In today’s briefing:
- Two Bits of Non-Bullish Toshiba News
- FTSE All-World/All-Cap Index Rebalance Preview (Dec): Quieter Than Usual as IPOs Dry Up
- Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
- EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
- O2Micro’s “Reasonable” Homecoming Offer
- O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS
- Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
- Noteworthy Lockup Releases for the Next Two Months in Korea
Two Bits of Non-Bullish Toshiba News
- On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
- Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
- Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts.
FTSE All-World/All-Cap Index Rebalance Preview (Dec): Quieter Than Usual as IPOs Dry Up
- We see 4 potential inclusions to the FTSE All-World and All-Cap indices that will be implemented at the close of trading on 16 December.
- There are a couple of other recent listings that are close to the investable market cap threshold and could be added to the All-Cap index.
- Given the lack of IPO in the April to August period, the rebalance will be quieter than usual though lock-up expiries will keep things interesting.
Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
- Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
- There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
- Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.
EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
- Stock has fallen 17% since Sep 15th, and implied vols have picked up
- The fundamentals remain strong and tech momentum may be shifting
- We suggest two directional trades using options to play earnings
O2Micro’s “Reasonable” Homecoming Offer
- O2Micro International (OIIM US), an integrated circuits play, has announced a definitive privatisation transaction.
- The acquirer, led by the CEO and CFO of O2Micro, are offering US$5.00/ADS, a 68.9% premium to the undisturbed price.
- The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. Roughly 30% of shares out appear to be supportive. This Offer is expected to close in the 1Q23.
O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS
- O2Micro International (OIIM US) entered into a definitive agreement for going private with FNOF Precious Honour Limited at US$5.00 per ADS, a 54.8% to the undisturbed price (17 March).
- Shareholders representing two-thirds of shares present and voting need to approve the deal. The rollover shareholders represent 16.90% of voting rights.
- The offer is attractive in the context of O2Micro’s weakening performance and grim market conditions. At the last close, the gross spread is 18.2%. Expect a 1Q23 deal close.
Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
- In early Jun 2022, Alipay raised around US$386m via selling 3.3% of outstanding shares of Kakao Pay (377300 KS). That was the first selldown by Alipay (Alibaba (ADR) (BABA US)).
- Despite pricing the shares at an enticing 11.8% discount to last close, the stock failed to hold the deal price and hasn’t looked back since.
- In this note, we will talk about the previous deal and the upcoming lockup expiry.
Noteworthy Lockup Releases for the Next Two Months in Korea
- K Car’s major shareholder is Hahn & Company, which has already fully recovered the initial investment. So, there is an actual probability that it will make an aggressive exit.
- SingEel’s 3-month IPO institutional and VCs will be released, 6.18% of SO. All of them are in a profit zone, there is a possibility that an aggressive overhang will occur.
- Kakao’s 47% holdings in Kakao Pay will be released. The possibility of lowering the stake seems quite low. Nevertheless, we must consider the risk that this will affect market sentiment.
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