In today’s briefing:
- Shift (3697 JP) – Short-Selling into Nikkei 225 Inclusion = Crowded Register Dynamic = Squeezy
- [Japan M&A/Activism] Soft99 Board Comes Out Against Effissimo Bid 66% Above MBO Price
- [Japan M&A] Mandom (4917 JP) MBO Launched at ¥1,960, Stock Is 15% Higher and Activists Dream Bigger
- Soft99 Corp (4464 JP): The Board Opposes Effissimo’s Hostile Offer and Hints the MBO Will Succeed
- StubWorld: Naspers Coming Up “Cheap” Vs Prosus
- FSS Just Announced: Treasury Disclosure Threshold Cut to 1% — Trading Highlights
- Shandong Hi-Speed (412 HK): Now Overshot To The Downside
- Kangji Medical (9997 HK): A Closer Look At The Shareholder Register
- Jinke Smart (9666 HK): Boyu’s Unconditional Offer Now Open To Tendering
- A Pair Trade Between Hyundai Elevator and Hyundai Movex Amid a 7% Stake Sale in Hyundai Movex
Shift (3697 JP) – Short-Selling into Nikkei 225 Inclusion = Crowded Register Dynamic = Squeezy
- Shift Inc (3697 JP) runs a software quality assurance testing business. 400% revenue growth in 5 years, but this year to Aug25 is “only” 17.5% according to Q3 results guidance.
- It was a “growth stock” for a long while, and large long-only growth investors flocked to the name. In the past several months many have exited.
- The stock will be included in the Nikkei 225 Average next Tuesday. The supply/demand dynamics here to there are interesting. Afterwards they may be more interesting.
[Japan M&A/Activism] Soft99 Board Comes Out Against Effissimo Bid 66% Above MBO Price
- Today after the close, the Soft99 Corp (4464 JP) Board of Directors came out AGAINST the Effissimo ¥4,100/share counterbid to the original ¥2,465/share MBO.
- “The Special Committee advised that the Tender Offer would not contribute to the enhancement of the Company Group’s corporate value, nor would it be fair to the Company’s general shareholders.”
- ¥2,465 is fair. ¥4,100 is not fair. Absolute hogwash. Unmitigated blatherskite. Pure trumpery. Codswallop, buncombe, taradiddle, balderdash, and nincompoopery too. I expound below.
[Japan M&A] Mandom (4917 JP) MBO Launched at ¥1,960, Stock Is 15% Higher and Activists Dream Bigger
- On 10 September, CVC announced a family-led MBO of well-known Japanese hair-care/cosmetics firm Mandom Corp (4917 JP). Agreed, supported, recommended, for a start date end-September. It was also too light.
- I suggested the open-ish register could trigger activists. The stock opened just above terms post-announcement and then traded higher. Shares fell today but it is still 15% through terms.
- Hibiki Path Advisors wrote a strong letter. Murakami announced a 6.67% stake yesterday, 8.39% today. But that’s 5 days old. Today, the company announced the TOB starts tomorrow. Still fun.
Soft99 Corp (4464 JP): The Board Opposes Effissimo’s Hostile Offer and Hints the MBO Will Succeed
- The Soft99 Corp (4464 JP) Board has, unsurprisingly, opposed the Effissimo offer for several reasons. Notably, they do address the huge price disparity between the two offers.
- While most of the reasons to justify the opposition are weak, the Board unexpectedly notes that as of 24 September, the MBO retained acceptances to satisfy its minimum tendering condition.
- Despite the significant premium of the Effissimo offer, this development suggests that the current acceptances for the MBO are sticky, thereby increasing the likelihood that Effissimo’s offer will fail.
StubWorld: Naspers Coming Up “Cheap” Vs Prosus
- As Prosus NV (PRX NA) outperforms, Naspers (NPN SJ) is coming up “cheap” on my monitor.
- Preceding my comments on Naspers/Prosus and Tencent (700 HK), 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%.
FSS Just Announced: Treasury Disclosure Threshold Cut to 1% — Trading Highlights
- Disclosure threshold drops from 5% to 1%, signaling stricter transparency, heavier penalties, and potential acceleration of buyback cancellations; new rules open for comment until November 5, effective Q4.
- Near-Term, high-treasury, solid-ROE stocks could see short-term momentum as mandatory cancels and tighter disclosure mechanically lift EPS, driving flows and setting up potential short-term longs.
- This sparks a new event-driven “disclosure schedule trading” setup, as 1%+ treasury holdings now trigger twice-yearly reports and six-month follow-ups, boosting volatility around announcements.
Shandong Hi-Speed (412 HK): Now Overshot To The Downside
- In What’s Up (& Up) With Shandong Hi-Speed (412 HK)?, I thought Shandong Hi-Speed Holdings (412 HK) was a bubble after gaining 190% in the past six months.
- My guess was that SDHG’s high shareholder concentration was still very much present, and the stock was getting (unjustly) squeezed.
- The SFC concurred on the 18th September, and issued a concentration warning. SDHG’s shares cratered 76% on the 19th September, before recovering 49%. Quite the ride.
Kangji Medical (9997 HK): A Closer Look At The Shareholder Register
- With the pre-cons squared away as per the 3rd September announcement, the key risk to Hangzhou Kangji Medical Instrument (9997 HK)‘s Offer is the Scheme vote.
- The HK$9.25/share consideration price (declared final), was an uninspiring 9.9% premium to last close. But pitched around a four-year high. And peers are down 10% on average since the Offer.
- A persual of the s329 investigative reports provides a significantly clearer picture on who holds what.
Jinke Smart (9666 HK): Boyu’s Unconditional Offer Now Open To Tendering
- On the 28th April 2025, PRC-incorporated property management play Jinke Smart Services (9666 HK) announced a possible unconditional MGO take-under at HK$6.67/share.
- At an auction, the Boyu-backed Offeror and Concert Parties, (then) holding 37.86%, bought a 18.05% stake in Jinke, subject to CSDC oversight. Approval was received on the 19th September.
- The Composite Document is now out, and shareholders, should they so choose, can tender. The first close is the 17th October. The Offer may get extended. I doubt it.
A Pair Trade Between Hyundai Elevator and Hyundai Movex Amid a 7% Stake Sale in Hyundai Movex
- On 24 September, Hyundai Elevator Co (017800 KS) announced that it plans to sell 7.8 million shares of Hyundai Movex (319400 KS), representing 7% of its outstanding shares.
- Over the next several weeks, we expect continued outperformance of Hyundai Elevator vs Hyundai Movex.
- We like the pair trade of going long Hyundai Elevator and going short Hyundai Movex over the next 1-3 months, especially due to concerns about a 7% sale in Movex.
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