In today’s briefing:
- Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness
- Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding
- Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move
- Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand
- Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
- Henlius (2696 HK): LVC Sits On A Blocking Stake. And Me (Maybe) Eating Humble Pie
- Henlius (2696 HK): Hurtling Towards a Likely Deal Break
- Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
- KRX H1 SSF Reshuffle: Play Setup from Last Round’s Learning Curve
- Foshan Haitian Flavouring & Food (603288 CH): Index Inclusion Post H-Share Listing
Henlius (2696 HK): LVC Won’t Block. Buy Here & On Weakness
- Ahead of Shanghai Henlius Biotech (2696 HK)‘s EGM and Court Meeting on the 22 January, the focus has shifted to Loyal Valley Capital (LVC)’s continued buying in the market.
- After the close of market last Friday, LVC held 7.8295%, above the 7.826% blocking stake. That % was as at 9th January. I assume LVC are still buying.
- Yet if you analyse how LVC has traded in and out of Henlius, they are not in it to block. They’re in for the back-end scrip option.
Nikkei 225 Index Rebalance Preview (Mar 2025): SHIFT Splits; Updated Ranking, Capping & Funding
- The review period for the Nikkei 225 Index March rebalance ends in 3 weeks. There could be one outright change and one or two others driven by sector balance.
- Shift Inc (3697 JP) will have a 15:1 stock split next week and that puts the stock in the list of potential inclusions over the next couple of rebalances.
- The recent drop in Fast Retailing (9983 JP)‘s stock price will lead to a single step drop in the PAF. That means less passive selling and a smaller funding buy.
Henlius (2696 HK): Test of Nerves Awaiting LVC’s Next Move
- The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread ballooned today due to LVC’s amassing a blocking stake.
- There are valid arguments for LVC to block the vote or to support the offer. LVC’s trading behaviour over the coming days will point to its voting intentions.
- I continue to believe that LVC will support the offer. At the current price and for a 15 February payment, the gross/annualised spread is 9.1%/160%.
Kokusai Electric (6525) – Upcoming Lockup Expiry And BIG Index Demand
- Kokusai Electric (6525 JP) was IPOed in September 2023. The stock was cheap. It rose sharply, tripling in 9 months. At the ATH, the pre-IPO owners launched a HUGE secondary.
- It was like a second IPO. The stock dipped, rallied, plummeted into pricing. Stayed there for two days, and in 6 months, the shares have halved.
- Lockup expiry is next week, and there is a likely large index event in ~10 weeks.
Bain To Launch an MBO for Aircraft Maintenance Co JAMCO (7408) ¥1800 Is Too Cheap
- Bain is buying out JAMCO (a long time ago called Itochu Aircraft Maintenance) from Itochu, ANA, Bain’s own portfolio company, and the public. It’s an expected deal. A done deal.
- It is being done too cheaply. The price is 6x next year’s expected EBIT. This year expected ROE is 22%. Next year could be double that.
- And the company has more in non-operating financial assets than its net equity. And a lot of really old land assets are not marked up. Just a shame.
Henlius (2696 HK): LVC Sits On A Blocking Stake. And Me (Maybe) Eating Humble Pie
- I was wrong. Loyal Valley Capital (LVC) have stopped buying Shanghai Henlius (2696 HK) – or have not bought since reaching a blocking stake of 7.8295% on the 9th January.
- LVC could either use that stake as leverage to negotiate with the Offeror on the scrip terms. Or blow up the deal and pick up shares after the deal breaks
- OR perhaps, as per my initial impression, LVC tenders. And they may still do that. It should be this straightforward; but the fact that it is not raises questions.
Henlius (2696 HK): Hurtling Towards a Likely Deal Break
- The vote on Fosun Pharma’s HK$24.60 offer for Shanghai Henlius Biotech (2696 HK) is on 22 January. The gross spread has ballooned to 21.8%, which suggests a deal break.
- I previously stated that LVC’s trading behaviour over the coming days will indicate its voting intentions. Unfortunately, this behaviour suggests a high likelihood of blocking the vote.
- Fosun Pharma has two potential options to secure LVC’s backing: increase the share alternative cap or introduce a rollover option. Both have challenges and are, therefore, not viable options.
Tokyo Metro (9023 JP): Index Inclusions – Light at the End of the Tunnel
- Tokyo Metro (9023 JP) listed on 23 October and was added to the TSE Tokyo Price Index TOPIX (TPX INDEX) at the close on 28 November.
- Tokyo Metro (9023 JP) was not expected to be added to one global index (it was not added), while it was expected to be added to the other (and missed).
- The stock could be added to one global index in February (its close!) and to the other in June (pretty much a sure thing).
KRX H1 SSF Reshuffle: Play Setup from Last Round’s Learning Curve
- Last time, price action showed up a week early, suggesting market makers are getting ahead, likely due to learning effects.
- This round’s a letdown—no KOSDAQ names and fewer plays. Still, lower-volume KOSPI names showed solid price action correlation in the last reshuffle.
- This round, focus on low-volume KOSPI names, enter 5 days before the listing, and exit just before it drops, using the learning curve from the last reshuffle.
Foshan Haitian Flavouring & Food (603288 CH): Index Inclusion Post H-Share Listing
- Foshan Haitian Flavouring & Food (603288 CH) has filed for a listing on the HKEX (388 HK) and reports indicate that the raise will be at least US$1.5bn.
- In line with the Midea Group (300 HK) and S.F. Holding (6936 HK) H-share listings, the discount on the H-shares could be in the 20-25% range.
- The stock will not get Fast Entry to any indices but there should be inclusions at subsequent rebalances, especially once the cornerstone investor lock-up expires.
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