In today’s briefing:
- Stealthy Long-Short Flow Playing Out Via Local KOSPI 200 Covered Call ETFs
- StubWorld: Swire Pac’s NAV Discount Widens. Bs Outperform As
- Kangji Medical (9997 HK): Consortium’s Light Preconditional Scheme Offer
- Kangji Medical (9997 HK): TPG/QIA/Founder’s Offer Is No Knockout
- LS Corp: Treasury Share Cancellation of 171 Billion Won
- Prosus–JET Arbitrage: EC Clearance Granted, Minimal Spread Remains
Stealthy Long-Short Flow Playing Out Via Local KOSPI 200 Covered Call ETFs
- Covered call ETFs ramped up KOSPI 200 weekly call selling, pushing premiums unusually low despite modest overall volume—likely a key driver behind the premium compression.
- KOSPI 100 outperformed KOSPI 200 small-mid caps by 3.7%p last month, probably boosted by call-selling ETFs’ delta-hedge buying concentrated in large caps.
- Watch for hedge buy flows ramping up before big events. Timing short-term longs in large caps and shorts in smaller KOSPI 200 names around these windows can yield solid alpha.
StubWorld: Swire Pac’s NAV Discount Widens. Bs Outperform As
- As Swire Pacific (A) (19 HK) plumbs new 12-month lows for its NAV discount and implied stub, Swire’s B shares have significantly outperformed the As over the past month.
- Preceding my comments on Pac, Swire Properties (1972 HK) & Cathay Pacific Airways (293 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%.
Kangji Medical (9997 HK): Consortium’s Light Preconditional Scheme Offer
- Hangzhou Kangji Medical Instrument Co., Ltd. (9997 HK) disclosed a preconditional privatisation from a consortium at HK$9.25, a 9.9% premium to last close and a 21.7% premium to the undisturbed price.
- The precondition relates to SAMR approval. The key condition will be approval by at least 75% disinterested shareholders (<10% of all disinterested shareholders’ rejection). The offer is final.
- The scheme vote risk is medium-to-high due to an unattractive offer, a blocking stake below the substantial disclosure threshold, unfavourable AGM voting patterns, and emerging retail opposition.
Kangji Medical (9997 HK): TPG/QIA/Founder’s Offer Is No Knockout
- Medical device play Kangji Medical (9997 HK) has announced an Offer, by way of a Scheme, from a consortium led by TPG and the Qatar Investment Authority, together with founders.
- The consortium is offering HK$9.25/share, a less-than-inspiring 9.9% premium to last close. The price has been declared final. It is 33.4% below the HK$13.88 2020 IPO price.
- Independent shareholders hold 25.25% of shares out. They could bare teeth; and they’ve been somewhat active at AGMs. But on balance, there’s probably enough here for this to get up.
LS Corp: Treasury Share Cancellation of 171 Billion Won
- On 12 August, LS Corp (006260 KS) announced that it will cancel 1 million treasury shares (171 billion won), representing 3.1% of its outstanding shares.
- This is significant, especially because the company has not cancelled any shares in the past five years. This move signals the company’s willingness to provide greater returns to its shareholders.
- LS plans to increase its dividend by at least 5% annually, to reach dividend payout of at least 30% by 2030.
Prosus–JET Arbitrage: EC Clearance Granted, Minimal Spread Remains
- The EC’s conditional clearance removes the final regulatory risk for Prosus’s €20.30/share JET acquisition, leaving only procedural steps. Current 0.69% spread reflects a near-99% implied probability of deal completion.
- Structural remedies (Delivery Hero stake cut, governance exit, voting restrictions) ensure JET and Delivery Hero remain independent competitors. An independent trustee will oversee compliance under the European Commission’s binding commitments.
- Early entrants capture ~9.6% annualized return; late entrants ~4.0%. Post-clearance, the market shows minimal mispricing, making the trade appealing only for short-term, low-volatility capital deployment strategies.
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