In today’s briefing:
- Kyocera (6971) – Changes Policies – Will Sell KDDI Faster and Buy Back Shares
- KOSPI200 Index Rebalance Preview: 6 Potential Changes in June; LG CNS Listing Could Increase That
- Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month
- Tam Jai (2217 HK) Suspended: Expect Toridoll (3397 JP) To Make An Offer
- Vesync (2148 HK): Trading Wide Ahead Of The Scheme Vote
- Fuji Soft (9749 JP): Nearing the Endgame as KKR Bumps to JPY9,850
- Proto Corp (4298) – MBO After Restatement Scandal Is Opportunistic at ¥2,100 (+64%)
- LG CNS: First Day Trading Strategy Post IPO
- Tecnos Japan (3666 JP): Ant Capital’s JPY1,155 Tender Offer
- Korea: 11 Potential Index Deletions in February
Kyocera (6971) – Changes Policies – Will Sell KDDI Faster and Buy Back Shares
- Today, in conjunction with the release of Q3 earnings, Kyocera Corp (6971 JP) announced a change in its Corporate Governance Code doc, a change in Cross-holding Policy, and Buyback Policy.
- Full-Year earnings guidance revision was non-salutary. Revs -1%, OP -69%, Net Profit -72% vs previous predictions from 30 October (those were -1.5%, -38.2%, -36.6% vs April guidance at the time).
- Based on this disappointment, they announced they would speed up the sale of crossholdings and buy back shares this year and over the following three years.
KOSPI200 Index Rebalance Preview: 6 Potential Changes in June; LG CNS Listing Could Increase That
- Halfway through the review period, there could be 6 changes for the Korea Stock Exchange KOSPI200 (KOSPI2 INDEX) in June. The LG CNS (LGCNSZ KS) listing could increase that number.
- The impact on the potential inclusions ranges from 2.1-26 days of ADV while the impact on the potential deletions varies from 5-11 days of ADV.
- The forecast adds have outperformed the forecast deletes over the last few months and the performance gap is near its widest point.
Barito Renewables Energy (BREN IJ): Global Index Inclusion Likely This Month
- Barito Renewables Energy (BREN IJ) stock has gone through a series of gyrations as index inclusion was announced and then retracted due to the concentrated holding of the stock.
- With pre-IPO PE/VC investors selling some stock, the increase in float could result in the inclusion of Barito Renewables Energy (BREN IJ) in a global index later this month.
- The inclusion of the stock in the index will require passive trackers to buy just over 400m shares of the stock. That is over 14x ADV and will be impactful.
Tam Jai (2217 HK) Suspended: Expect Toridoll (3397 JP) To Make An Offer
- Tam Jai International (2217 HK), an operator of Asia noodle specialty restaurants, is currently suspended pursuant to the Takeovers Code.
- On the 13th November 2024, Tam Jai announced 1H25 net profit – to 30th September 2024 – declined 55.8% yoy to HK$36.1mn, its lowest six-month tally since listing.
- Toridoll Holdings Corporation (3397 JP) controls 74.61% of Tam Jai. Expect a Scheme to unfold. An Offer price around HK$1.50/share would be welcome. That’s probably a stretch.
Vesync (2148 HK): Trading Wide Ahead Of The Scheme Vote
- Back on the 27th December, Vesync (2148 HK), a manufacturer of small home appliances, announced an Offer, by way of a Scheme, from the Yang family controlling ~69.04% of Vesync.
- The Cancellation Price of $5.60/share, declared final, was a 33.3% premium to undisturbed, and above the 2020 IPO price of HK$5.52/share.
- The US anti-trust condition has now been fulfilled. The Scheme Doc dispatch has been extended to the 11 April. I estimate payment under the Offer late May.
Fuji Soft (9749 JP): Nearing the Endgame as KKR Bumps to JPY9,850
- KKR & Co (KKR US) has increased its Fuji Soft Inc (9749 JP) offer to JPY9,850, a 4.2% premium to the previous JPY9,451 offer and a 2.6% premium to Bain’s JPY9,600 offer.
- A bump from KKR was expected and necessary, as the shares have consistently traded above its previous offer. Bain is scheduled to launch its competing offer this week.
- Expect a final round of bids, as KKR’s offer is not final. The shares closed above KKR’s offer, which remains below the high end of the IFA DCF valuation range.
Proto Corp (4298) – MBO After Restatement Scandal Is Opportunistic at ¥2,100 (+64%)
- Proto Corp (4298 JP) is not the name on people’s lips, but everyone who knows cars in Japan knows this company. They have run car mags for decades.
- Now they do other things too but car magazines, websites, and associated data provision are worth 90% of OP. And they are ubiquitous, and growth has been good.
- Management forecasts for growth are a damp squib. This is opportunistic.
LG CNS: First Day Trading Strategy Post IPO
- In this insight, we discuss the first day trading strategy of LG CNS which starts trading on 5 February.
- On the first day of trading, we believe LG CNS’s shares could trade at higher levels, overshooting its intrinsic valuations.
- We recommend investors to take some profits off the table if the share price shoots higher by 30% to 50%+ from the IPO price on the first day.
Tecnos Japan (3666 JP): Ant Capital’s JPY1,155 Tender Offer
- Tecnos Japan (3666 JP) has recommended a tender offer from Ant Capital at JPY1,155, a 38.7% premium to the last close.
- The offer is reasonable as it is above the midpoint of the target IFA’s DCF valuation range and represents a seven-year high.
- Ant has secured irrevocables from the top three shareholders. However, the largest shareholder’s irrevocable has a counteroffer and share price clause, which could result in a competing bid.
Korea: 11 Potential Index Deletions in February
- There are 11 stocks (maybe 12) in Korea that could be deleted from a global index in February and that will result in large selling from passive trackers.
- With announcement in a week and implementation in just over 3 weeks, there is positioning in a lot of the names.
- With short selling still banned, positioning will not be as high as the passive selling and the stocks could still drop over the next few weeks.
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