In today’s briefing:
- De Grey Mining/Northern Star Resources: The Passive Flows
- Sanrio (8136 JP): Global Index Inclusion in May
- GMO Internet (4784) DropDown Holdco Gone Ballistic – Squeezed on Truly Tiny Float
- Hanwha Aero: Base Case Is the Raise Goes Through
- Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion
- LQ45 Index Rebalance Preview (Apr 2025): Identifying Potential Index Changes
- Mayne Pharma (MYX AU): This Is A Buy
- Shibaura Electronics (6957 JP): Minebea Secures Further Irrevocables as It Ponders a Revised Offer
- Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares
- IHI Corp (7013 JP): Global Index Inclusion in May
De Grey Mining/Northern Star Resources: The Passive Flows
- With De Grey Mining (DEG AU) shareholders approving the acquisition by Northern Star Resources (NST AU), we move to the phase of passive index flows.
- As expected, Generation Development Group (GDG AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 23 April to replace De Grey Mining (DEG AU).
- There will be passive inflows for Northern Star Resources (NST AU) from some local and global index trackers due to the increase in the number of shares outstanding.
Sanrio (8136 JP): Global Index Inclusion in May
- Sanrio (8136 JP)‘s stock price dropped following the placement announcement in November. Then there was a rally in the stock amid increased volatility.
- The placement resulted in an increase in free float and the move higher in the stock could lead to Sanrio (8136 JP) being added to a global index in May.
- There is positioning in the stock but a lot of that appears to have been taken off in the last month. The stock could move higher depending on global cues.
GMO Internet (4784) DropDown Holdco Gone Ballistic – Squeezed on Truly Tiny Float
- Gmo Ad Partners (4784 JP) has become GMO Internet as of 1 January 2025. On that day, it merged with the “internet infrastructure business” of GMO Internet (9449 JP).
- It was a kind of reverse takeover – a backdoor listing – and it on 24-Dec-2024, it was announced GMO Internet would move from TSE Standard to TSE Prime end-Jan2025.
- The stock is +300% since then. Why? A squeeze. Share count increase? 15x. Float share increase? Zero. Resulting Real World Float? 1.24% of shares out and about to shrink.
Hanwha Aero: Base Case Is the Raise Goes Through
- FSS has quietly greenlit Hanwha Aero’s raise — current pushback is just optics, with defense being too strategic for regulators to risk sending the wrong signal.
- Hanwha Aero’s second updated filing should check the FSS box, and Hanwha Energy swapping cash for equity gives regulators cover to bless the deal without catching heat.
- Base case is the raise goes through — trade the window between the amended filing and effective date, and shorts can still join the deal if they cover in time.
Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion
- Swiggy (SWIGGY IN) listed in November 2024 and around 85% of the shares outstanding (US$7.6bn) will unlock on 13 May.
- Nearly 80% of the shares that unlock are held by pre-IPO PE/VC investors and they are 100% in the money in most cases. Expect the selldown to commence soon.
- Swiggy (SWIGGY IN) should be added to one global index in June, while inclusion in the other global index will require a small price increase or selling from PE/VC investors.
LQ45 Index Rebalance Preview (Apr 2025): Identifying Potential Index Changes
- The review period for the LQ45 Index April rebalance ended 31 March. The changes should be announced later this week, becoming effective after the close on 30 April.
- We highlight 4 potential inclusions and 3 potential exclusions for the index at the rebalance. The actual number of changes could be lower at 2-3 a side.
- All the potential changes have over 1x ADV to trade from passive trackers and some stocks will be impacted more than others.
Mayne Pharma (MYX AU): This Is A Buy
- On the 21st Feb 2025, Mayne Pharma (MYX AU), a leader in dermatology and women’s health, entered into a Scheme Implementation Deed with US-based pharmaceutical outfit, Cosette Pharmaceuticals.
- Cosette is offering A$7.40/share, a 37% premium to last close. The Offer has the backing of Mayne’s two largest shareholder, Viburnum and Bruce Mathieson, collectively holding 14.1%.
- Mayne has now revised the Scheme timeline, with completion targeted late June, early July. This is done.
Shibaura Electronics (6957 JP): Minebea Secures Further Irrevocables as It Ponders a Revised Offer
- In response to Yageo Corporation (2327 TT)’s revised JPY5,400 offer, Shibaura Electronics (6957 JP) has asked Minebea Mitsumi (6479 JP) if it intends to revise its terms.
- Minebea is reviewing its offer and has disclosed additional irrevocables from the founder’s family and MUFG. Total irrevocables represent a 15.83% ownership ratio.
- On April 22, Yageo issued a public letter to change the narrative regarding the Board’s concerns. There is an increasing likelihood that Minebea will return with a revised offer.
Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares
- With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.
- Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.
- Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.
IHI Corp (7013 JP): Global Index Inclusion in May
- IHI Corp (7013 JP) has had a monster rally over the last year with the stock price tripling over the period. That could now result in a global index inclusion.
- IHI Corp (7013 JP) has outperformed its peers over the last year but still trades cheaper than the average and median of its peers on quite a few valuation metrics.
- The appears to be a lot of positioning in the stock, but we see a similar pattern in its peers too. There could be some upside over the near term.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
