Daily BriefsEvent-Driven

Daily Brief Event-Driven: Introducing KODEX Top 5 Plus ETF Rebalancing Event and more

In today’s briefing:

  • Introducing KODEX Top 5 Plus ETF Rebalancing Event
  • KOSPI 200 Ad Hoc Rebalance for Meritz Securities: DGB Financial Will Be Added
  • Golden Energy (GER SP): Long-Stop Date Extended as the Offer Looks Increasingly Light
  • Sun Capital Partners/K3 Capital Group: Agreed Underwhelming Offer
  • Sun Pharmaceutical Ind (SUNP IN): Acquisition Adds Late-Stage Biopharma Product in Derma Franchise
  • KCGI Formally Goes Activist on Osstem Implant

Introducing KODEX Top 5 Plus ETF Rebalancing Event

By Sanghyun Park

  • At this point, one constituent change is expected, and LG Chem is expected to replace KT&G.
  • The return of the equal-weighted long/short basket trade for the constituent changes in the past two years was recorded from 2.3% to 3.8%.
  • Both LG Chem and KT&G are expected to have a significant rebalancing flow impact. It can be an event that brings a juicy day trading return.

KOSPI 200 Ad Hoc Rebalance for Meritz Securities: DGB Financial Will Be Added

By Sanghyun Park

  • With JB Financial Group gone for Meritz Fire, the next one in line will enter KOSPI 200 in place of Meritz Securities. And the lucky one is DGB Financial.
  • DGB can expect an inflow of 8.23x ADTV and will face a 2.8x ADTV in one day on March 31.
  • Given the size of the preemptive flow that JB Financial is currently attracting, we should prepare for DBG to start receiving a similar level of price impact earlier than usual.

Golden Energy (GER SP): Long-Stop Date Extended as the Offer Looks Increasingly Light

By Arun George

  • The long-stop date for the satisfaction of the offer conditions has been extended from 9 April to 9 August, to help Dian Swastatika Sentosa (DSSA IJ) obtain shareholder approval.
  • An alternative explanation is that the Widjaja family’s offer for Golden Energy & Resources (GER SP) is increasingly looking unattractive in light of Stanmore Coal (SMR AU)’s share price rally. 
  • The offer remains light and we think that there is a good chance that the Widjaja family will raise its offer (likely a bump to the delisting price) to succeed.  

Sun Capital Partners/K3 Capital Group: Agreed Underwhelming Offer

By Jesus Rodriguez Aguilar

  • Sun Capital offers 350p/share for K3, 10.7x EV/NTM EBITDA, lower than median of peers at 11.3x and lower than my DCF-based estimate of 404.7p (implied 12.4x EV/NTM EBITDA).
  • In spite of the underwhelming figure, the deal is likely to go ahead: top shareholders/managers (30.4%) will contribute to Bidco, and irrevocables total 10%. Court/GM meetings are on 26 January.
  • Gross spread is 0.71%. Assuming it all goes smoothly, the estimated annual return assuming settlement by 28 February is 7%. Long.

Sun Pharmaceutical Ind (SUNP IN): Acquisition Adds Late-Stage Biopharma Product in Derma Franchise

By Tina Banerjee

  • Sun Pharmaceutical Industries (SUNP IN) is acquiring the U.S.-based late-stage biotechnology company, Concert Pharmaceuticals (CNCE US) for $576M in equity value. The transaction is expected to be completed in 1Q23.
  • Concert has completed the evaluation of the efficacy and safety of its lead candidate, deuruxolitinib in adult patients with moderate to severe Alopecia Areata in its phase 3 clinical program.
  • With the disease affecting up to ~1.5M people in the U.S., Alopecia represents potential blockbuster opportunity. Sun Pharma plans to file NDA for deuruxolitinib to the FDA in 1H23.

KCGI Formally Goes Activist on Osstem Implant

By Douglas Kim

  • On 20 January, KCGI private equity fund formally started its corporate governance activist campaign on Osstem Implant (048260 KS).
  • KCGI officially going activist on the company, its strong fundamentals and deep discount valuations suggest that Osstem Implant’s price is likely to outperform KOSPI by a wide margin in 2023.
  • KCGI has demanded Kyoo-Ok Choi (Chairman of Osstem Implant) to resign.

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