Daily Briefs

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

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

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

(Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal discussed this week on Smartkarma: TDCX (TDCX US)‘s MBO.
Key updates took place on: Orecorp Ltd (ORR AU), T&K Toka Co Ltd (4636 JP), Taisho Pharmaceutical Holdin (4581 JP), Benesse Holdings (9783 JP), and IJTT Co., Ltd. (7315 JP).

OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?

By Douglas Kim

After the market close on 12 January, OCI Holdings (010060 KS) announced that it plans to acquire a 27.03% stake in Hanmi Science (008930 KS) for 770 billion won.
Through this investment and integration between OCI Holdings and Hanmi Science, the OCI Group and Hanmi Pharmaceutical Group plans to establish a joint management system.
This deal between OCI Holdings and Hanmi Science is not over and it could lead to an M&A fight for the control of Hanmi Science by its family members.

Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024.
Wilmar International (WIL SP)‘s current implied stub and simple ratio (Wilmar/ Yihai Kerry Arawana Holdings (300999 CH)) are both at all-time highs.
Reportedly, the mother and two sisters of Samsung Electronics (005930 KS) Chairman Jay Y. Lee plan to sell shares in a block deal worth ~₩2.8tn ($2.1bn billion.

Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola

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 – Amer Sports (AS US), Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
Event-Driven developments – Fuji Soft Inc (9749 JP), T&K Toka Co Ltd (4636 JP), Taisho Pharmaceutical Holdin (4581 JP), Irc Ltd (1029 HK), Weiqiao Textile Co (2698 HK).

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Jan 14

Daily Brief Macro: The Weekly Market Monitor – Chinese Equities Out and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

The Weekly Market Monitor – Chinese Equities Out, Bitcoin In!

The Weekly Market Monitor – Chinese Equities Out, Bitcoin In!

By Jeroen Blokland

After a ten-year struggle, US spot Bitcoin ETFs have been approved, closing one of the most entertaining and remarkable (what regulator gets hacked in the process) ETF races ever.
US inflation came in hotter than expected, but unlike previous months, underlying data was pretty benign, with one measure of headline CPI dropping below 2% for the first time in 3.5 years.
Chinese equities are out. And not just by sentiment-driven short-term investors. Meanwhile, Japanese stocks are on fire, powering ahead by more than 6% since the start of this year.

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Jan 14

Daily Brief Equity Bottom-Up: TSMC Finishes 2023 With A Flourish and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

TSMC Finishes 2023 With A Flourish
Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024
Korean Air: European Approval for Asiana Merger Reportedly Imminent
China Healthcare Weekly (Jan.12) – Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

TSMC Finishes 2023 With A Flourish

By William Keating

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

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

By Howard J Klein

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

Korean Air: European Approval for Asiana Merger Reportedly Imminent

By Neil Glynn

Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana’s cargo business.
The EC had set a preliminary decision deadline of 14 February.
US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.

China Healthcare Weekly (Jan.12) – Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

By Xinyao (Criss) Wang

The entire R&D cycle involves multi-party cooperation, leveraging one’s strengths. So, it is not difficult to understand some of the choices made by domestic pharmaceutical companies (e.g. Innovent, BeiGene).
Due to outdated technology, investment value of Sirnaomics is low, which means the likelihood of the company being acquired is also not high. We remain conservative about the outlook.
ImmuneOnco’s stock price has performed much better-than-expected after IPO on HKEX. However, the endgame of ImmuneOnco’s market value could be only about RMB1.5 billion, which means large potential downside ahead.

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Jan 14

Daily Brief South Korea: Hanmi Science, Korean Air Lines, Samsung Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?
Korean Air: European Approval for Asiana Merger Reportedly Imminent
ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

OCI Holdings Plans to Acquire a 27% In Hanmi Science – To Spark a Family Feud?

By Douglas Kim

After the market close on 12 January, OCI Holdings (010060 KS) announced that it plans to acquire a 27.03% stake in Hanmi Science (008930 KS) for 770 billion won.
Through this investment and integration between OCI Holdings and Hanmi Science, the OCI Group and Hanmi Pharmaceutical Group plans to establish a joint management system.
This deal between OCI Holdings and Hanmi Science is not over and it could lead to an M&A fight for the control of Hanmi Science by its family members.

Korean Air: European Approval for Asiana Merger Reportedly Imminent

By Neil Glynn

Reuters reported on the Friday that the European Commission is to accept concessions of four European route divestitures and the sale of Asiana’s cargo business.
The EC had set a preliminary decision deadline of 14 February.
US and Japanese approvals are still required, while it remains to be seen who might acquire Asiana Cargo.

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

By Sumeet Singh

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, a number of large filings over the holidays is somewhat positive for 2024 prospects.
On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.

Last Week in Event SPACE: Furuya Metal, Visional, Wilmar, Samsung Electronics, ViinFast/Vingroup

Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024.
Wilmar International (WIL SP)‘s current implied stub and simple ratio (Wilmar/ Yihai Kerry Arawana Holdings (300999 CH)) are both at all-time highs.
Reportedly, the mother and two sisters of Samsung Electronics (005930 KS) Chairman Jay Y. Lee plan to sell shares in a block deal worth ~₩2.8tn ($2.1bn billion.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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Jan 14

Daily Brief Singapore: Genting Singapore and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

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

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

By Howard J Klein

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

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The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jan 14

Daily Brief China: BYD Electronics, ImmuneOnco Biopharmaceuticals (Shanghai) and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
China Healthcare Weekly (Jan.12) – Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

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

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

China Healthcare Weekly (Jan.12) – Mainstream R&D Trend, Innovent, BeiGene, Sirnaomics, ImmuneOnco

By Xinyao (Criss) Wang

The entire R&D cycle involves multi-party cooperation, leveraging one’s strengths. So, it is not difficult to understand some of the choices made by domestic pharmaceutical companies (e.g. Innovent, BeiGene).
Due to outdated technology, investment value of Sirnaomics is low, which means the likelihood of the company being acquired is also not high. We remain conservative about the outlook.
ImmuneOnco’s stock price has performed much better-than-expected after IPO on HKEX. However, the endgame of ImmuneOnco’s market value could be only about RMB1.5 billion, which means large potential downside ahead.

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Jan 14

Daily Brief Japan: Fuji Soft Inc, Taisho Pharmaceutical Holdin, T&K Toka Co Ltd, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
(Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT
Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola
TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

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

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

(Mostly) Asia-Pac Weekly Risk Arb Wrap: TDCX, Orecorp, T&K Toka, Taisho Pharma, Benesse, IJTT

I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal discussed this week on Smartkarma: TDCX (TDCX US)‘s MBO.
Key updates took place on: Orecorp Ltd (ORR AU), T&K Toka Co Ltd (4636 JP), Taisho Pharmaceutical Holdin (4581 JP), Benesse Holdings (9783 JP), and IJTT Co., Ltd. (7315 JP).

Weekly Deals Digest (14 Jan) – T&K Toka, Fuji Soft, Taisho, Benefit One, IRC, Weiqiao, Amer, Ola

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 – Amer Sports (AS US), Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
Event-Driven developments – Fuji Soft Inc (9749 JP), T&K Toka Co Ltd (4636 JP), Taisho Pharmaceutical Holdin (4581 JP), Irc Ltd (1029 HK), Weiqiao Textile Co (2698 HK).

TSE’s Request for Disclosure About Parent-Subsidiary Listings Is an Improvement, Not a Solution

By Aki Matsumoto

Parent-Subsidiary listings present several problems: the disadvantages to parent company’s shareholders that drain subsidiary’s profits, the distortion of market capitalization between subsidiary and parent company, and independence of subsidiary’s management.
While it’s an improvement for TSE to ask companies to disclose their purpose and policy of listing subsidiaries and affiliates, it doesn’t ensure the complete independence of subsidiaries and affiliates.
More than 30% of listed companies are listed subsidiaries or affiliates. Investors are forced to look for investment targets while worrying about management independence in 70% of the companies.

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Jan 14

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

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

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

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

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

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

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

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

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

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

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

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

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

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

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

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

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

TSMC Finishes 2023 With A Flourish

By William Keating

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

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

By Howard J Klein

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

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