In today’s briefing:
- Curator’s Cut: BABA Hedges, Substantive Spin-Offs & Japanese Activist Situations
- Merger Arb Mondays (29 Sep) – Soft99, Ashimori, Mandom, Paramount, OneConnect, Dongfeng, Spindex
- TOPPAN Holdings – IPO Premium Priced In, Core Execution the Next Test
- Integral Corp (5842 JP) — Tekscend IPO Crystallizes Value; Discount Persists Without Payouts
- Tekscend IPO – Scarce Photomask Pure-Play Positioned in Oligopoly, but Cash Flow Strains Loom
- Asia/Pacific Stocks Outlook For the Week Sep 29-Oct 3
- Behind % Rising Female Board Members, How Many Companies Make Progress Reforming Their Boards?
- Genky Drugstores (9267 JP) Aims for 10% Growth
Curator’s Cut: BABA Hedges, Substantive Spin-Offs & Japanese Activist Situations
- Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,000+ Insights published over the past two weeks on Smartkarma
- In this cut, we review strategies to hedge Alibaba (9988 HK) exposure, examine signficant Asian spin-offs, and explore engaging activist situations in Japan
- Want to dig deeper? Comment or message with the themes you’d like to see highlighted next
Merger Arb Mondays (29 Sep) – Soft99, Ashimori, Mandom, Paramount, OneConnect, Dongfeng, Spindex
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Mayne Pharma (MYX AU), Smart Share Global (EM US), ENN Energy (2688 HK), Dongfeng Motor (489 HK), Soft99 Corp (4464 JP), Joy City Property (207 HK).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Mandom Corp (4917 JP), Paramount Bed Holdings Co Lt (7817 JP).
TOPPAN Holdings – IPO Premium Priced In, Core Execution the Next Test
- IPO catalyst already priced in – Tekscend Photomask IPO (¥300 bn base case) crystallizes hidden value, but with TOPPAN at ~¥3,900, the upside to bull case (~¥4,100) is limited.
- Core execution the swing factor – Information & Communication (~54% sales) and BPO/Digital DX must expand margins (target 10% by FY2030 vs. ~5% today) for further re-rating.
- Balanced risk–reward – Strong balance sheet and shareholder returns (2.5% equity cancelled FY25) support valuation, but high capex and legacy print drag keep FCF and ROE volatile.
Integral Corp (5842 JP) — Tekscend IPO Crystallizes Value; Discount Persists Without Payouts
- NAV crystallization from Tekscend IPO – ~¥108 bn cash proceeds plus a ~14% residual stake; base NAV ~¥150–160 bn vs. ¥129 bn market cap (15–20% discount).
- Upside capped without payout shift – modest base case (¥3,900–4,100/share, flat to +7%); bull case (¥4,400, +15–20%) requires high-end IPO pricing and explicit return policy.
- Persistent structural discount – low dividend (~0.9% yield), no buyback track record, and opaque residual portfolio (e.g., Golf Digest) keep holdco discount entrenched.
Tekscend IPO – Scarce Photomask Pure-Play Positioned in Oligopoly, but Cash Flow Strains Loom
- Scarce exposure to EUV photomasks – one of only three global leaders (with Hoya, DNP) in a concentrated oligopoly.
- IPO at ¥250–400 bn (Oct 16, 2025) implies ~12–16× EV/EBITDA, offering rare pure-play access.
- Execution risks – capex intensity turns FCF negative; overhang from Integral (~14% post-IPO) may weigh.
Asia/Pacific Stocks Outlook For the Week Sep 29-Oct 3
- Multi-Week forecasts for the Asian indices and stocks we track, based on our proprietary probability model.
- OVERBOUGHT: Samsung Electronics (005930 KS) , Softbank Group (9984 JP) , Toyota Motor (7203 JP) , Nikkei 225 (NKY INDEX)
- OVERSOLD: China Mobile (941 HK) , Fast Retailing (9983 JP)
Behind % Rising Female Board Members, How Many Companies Make Progress Reforming Their Boards?
- Amidst very modest improvements in corporate governance over the past few years, the percentage of female board members has steadily increased.
- Even if the %of female board members rises, there’re concerns that it will be a repeat of governance reforms that have’t achieved to transform management into one that creates value.
- Whether companies that step forward with diversity-conscious boards of directors can use this as a catalyst for management change, and promote female executive directors within companies, will be closely watched.
Genky Drugstores (9267 JP) Aims for 10% Growth
- Genky Drugstores is one of three hybrid food & drug chains, all of which target the discount end of the market.
- Unlike rivals, Genky’s blends in-house control of both store and product development, and logistics.
- This level of control and discipline is making Genky a growing threat to competitors in central Japan.
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