In today’s briefing:
- Solactive Global Lithium Index Rebalance: Passive Flows Next Week
- Evolution Mining (EVN AU): Global Index Inclusion in May as Gold Rallies
- Korea Dems’ Surprise Proposal: Separate Tax for Dividends Over 35% Payout
- Pop Mart (9992 HK): Eye-Popping Growth. Is It the Next Pokémon for Kidults?
- Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool 🥳
- Kakao Corp Placement – Momentum Isn’t Great but It Is a Small Deal
- DN Solutions IPO – Tariffs, Peer Correction Don’t Help
- IDX30/LQ45/IDX80 Index Rebalance: Few Changes
- Gunma Bank (8334 JP): Daishi Hokuetsu (7327 JP) Share Exchange to Establish a Top Regional Bank
- DOGE Didn’t Dent Resilience
Solactive Global Lithium Index Rebalance: Passive Flows Next Week
- Solactive has announced the review results for the Global Lithium Index. There are no constituent changes for the index but there will be capping changes for a few stocks.
- Estimated one-way turnover is 10.8% and will result in a round-trip trade of US$208m. There are some stocks with over 0.5x ADV to trade.
- The index has been in a secular downtrend over the last few years and there have been big redemptions from ETFs tracking the index.
Evolution Mining (EVN AU): Global Index Inclusion in May as Gold Rallies
- Evolution Mining‘s stock price has moved higher over the last year as Gold has gone on a big run. The increased market cap should result in a global index inclusion.
- Evolution Mining (EVN AU) has performed in line with its peers over the last year and trades in line with the group on most valuation parameters.
- Positioning has jumped in Evolution Mining (EVN AU) and its peers over the last couple of months. The index inclusion could result in outperformance over the next few weeks.
Korea Dems’ Surprise Proposal: Separate Tax for Dividends Over 35% Payout
- The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.
- We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&T, LG, and Hyundai Glovis could attract attention too.
- Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.
Pop Mart (9992 HK): Eye-Popping Growth. Is It the Next Pokémon for Kidults?
- Pop Mart International Group L (9992 HK) ’s stock has nearly doubled in three months, fueled by surging revenue and the breakout popularity of its Labubu dolls.
- Driven by strong international expansion and solid omni-channel demand in its home market, Pop Mart reported over 165% revenue growth in 1Q2025 compared to the same period last year.
- Investors remain split on whether Pop Mart’s unconventional products and marketing are driven by lasting fandom or just a passing trend.
Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool 🥳
- Fujitsu Earnings. Revenues +2.1%, OP +77.5%, Pretax +65.1%, Net -13.0% (basis effect from FY23 one-offs). Forecast? Revs -2.8%, OP/adj +35.8%/+17.2%, Net/adj +77.4%/+3.7%. All guided measures shy vs the Street consensus.
- The company presented a progress update on its Medium-Term Management Plan. Core profits are better. Things are improving.
- The company also announced a big 11-month ¥170bn buyback. Last year’s was ¥180bn (completed 24 March). Worth checking out the details (and our brand-new buyback tool)
Kakao Corp Placement – Momentum Isn’t Great but It Is a Small Deal
- SK Telecom (017670 KS) plans to raise around US$280m via selling its 2%+ stake in Kakao Corp (035720 KS).
- Kakao’s recent performance hasn’t been particularly great and the stock has been suffering even since the Kakao Pay management scandal in 2021.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
DN Solutions IPO – Tariffs, Peer Correction Don’t Help
- DN Solutions (298440 KS) (DNS) aims to raise around US$1.1bn in its Korea IPO via selling a mix of primary and secondary shares.
- DNS is engaged in the manufacture and sale of machine tools and the business of automation solutions and services related thereto.
- In our previous note, we looked at the company’s past performance and valuations. In this note, we talk about the updates since then.
IDX30/LQ45/IDX80 Index Rebalance: Few Changes
- There is 1 constituent change for the IDX30 Index and 2 changes for the IDX80 Index to be implemented at the close on 30 April.
- The largest passive flows are expected in Bank Rakyat Indonesia, Bank Jago Tbk PT, Bank Mandiri Persero, Bank Tabungan Negara Persero, Adaro Energy and Bukalapak.com PT Tbk.
- There are only 4 days to implementation, so there could be relatively big moves on the changes to the IDX30 Index.
Gunma Bank (8334 JP): Daishi Hokuetsu (7327 JP) Share Exchange to Establish a Top Regional Bank
- Gunma Bank (8334 JP) and Daishi Hokuetsu Financial Group (7327 JP)/DHFG have announced an MoU to establish one of the largest regional banks in Japan by 1 April 2027.
- The transaction involves delisting Gunma through a share exchange with DHFG. A definitive agreement is expected around March 2026.
- The plan is long-dated. The lack of a controlling shareholder necessitates a “fair” exchange ratio. My estimated Gunma/DHFG exchange ratio range is 0.38-0.39x.
DOGE Didn’t Dent Resilience
- President Trump is restructuring the US state through tariff funding and efficiency savings. The former dominates focus, but we also see no evidence of problematic cuts.
- Jobless claims are low and stable, including among federal workers and in states with the highest federal workforce shares. Government job openings haven’t even fallen.
- DOGE cuts are often multi-year and in grants to others. It may have helped the deficit, and the efficiency is fundamentally desirable. Concerns about it still seem overblown.
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