In today’s briefing:
- Dai-Nippon Printing (7912) – Whoomp There It Is! Part Deux
- WisdomTree Indexes Special Rebalance: ESG Considerations Dropped
- MV US Listed Semiconductor 25 Index Rebalance: Over US$1bn to Sell in NVIDIA
- MV Global Junior Gold Miners Index Rebalance: Over US$500m to Trade
- Nippon Express (9147 JP) – Buying the Overhang
- MV Australia Equal Weight Index Rebalance: Float & Capping Changes to Drive Flow
- CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer
- Yaizu Suisankagaku Industry (2812 JP): 3D Succeeds in Securing a Bump to JPY1,438
- CIMC (1839 HK): Firm Offer. With A Bump!
- On A Charge: Hanon Systems & Renewed Interest In Hahn/Hankook’s Stake
Dai-Nippon Printing (7912) – Whoomp There It Is! Part Deux
- At end-January 2023 it became clear activist Elliott Management had set its sights on Dai Nippon Printing (7912 JP). The stock popped and people got bullish.
- I warned about the “complicated” nature of gains going forward here. Three weeks later they announced details of including ¥100bn of buybacks per year for 3yrs. That’s discussed here.
- I rarely write bearishly about a huge buyback program but from next day open, over 1yr, total return has been 4.9%. Stage 2 starts 11 March with ¥50bn through end-Sep24.
WisdomTree Indexes Special Rebalance: ESG Considerations Dropped
- WisdomTree has dropped ESG considerations while selecting stocks for the EMXSOE, CHXSOE and WTEMXC indices.
- That results in a lot of inclusions and fewer deletions across indices that will be implemented at the close on 15 March.
- The round-trip trade across the indices will exceed US$500m with Tencent (700 HK) as the largest buy.
MV US Listed Semiconductor 25 Index Rebalance: Over US$1bn to Sell in NVIDIA
- There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in March but there are a lot of float and capping changes.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) is the largest buy while capping results in NVIDIA Corp (NVDA US) being the largest sell by far.
- Estimated one-way turnover is 8.3% resulting in a round-trip trade of nearly US$3bn. There are a few stocks with more than 0.2x ADV to trade.
MV Global Junior Gold Miners Index Rebalance: Over US$500m to Trade
- Emerald Resources Nl (EMR AU) will be added to the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in March while there are 3 deletions for the index.
- The constituent changes along with float and capping changes result in an estimated one-way turnover of 6.4% and a one-way trade of US$263m.
- There are 9 stocks with more than US$10m to trade and 9 stocks with over 2x ADV to trade.
Nippon Express (9147 JP) – Buying the Overhang
- The Offering priced today at ¥7,338/share vs ¥8,039/share traded at the close on the day of the announcement. That’s an 8.7% discount for no dilution.
- Compared to a broad basket of Peer Baskets (yes, a basket of baskets), the stock has underperformed by 4.2%, and the 3% discount today puts it at 7+% move.
- Given the relative cheapness, one should be comfortable putting this on if it gets sold off. This is not different to my initial opinion.
MV Australia Equal Weight Index Rebalance: Float & Capping Changes to Drive Flow
- There are no constituent changes for the MVIS Australia Equal Weight Index at the March rebalance.
- Float and capping changes will result in a one-way turnover of 4.4% and in a round-trip trade of A$195m.
- We had Lendlease Group (LLC AU), IDP Education (IEL AU) and nib holdings (NHF AU) as close deletes and they will now have inflows due to capping.
CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer
- CIMC Vehicle Group Co Ltd (1839 HK) announced the H Share buyback offer, excluding CIMC’s shares, is at HK$7.50, a 16.5% premium to the undisturbed price. The offer is final.
- The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.
- Excluding the irrevocables, the 90% threshold requires an independent H Shareholder acceptance rate of 77.7%, which could be challenging due to a light offer. Risk/reward unfavourable.
Yaizu Suisankagaku Industry (2812 JP): 3D Succeeds in Securing a Bump to JPY1,438
- Inaba has bumped its Yaizu Suisankagaku Industry (2812 JP) offer by 6.5% to JPY1,438 and lowered the minimum number of shares to be purchased from 66.67% to 60.00% ownership ratio.
- The bump was forced by 3D Investment Partners increasing its shareholding from 9.78% to 13.81% ownership ratio after the previous JPY1,350 offer was announced on 5 February.
- While the offer continues to value YSK below book value, Murakami and 3D’s support paves the way for completion. At the last close, the gross spread was 7.1%.
CIMC (1839 HK): Firm Offer. With A Bump!
- Back on the 28 November 2023, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a conditional H-share buyback at a $7.00/H-share, a paltry 8.6% premium to last close.
- This Scheme-like Offer, with a tendering condition, secured SAFE approval late January. But last month CIMC announced a CBP investigation into the evasion of U.S. anti-dumping and countervailing duties.
- Now CIMC has announced a firm Offer at HK$7.50/share. Terms are final. The majority of independent H-shareholders are supportive. This looks done. Possible completion late-May, early-June.
On A Charge: Hanon Systems & Renewed Interest In Hahn/Hankook’s Stake
- Back in 2004, Hahn & Co and Hankook Tire (161390 KS) acquired a 70% stake in Hanon Systems (018880 KS) from Visteon (VC US), an automotive electronics supplier, for ₩3.8tn.
- Three years ago, Hahn/Hankook explored the sale of this 70% stake, which was expected to fetch ~₩8tn (US$7bn). Reportedly, Carlyle, TPG, Bain and auto supplier Mahle submitted preliminary bids.
- That 70% stake is now worth ₩2.3tn. And reportedly, Carlyle has returned to the trough.
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