In today’s briefing:
- CATL (3750 HK): Cornerstone Lock-Up Expiry, Passive Flows, H/A Premium
- Advantest (6857 JP): Rally Leads to Potential NKY Capping
- Lynas Rare Earths (LYC AU): Global Index Inclusion & Passive Flows as Rare Earths Get Rarer
- Ganfeng Lithium (1772 HK): Global Index Inclusion, Outperformance & The A/H Trade
- China Gold Intl (2099 HK): Gold Rally & Upcoming Global Index Inclusion
- Soft99 Corp (4464 JP): Could the MBO Revised Offer Get the Job Done?
- Mandarin Oriental (MAND SP): Jardine Matheson’s Attractive Scheme Offer
- Block Deal Sale of 1.7 Trillion Won Worth of Samsung Electronics
- Why Shiseido (4911) Never Worked as a Turnaround Stock
- Final Samsung Electronics Stake Sale: Overhang Risk, Control Optics, & Clean Pref Reversion Trade
CATL (3750 HK): Cornerstone Lock-Up Expiry, Passive Flows, H/A Premium
- CATL (3750 HK) listed in May by selling 135.579m shares (including the Offer Size Adjustment Option) at HK$263/share. The overallotment option of 20.337m shares was also exercised in full.
- Nearly 50% of the IPO shares were allotted to cornerstone investors. The lock-up on those investors ends on 19 November. That increases float and will bring in passive flows.
- CATL (3750 HK) is trading at a big premium to CATL (300750 CH) and that could start to move lower as the number of free float shares increases.
Advantest (6857 JP): Rally Leads to Potential NKY Capping
- Advantest Corp (6857 JP)‘s weight in the Nikkei 225 (NKY INDEX) has crossed 10% and staying there will lead to capping at the March rebalance.
- A lot of Advantest Corp (6857 JP)‘s float is held by passive trackers, and the real float is much lower. The capping will increase that float significantly.
- Advantest Corp (6857 JP) has outperformed its peers significantly and trades at higher valuation metrics compared to its peers.
Lynas Rare Earths (LYC AU): Global Index Inclusion & Passive Flows as Rare Earths Get Rarer
- Lynas Corp Ltd (LYC AU)‘s stock price has more than doubled in the last few months as equity markets rally, the rare earth boom continues, and export restrictions are imposed.
- The significant increase in market cap and free float market cap should result in the stock being added to a global index in November.
- There will be positioning for the inclusion (and that partly explains the recent run-up in the stock). But with export controls continuing, there could be further upside.
Ganfeng Lithium (1772 HK): Global Index Inclusion, Outperformance & The A/H Trade
- Ganfeng Lithium (1772 HK)‘s stock price has surged over the last 6 months, and the higher free float market cap should result in global index inclusion in November.
- Ganfeng Lithium (1772 HK) has outperformed its peers and is trading at higher valuations on most metrics. Tianqi Lithium (9696 HK) is trading a lot cheaper.
- The Jiangxi Ganfeng Lithium (002460 CH) / Ganfeng Lithium (1772 HK) premium has drifted lower and there could be a move higher as we near index inclusion.
China Gold Intl (2099 HK): Gold Rally & Upcoming Global Index Inclusion
- Rising gold prices have led to a sharp rally in China Gold International Resources (2099 HK) over the last couple of months.
- The significantly higher market cap and free float market cap should lead to the inclusion of the stock in a global index in November.
- China Gold International Resources (2099 HK) trades cheaper than its peers on forward PE and price to book. A continuation of the gold rally and index inclusion are positives.
Soft99 Corp (4464 JP): Could the MBO Revised Offer Get the Job Done?
- The Soft99 Corp (4464 JP) MBO offer price has been increased by 8.7% to JPY2,680, an 18.8% discount to the last close and a 34.6% discount to the Effissimo offer.
- Ostensibly, the offer was revised based on requests from some shareholders to increase the offer price and for it to exceed the book value of JPY2,653 (implying P/B of 1.01x).
- The latest update points to modest withdrawals of non-KeePer acceptances. Effissimo continues to face an uphill task, and the revised MBO offer increases the odds of success.
Mandarin Oriental (MAND SP): Jardine Matheson’s Attractive Scheme Offer
- Mandarin Oriental International (MAND SP) disclosed a privatisation offer from Jardine Matheson Holdings (JM SP) at US$3.35 (US$2.75 cash + US$0.60 special dividend), a 39.6% premium to the last close.
- The special dividend represents the majority of the proceeds from the sale of the top thirteen floors of One Causeway Bay (OCB) to Alibaba and Ant Group for US$925 million.
- The offer is final. The scheme is conditional on the completion of the OCB sale and Mandarin shareholder approval. This is a done deal due to an attractive offer.
Block Deal Sale of 1.7 Trillion Won Worth of Samsung Electronics
- It was reported that Hong Ra-hee, Lee Boo-jin, and Lee Seo-hyun will be selling a combined 1.7 trillion won worth of Samsung Electronics to pay for inheritance taxes.
- This stake sale by the Lee family will represent 0.3% of Samsung Electronics outstanding shares.
- Samsung Electronics still trade at low multiples and its valuations remain attractive. Its recent strategic partnership with OpenAI regarding the Stargate project also remain a major positive catalyst.
Why Shiseido (4911) Never Worked as a Turnaround Stock
- Shiseido’s share price dropped 70% over the past six years, compared to a 110% gain by Topix, but the stock just crossed its 200-day MAV. Time for another look?
- In our view, the stock lacks most of the required criteria for a successful turnaround, and reeks of all the important criteria for failure.
- Shiseido’s stock already prices in a 50% earnings recovery. To be compelling, the forecast needs to be 4 standard deviations above the mean, or the price needs to decline 30%.
Final Samsung Electronics Stake Sale: Overhang Risk, Control Optics, & Clean Pref Reversion Trade
- Near‑term flow looks muted: Shinhan likely drips ~0.3% SO stake into liquid tape, not a block. With ₩2tn daily turnover, market easily absorbs without price shock.
- Top‑holder stake dips 20.14→19.84% post‑sale, but ₩10tn buyback cancels ~1.5ppt float, restoring 20.14%. The 0.3% selldown’s pre‑calculated; no real trading juice, flow impact minimal.
- Inheritance‑tax overhang done, buyback cycle fading. Gov’t pressure plus family’s last selldown point to dividend ramp. Prefs at 23% discount vs 10% target set up clean reversion trade.
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