiliates and short others), starting with the listing of this ACE POSCO Group Focus ETF.

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Oct 05

Most Read: Bharat Electronics, JMDC , Zinus, Kasumigaseki Capital, Cainiao Smart Logistics, New World Development, Monex Group Inc, Doosan Robotics, Kokusai Electric , J&T Global Express and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd
JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)
Setting up to Target Exclusion Stock Post Doosan Robotics’ KOSPI 200 Fast Entry
UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise
Cainiao IPO: Index Inclusion Timeline
StubWorld: NWD (17 HK) Is Cheap. It May Get Cheaper Still
NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet
Doosan Robotics IPO Trading – Strong Insti Subscription Rates but Still Feels like a Punt
Kokusai Electric IPO: Valuation Insights
J&T Global Express Pre-IPO – PHIP Updates – Managed to Grow but Isn’t Sustainable Yet

NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd

There should be two changes for the NIFTY Index (NIFTY INDEX) in March. That could increase to three, but that would take some big price moves from now to January.
Impact on the potential changes is pretty large at over 6 days of ADV to trade from passive trackers. The impact is over 11 days of delivery volume.
Inclusion of Avenue Supermarts Ltd (DMART IN) in the F&O segment before January could lead to another change.

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)

When this was launched, it traded more a fair bit on the first day, but then more volume traded than I expected. This could mean a couple of things.
Re-Reading the original doc leaves nuances. The change in management responsibilities this past summer make some holders less certain. It’s complicated.
There have been several blocks traded, and a large short instantiated. And if one has a more conservative estimate at a higher top-end participation, the back end gets uglier.

Setting up to Target Exclusion Stock Post Doosan Robotics’ KOSPI 200 Fast Entry

Doosan Robotics has the potential to rise up to ₩104,000 on the listing date. The market cap would reach ₩6.74T, which fulfills the criteria for KOSPI 200 fast entry
Based on this calculation, Zinus had the lowest average daily market cap during the previous rebalancing screening period. Therefore, Zinus will be excluded due to the inclusion of Doosan Robotics.
KOSPI 200 passive trackers will need to conduct rebalancing trading reflecting this ad-hoc change on the closing price of November 9th.

UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise

Over the weekend I wrote about Kasumigaseki Capital (3498 JP)‘s move to TSE Prime and then move to TOPIX. I noted earnings would be out 3 October.
I talked about the possibility of a surprise. They had revised full-year to end-Sep to ¥2bn. They got ¥2.05bn.
But after growing revenue 79% last year, and growing net profit 101%, this year they expect revs +60% and Net Profit +144%.

Cainiao IPO: Index Inclusion Timeline

Cainiao Smart Logistics (1437124D HK) has filed an application proof to list on the HKEX (388 HK) and could raise US$1bn at a valuation between US$15bn-20bn.
Cainiao Smart Logistics (1437124D HK) could get Fast Entry to the HSCI and be included in Southbound Stock Connect once the price stabilisation period is complete.
Inclusion in other indices will take longer with the highest probability of index inclusion in June. Earlier inclusion will depend on the IPO timing, size and allocation to strategic/cornerstone investors.

StubWorld: NWD (17 HK) Is Cheap. It May Get Cheaper Still

New World Development (17 HK) nudges an all-time low P/B and implied stub; as the privatisation of NWS Holdings (659 HK) moves gradually forward.
Preceding my comments on NWD/NWS are the current setup/unwind tables for Asia-Pacific Holdcos
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet

Today, Monex Group Inc (8698 JP) and NTT (Nippon Telegraph & Telephone) (9432 JP)‘s NTT Docomo announced a Capital and Business Alliance Agreement. It is a complicated deal.
Monex GROUP will create a holdco which owns Monex Inc (the broker) and sell 51% to Docomo. Docomo will consolidate. Monex Group will own 49% as an equity method affiliate.
Monex GROUP will then double its dividend, maybe buy back shares, and expects to grow as Docomo pushes and Monex invests. But what remains is a mixed bag.

Doosan Robotics IPO Trading – Strong Insti Subscription Rates but Still Feels like a Punt

By Ethan Aw

Doosan Robotics (454910 KS) raised around US$318m in its Korea IPO, after pricing its IPO at the top end of the range at KRW26,000/share.
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
In this note, we will talk about the demand for the deal and other trading dynamics.

Kokusai Electric IPO: Valuation Insights

Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR & (KKR US) seeks to raise about US$745 million through listing Kokusai.
We previously discussed the IPO in Kokusai Electric IPO: The Bull Case and Kokusai Electric IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Kokusai is fully valued at the IPO reference price of JPY1,890 per share. We would pass on the IPO.

J&T Global Express Pre-IPO – PHIP Updates – Managed to Grow but Isn’t Sustainable Yet

J&T Global Express, a global logistics service provider, is looking to raise about US$500m in its upcoming Hong Kong IPO.
As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
We have looked at the company’s past performance in our earlier notes. In this note we will look at its PHIP updates.

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Oct 04

Most Read: E Guardian Inc, Taiwan Secom, KT&G Corporation, Boustead Plantations, China Vanke (H), Ecopro Co Ltd, Japan Rental Housing Investment, Kokusai Electric , Vertex Technology Acquisition Corporation, Bharat Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SBI Affiliate To Buy 45-49% of E-Guardian (6050) In Partial Tender Offer
Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade
Alpha Generation Through Share Buybacks in Korea: August & September 2023
Boustead Plantations (BPLANT MK): A Transaction Mired in Political Debate
Quiddity A/H Premium Tracker (To Sep28): Hs Suffer Vs As Despite Inflows
Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2023
Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All
Kokusai Electric Pre-IPO – Peer Comparison
Vertex Technology’s Hybrid Arb
NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd

SBI Affiliate To Buy 45-49% of E-Guardian (6050) In Partial Tender Offer

Today, Change Inc (3962 JP) (30%-owned by SBI Holdings (8473 JP)) announced a Tender Offer to buy 32-36.9% of E-Guardian, followed by a third-party placement to get them to 45-49%.
Small cap E-Guardian does internet services support, ad processing, cyber security (their fastest growing segment) and top line has been growing.
The partial offer is big enough to matter, and up 50%. It is worth a look for people who like small cap special sits.

Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade

Using data from the close on 28 September, 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 19.8% and a one-way trade of US$1.36bn.
There are 15 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.

Alpha Generation Through Share Buybacks in Korea: August & September 2023

In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in August and September 2023.
We provide a list of 18 stocks in the Korean stock market that have announced share buyback programs in August and September 2023.
The top three market cap stocks that have announced share repurchases include Celltrion Inc (068270 KS), Celltrion Healthcare (091990 KS), and KT&G Corporation (033780 KS).

Boustead Plantations (BPLANT MK): A Transaction Mired in Political Debate

Boustead Plantations (BPLANT MK) shares are down 16%, resulting in proprietary day trading and intraday short selling being suspended. The transaction is mired in political debate.
The bull case is that Kuala Lumpur Kepong (KLK MK) continues on-market purchases and the opposition will compromise, paving the way for deal completion. Timing is the key risk.
The bear case is a deal break. The downside is limited as the government will need another buyer, the shares trade below the undisturbed price, and the undemanding valuation.

Quiddity A/H Premium Tracker (To Sep28): Hs Suffer Vs As Despite Inflows

The Brand-Spanking New (8 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
We used to do it. We brought it back better, with lots of cool interactive tables, and charts, heat maps, and comparative data. And 47 Trade Recommendations.
The last 7 weeks (since the start of the new Trcker and Portfolio 8 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 4Q 2023

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 4Q 2023.
Of the 38 pair trades, 18 of them involved holdcos outperforming opcos YTD and 20 of them involved opcos outperforming holdcos in the same period.
We highlight 38 pair trades that involve Korean holdcos and opcos.

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

By Janaghan Jeyakumar, CFA

Midsize residential JREIT Daiwa Securities Living (8986 JP) (“DSLIC“) launched a follow-on equity offering to partially fund their recently-announced acquisitions.
The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.
In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC’s previous follow-on equity offerings.

Kokusai Electric Pre-IPO – Peer Comparison

KKR is looking to raise around US$750m via selling a stake in Kokusai Electric (6525 JP) (KE) in its Japan IPO.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In our previous notes we have looked at the company’s past performance. In this note, we will undertake a peer comparison.

Vertex Technology’s Hybrid Arb

Temasek-Backed Vertex Technology Acquisition Corporation (VTAC SP), the first of three SPACs (so far) to list on the SGX, has announced a transaction to buy Taiwanese live-streaming platform, 17Live.
Assuming the deal completes, potentially by year-end, the merged entity would be valued at ~S$1.16bn.
All independent shareholders are entitled to redemption rights. That is, you’ll get ~$5 back if redeeming against $4.96/share now. But liquidity is not great. Plus this appears a related-party transaction.

NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd