In today’s briefing:
- [Quiddity Index] Nikkei 225 Sep25 Rebal: One ADD/DEL, Less Certain Than Before
- Hygon/Sugon Merger: BIG Index Flows on Completion
- Korea Holdco Rerating Pullback Risk: No Retroactive Treasury Cancellation
- Smartpay (SPY NZ/SMP AU) Enters Into Scheme With Shift4
- TechChain Insights: Himax Threatened by China Auto Chip Push? CPO Tech with TSMC Remains Bright Spot
- Apple Intelligence. What’s Another Year?
[Quiddity Index] Nikkei 225 Sep25 Rebal: One ADD/DEL, Less Certain Than Before
- I published a Sep25 Nikkei 225 prediction list last Wednesday. By Friday, we had a new paradigm due to an ad hoc change. That new paradigm informs the September selection.
- As it is, I expect one (1) ADD (Shift Inc (3697 JP)) and one (1) DELETE (Tokuyama Corp (4043 JP)) – a prediction which change on a corporate announcement.
- My confidence on the ADD is a little lower due to the implications of the choice of Rohm. And the interesting ECM trade for September remains Sony Financial.
Hygon/Sugon Merger: BIG Index Flows on Completion
- On 26 May, Hygon Information Technology (688041 CH) and Dawning Information Industry (603019 CH) announced a merger in a sign of consolidation in China’s chipmaking industry.
- For each share of Dawning held, shareholders will receive 0.5525 shares of Hygon. With uncertainty on the timeline for merger completion, Dawning is trading at a 10% discount.
- On completion of the merger, passive trackers will need to buy over US$1.1bn of Hygon Information Technology C (688041 CH) with nearly of that from local index trackers.
Korea Holdco Rerating Pullback Risk: No Retroactive Treasury Cancellation
- Mandatory treasury cancellation isn’t in the current bill, but FSC and MOJ have started internal reviews; enforcement decree could drop as early as Q4.
- An internal policy paper suggests mandatory cancellation will apply only to newly acquired treasury shares, with tight limits on existing ones to curb owner control abuse.
- Lack of retroactive cancellation weakens the bull case, and while holdco sentiment stays upbeat, momentum may fade, opening the door to a tactical pullback.
Smartpay (SPY NZ/SMP AU) Enters Into Scheme With Shift4
- Eftpos terminal provider Smartpay Holdings (SPY NZ/SMP AU) has now entered into a Scheme Implementation Deed with Shift4 Payments (FOUR US).
- Shift4 is offering NZ$1.20, the same price as that under the NBIO announced early last month. It’s a 46.05% premium to the 90-day VWAP, and 14.2x normalised FY25 EBITDA.
- The Offer has the unanimous backing of both boards, and also has the backing from Microequities holding 13.3% of shares out. Implementation expected in 4Q25.
TechChain Insights: Himax Threatened by China Auto Chip Push? CPO Tech with TSMC Remains Bright Spot
- China’s push for 100% auto chip localization by 2027 poses risk to Himax, which derived 75% of 1Q25 revenue from China. We engaged the company for comments./
- Himax may avoid direct targeting due to Taiwanese roots and local production via CN Nexchip, and we believe is less vulnerable than Western firms like NXP, TI, and Wolfspeed.
- Copackaged Optics (CPO) industry momentum continues to build as Himax continues role alongside TSMC and FOCI; industry moves from Nvidia, AMD validate long-term optical interconnect opportunity Himax is positioned for.
Apple Intelligence. What’s Another Year?
- Apple failed to deliver on the highly anticipated Siri makeover, noting that it didn’t meet their quality standards and effectively pushing it out for another full year
- Internal rivalries, divided opinions on the direction AI should take, organizational restructuring, unwillingness to do meaningful acquisitions would all appear to be contributing to Apple’s AI woes
- Apple’s peers are advancing their AI ambitions at warp speed, investing heavily, taking bold risks and mostly delivering on their promises. Apple is the polar opposite. What’s another year? Failure.
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