In today’s briefing:
- LG Electronics India IPO: Big Market Cap, Small Float -> Small Passive Flows
- Dongfeng Motor (489 HK): VOYAH Listing Docs Underscore the Upside
- Tata Motors (TTMT IN) Demerger: Interesting Index Implications
- HSCI Index Rebalance Preview: Potential Inclusions in December
- HEW: Watching What Didn’t Happen
- Last Week In Event SPACE: MINISO, Sony Financial, Zijin Mining/Gold, Jardines/Mandarin Oriental
- Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (6 Oct)
- Merger Arb Mondays (06 Oct) – Kangji, Soft99, I-Net, Daiseki, Mandom, Changhong, Smart Share
- Hitachi Ltd. (6501 JP): Tie-Up with OpenAI Opens the Flood Gates
- Weekly Deals Digest (05 Oct) – Mitsubishi Logisnext, Soft99, Daiseki Eco, I Net, Tekscend, LG
LG Electronics India IPO: Big Market Cap, Small Float -> Small Passive Flows
- LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of US$8.7bn and raising around US$1.3bn in its IPO.
- The new valuation is around 24% lower than the rumoured valuation at the time of the DRHP filing last December.
- The stock will not get Fast Entry to global indices. Inclusion at regular rebalances will commence in June 2026 but flow will be small given the low float.
Dongfeng Motor (489 HK): VOYAH Listing Docs Underscore the Upside
- On 22 August, Dongfeng Motor (489 HK) disclosed a pre-conditional privatisation by merger by absorption by Dongfeng Motor Corporation, along with a proposed distribution and listing of VOYAH shares.
- The VOYAH application proof, filed on 2 October, points to strong fundamentals and suggests that the appraised value of VOYAH and the offer are conservative.
- Based on the data points from the application proof, I calculate that the implied offer is HK$12.11-12.25 per H Share, a 11.6%-12.9% premium to the appraised value of HK$10.85.
Tata Motors (TTMT IN) Demerger: Interesting Index Implications
- Tata Motors (TTMT IN) is demerging the company into two separate listed entities that will focus on the Passenger Vehicle business and the Commercial Vehicle businesses.
- Based on the estimated valuation for the two entities, both stocks will continue to remain in the MGlobal Index and the FGlobal Index.
- NIFTY and SENSEX trackers will need to sell their Commercial Vehicle business holdings soon after listing. There could be selling in the Passenger Vehicle business holdings at a later rebalance.
HSCI Index Rebalance Preview: Potential Inclusions in December
- In a pick-up in primary market activity, there have been 25 new listings on the Main Board of the HKEX (388 HK) in Q3.
- Zijin Gold (2259 HK) will be added to the HSCI after market close on 15 October and should be added to Southbound Stock Connect from the open on 27 October.
- There could be 4 (maybe 5) additions to the HSCI Index in December and 3 of those stocks will be added to Southbound Stock Connect from the open 8 December.
HEW: Watching What Didn’t Happen
- The US government shutdown removes the potential for official statistics to damp dovish concern, raising the likelihood of October’s cut, especially with other weak data.
- EA unemployment’s rise reflected rounding rather than substance. UK national accounts revealed healthy balance sheets, aside from the government, and bullish lending stats.
- Next week’s calendar stays thin with US releases suspended and Europe’s cycle focusing on the following week. The RBNZ, BoT, BSP and Peru announce rates next week.
Last Week In Event SPACE: MINISO, Sony Financial, Zijin Mining/Gold, Jardines/Mandarin Oriental
- The Labubu craze has resulted in a ~200% increase in Pop Mart (9992 HK)’s shares YTD. MINISO (9896 HK)‘s TOP TOY will be wanting to cash in on this exuberance.
- Those who want to buy Sony Financial (8729 JP) may wait until earnings. If shares stayed flat for a month until earnings came out, don’t short the eve of earnings.
- Zijin Mining Group (2899 HK) is fully valued as Zijin Gold (2259 HK) trades at a 100% premium to peers on forward PER and EV/EBITDA multiples.
Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (6 Oct)
- Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
- Highlights: Currently nine pair trade opportunities across four markets and five sectors persist.
- Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.
Merger Arb Mondays (06 Oct) – Kangji, Soft99, I-Net, Daiseki, Mandom, Changhong, Smart Share
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Smart Share Global (EM US), Mayne Pharma (MYX AU), ENN Energy (2688 HK), Soft99 Corp (4464 JP), I Net Corp (9600 JP), Daiseki Eco. Solution (1712 JP).
- Lowest spreads: Bright Smart Securities (1428 HK), Pacific Industrial (7250 JP), Humm Group (HUM AU), Mandom Corp (4917 JP), Seven West Media (SWM AU), Ainsworth Game Technology (AGI AU).
Hitachi Ltd. (6501 JP): Tie-Up with OpenAI Opens the Flood Gates
- An agreement to supply OpenAI with energy-saving electric power equipment should be accretive to Hitachi’s sales and profits as long as the AI boom continues.
- Hitachi is also building an “AI Factory” based on Nvidia technology. This should accelerate the growth of Hitachi’s Lumada digital services platform, also boosting sales and profits.
- Hitachi’s share price jumped 10.3% on the OpenAI news. Data center news flow and AI sentiment now drive the share price.
Weekly Deals Digest (05 Oct) – Mitsubishi Logisnext, Soft99, Daiseki Eco, I Net, Tekscend, LG
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Tekscend Photomask (429A JP), Tata Capital Limited (TATACAP IN) and LG Electronics India (123D IN) IPOs.
- Event-Driven developments: Soft99 Corp (4464 JP), Daiseki Eco. Solution (1712 JP), I Net Corp (9600 JP), Mitsubishi Logisnext Co., Ltd. (7105 JP), Hangzhou Kangji Medical Instrument Co., Ltd. (9997 HK).
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