In today’s briefing:
- Meituan (3690 HK): All Stock in CCASS Now; Tracking the Selling
- Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses
- Meituan (3690 HK) Distro – Prosus Shares Hit CCASS. What We Know And What We Don’t Know
- Toyo Construction (1890) Tries a Different Tactic – FEFTA!
- Korea FSC Officially Eases a Major Hurdle for a Tender Offer: Names to Watch
- W-Scope IPO Lock-Up – US$300m Worth of Shares to Come Free
- Tencent Meituan Dividend – All Shares in CCASS – More Pressure Now but Will Have a Shorter Overhang
- AAG Energy (2686 HK): Pre-Cons Done. Still A Rubbish Offer
- KT Corp (030200 KS): Foreign Room Increase Could Mean MSCI Inclusion
- Liontown (LTR AU) Rejects Albemarle’s Advances
Meituan (3690 HK): All Stock in CCASS Now; Tracking the Selling
- Following the settlement of Meituan (3690 HK) shares from Tencent (700 HK)‘s in-specie dividend, nearly all the shares are now in CCASS.
- Meituan (3690 HK) has underperformed Tencent (700 HK) by nearly 50% and Alibaba Group (9988 HK) by 27% since the announcement of the in-specie dividend.
- Short interest is higher over the last couple of months but is far lower than the selling that could come through, especially on the Prosus (PRX NA) holding.
Nikkei 225 Index Rebalance Preview (Sep 2023): Potential Changes & Dark Horses
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.
- There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.
- Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.
Meituan (3690 HK) Distro – Prosus Shares Hit CCASS. What We Know And What We Don’t Know
- Meituan (3690 HK) shares hit accounts on Friday, they showed up in the CCASS data. All but about 2.3mm shares worth. Another 248.8mm shares showed up on Monday.
- That was the Prosus stake, which was expected as of November 2022 (evidently, they did not convert more Tencent shares in the interim.
- The data tells us some things. It does not tell us much else. Be careful of the details.
Toyo Construction (1890) Tries a Different Tactic – FEFTA!
- This morning, Reuters is reporting that Toyo Construction (1890 JP) has asked the Japanese government to investigate alleged breaches of the Foreign Exchange and Foreign Trade Act by YFO.
- Why? The Very Japanese family office of Nintendo’s founding family used Cayman entities to purchase Toyo shares and Toyo was re-labeled as having businesses in “Core Sectors” in October 2021.
- Toyo has also repeated its complaint about changed “intentions” on large shareholder filings. That bit of the complaint is 10 months old. A closer look at the details within.
Korea FSC Officially Eases a Major Hurdle for a Tender Offer: Names to Watch
- Korea FSC will accept financial institutions’ LOC and LPs’ investment performance agreements as certifying documents for securing funds. This revision will be effective right from April 1 this year.
- The impact from a preemptive trading perspective is likely to be significant. Additional stake purchases through tender offers will increase more aggressively, particularly when purchasing shares from the majority shareholder.
- We should first pay attention to companies where private equity (PE) is the largest shareholder whose stake is relatively low (less than 50%): Hugel, Hana Tour Service, & Hanssem
W-Scope IPO Lock-Up – US$300m Worth of Shares to Come Free
- WCP (393890 KS) raised around US$314m via in its Korean IPO. The stock was listed on 30th Sep 2022, its six-month lockup will expire soon.
- WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Tencent Meituan Dividend – All Shares in CCASS – More Pressure Now but Will Have a Shorter Overhang
- On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
- At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares.
- We have spoken about the background of the deal in our earlier notes. In this note, we talk about the overnight updates.
AAG Energy (2686 HK): Pre-Cons Done. Still A Rubbish Offer
- Back on the 17 February, AAG Energy Holdings (2686 HK) announced an underwhelming Offer of HK$1.85/share (declared final) by way of a Scheme from major shareholder Xinjiang Xintai (603393 CH).
- Yesterday, Xinjiang Xintai shareholders approved the proposal. This was expected – it’s a total bargain.
- AAG shareholders will likely get to vote on the Scheme in early May. They should vote it down.
KT Corp (030200 KS): Foreign Room Increase Could Mean MSCI Inclusion
- KT Corp (030200 KS) missed out on inclusion to the MSCI Korea Index at the May 2022 SAIR following a drop in foreign room below 15%.
- Bottoming out at 6.5%, foreign room has started to increase again. The last data point shows foreign room at 14.43%, just shy of the 15% threshold for inclusion eligibility.
- If foreign room increases above 15% in the next three weeks, KT Corp (030200 KS) will be added to the MSCI Korea Index at the May QCIR.
Liontown (LTR AU) Rejects Albemarle’s Advances
- Lithium play Liontown Resources (LTR AU) has now thrice rejected Albemarle Corp (ALB US)‘s proposals.
- Liontown has labeled Albermarle’s third bid of A$2.50/share as opportunistic.
- Albemarle has picked up 2.2% in Liontown. But that is dwarfed by Tim Goyder’s (chairman)’s 15% stake, who is not engaged at the current bid price.
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