In today’s briefing:
- Chery Auto (9973 HK) IPO: No Inclusion in Global Indices; HSTECH Is Interesting
- Korea Semicon ETF Rebal October Play: 2 In, 2 Out Long-Short Setup
- [Japan M&A] Paramount Bed (7817 JP) Founding Family Takeout – Too Cheap, Deserves Activist Response
- Alibaba (9988 HK): It’s Raining AI at the Apsara Conference, Firing up the Stock.
- Broadly Slower Services PMIs
- Potential Additions and Deletions to KOSPI200 in December 2025
- Paramount Bed Holdings (7817 JP): Another MBO Susceptible to Activism
- Tekscend Photomask (429A JP) IPO: The Bull Case
- Timing a Structural Pivot in Samsung’s Max Stretched Pref Discount: Potential Special Dividend
- Ecopro Co – Confirms Raising 800 Billion Won Through a PRS Using Stake in Ecopro BM
Chery Auto (9973 HK) IPO: No Inclusion in Global Indices; HSTECH Is Interesting
- Chery Automobile Co. Ltd. (9973 HK)‘s IPO range is HK$27.75-HK$30.75/share and will raise up to HK$10bn (US$1.3m) if the oversubscription option is exercised, valuing the company at HK$169bn (US$21.7bn).
- The stock should be added to the HSCI Index in December and that will make the stock eligible for inclusion in Southbound Stock Connect.
- There will be no inclusion in global indexes for the next year, but there is a possibility of inclusion in the Hang Seng TECH Index (HSTECH INDEX) in December.
Korea Semicon ETF Rebal October Play: 2 In, 2 Out Long-Short Setup
- MTD screening results with 5 trading days left point to 2 names going out and 2 names coming in: Gemvax and Wonik IPS replace Dongjin Semichem and Jusung Engineering.
- Unlike last April’s tariff-distorted +1.3% rebalance, this time we expect cleaner, more meaningful price action.
- No pre-positioning seen, so I’ll target ETF rebalance day (Oct 10) and maybe take an anticipatory position a day earlier.
[Japan M&A] Paramount Bed (7817 JP) Founding Family Takeout – Too Cheap, Deserves Activist Response
- In a fairly common pattern, the founding family (38% ownership) of Paramount Bed Holdings Co Lt (7817 JP) have launched an MBO.
- It is too cheap at 4.2x adjusted EV/EBITDA (one could argue it is 5.0x but they also have net receivables) for such a ubiquitous brand and growth.
- Soft99 Corp (4464 JP) may have been a one-off. Maybe not. People may look at this situation through that lens. It deserves that look.
Alibaba (9988 HK): It’s Raining AI at the Apsara Conference, Firing up the Stock.
- Alibaba (9988 HK) launched Qwen3-Max, its largest LLM to date, along with a suite of Qwen3 models and technical upgrades at its annual flagship conference, reinforcing its full-stack AI ambitions.
- The stock has surged nearly 50% month-to-date, fueled by investor optimism over AI-related upside, since the August 29 investor call.
- Investors now await proof that execution and performance will deliver on Alibaba’s bold technical claims and high market expectations.
Broadly Slower Services PMIs
- PMIs broadly disappointed and declined relative to August, but absolute levels mostly remain robust or at least expansionary. We are not concerned by these noisy moves.
- Such broad slowing seems shocking relative to the past few months, but it is historically a regular occurrence. Five of the previous twelve were at least as broadly bad.
- The labour market remains tight in the euro area, softened in the UK, and steady in the US. Slower activity does not mean disinflationary slack. We stay relatively hawkish.
Potential Additions and Deletions to KOSPI200 in December 2025
- In this insight, we provide an early look at the potential additions and deletions to KOSPI200 rebalance in December 2025.
- The seven potential additions are up on average 200% YTD. The eight potential deletion candidates are down on average 8.8% YTD. KOSPI is up 44.7% YTD.
- The average market cap of the seven potential additions is 3.5 trillion won. The average market cap of the seven potential deletion candidates is 0.6 trillion won.
Paramount Bed Holdings (7817 JP): Another MBO Susceptible to Activism
- Paramount Bed Holdings Co Lt (7817 JP) has recommended an MBO at JPY3,530, a 32.2% premium to the last close price. The offer represents a ten-year high.
- The offer is below the midpoint of the special committee IFA’s DCF valuation range and its requested price. Hibiki has previously suggested an intrinsic value of JPY4,929.
- The setup shares several traits with the Mandom MBO, and has the potential for a bump, particularly if an activist emerges as a substantial shareholder or agitates for better terms.
Tekscend Photomask (429A JP) IPO: The Bull Case
- Tekscend Photomask (429A JP) is a global leader in semiconductor photomasks. It is seeking to raise up to JPY123 billion (US$832 million). Pricing is on 30 September.
- Tekscend, which was carved out of Toppan Printing (7911 JP) in 2022, is owned by Toppan (with a 50.1% stake) and Integral (5842 JP) (with a 49.9% stake).
- The bull case rests on its leading market position, attractive market opportunity, stable underlying margins, net cash position, and attractive dividend policy.
Timing a Structural Pivot in Samsung’s Max Stretched Pref Discount: Potential Special Dividend
- Pref spread looks stretched near 21–22%, likely a pullback soon. Structural re-rate needs a major Samsung narrative shift.
- A surprise Samsung special dividend could pivot the pref discount; H2 FCF, Q3 prelims, and lighter capex are the key swing factors.
- Expect a short-term pullback; but still stay cautious. Watch the memory upcycle and consider a discount-narrowing trade around late September.
Ecopro Co – Confirms Raising 800 Billion Won Through a PRS Using Stake in Ecopro BM
- On 24 September, Ecopro Co confirmed that it will be raising 800 billion won through a PRS using its stake in Ecopro BM as the base asset.
- Ecopro BM has a market cap of 11.3 trillion won. A PRS worth 800 billion won represents 7.1% of Ecopro BM’s market cap.
- All in all, we believe this PRS deal worth 800 billion won is likely to negatively impact both Ecopro Co and Ecopro BM.
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