In today’s briefing:
- What if China ADRs Are Delisted from US Exchanges?
- Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities
- Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX
- FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies
- Timing the Announcement of POSCO Future M’s Rights Issue
- Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set
- Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
- US Tariffs: Of Words And Bonds
- Midea Group (300 HK): Cornerstone Lock-Up Expiry and Upcoming Index Flows
- TKP Corp (3479) – A Second Big Buyback In Short Order
What if China ADRs Are Delisted from US Exchanges?
- We see 281 Chinese companies listed on U.S Stock Exchanges with a total market cap of US$869bn. 32 of these companies are listed on the HKEX (388 HK).
- If the rumours of Chinese stocks being delisted from U.S. Exchanges gathers steam, we could see a wave of secondary listings in Hong Kong.
- PDD Holdings, Full Truck Alliance, Vipshop Holdings, TAL Education and ZEEKR are the largest China ADRs with no HK listing and could come under pressure.
Tsuruha (3391), Welcia (3141), and Aeon (8267) Do a Deal, Short-Changing Tsuruha Minorities
- On Friday, Tsuruha Holdings (3391 JP), Welcia Holdings (3141 JP), and Aeon Co Ltd (8267 JP) announced the Tsuruha/Welcia merger and Partial Tender to get Aeon to 50+% of NEWCO.
- The scrip ratio short-changes Tsuruha shareholders. The subsequent partial offer to raise Aeon’s stake above 50% is low too. 9.7% shareholder Orbis is already out with a complaint.
- But… all is not lost. There are some interesting angles here to complain.
Suzuki Motor (7269 JP) Placement: Likely to Price Today; 7-8% Underperformance Vs Peers/TOPIX
- Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to raise US$1.2bn by offloading their entire stakes in Suzuki Motor by way of a secondary offering.
- Suzuki Motor (7269 JP) stock is flat since the announcement of the placement but has underperformed its peers and the TSE Tokyo Price Index TOPIX (TPX INDEX).
- With the placement being less than 5% of the number of shares outstanding, there is unlikely to be any immediate passive inflow which could pressure the stock.
FSS Bans Arb in Local MM Books: Identifying Opportunities from Short-Term Inefficiencies
- The FSS is banning arb trades under the MM book, requiring separate books for any arb positions to keep them distinct from MM flow.
- Most local shops lack the resources to set up a separate arb desk. Splitting teams, creating new workflows, and hiring extra staff isn’t feasible given their tight P&L.
- Building a tracker for MM dropouts could spot dislocations, as the crackdown creates short-term inefficiencies—if we’re dialed in, there’s alpha to be made.
Timing the Announcement of POSCO Future M’s Rights Issue
- All three local CRAs are pushing hard — an equity raise isn’t optional, it’s the only shot at keeping the AA- rating intact. Street says it’s not if, it’s when.
- Late April to mid-May looks like the key window. And start keeping tabs on the flow real tight.
- Leak channels are still active. FSC’s pointed at IB sales and law firm staff. If we see outsized sell prints—especially from local hedge funds, that’s our cue to act.
Aeon Mall (8905 JP): Aeon (8267 JP)’s Share Exchange Ratio Is Set
- AEON Mall (8905 JP) announced a share exchange offer by Aeon Co Ltd (8267 JP) at 0.65 Aeon shares per Aeon Mall share, a 30.9% premium to the undisturbed price.
- The share exchange ratio is reasonable compared to historical price ratios and IFA valuation ranges. The implied offer multiple is attractive compared to peer multiples.
- Aeon’s 58.16% shareholding ensures that Aeon Mall’s vote on 22 May is low-risk. The share exchange’s effective date is 1 July.
Midea (300 HK): IPO Lock-Up Expiry Triggers 10% Float Increase in Global Indices for May and June
- Midea Group (300 HK) went public on HKEX on 17 September 2024 and achieved fast-entry in both global indices due to high free float and a market cap of ~$4.5bn.
- The 6-month lockup on cornerstone investors expired on 17 March 2025.
- The free float is forecasted to increase from ~65% to ~75% for both global indices in May and June 2025 following the lockup expiry.
US Tariffs: Of Words And Bonds
- Donald Trump’s recent policy reversal may provide an opportunity for the completion of bilateral trade agreements with certain US partners.
- However, neither China nor the EU is expected to reach an agreement soon, particularly in the current context.
- This is largely due to the evident vulnerability of America to the bond market.
Midea Group (300 HK): Cornerstone Lock-Up Expiry and Upcoming Index Flows
- Midea Group listed in September 2024 by selling 650.85m shares (including the overallotment option) and raising HK$35.7bn (US$4.6bn). A large part of the offering was allocated to cornerstone investors.
- Given the large company market cap and a free float that met the inclusion threshold, Midea Group (300 HK) was added to global indices via Fast Entry.
- The lock-up expiry on cornerstone investors will increase the float for the stock in the global indices and Hang Seng TECH Index (HSTECH INDEX) over the next two months.
TKP Corp (3479) – A Second Big Buyback In Short Order
- TKP Corporation (3479 JP) is a fascinating little company. It rents space. From people. To people. Then adds on services. Meeting, recruiting, training, seminar, banquet, party, etc rooms.
- Last year they bought control of two small businesses to add features. Revenues are up. The new FY suggests revenue growth, OP growth, and now a buyback.
- The buyback is the interesting bit. They did one last FY with interesting parameters, and Quiddity has a new tool we are trying out, so we showcase an example here.
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