In today’s briefing:
- ADR Arb on Korean Divvy Names: A Side Play Riding the Policy-Driven Liquidity Wave
- WuXi AppTec (2359 HK) Placement: Strong Momentum & Index Flows
- Fujitec (6406 JP): EQT’s Takeunder Likely a Done Deal
- SK Innovation Cleanup: Watch Out for a Classic NAV Compression Play
- PointsBet (PBH AU): Either Betr Pulls A Rabbit Out Of The Hat, Or Walks
- StubWorld: Stay Short On GMO Internet (4784 JP); Haw Par Now Even More Stretched
- A Merger Between SK On and SK Enmove + A Massive 8 Trillion Won in Capital Raise
- SK IE Technology – Capital Raise of 300 Billion Won
- Bavarian Nordic: Event-Driven Bid with Strategic Block, Bull Case Supports Sweetening
- PointsBet (PBH AU): Betr Bumps Its Offer, but Is It Superior to Mixi?
ADR Arb on Korean Divvy Names: A Side Play Riding the Policy-Driven Liquidity Wave
- ETF rebalancing’s key, but still too early to front-run — both use FnGuide screens based on FY1 DPS and prices from 20 days before November-end.
- Beyond the rebalance noise, ADR-local spreads have been widening — KB hit +6%, Shinhan’s also drifting. Likely tied to the recent liquidity surge in dividend names.
- ADR arb’s more doable with NXT tightening slippage. With proper FX hedging, it’s a clean side play riding the policy-driven liquidity wave.
WuXi AppTec (2359 HK) Placement: Strong Momentum & Index Flows
- WuXi AppTec (2359 HK) is looking to raise US$650m at a price range of HK$104.16-106.4/share, a 5-7% discount from last close.
- There will be passive buying from global index trackers around the time of settlement of the placement shares. Then there will be some Hang Seng Index buying in August.
- Short interest in WuXi AppTec (2359 HK) has spiked and some shorts could cover into the placement. The AH premium could move higher following the placement.
Fujitec (6406 JP): EQT’s Takeunder Likely a Done Deal
- Fujitec Co Ltd (6406 JP) has recommended a preconditional tender offer from EQT (EQT SS) at JPY5,700, an 8.1% discount to the last close price of JPY6,205.
- The precondition relates to regulatory approvals in several countries. The tender offer is expected to commence in late January 2026.
- Although the offer is light, it is likely to succeed, as it resulted from an auction process and was supported by irrevocables from the two prominent activists on the register.
SK Innovation Cleanup: Watch Out for a Classic NAV Compression Play
- Facing tough fundraising, SK avoided a rights issue, opting for a complex deal to limit dilution and ease investor worries.
- It all hinges on how the market views SK On’s cleanup plus Enmove’s steady cash flow—SK Innovation looks oversold, making this a decent long setup.
- Enmove’s stable earnings boost SK On’s P&L, likely triggering a rerate for SK Innovation and setting up a classic NAV compression trade.
PointsBet (PBH AU): Either Betr Pulls A Rabbit Out Of The Hat, Or Walks
- Mixi (2121 JP)‘s A$1.20/share cash Offer is now open, with a 50.1% acceptance condition. PointsBet Holdings (PBH AU) is supportive. Mixi currently holds 25.15%. ~16% of shares out have tendered.
- Betr Entertainment (BBT AU) (self-alleged superior) scrip Offer, with no minimum acceptance condition, is still out there. betr holds 19.6%. No shareholder has accepted terms.
- PBH has now tapped the Takeover Panel seeking orders betr clarify its convoluted Offer.
StubWorld: Stay Short On GMO Internet (4784 JP); Haw Par Now Even More Stretched
- GMO Internet Group (9449 JP) needs to sell shares in GMO Internet (4784 JP) to achieve a “float” of 35% by 31 December 2026. Recent filings show they are selling.
- Preceding my comments on the GMO group – and Haw Par Corp (HPAR SP)/ UOB (UOB SP) – 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%.
A Merger Between SK On and SK Enmove + A Massive 8 Trillion Won in Capital Raise
- On 30 July, SK Innovation (096770 KS) announced that it plans to merge its subsidiaries SK On and SK Enmove. The merged company will be launched on 1 November.
- SK Group has announced a massive 8 trillion won capital raise plan involving this deal including paid-in capital increase of 2 trillion won for SK Innovation and SK On each.
- We provide three major reasons why we are negative on this merger/capital raise.
SK IE Technology – Capital Raise of 300 Billion Won
- SK IE Technology (361610 KS) announced that it plans to raise 300 billion won through a third party paid-in capital allocation.
- SK IE Technology plans to issue 10.5 million new shares (14.7% of outstanding shares). Expected price of capital raise is 28,600 won (2.1% lower than current price).
- We have a Negative View of SK IE Technology as well its plans to raise capital worth 300 billion won.
Bavarian Nordic: Event-Driven Bid with Strategic Block, Bull Case Supports Sweetening
- Bavarian Nordic’s board recommends a DKK 233/share bid, but ATP’s 10% block and market premium pricing suggest anticipation of a higher offer or strategic alternatives.
- The offer undervalues Bavarian Nordic’s scalable platform, outbreak-response contracts, and optionality; a fair value of DKK 255–265 is justified, with a bull case up to DKK 330/share.
- Deal spread trades negative as market expects sweetening; low irrevocables and strategic buyer risk suggest asymmetry for long positions with regulatory and ATP dynamics as key catalysts.
PointsBet (PBH AU): Betr Bumps Its Offer, but Is It Superior to Mixi?
- BETR Entertainment (BBT AU) has bumped its PointsBet Holdings (PBH AU) offer to 4.219 BBT shares per PBH share. However, the offer’s opening is delayed by the Panel’s interim orders.
- Betr expects that the Board will now recommend its offer. However, the Board has several reasons not to deem Betr’s revised proposal as superior to Mixi Inc (2121 JP).
- Since 3 June, the average gross spread of the revised Betr offer to the Mixi offer is 3.4%. The logical next step is for Mixi to declare its offer unconditional.
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