In today’s briefing:
- Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”
- Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN
- StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback
- Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large
- CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- JSR (4185) – Reporters Reportedly Report Conditions Such That JIC Deal Could Come Soon
- Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now
- Emerging Markets Ex-China: Looking Back… And Forward
- JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval
- Wiwynn GDRs Early Look – US$1.3bn Taiwan GDR Would Be Easily Digested
Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”
- Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
- The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback.
- Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It’s pretty clear.
Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN
- Now that the March 2024 Nikkei 225 Rebalance is decided, we have a model for the Sep 2024 Review. As previously discussed on Smartkarma, actual name changes get tough now.
- As of now, there should be two ADDs and two DELETEs. They might not occur. But there are two other situations which create interesting dynamics around big names.
- The dynamics of Fast Retailing and Tokyo Electron promise more fun than the actual name changes in September 2024. It impacts how you trade Nikkei vs TOPIX and tech internals.
StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback
- Keisei Electric (9009 JP) has been an outperformer since activist fund Palliser Capital called on the company sell some Oriental Land (4661 JP) shares. It has now announced another buyback.
- Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large
- Keisei Electric Railway Co (9009 JP) is looking to raise up to US$553m from selling a 1% stake in Oriental Land (4661 JP).
- Palliser Capital, has been pushing Keisei Electric Railway to reduce its stake in OLC to unlock shareholder value owing to the wide discrepancy between carrying/market value of the former’s investment.
- Selling just 1% of shares outstanding, the deal wouldn’t be a very large one to digest, representing 4.7 days of OLC’s three month ADV.
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
- With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
- The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.
JSR (4185) – Reporters Reportedly Report Conditions Such That JIC Deal Could Come Soon
- JSR Corp (4185 JP) saw its stock pop Monday when an article in a Japanese paper said the Tender Offer would start “within the month.”
- Investors went from “concerned about delay or worse” to “anticipating resolution.” Then Wednesday just before the close the stock popped as media outlets reportedly reported no SAMR approval was required.
- There has been no comment from either JIC or JSR but the discount to terms has gone from 6.9% last Friday to a 1.7% discount now.
Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now
- Seven weeks ago I wrote about Shinko Electric Industries (6967 JP)‘s changing Break/Gap Risk as comps had gained. Shinko was cheap to its main comp and peers vs Announcement Date.
- Since then, Shinko is +4.1% and direct peer Ibiden Co Ltd (4062 JP) is -14.5%. This has erased Shinko’s underperformance since announcement, and shrunk a 9% spread to 3.3% yesterday.
- With the spread tighter and tech showing some weakness, I’d be happy unwinding at yesterday’s closing spread (3.3%).
Emerging Markets Ex-China: Looking Back… And Forward
- We first wrote about the iShares Emerging Markets ex-China (EMXC US) ETF 3 years ago when AUM was less than US$500m. AUM now stands at US$11bn.
- IShares Emerging Markets ex-China (EMXC US) has outperformed iShares Emerging Markets (EEM US) and iShares Emerging Markets Asia (EEMA US) with lower volatility and a lower drawdown.
- With the Chinese economy misfiring and markets under pressure, we could see a further shift in positioning away from China and that means inflows to other Emerging Markets.
JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval
- JSR Corp (4185 JP) has filed a solid response to SUNY RF’s lawsuit. SUNY RF will counter with a response by 13 March.
- The response suggests that SUNY RF’s lawsuit will not be harmed if JIC proceeds with TOB, which is the strongest indication that JIC is comfortable taking on the litigation risk.
- A media article stating that SAMR has allowed JIC to withdraw its merger control filing helps explain the current tight spread. However, the article needs to be treated with caution.
Wiwynn GDRs Early Look – US$1.3bn Taiwan GDR Would Be Easily Digested
- Wiwynn Corp (6669 TT) is looking to raise up to US1.3bn in its upcoming global depository receipts (GDRs) offering.
- Wiwynn recently reported its board’s resolution to issue up to 17m new shares in the form of GDRs for purchasing overseas raw materials, debt repayment, investing overseas and others.
- Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.
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