In today’s briefing:
- Rakuten (4755 JP) – A Tricky Offering But Lots of Non-Fundamental Long Demand
- Cosmo Energy (5021) In a Display of Stunningly Bad Governance; If You Disagree, You Can’t Vote
- Rakuten Bank & SBI Sumishin Net Bank: Upcoming Passive Flow
- Stuck With Each Other: Toyo “Special Committee” Against Toyo Tender, Toyo Against YFO Proposals
- HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications
- Nvidia Results Blow-Out: Multi-Year Growth Ahead; Wiwynn in Taiwan, Plus a Smallcap Wildcard AI Play
- Early Targetable Names in KOSPI 200 December Rebalancing
- StubWorld: Swire Drifts Lower As Cathay Faces Discrimination Claim
- FUJIFILM (4901.T) Loving The Setup Here
- Mapletree Industrial Trust Placement – Data Centre Exposure Still on the Rise
Rakuten (4755 JP) – A Tricky Offering But Lots of Non-Fundamental Long Demand
- The Rakuten (4755 JP) offering is producing interesting analysis. My read on the telecom side is that things are better (or less bad) than they were.
- Longer-Term, I see the idea. Shorter-term, there will still be questions until there are not. However, there could be a lot of non-fundamental “I want this” demand in the offering.
- Questions to ask yourself are: 1) how much will get placed with investors who want it 20+% lower than 15 May highs? 2) how many shorts will cover?
Cosmo Energy (5021) In a Display of Stunningly Bad Governance; If You Disagree, You Can’t Vote
- Cosmo Energy Holdings (5021 JP) and noted Japanese activist Yoshiaki Murakami and affiliates/companies have been duking it out for the better part of a year.
- Now Cosmo is putting a Poison Pill to an AGM vote. And it has decided to not allow Murakami-san to vote his shares. Because he is an interested party.
- INVESTORS NEED TO BE AWARE. This is the second time a company has sought to deny a shareholder its voting rights without legal basis. The last time the court agreed.
Rakuten Bank & SBI Sumishin Net Bank: Upcoming Passive Flow
- SBI Sumishin Net Bank (7163 JP) and Rakuten Bank (5838 JP) listed over the last couple of months and the stocks will be added to various indices over the year.
- First up, Rakuten Bank (5838 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 30 May.
- Then both stocks will be added to other global indices between August and December bringing in passive flows and helping support the stock.
Stuck With Each Other: Toyo “Special Committee” Against Toyo Tender, Toyo Against YFO Proposals
- Today, Toyo Construction (1890 JP) announced it was against YFO’s AGM shareholder proposals. And that the Special Committee was unanimously against YFO’s tender proposal.
- The content is mixed. Some is probably correct (YFO hasn’t done a great job it appears). Some is clearly taking management’s statements at face value where it shouldn’t.
- And some is just the passage of time. Last year, ¥1,000 was “too high.” This year it is “not enough.” Now Toyo and YFO are stuck with each other.
HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications
- Media reports indicate that the HDFC Bank (HDFCB IN) merger with HDFC Limited (HDFC IN) is expected to complete in 4-5 weeks.
- There will be inclusions to the NIFTY Index, Nifty Next 50 Index and S&P BSE SENSEX Index and capping changes to the Nifty Bank Index apart from changes to global indices.
- While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.
Nvidia Results Blow-Out: Multi-Year Growth Ahead; Wiwynn in Taiwan, Plus a Smallcap Wildcard AI Play
- Nvidia’s results and guidance sparked a massive rally in the shares, marking one of the largest single-day increases in market cap in U.S. stock market history.
- The company sees a multi-year growth cycle of data center upgrades ahead. Key supply chain partners TSMC and ASML are rising as well.
- Wiwynn in Taiwan should be a key winner. We also highlight a potential wildcard smallcap AI play that we will investigate further.
Early Targetable Names in KOSPI 200 December Rebalancing
- Based on the average daily full market cap up until the last close, the following additions have been identified as high-probability candidates: Sam A Aluminum, Dentium, and Dongwon Industries.
- Three constituents will likely leave as they rank at the bottom in descending order of full market cap among those failing the screening: Cuckoo Homesys, Zinus, and Hyundai Home Shopping.
- Dongwon Industries seems to be the most attractive, but given the uncertainty surrounding its inclusion, it may be more appropriate to target Dentium.
StubWorld: Swire Drifts Lower As Cathay Faces Discrimination Claim
- A double dose of StubWorld this week. Swire Pacific (A) (19 HK)‘s P/B is back down to 0.31x as Cathay Pacific (293 HK) tackles alleged language bias by flight attendants.
- Preceding my comments on Japan Post are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
FUJIFILM (4901.T) Loving The Setup Here
- Q1’23 revenues of ¥764 billion, up 15% YoY and 2.6% QoQ
- FY2022, revenues grew by 13.2% to ¥2,859 while net income grew by 3.9% to ¥219.4.
- Electronic Materials set to grow from ¥180 billion in ’22 to ¥500 billion by ’30
Mapletree Industrial Trust Placement – Data Centre Exposure Still on the Rise
- Mapletree Industrial Trust (MINT SP) is looking to raise at least S$202m (US$150m) in its primary placement.
- The proceeds will be used to partially fund its acquisition of a data centre asset in downtown Osaka, Japan, while the remainder will be funded by debt.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
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