In today’s briefing:
- Shin-Etsu Chemical (4063) – OK Earnings, OK Forecast, But Ground-Breaking Buyback
- Bright Smart Securities (1428 HK): Ant’s Possible Unconditional MGO at HK$3.28
- HK Connect SOUTHBOUND Flows (To 25 Apr 2025); First Net Sell in Ages, Led by Heavy SOE Selling
- A/H Premium Tracker (To 25 Apr 2025): AH Premia Fall Sharply; “Feels” Risk-On But Noisy Spreads
- Fujitsu General (6755 JP): Done Deal as Precondition Satisfied
- (Mostly) Asia-Pac M&A: Mayne Pharma, Piedmont/Sayona, Jamco, Makino Milling, Sinarmas, Dada Nexus
- Last Week in Event SPACE: GMO Internet, Hongkong Land, Shibaura Electronics, Millennium & Copthorne
Shin-Etsu Chemical (4063) – OK Earnings, OK Forecast, But Ground-Breaking Buyback
- Shin Etsu Chemical (4063 JP) reported FY earnings to beat January guidance for all four major measures, just slightly. They only guide 1 quarter out, and Q1 is up year-on-year…
- …in revenues, but down in OP and NP. Note: OP and NP guidance is nearly identical to what they guided for Q1 last year on ¥585bn revenues (vs ¥610bn now)
- The BIG news here is a Very Large Buyback. The company has long has huge piles of cash. This buyback (~90% of annual profit) starts to make use of it.
Bright Smart Securities (1428 HK): Ant’s Possible Unconditional MGO at HK$3.28
- Bright Smart Securities And (1428 HK)‘s Chairman entered a SPA with Ant Holdco to sell his 50.55% stake at HK$3.28, a 7.5% premium to the last close.
- The SPA completion requires approval from both the NDRC and SFC. Unusually, Ant has the option of extending the long-stop date, reflecting a possibility of extra scrutiny by the regulators.
- Under Rule 26.1 of the Code, upon completion, Ant will be required to make an unconditional mandatory cash offer at HK$3.28. The MGO price is final and a knockout offer.
HK Connect SOUTHBOUND Flows (To 25 Apr 2025); First Net Sell in Ages, Led by Heavy SOE Selling
- Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. The first three weeks in April were HK$168bn.
- The fourth week (this past week) saw net outflows on low volume as SOUTHBOUND investors sold SOEs quite heavily.
- 9 of the top 10 Net Sells as % of Volume this past week had China, Beijing, or Shanghai as the first word in their name.
A/H Premium Tracker (To 25 Apr 2025): AH Premia Fall Sharply; “Feels” Risk-On But Noisy Spreads
- AH Premia fall sharply. Spread curve torsion is mild but present, with narrow AH Premia widening, and wide premia narrowing.
- For a month I thought warning signs were flashing and spreads could widen. That has taken a pause. I am not comfortable it will remain paused or Hs will outperform.
- The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from wider spreads coming in, narrow spreads widening, and liquidity dropping. Alpha good again this week.
Fujitsu General (6755 JP): Done Deal as Precondition Satisfied
- The precondition for Paloma Rheem Holdings’ tender offer for Fujitsu General (6755 JP) is satisfied. The offer is from 28 April to 28 May.
- Despite an arguably light offer and less than ideal process, this is a done deal due to a lack of opposition and no competing offer.
- At the last close and for a 5 June payment, the gross and annualised spreads are 1.3% and 14.1%, respectively.
(Mostly) Asia-Pac M&A: Mayne Pharma, Piedmont/Sayona, Jamco, Makino Milling, Sinarmas, Dada Nexus
- I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
- No new deals discussed on Smartkarma this week. Although Dickson Concepts (113 HK), Bright Smart (1428 HK), and Jilin Jiutai Bank (6122 HK) are suspended pursuant to the Takeovers Code.
- Key updates/news took place on Mayne Pharma (MYX AU), Piedmont (PLL AU)/Sayona (SYA AU), Jamco (7408 JP), Makino Milling (6135 JP), Sinarmas Land (SML SP), and Dada Nexus (DADA US).
Last Week in Event SPACE: GMO Internet, Hongkong Land, Shibaura Electronics, Millennium & Copthorne
- Negligible float, highly manipulatable, 150x+ forward earnings – yes, investors can afford NOT to have GMO Internet (4784 JP) in their portfolio.
- Hongkong Land (HKL SP) stamps its “recycling capital” motto and sells nine floors of One Exchange Square to HKEX (388 HK) for HK$6.3bn (US$810mn).
- Shibaura Electronics (6957 JP)asks Minebea Mitsumi (6479 JP) whether they intend to change the consideration terms. Minebea says it is “proceeding with its consideration“.
💡 Before it’s here, it’s on Smartkarma
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