Daily BriefsEvent-Driven

Daily Brief Event-Driven: Rakuten Bank – Big TOPIX Inclusion Next Week and more

In today’s briefing:

  • Rakuten Bank – Big TOPIX Inclusion Next Week
  • KOSPI200 Ad Hoc Index Rebalance: Youlchon Chem to Replace Dongkuk Steel Mill
  • Two of KS200/KQ150 Additions Are Prime-Targeted for Shorting Due to Their Inflated Float Shares
  • KOSPI 200 Ad-Hoc Changes for Dongkuk Steel Spinoff: Discussing Flow Trading Timeline
  • Quiddity Leaderboard SE600 Jun 23: Credit Suisse Deletion Imminent; Multiple Changes in June
  • Silk Laser Australia (SLA AU): David Vs Goliath Bidding Battle
  • Silk Laser: EC Healthcare’s Superior Counter
  • Advent & CenterBridge/​Aareal Bank AG: All Conditions Met

Rakuten Bank – Big TOPIX Inclusion Next Week

By Travis Lundy

  • Rakuten Bank priced its IPO low and then immediately bounced. Earnings came in as forecast, and the forecast next year did too. Highish PBR, high ROE, not-so-high-PER on low ROA.
  • The stock fell on 16 May after Rakuten Bank announced its capital raising. That was probably a knee-jerk reaction, and had no reason. 
  • Next week sees the TOPIX inclusion. And the Real World Float has gotten smaller since the offering. And some of those people aren’t going to sell near-term.

KOSPI200 Ad Hoc Index Rebalance: Youlchon Chem to Replace Dongkuk Steel Mill

By Brian Freitas


Two of KS200/KQ150 Additions Are Prime-Targeted for Shorting Due to Their Inflated Float Shares

By Sanghyun Park

  • Lutronic Corp and Jeisys Medical have considerably lower DTV in comparison to their float shares. It is highly probable that they have artificially increased their float shares.
  • Coincidentally, these two stocks are the ones that have experienced the most dramatic increase in borrow balance after the result announcement.
  • These two stocks are being targeted for short-selling from a post-event perspective because the market believes they will exhibit abnormal passive (price) impact due to their inflated float shares.

KOSPI 200 Ad-Hoc Changes for Dongkuk Steel Spinoff: Discussing Flow Trading Timeline

By Sanghyun Park

  • Applying the T+3 relisting date as the effective date will again lead to noteworthy changes to the timeline of rebalancing flow trading.
  • It seems unnecessary to concentrate shorting on the trading halt day for Dongkuk Steel. We should aim for price corrections driven by passive flows on the T+2 period before effective.
  • Despite the Dongkuk Steel shareholders’ approval on the 12th, Youlchon Chemical’s price experienced a significant decline. The ongoing risk of major shareholder stake sales appears to have overshadowed this event.

Quiddity Leaderboard SE600 Jun 23: Credit Suisse Deletion Imminent; Multiple Changes in June

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the STX Europe 600 and EUROSTX Indices for the June 2023 Rebalance.
  • I currently expect Credit Suisse (CSGN SW) and Mediclinic International (MDC LN) to be deleted in the next few trading days
  • Separately, there could be five ADDs and DELs during the regular review in June 2023.

Silk Laser Australia (SLA AU): David Vs Goliath Bidding Battle

By Arun George

  • Silk Laser Australia (SLA AU) disclosed a non-binding indicative offer from EC Healthcare (2138 HK) at A$3.35 per share, a 6.3% premium to Wesfarmers Ltd (WES AU)’s offer of A$3.15.
  • The Board has concluded that EC Healthcare’s offer is superior. Wesfarmers has matching rights which expire on 30 May. 
  • Wesfarmers has the balance sheet and synergies to bump its offer. However, it is uncertain if EC Healthcare can engage in a bidding war due to a modest balance sheet.

Silk Laser: EC Healthcare’s Superior Counter

By David Blennerhassett


Advent & CenterBridge/​Aareal Bank AG: All Conditions Met

By Jesus Rodriguez Aguilar

  • All conditions of the takeover offer have been fulfilled after the ECB approved the acquisition of a majority stake in Aareal. Settlement will take place by 7 June.
  • The shares closed 3.33% higher vs. prior trading session, above the offer price(!). Aareal is trading at an undemanding 0.6x P/BV and 10.7x NTM Fwd P/E. No dividend is expected.
  • The bidders specifically left open the possibility of a squeeze-out/delisting. If the 90% threshold is confirmed, I believe Atlantic will compulsorily acquire the remaining shares at €33/share.

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