Most Read

The data for the Nikkei 225 Rebalance is cemented as of 31 July 2023. Lasertec Corp (6920 JP) looks like a shoo-in. The DELETEs are obvious too.
Fast Retailing (9983 JP) doesn’t get a cap (yet). But the other ADDs are a real question. It is a matter of interpreting the methodology and qualitative aspects. And FLOAT.
One way, Socionext (6526) and Mercari (4385) are ADDs. Another way, it looks like Nitori Holdings (9843) and ZOZO Inc (3092) or Ryohin Keikaku (7453). FLOAT IS A PROBLEM ANYWAY.

Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS

Chindata Group (CD US) has entered a definite agreement with Bain Capital at US$8.60 per ADS, 7.5% higher than its previous offer of US$8.00 per ADS.
Completion is conditional on shareholder approval, dissenting shareholders representing less than 12% of outstanding shares and any applicable regulatory approvals. The completion conditions should be met.
CMC’s offer, while higher, does not meet the “superior proposal” criterion. At the last close price and December-end completion, the gross and annualised spread is 6.0% and 16.6%, respectively.

The Brand Spanking New Extra Spiffy 🦄H/A-Share Discount/Premium Weekly (As of 11 Aug 2023)

This is the Brand Spanking New and Extra Spiffy H/A-Share Discount/Premium Weekly designed to help investors see the relationships easily. We used to do it.
We decided to bring it back better. There are lots of cool interactive tables, and charts, heat maps, and comparative data. And 19 Trade Recommendations.
We hope this new version serves readers even better. Feedback is actively solicited to see if we can improve it from here.

L’Occitane (973 HK): Board Updates on the Potential Offer Structure and Price

In response to media speculation, L’Occitane (973 HK) has clarified that Reinold Geiger, the Chairman and the largest shareholder, is contemplating a possible transaction through a voluntary general offer.
However, the rumoured offer of HK$35 per share is false. Mr Geiger has confirmed that the potential offer price would be no less than HK$26.00 per share.
The floor price of HK$26 is light and needs a bump (towards HK$30), particularly if Mr Geiger wants 95% of voting rights to exercise the right of compulsory acquisition (squeeze-out).

Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea

The review period for the September rebalance of the S&P/ASX family of indices ends on Friday. There will be a lot of changes across the family.
Hang Seng Indices will announce the changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI after market close on Friday.
There were HUGE inflows to onshore China focused ETFs during the week with CSI 300 Index, CSI 500 Index and SSE50 Index ETFs taking in the largest amounts.

Itochu Takeout of Daiken (7905) – Too Low at ¥3,000/Share But May Be Tough To Oppose

Itochu owns 36.3% of building materials and engineering firm Daiken Corp (7905 JP). They have launched a tender with gimmicky Majority-of-Minority to buy the rest at ¥3,000/share, 4.7x FY2024e EBITDA.
That’s low-ish, but given securities holdings, inventory, and net receivables at 4+x EBITDA it’s probably too cheap, but it gets quite close to the minimum threshold just with cross-holders.
This deal price doesn’t include synergies (according to the valuations and the SC) but a bump would need an agitator. Hope alone won’t get it.

Where & How to Check CFD Trading Data Starting Sept 1st

The CFD balance information (both overall and individual stock) will be provided by KOFIA and KOSCOM, starting from September 1st.
September 1st also marks the day when local brokerages that temporarily suspended CFD trading services will resume them.
With the disclosure of individual stock CFD balances starting from September 1st, there’s a high probability of another volatility turning point.

MVIS Australia Equal Weight Index Rebalance Preview: Deletes, Close Deletes, Capping Changes

There could be two deletes for the index in September. There are two other stocks that are close to the deletion threshold.
Even if there are no constituent changes, there will be capping changes that will result in one-way turnover of around 2.7% and a one-way trade of A$51m.
Short interest has been increasing on Charter Hall (CHC AU) and JB Hi-Fi Ltd (JBH AU) and could be partially driven by potential index deletions.

MVIS Australia A-REITs Index Rebalance Preview: One Delete, One Close Delete & Capping

There should be one deletion from the index in September. And there could be another deletion. And there will be capping changes for a few stocks.
The index changes will lead to a one-way turnover of 2.12% resulting in a one-way trade of A$13m. There is only one stock with over A$5m to trade.
Following the spinoff, Abacus Group (ABG AU) and Abacus Storage King (ASK AU) will be the lowest ranked index constituents and at risk of deletion from the index.

Ohayo Japan| Uncertainty Reigns in Equity World; NUGGET: Honda – A Bike Company that Makes Cars

By Mark Chadwick

OVERSEAS. Uncertainty reigns as SPX closed flat Friday; US Treasury Yields rise as Yield Curve flattens on strong producer price data; Headwinds Mount in China’s Economy; Oil Demand reach record.
JAPAN. Nikkei Futures -0.1% vs Cash; USDJPY 145; Kishida Cabinet approval down; Wholesale prices slow; Japanese firms opt to go private rather than face activists; Inbound Boost from China.
NUGGET. Honda has a robust earnings structure that we think will be resilient to the increasing investment spend on BEV, with motor bike profitability

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Aug 13

Most Read: MOG Digitech Holdings , Zydus Lifesciences Ltd, ROHM Co Ltd, Mercari , Inpex Corp, Chindata Group, Rakuten Bank , Lasertec Corp, Supreme Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MOG Digitech (1942 HK): What the Flow Is Going On?
Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented
JPX Nikkei 400 Index Rebalance: Some Big Impact Names
Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding
Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback (Aug 2023 Version)
Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS
Rakuten Bank (5838 JP) – At a Valuation Inflection Point
Sep 2023 Nikkei 225 Review – Not An Easy Rebal 🤨
Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea

MOG Digitech (1942 HK): What the Flow Is Going On?

MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends

The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn).

NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented

Using the current index methodology throws up 5 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be BIG.
Using the proposed index methodology throws up 11 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be HUGE.
The market consultation being put on hold could indicate pushback from index users or the possibility of F&O contracts being introduced on some of the non-F&O index constituents.

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.

Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding

The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.

Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback (Aug 2023 Version)

A year ago I wrote that same headline as Inpex Corp (1605 JP) reported H1 results, a change in forecasts, and a bigly buyback.
Yesterday, Inpex reported FY2023 H1 results, a change in forecasts, and a bigly buyback.
The mechanics are the same. The impact is a bit different, but it is worth looking at. Then there is the event on 28 February 2024.

Chindata (CD US): Bain’s Binding Proposal at US$8.60 Per ADS

Chindata Group (CD US) has entered a definite agreement with Bain Capital at US$8.60 per ADS, 7.5% higher than its previous offer of US$8.00 per ADS.
Completion is conditional on shareholder approval, dissenting shareholders representing less than 12% of outstanding shares and any applicable regulatory approvals. The completion conditions should be met.
CMC’s offer, while higher, does not meet the “superior proposal” criterion. At the last close price and December-end completion, the gross and annualised spread is 6.0% and 16.6%, respectively.

Rakuten Bank (5838 JP) – At a Valuation Inflection Point

By Victor Galliano

Rakuten Bank is a clear beneficiary of the steepening yield curve in Japan, with its low LDR and healthy capital ratio
Rakuten Bank’s LTM PE multiple of 11.4x, LTM PBV ratio of 1.5x and ROE of 13.8% makes it the best ROE to PBV ratio bank among its digital peers
Rakuten Bank is also the lowest cost to serve Japanese digital bank; it is narrowing the PBV ratio discount gap with SBI Sumishin

Sep 2023 Nikkei 225 Review – Not An Easy Rebal 🤨

The data for the Nikkei 225 Rebalance is cemented as of 31 July 2023. Lasertec Corp (6920 JP) looks like a shoo-in. The DELETEs are obvious too.
Fast Retailing (9983 JP) doesn’t get a cap (yet). But the other ADDs are a real question. It is a matter of interpreting the methodology and qualitative aspects. And FLOAT.
One way, Socionext (6526) and Mercari (4385) are ADDs. Another way, it looks like Nitori Holdings (9843) and ZOZO Inc (3092) or Ryohin Keikaku (7453). FLOAT IS A PROBLEM ANYWAY.

Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning – India, Japan, Korea

The review period for the September rebalance of the S&P/ASX family of indices ends on Friday. There will be a lot of changes across the family.
Hang Seng Indices will announce the changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI after market close on Friday.
There were HUGE inflows to onshore China focused ETFs during the week with CSI 300 Index, CSI 500 Index and SSE50 Index ETFs taking in the largest amounts.

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✓ Unlimited Research Summaries
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✓ Company Analytics and News
✓ Events & Webinars

Aug 12

Most Read: MOG Digitech Holdings , ROHM Co Ltd, Mercari , Power Finance, Alibaba Group Holding , Eoflow , Hongkong Land, Hotel Shilla, Metro Pacific Investments Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MOG Digitech (1942 HK): What the Flow Is Going On?
JPX Nikkei 400 Index Rebalance: Some Big Impact Names
Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding
India – Positioning on Some Interesting Names
Alibaba (9988 HK): 1Q24, Brilliant Result After Reorganization, 90% Upside
Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)
Metro Pacific Investments (MPI PM): Risk/Reward as Uncertainty Hangs on the Delisting Threshold
Hotel Shilla Pref: Discount Vs Common to Narrow and Boost from Chinese Group Tours to Korea
Metro Pacific’s Tender Offer Kicks Off

MOG Digitech (1942 HK): What the Flow Is Going On?

MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.

Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding

The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.

India – Positioning on Some Interesting Names

Power Finance, Astral, IDFC First Bank, Cummins India, HDFC Asset Management, Ashok Leyland, Polycab India and Supreme Industries have all run up over the recent past and have investor attention.
The increase in market cap has put the stocks on active manager radars and could also result in the stocks being added to global indices in the near future.
We take a look at the positioning on the stocks and recommend pair trades to reduce market risk while trying to capture alpha.

Alibaba (9988 HK): 1Q24, Brilliant Result After Reorganization, 90% Upside

By Ming Lu

The revenue growth rate rose to 14% in 1Q24, compared to the past four stagnant quarters.
All businesses continued to improve their margins, so that the general operating margin rose to 19% in 1Q24 versus 12% in 1Q23.
We believe the re-organization is successful and the stock price is overly impacted. Buy.

Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”

Insulet Corp (PODD US)’s lawsuit against Eoflow (294090 KS) caused a sharp decline in Eoflow’s share price today (down 10.7% to 24,950 won).
Insulet is accusing Eoflow of hiring several senior personnel that have helped Eoflow to develop a product that could take away market share from Insulet.
The most important factor may be Eoflow’s “special sauce” which is some kind of technology/mechanism that allows this 17% greater efficiency/convenience for the wearable EOPatch insulin device.

Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire Hongkong Land (HKL SP)‘s 33-storey Three Exchange Square.
This “news” is straight out of left field. For its part, HKL said the market rumour is pure speculation.
HKL’s P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid.

Metro Pacific Investments (MPI PM): Risk/Reward as Uncertainty Hangs on the Delisting Threshold

Metro Pacific Investments Co (MPI PM)‘s voluntary delisting tender offer from a consortium at PHP5.20 (net price of PHP5.1677 per share) will run from 9 August to 7 September.
The delisting proposal was approved on 8 August. Excluding the consortium’s votes, only 37.4% of minorities (representing 13.73% of outstanding shares) voted YES for the delisting proposal.
A key risk is satisfying the 95% delisting threshold, which would require a minorities acceptance rate of 86.4%. The risk/reward is unattractive at the current spread of 4.4% (net 3.8%).

Hotel Shilla Pref: Discount Vs Common to Narrow and Boost from Chinese Group Tours to Korea

Hotel Shilla, one of the largest operators of duty free shops in Korea, will be a major beneficiary of the return of the group tours from China to Korea.
We expect the consensus to raise the company’s sales estimates in 2024 to 2025 by about 3-7% and net profit estimates by 20-25%+ in this period.
Currently, Hotel Shilla Pref/Common stock price ratio is 0.61 which is 22% below the five year average of 0.78.

Metro Pacific’s Tender Offer Kicks Off

Back on the 26 April, First Pacific (142 HK) and three other entities, proposed delisting Metro Pacific Investments (MPI PM) at PHP 4.63/share. This was subsequently bumped to PHP 5.20.
A Special Stockholders’ Meeting was held on August 8, and MPI stakeholders approved all the resolutions. An SGM for independent First Pac shareholders will be held on the 24 August.
The Tender Offer is now open and closes on the 7 September, with (expected) settlement on 19 September – provided the Tender Offer delisting conditions are met.

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Aug 11

Most Read: MOG Digitech Holdings , Power Finance, Hotel Shilla, Eoflow , Inpex Corp, Alibaba Group Holding , Alibaba (ADR), Hongkong Land, Ecopro Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MOG Digitech (1942 HK): What the Flow Is Going On?
India – Positioning on Some Interesting Names
China to Finally Allow Group Tours to Korea and Japan?
Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback (Aug 2023 Version)
Alibaba (9988 HK): 1Q24, Brilliant Result After Reorganization, 90% Upside
Alibaba: A Quick Take on 1QFY24
Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)
StubWorld: Japex/Inpex, Amorepacific, Wynn, Shimao, Takara, Silicon Integrated/United Micro
Two Noteworthy Issues in Korea’s SSF/SSO Selection in September Round

MOG Digitech (1942 HK): What the Flow Is Going On?

MOG Holdings (1942 HK) has been skyrocketing in price since the start of the year. Remarkably, there is little change in the number of shares that trade daily.
MOG Holdings (1942 HK) has a market cap of US$6.44bn and trades at a modest Price/Sales ratio of 75x and an equally modest Price to Book Value of 89.5x.
Liquidity has improved to the point where the stock could be added to some indices. However, there is a precedent of stocks not being added following market participant feedback.

India – Positioning on Some Interesting Names

Power Finance, Astral, IDFC First Bank, Cummins India, HDFC Asset Management, Ashok Leyland, Polycab India and Supreme Industries have all run up over the recent past and have investor attention.
The increase in market cap has put the stocks on active manager radars and could also result in the stocks being added to global indices in the near future.
We take a look at the positioning on the stocks and recommend pair trades to reduce market risk while trying to capture alpha.

China to Finally Allow Group Tours to Korea and Japan?

In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days.
The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.

Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”

Insulet Corp (PODD US)’s lawsuit against Eoflow (294090 KS) caused a sharp decline in Eoflow’s share price today (down 10.7% to 24,950 won).
Insulet is accusing Eoflow of hiring several senior personnel that have helped Eoflow to develop a product that could take away market share from Insulet.
The most important factor may be Eoflow’s “special sauce” which is some kind of technology/mechanism that allows this 17% greater efficiency/convenience for the wearable EOPatch insulin device.

Inpex (1605 JP) – Earnings, Forecasts and a BIGLY Buyback (Aug 2023 Version)

A year ago I wrote that same headline as Inpex Corp (1605 JP) reported H1 results, a change in forecasts, and a bigly buyback.
Yesterday, Inpex reported FY2023 H1 results, a change in forecasts, and a bigly buyback.
The mechanics are the same. The impact is a bit different, but it is worth looking at. Then there is the event on 28 February 2024.

Alibaba (9988 HK): 1Q24, Brilliant Result After Reorganization, 90% Upside

By Ming Lu

The revenue growth rate rose to 14% in 1Q24, compared to the past four stagnant quarters.
All businesses continued to improve their margins, so that the general operating margin rose to 19% in 1Q24 versus 12% in 1Q23.
We believe the re-organization is successful and the stock price is overly impacted. Buy.

Alibaba: A Quick Take on 1QFY24

By Oshadhi Kumarasiri

Alibaba (ADR) (BABA US)‘s 1QFY24 revenue and OP beat consensus by RMB 9.2bn and RMB 14.4bn respectively, possibly on the back of a successful 6.18 shopping festival.
It looks like Alibaba Group Holding (9988 HK) has decided to abandon its New Retail Strategy and instead, put more effort into e-commerce, especially on popular platforms like Taobao and Tmall.
Although this is a good-sign and could rally the stock short-term, we would still steer clear of Alibaba as we remain skeptical about the overall health of the Chinese economy.

Hongkong Land: Exchange Square Sale Would Be BIG News. (If True)

According to Sing Tao, two PRC firms and a mainland bank have formed a consortium to acquire Hongkong Land (HKL SP)‘s 33-storey Three Exchange Square.
This “news” is straight out of left field. For its part, HKL said the market rumour is pure speculation.
HKL’s P/B of 0.24x is closing in on its all-time low of 0.21x during the depths of Covid.

StubWorld: Japex/Inpex, Amorepacific, Wynn, Shimao, Takara, Silicon Integrated/United Micro

For a change of pace, this insight briefly canvasses a clutch of Holdco’s trading at extreme levels.
Preceding the chart-heavy insight 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%.

Two Noteworthy Issues in Korea’s SSF/SSO Selection in September Round

Recent information leaked through local media reveals that KRX has ultimately opted not to list Ecopro Co’s SSF in the upcoming September round.
Given the unusually high trading volume of at-the-money (ATM) options in the local SSO market, the market’s interest in covered calls for dividend-yielding stocks can be substantial.
So, we should pay attention to stocks whose SSO is already listed or will be newly listed in September among those that have shifted their ex-dividend dates to post-dividend confirmation.

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✓ Company Analytics and News
✓ Events & Webinars

Aug 10

Most Read: Kenedix Office Investment Co, Eoflow , L’Occitane, NTT (Nippon Telegraph & Telephone), Hotel Shilla, Invocare Ltd, Kyoden Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Kenedix Merger: Big Passive Inflows on the Cards
EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks
Insulet Accuses EOFlow Of Stealing Trade Secrets
Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow
L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?
Amari Ni Mo… NTT (9432)
Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”
China to Finally Allow Group Tours to Korea and Japan?
InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share
Kyoden (6881 JP) MBO – An Small, Easy, Illiquid, Light But Not Horribly Unfair Done Deal at ¥600

Kenedix Merger: Big Passive Inflows on the Cards

The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.

EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks

Insulet Corp (PODD US) filed with the United States District Court a complaint for patent infringement against Eoflow (294090 KS), Flex (FLEX US), Luis Malave, Steven DiIanni, and Ian Welsford.
Insulet’s primary allegation is that Eoflow’s EOPatch device is built using Insulet’s proprietary trade secrets and infringes three Insulet US patents (‘741, ’883 and ‘950 patents).
The most likely scenarios are that Medtronic Plc (MDT US) and Insulet sign a licensing agreement (resulting in a possible tender offer price cut) or Medtronic walks.

Insulet Accuses EOFlow Of Stealing Trade Secrets

From the outset, EOFlow (294090 KS) has traded wide (~7% of average) to Medtronic Plc (MDT US)‘s Offer. An apparent delay in filing with Korean regulators formed one argument.
Now there’s a compelling reason. Key insulin pump competitor Insulet (PODD US) has filed a lawsuit accusing EOFlow of the misappropriation of trade secrets, patent infringement, and trademark dilution.
Singapore-Based Flex (FLEX US) and three ex-employees of Insulet are also defendants. This does not bode well for the transaction.

Summary of the Situation Regarding Insulet’s Lawsuit in the US Against Eoflow

This signifies the official commencement of a lawsuit against Eoflow in the United States, which has been considered one of the most significant risks for Eoflow.
Eoflow is externally saying that the aspect of patents claimed by Insulet is actually based on previously expired patents. Hence, Eoflow believes they can win this patent lawsuit.
This lawsuit emerged before the acquisition decision by Medtronic suggesting a need to consider trading the current spread based on the inference that the tender offer is still valid.

L’Occitane (973 HK): HK$35 Offer from the Controlling Shareholder?

According to Bloomberg, L’Occitane (973 HK) is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.
The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.
The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples.

Amari Ni Mo… NTT (9432)

NTT reports a Q1 which looks like KDDI where the business looks like KDDI and a bit better than that where it doesn’t. Good. Not great.
But NTT announced a ¥200bn buyback. Again good. Not great.
And on Sunday, LDP politician Amari spoke on a Sunday news show about the possible govt selldown of NTT shares. 20yrs is a long time. So no overhang.

Insulet’s Lawsuit Against Eoflow, Medtronic’s Tender Offer, and Eoflow’s “Special Sauce”

Insulet Corp (PODD US)’s lawsuit against Eoflow (294090 KS) caused a sharp decline in Eoflow’s share price today (down 10.7% to 24,950 won).
Insulet is accusing Eoflow of hiring several senior personnel that have helped Eoflow to develop a product that could take away market share from Insulet.
The most important factor may be Eoflow’s “special sauce” which is some kind of technology/mechanism that allows this 17% greater efficiency/convenience for the wearable EOPatch insulin device.

China to Finally Allow Group Tours to Korea and Japan?

In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days.
The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.

InvoCare (IVC AU): SID Signed with TPG at A$12.7/Share

Invocare has entered into a scheme implementation deed with TPG at A$12.7/share. This is higher than the initial offer of A$12.65/share but lower than the revised offer of A$13/share.
There is an extra A$0.26/share in franking credits for Invocare Ltd (IVC AU) shareholders that can use them.
Passives will need to sell nearly 11m shares of Invocare Ltd (IVC AU) on the last trading day and there will be an adhoc inclusion to the S&P/ASX 200 Index.

Kyoden (6881 JP) MBO – An Small, Easy, Illiquid, Light But Not Horribly Unfair Done Deal at ¥600

Today, the personal holding company of Kyoden Co Ltd (6881 JP) founder Hashimoto-san announced a Tender Offer to take the company private.
Together with his company, he owns 64.75%. He only needs 1.93% to tender. The combination of Shokochukin, SMBC, and Yokohama Bank get him over the line.
This is small, illiquid, and will trade tight, but it’s a done deal.

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Aug 09

Most Read: ROHM Co Ltd, Samsung Electronics Pref Shares, Bank of Kyoto, Lasertec Corp, Kenedix Office Investment Co, Toshiba Corp, Zomato, Eoflow and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JPX Nikkei 400 Index Rebalance: Some Big Impact Names
Samsung Electronics: Prefs Need to Catch Up
JIP Tender Offer for Toshiba (6502) Finally Here
Toshiba – The Tender Arrives
Bank of Kyoto (8369) – Too Far Too Fast
2023 JPX Nikkei 400 Rebal – 38 IN, 36 OUT, 4.2% One Way Flow
Kenedix Merger: Big Passive Inflows on the Cards
Toshiba (6502) Tender Offer – Kioxia Optionality
Zomato Lock-Up – A US$650m+ Worth Acquisition Linked Lockup Release
EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.

Samsung Electronics: Prefs Need to Catch Up

Over the last year, the discount of Samsung Electronics Pref Shares (005935 KS) to Samsung Electronics (005930 KS) has increased from 5% to 17%.
The preferred shares have adequate liquidity, a large issue market cap, and now trade at a much higher dividend yield. A special dividend will further increase the dividend yield differential.
Breaking from history, the preferred shares discount has continued to increase as the stock has moved higher. With the preferred shares trading near its widest discount, that could change.

JIP Tender Offer for Toshiba (6502) Finally Here

The JIP TOB for Toshiba is here. Finally. It is still too low. Since the announcement, when it was too low, peers are up a lot, and memory looks healthier.
But it is not clear that activists who pushed this for years want to push any more. There appears to be Toshiba Fatigue, as I warned in March.
That makes this deal look “safe” but there are technical aspects which make it less “comfortable” than normal large and long-awaited deals.

Toshiba – The Tender Arrives

By Mio Kato

At long last the end to the Toshiba saga appears at hand with JIP’s belated tender offer being formally announced today at the previously quoted price of ¥4,620.
With a minimum target of 66.7% this does not seem guaranteed to pass but we nevertheless believe that odds are good.
The question is whether there is any room for a small hike in the price as alluded to by the Chairman.

Bank of Kyoto (8369) – Too Far Too Fast

Bank of Kyoto (8369 JP) has been on a relative tear recently. This is a bit surprising. On a static equity-portfolio discount measure, it has outperformed regional banks.
On a static regional bank PBR basis, it has outperformed its equity portfolio and the discount to the After Tax Equity Portfolio Value (ATEPV) is the smallest in eight years.
Is there a sea change? There is a possibility, however remote, that domestic investor disappointment rears its voting head. That’s the dream scenario. But I don’t see it coming soon.

2023 JPX Nikkei 400 Rebal – 38 IN, 36 OUT, 4.2% One Way Flow

The Tenth Annual JPX Nikkei 400 Index Review was announced on Monday 7 August. There are 38 Inclusions, 36 Deletions. They are mostly in line with Janaghan Jeyakumar, CFA‘s predictions.
The BIG SELL is T&D Holdings (8795 JP), which surprised me. The top BUY is ROHM Co Ltd (6963 JP) which was not on the Quiddity Leaderboard.
Otherwise, the ADDs and DELETEs are 1.8-2.0 days of ADV, there are several NEW CAPs and some RECAPS among LARGE CAPS

Kenedix Merger: Big Passive Inflows on the Cards

The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.

Toshiba (6502) Tender Offer – Kioxia Optionality

Yesterday, JIP finally announced its Tender Offer for Toshiba Corp (6502 JP) as discussed in JIP Tender Offer for Toshiba (6502) Finally Here
I got a few questions this morning on the earnings call comments from Chairman Watanabe regarding what might happen if a Kioxia Transaction were announced mid-JIP Tender.
My assumption before, during, and after, is that the Board wants this deal done. And doesn’t really want to take any responsibility for pushing any more.

Zomato Lock-Up – A US$650m+ Worth Acquisition Linked Lockup Release

By Sumeet Singh

In Aug 2022, Zomato completed the acquisition of Blinkit’s outstanding shares via issuing its own shares. These issued shares will come up for lockup release on 10th Aug 2023.
Zomato is one of two leading food delivery app operators in India. Its acquisition of Blinkit marked its foray into the instant grocery segment.
In this note, we will talk about the lock-up dynamics and recent updates.

EOFLOW/Medtronic Tender: Insulet’s US Complaint Materially Increases Deal Break Risks

Insulet Corp (PODD US) filed with the United States District Court a complaint for patent infringement against Eoflow (294090 KS), Flex (FLEX US), Luis Malave, Steven DiIanni, and Ian Welsford.
Insulet’s primary allegation is that Eoflow’s EOPatch device is built using Insulet’s proprietary trade secrets and infringes three Insulet US patents (‘741, ’883 and ‘950 patents).
The most likely scenarios are that Medtronic Plc (MDT US) and Insulet sign a licensing agreement (resulting in a possible tender offer price cut) or Medtronic walks.

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Aug 08

Most Read: Kum Yang, NGK Insulators, Toshiba Corp, Mercari , ROHM Co Ltd, Bank of Kyoto, Samsung Electronics Pref Shares, Estia Health, CELSYS and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea – Positioning in Ecopro, Kumyang, JYP Entertainment, Hanwha Ocean, Hanmi Semi, Posco DX
Japan – Increase in Shorts on Some Interesting Stocks
JIP Tender Offer for Toshiba (6502) Finally Here
Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding
JPX Nikkei 400 Index Rebalance: Some Big Impact Names
Bank of Kyoto (8369) – Too Far Too Fast
Toshiba – The Tender Arrives
Samsung Electronics: Prefs Need to Catch Up
Estia & Bain Enter Into Scheme Agreement
TOPIX Inclusions: Who Is Ready (Aug 2023)

Korea – Positioning in Ecopro, Kumyang, JYP Entertainment, Hanwha Ocean, Hanmi Semi, Posco DX

Ecopro Co Ltd, Kum Yang, Jyp Entertainment, Hanwha Ocean, Hanmi Semiconductor and Posco DX have all rallied recently and could find their way into global passive portfolios.
There could be liquidity events in some of the stocks as early as the end of the month and there is pre-positioning on a lot of the stocks.
Retail investors have been big buyers in Ecopro Co and Kum Yang while foreign investors have been buyers in Jyp Entertainment, Hanwha Ocean, Hanmi Semiconductor and Posco DX.

Japan – Increase in Shorts on Some Interesting Stocks

Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.

JIP Tender Offer for Toshiba (6502) Finally Here

The JIP TOB for Toshiba is here. Finally. It is still too low. Since the announcement, when it was too low, peers are up a lot, and memory looks healthier.
But it is not clear that activists who pushed this for years want to push any more. There appears to be Toshiba Fatigue, as I warned in March.
That makes this deal look “safe” but there are technical aspects which make it less “comfortable” than normal large and long-awaited deals.

Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding

The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.

Bank of Kyoto (8369) – Too Far Too Fast

Bank of Kyoto (8369 JP) has been on a relative tear recently. This is a bit surprising. On a static equity-portfolio discount measure, it has outperformed regional banks.
On a static regional bank PBR basis, it has outperformed its equity portfolio and the discount to the After Tax Equity Portfolio Value (ATEPV) is the smallest in eight years.
Is there a sea change? There is a possibility, however remote, that domestic investor disappointment rears its voting head. That’s the dream scenario. But I don’t see it coming soon.

Toshiba – The Tender Arrives

By Mio Kato

At long last the end to the Toshiba saga appears at hand with JIP’s belated tender offer being formally announced today at the previously quoted price of ¥4,620.
With a minimum target of 66.7% this does not seem guaranteed to pass but we nevertheless believe that odds are good.
The question is whether there is any room for a small hike in the price as alluded to by the Chairman.

Samsung Electronics: Prefs Need to Catch Up

Over the last year, the discount of Samsung Electronics Pref Shares (005935 KS) to Samsung Electronics (005930 KS) has increased from 5% to 17%.
The preferred shares have adequate liquidity, a large issue market cap, and now trade at a much higher dividend yield. A special dividend will further increase the dividend yield differential.
Breaking from history, the preferred shares discount has continued to increase as the stock has moved higher. With the preferred shares trading near its widest discount, that could change.

Estia & Bain Enter Into Scheme Agreement

After its initial bid of $3.00/share was rejected by Estia Health (EHE AU), Bain returned on the 7 June with a $3.20/share non-binding proposal and was granted exclusive due diligence.
Estia and Bain Capital have now entered into a Scheme Implementation Agreement at A$3.20/share, a 50% premium to undisturbed.
A shareholder meeting is expected to be held in November with implementation expected prior to the end of 2023.

TOPIX Inclusions: Who Is Ready (Aug 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.
Plus Alpha Consulting (4071 JP) will be included in TOPIX at the end of August 2023 and so far the stock has performed negatively as expected (see link).
Our long-term TOPIX pre-event name CELSYS (3663 JP) has seen its share price decline sharply in the last few weeks which raises some important questions.

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Aug 07

Most Read: S.F. Holding, SK Inc, Kum Yang, NGK Insulators, Mercari , Nippon Yusen Kk, JSR Corp, Toshiba Corp, Yaizu Suisankagaku Industry and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SF Holding (002352 CH): H-Share Listing & Index Implications
Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc
Korea – Positioning in Ecopro, Kumyang, JYP Entertainment, Hanwha Ocean, Hanmi Semi, Posco DX
Japan – Increase in Shorts on Some Interesting Stocks
Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding
Last Week in Event SPACE: Nippon Yusen, Takara, Kawasaki Kisen Kaisha, PCCW/HKT, ANZ
Merger Arb Mondays (07 Aug) – JSR, ITOCHU, Allkem, Origin, Symbio, Pacific Current, United Malt, MPI
Weekly Deals Digest (06 Aug) – Toshiba, E-Guardian, ITOCHU, Allkem, Symbio, Pacific Current, MPI
Ohayo Japan| SPX -2.3%WoW; Buffett Buying UST; NUGGET:Motorcycle Electrification – Honda Roars Ahead
Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer

SF Holding (002352 CH): H-Share Listing & Index Implications

S.F. Holding (002352 CH) could raise between HK$26-33bn (US$3.4-4.2bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
The H-shares could get Fast Entry to certain indices and regular entry to others depending on the number of shares that are allotted to cornerstone and/or strategic investors.
The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.

Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc

In a surprising move, SK Inc confirmed the interim dividend amount (₩1,500) on July 26, and the ex-dividend date is set for August 10.
As a result, this enables risk-free dividend arb trading in Korea as SK Inc carries single-stock futures, whose liquidity level is around 70% of the spot since July 26.
The backwardation level has not yet pushed this arbitrage to a profitable level. Nevertheless, it’s still possible to observe the basis spread moving to a meaningful extent before the ex-date.

Korea – Positioning in Ecopro, Kumyang, JYP Entertainment, Hanwha Ocean, Hanmi Semi, Posco DX

Ecopro Co Ltd, Kum Yang, Jyp Entertainment, Hanwha Ocean, Hanmi Semiconductor and Posco DX have all rallied recently and could find their way into global passive portfolios.
There could be liquidity events in some of the stocks as early as the end of the month and there is pre-positioning on a lot of the stocks.
Retail investors have been big buyers in Ecopro Co and Kum Yang while foreign investors have been buyers in Jyp Entertainment, Hanwha Ocean, Hanmi Semiconductor and Posco DX.

Japan – Increase in Shorts on Some Interesting Stocks

Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.

Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding

The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.

Last Week in Event SPACE: Nippon Yusen, Takara, Kawasaki Kisen Kaisha, PCCW/HKT, ANZ

This may get squeezy after Nippon Yusen Kk (9101 JP) announced a ¥200bn over 9mos. Do not be short. Be long.
On an implied stub and simple ratio, Takara Holdings (2531 JP) is trading rich to 60.9%-held Takara Bio Inc (4974 JP).
Remain bullish Kawasaki Kisen Kaisha (9107 JP) vs TOPIX, especially near-term. But this is a much less exciting and squeeze-able opportunity than before,

Merger Arb Mondays (07 Aug) – JSR, ITOCHU, Allkem, Origin, Symbio, Pacific Current, United Malt, MPI

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 – 111 Inc (YI US), Chindata Group (CD US), Estia Health (EHE AU), Invocare Ltd (IVC AU), ENM Holdings (128 HK), Eoflow (294090 KS), JSR Corp (4185 JP).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Penguin International (PBS SP), Itochu Techno Solutions (4739 JP), Oishi Group PCL (OISHI TB), Kenedix Retail REIT (3453 JP).

Weekly Deals Digest (06 Aug) – Toshiba, E-Guardian, ITOCHU, Allkem, Symbio, Pacific Current, MPI

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Rakuten Securities (RAKUSEC JP), EbixCash (EBIXC IN), Lalatech Holdings Co Ltd (LALA HK) and Lianlian DigiTech (2104619D CH) IPOs.
Event-Driven developments – E Guardian Inc (6050 JP), Itochu Techno Solutions (4739 JP), Toshiba Corp (6502 JP), Symbio Holdings (SYM AU), Metro Pacific Investments Co (MPI PM).

Ohayo Japan| SPX -2.3%WoW; Buffett Buying UST; NUGGET:Motorcycle Electrification – Honda Roars Ahead

By Mark Chadwick

OVERSEAS. SPX500 fell on Friday, and closed -2.3%WoW; July jobs report showed cooling in the labor market; Apple -4.8% weighed on market sentiment; Reports that Buffet buying short dated UST.
JAPAN. NKY Futures -0.8% vs Cash; USDJPY 141.8; Strong JP earning season so far- NP +20%YoY; Investors favor Japan> China; Oasis’s Fischer says still more to be done with Governance.
NUGGET. Honda is ahead of their motorcycle electrification strategy vs Japanese competitors. With the #1 global share and 2.7 trillion yen in sales, they CANNOT afford to be left behind.

Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer

Yaizu Suisankagaku Industry (2812 JP)/YSK has recommended J-STAR’s tender offer of JPY1,137 per share, a 35.0% premium to the undisturbed price (4 August).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
YSK is cash rich, and the offer is below book value. The tender offer is a reasonable alternative in challenging trading conditions that have slashed operating margin targets.

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Aug 06

Most Read: Lasertec Corp, Zydus Lifesciences Ltd, MOG Digitech Holdings , Nice Information Service Co, Piotech , Water Oasis, SK Inc, Tokyo Stock Exchange Tokyo Price Index Topix, Mercari and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented
Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT
KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)
STAR50 Index Rebalance Preview: Potential Changes Playing Catchup
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – August 2023
Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc
Increasing Attention to the Role Played by Individuals in the Rising Trend of Stock Ownership
Japan Weekly | Stocks Down, Bonds up as BoJ Tightens; What Moved
Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding

Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends

The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn).

NIFTY/NEXT50 Index Rebalance Preview: Loads of Changes if Proposed Methodology Is Implemented

Using the current index methodology throws up 5 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be BIG.
Using the proposed index methodology throws up 11 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September. Turnover will be HUGE.
The market consultation being put on hold could indicate pushback from index users or the possibility of F&O contracts being introduced on some of the non-F&O index constituents.

Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT

The changes to the LQ45/IDX30 were announced last week and will be implemented Monday. The PSE also announced that there would be no changes for the PCOMP INDEX in August.
There are a bunch of review cutoffs on Monday, most notably for the Nikkei 225 (NKY INDEX), STAR50 INDEX, the NIFTY family of indices and the KRX New Deal indices.
There were inflows to China focused ETFs and outflows from Taiwan and Korea focused ETFs during the week.

KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)

The KRX has approved Nice Information Service Co (030190 KS)‘s transfer from the KOSDAQ Board to the KOSPI Board. The transfer could take place in the next two weeks.
Hydro Lithium (101670 KS) was the highest ranked non-constituent from the Industrials sector at the June rebalance and could replace Nice Information Service (030190 KS) in the KOSDAQ 150 Index.
Nice Information Service Co (030190 KS) has no chance of inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) and will not be short sell eligible post section transfer.

STAR50 Index Rebalance Preview: Potential Changes Playing Catchup

The review period for the September rebalance ends today. The changes could be announced on 25 August with the implementation taking place after the close on 8 September.
The upcoming launch of the STAR100 Index could result in the index committee continuing to use a 6-month minimum listing history resulting in two changes to the index.
One way turnover is estimated at 2.3% resulting in a one-way trade of CNY 2,658m. The impact on the deletions will be much larger than that on the inclusions.

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – August 2023

By Sameer Taneja

We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
We expand our list coverage into Multi Bintang Indonesia (MLBI IJ), Delta Djakarta (DLTA IJ), and Sheng Siong (SSG SP) as quality high ROCE names worth looking at.

Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc

In a surprising move, SK Inc confirmed the interim dividend amount (₩1,500) on July 26, and the ex-dividend date is set for August 10.
As a result, this enables risk-free dividend arb trading in Korea as SK Inc carries single-stock futures, whose liquidity level is around 70% of the spot since July 26.
The backwardation level has not yet pushed this arbitrage to a profitable level. Nevertheless, it’s still possible to observe the basis spread moving to a meaningful extent before the ex-date.

Increasing Attention to the Role Played by Individuals in the Rising Trend of Stock Ownership

By Aki Matsumoto

The percentage of stockholdings by individuals will continue rising. Their tendency to buy-on-decline will continue to serve as a cushion in times of falling stocks as well as voting behavior.
Now that the BOJ’s ETF purchases have subsided, an increase in trust bank stock holdings is not expected. A limited increase in pension assets is also expected.
The reduction in cross-shareholdings has reduced the shareholding ratio of corporations to 19.6%. Meanwhile, corporations repurchased total of 5,790.7 billion yen in FY2022, indicating that share repurchases have taken root.

Japan Weekly | Stocks Down, Bonds up as BoJ Tightens; What Moved

By Mark Chadwick

A cautious BoJ has begun to tighten monetary policy, allowing bond yields to rise to 1%
Even Toyota ( a famous laggard) is improving its Corporate Governance – selling off Y250b of its KDDI stock holdings
For every two stocks that went up last week, three fell. It is all earnings related at the moment

Index Rebalance & ETF Flow Recap: NKY, STAR50, NIFTY NEXT50, SF Holding

The review period for a bunch of indices ended early last week and the announcement of the changes will be made in the next few weeks.
Hydro Lithium (101670 KS) will replace Nice Information Service Co (030190 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the close on Monday.
There have been big net inflows into China focused ETFs and outflows from Taiwan focused ETFs during the week.

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✓ Company Analytics and News
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Aug 05

Most Read: Lasertec Corp, Nippon Yusen Kk, E Guardian Inc, S.F. Holding, KT&G Corporation, Korea Stock Exchange KOSPI 200, PCCW Ltd, NIFTY Index, SK Inc, Fadu and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends
Nippon Yusen (9101) BIG Buyback Announced
SBI Affiliate To Buy 45-49% of E-Guardian (6050) In Partial Tender Offer
SF Holding (002352 CH): H-Share Listing & Index Implications
KT&G: First Shares Cancellation in 14 Years
Preparing for ATS Arrival in Korea: Strategies to Adapt to Changing Intraday Flow Patterns
PCCW’s Stub Ops Spill More Red Ink
EQD | NIFTY Index WEEKLY Correction May Be Ending
Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc
Fadu IPO Trading – Strong Subscription Rates Compared to Recent Korean IPOs

Nikkei 225 Index Rebalance Preview (Sep 2023): Final Look as Review Period Ends

The review period for the Nikkei 225 (NKY) September rebalance ended yesterday. There should be three index changes, potential stepwise inclusion, no Fast Retailing capping and a big funding trade.
There appears to be decent positioning on the potential adds, while it is the close adds that are spiking along with a big increase in traded volumes.
If the three changes are on expected lines, estimated one-way turnover at the rebalance is 2.01% resulting in a one-way trade of JPY 461bn (US$3.24bn).

Nippon Yusen (9101) BIG Buyback Announced

In March, NYK announced a new Mid-Term Management Plan discussed in Nippon Yusen – New MidTermPlan = New Shareholder Return Policy. They promised a full Shareholder Return Policy in May.
There was limited new SRP discussion in the 9 May earnings announcement. The MTMP suggested ¥200bn over 2yrs. The (Japanese) earnings announcement did too. Then May ended.
Now the Buyback Plan is out. ¥200bn over 9mos. That is different. This could move.

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.

SF Holding (002352 CH): H-Share Listing & Index Implications

S.F. Holding (002352 CH) could raise between HK$26-33bn (US$3.4-4.2bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
The H-shares could get Fast Entry to certain indices and regular entry to others depending on the number of shares that are allotted to cornerstone and/or strategic investors.
The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.

KT&G: First Shares Cancellation in 14 Years

KT&G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation for KT&G in 14 years.
If the company’s DPS is 5,200 won for 2023 fiscal year, this would represent dividend yield of 6.2% at current prices.
Although we have a positive view on KT&G’s share buyback and cancellation of 3.47 million shares, the company could do much more to improve its shareholder returns to its shareholders.

Preparing for ATS Arrival in Korea: Strategies to Adapt to Changing Intraday Flow Patterns

Nextrade aims to secure the business permit within the next year’s second half. They intend to launch their services by the end of next year or early the following year.
All eyes are focused on the proposal to be operational from 8:30 AM to 11:59 PM, with the afternoon call auction session running from 3:00 PM to 6:00 PM.
It would be crucial to observe how the elongation of the time period for specific issues to be reflected in prices could potentially lead to changes in intraday flow patterns.

PCCW’s Stub Ops Spill More Red Ink

Net of HKT Ltd (6823 HK), PCCW Ltd (8 HK) recorded negative EBITDA of HK$378mn in the 1H23.
This is the largest six-month negative EBITDA figure since the EBITDA loss of HK$427mn in 2H22, and the third largest in the past decade.
PCCWs current discount to NAV is at an unsustainable 5%.

EQD | NIFTY Index WEEKLY Correction May Be Ending

By Nico Rosti

The NIFTY Index has been falling for 2 weeks and is reaching mildly OVERSOLD territory. If this was a retracement during the main rally, it may be time to BUY.
The Market Reversal Matrix’s shows a bullish pattern, the time+price combined probability of success for LONG trades from current prices, after 2 weeks down, is >66%.
Price area to go LONG: 19400 to 18792, you can go LONG this week and also next week, if down (CC=-3).

Finally, a Risk-Free Dividend Arbitrage Trading Opportunity Is Presented in Korea: Feat. SK Inc