In today’s briefing:
- Thinking Strategically About a Shinsei Position – Things To Do NOW
- Link’s Ongoing Overtures from DND Underscore Its Value
- StubWorld: Link And D&D Continue Negotiations On Unlisted Ops
- KOSDAQ 150 Rebalancing: 7 Regular Changes + 2 Special Entries
- Samsung Electronics: Lee Jae-Yong Orders the Creation of a New Task Force to Raise Shareholder Value
- FTSE China 50 Index Rebalance Preview: One Change Could Increase to Three
- Trading Ideas on the Possibility of Samsung Electronics’ Special Shareholder Returns
- Shidax Outlook May Change – Better Governance Matters
- FEMSA/Valora Holding: Offer Success and Squeeze-Out
Thinking Strategically About a Shinsei Position – Things To Do NOW
- SBI Holdings (8473 JP)‘s subsidiary has reportedly filed its application to become a Bank Holding Company, the definition being a company holding a 50% or greater stake in a bank.
- The day after I last wrote, Shinsei announced it had received approval to change its name to SBI Shinsei Bank as of 4 January 2023.
- My expectation is the move above 50% happens sooner rather than later. And in that case, investors should think about their approach. Get your cowbells ready.
Link’s Ongoing Overtures from DND Underscore Its Value
- Dye & Durham/DND is a persistent bidder and returned with a A$1.27 billion bid for Link Administration (LNK AU)’s CM and BCM businesses. The Board will update next week.
- The latest offer is attractive but curiously, contradicts DND’s previous comments that the FCA would make it challenging to distribute any part sale proceeds.
- Despite the overhang from the FCA fine, DND’s ongoing persistence and the Board’s potential in-specie distribution of the PEXA Group (PXA AU) stake highlight the underlying value.
StubWorld: Link And D&D Continue Negotiations On Unlisted Ops
- In a Musk/Twitter-like on/off/on-again situation, Link Administration (LNK AU) announced it received an improved offer for its corporate markets and Banking & Credit Management (BCM) businesses from Dye & Durham.
- Separately, Link is working with the Australian Tax Office on the in-specie distribution of a minimum of 80% of Link’s holding into PEXA Group (PXA AU).
- Preceding my comments on Link 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%.
KOSDAQ 150 Rebalancing: 7 Regular Changes + 2 Special Entries
- KOSDAQ 150’s December rebalancing will feature seven regular changes and two special entries.
- Among the additions, we should focus on Dear U and ISC, which have a balanced level of liquidity and flow, rather than those theme stocks with high volatility.
- As for Nature Holdings, Eoflow, and Nextin, I suggest a more aggressive entry point due to low trading volume. Then, I’d basket-trade the deletions on equal weight.
Samsung Electronics: Lee Jae-Yong Orders the Creation of a New Task Force to Raise Shareholder Value
- On 4 October, it was reported that Samsung Electronics (005930 KS) has set up a task force to raise shareholder value of the company.
- This task force was formed at the order of Samsung’s Vice Chairman Lee Jae-Yong.
- All in all, a major share buyback and cancellations coupled with higher dividends could result in a share price turnaround for Samsung Electronics.
FTSE China 50 Index Rebalance Preview: One Change Could Increase to Three
- PICC Property & Casualty H (2328 HK) is a potential replacement for XPeng (9868 HK) at the December rebalance of the FTSE China 50 Index.
- There are a couple of index constituents that are close to the deletion threshold rank and that could drive two more changes. The review cutoff date is 21 November.
- Tianqi Lithium (9696 HK) will be eligible for index inclusion if it is added to the FTSE All-World Index in December – we have that as a high probability event.
Trading Ideas on the Possibility of Samsung Electronics’ Special Shareholder Returns
- 1P/Ord LONG/SHORT betting on a 1P-skewed buyback does not look very desirable. The Lee family’s financial needs are short-term, so there is no need for a 1P-skewed buyback.
- Given that the 1P discount rate has stabilized again, a strategy betting on the mean reversion does not seem very timely either.
- We should look at the possibility that false expectations for a special year-end dividend will further deepen futures backwardation. This situation can lead to quite a juicy spot/futures spread opening.
Shidax Outlook May Change – Better Governance Matters
- On 8 September, I went over the Oisix ra daichi (3182 JP) bid for the stake in Shidax Corp (4837 JP) held by Unison Capital.
- The founding Shida family had a deal whereby when the company raised capital years ago, the family had ROFR to buy or nominate a buyer of the Unison stake.
- The problem? Shidax’ independent board said this was unfair to minorities. The back and forth has continued but there may now be hope for a better deal.
FEMSA/Valora Holding: Offer Success and Squeeze-Out
- The Additional Acceptance Period ended on 29 September. On 3 October, FEMSA announced the satisfaction of all conditions. On 5 October, FEMSA announced that its participation amounts to 96.87%.
- Settlement will occur on 7 October. FEMSA intends to initiate a squeeze-out procedure and delist the Valora shares from trading on SIX Swiss Exchange.
- The tender was good news for shareholders. My TP is CHF 252.2/share, therefore I believe the offer is fair and there was no counterbid.
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