In today’s briefing:
- Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)
- Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
- China ETF Inflows & Implications: Central Huijin’s Huge Buying
- Korea Short Selling: Biggest Changes in Shorts & Trade Performance
- Corporate Act Amendment Takes Unexpected Turn: Watch for Holdco Momentum Plays Post-June Election
- Chagee Holdings IPO Valuation Analysis
- Clearing Up the Confusion: Ex-Rights Trading in Korean Rights Offerings
- Chagee Holdings Limited (CHA): Chinese Tea Company Moves Forward with IPO Despite Macro Risks
- Chagee IPO: Trading at a Discount to Peers but with Geopolitical Overhang
- UK: GDP Seasonal Surge Before Slowing
Minebea Mitsumi Overbids Yageo for Shibaura Electronics (6957)
- In early February, Yageo Corporation (2327 TT) made an unsolicited bid for Shibaura Electronics (6957 JP) at ¥4,300/share. They had approached in October 2024, and continued approaches through end-January.
- Shibaura’s bankers approached Minebea Mitsumi (6479 JP) in January. Due diligence, then bids. They bid ¥4,600. Not enough said the SC. Then Trump. Then ¥4,400. Now ¥4,500 accepted 9 April.
- But Trump tariffs relief came 9 April US time. And the Offer Price is below the mid-point of ALL three different financial advisors. I think this is not done yet.
Tsuruha (3391) – Welcia (3141) – Tsuruha Earnings In a Week – Still Good To Be Long The Ratio
- Tsuruha and Welcia are on the road to a merger, where Tsuruha takes over Welcia but Aeon ends up owning “more than 50% but less than 51%” of Tsuruha.
- The Price Ratio is now 4.24x. Trailing EPS ratios is >5. Forward EPS ratios are further above 5. BVPS ratio? Near 5. Welcia grows storecount. Tsuruha makes more money/store.
- Tsuruha changed its FY-end to match that of Welcia/Aeon so both will report earnings/guidance in just over 3 weeks. That will likely influence the ratio.
China ETF Inflows & Implications: Central Huijin’s Huge Buying
- Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
- Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
- There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.
Korea Short Selling: Biggest Changes in Shorts & Trade Performance
- The resumption of short selling in Korea came at a good time for investors, giving them some additional tools to manage market volatility.
- Short interest has increased from 0.17% to 0.23% of market cap for the KOSPI market and from 0.46% to 0.63% for the KOSDAR market.
- The KOSPI/KOSDAQ ratio has reverted a bit on profit taking, and the forecast index deletions have recovered a bit but should continue to see increase short interest.
Corporate Act Amendment Takes Unexpected Turn: Watch for Holdco Momentum Plays Post-June Election
- The word on the street is the Dems are banking on their candidate winning in June, then clearing the veto and pushing the Corporate Act amendment through immediately.
- What seemed like a dead issue for the Corporate Act amendment has turned into a surprise, shifting market momentum and potentially impacting the Korean stock scene.
- It could shift the Korean market’s focus to long-term governance improvements, targeting major holdcos like CJ, Hanwha, GS, Doosan, Mobis, SK, and Samsung C&T, with June’s election key.
Chagee Holdings IPO Valuation Analysis
- Our base case valuation of Chagee Holdings is target price of $46.7 per share, representing 67% higher than the high end of the IPO price range ($28 per share).
- Our base case valuation is based on a P/E of 21.4x on our estimated net profit of 2.9 billion RMB in 2025.
- We used a very conservative valuation multiple, mainly due to the extremely high macro risks related to the ongoing tariff dispute between China and the United States.
Clearing Up the Confusion: Ex-Rights Trading in Korean Rights Offerings
- Not much juice at ex-rights — price move’s small, and shorting’s risky with recall risk and having to compensate the lender for lost rights.
- Some locals chase rights instead, but it’s not really a go-to trade with all the cost/efficiency uncertainty.
- First round price pre–ex-rights sets the floor for arb margins and anchors rights pricing once they start trading — key level to keep in the playbook.
Chagee Holdings Limited (CHA): Chinese Tea Company Moves Forward with IPO Despite Macro Risks
- Chinese Tea Company is moving ahead with the IPO despite heavy Macro-Economic winds.
- The company is seeking up to $412m with a high-end pricing and already includes $205m worth of buying on the cover of the prospectus.
- There are. more questions than answers regarding this IPO due to the current uncertainty in the market.
Chagee IPO: Trading at a Discount to Peers but with Geopolitical Overhang
- Chagee Holdings (CHA US) is looking to raise up to US$411m in its upcoming US IPO.
- It is a leading premium tea drinks brand, serving healthy and delicious freshly-made tea drinks.
- We have looked at the company’s past performance and provided our initial thoughts on valuations. In this note, we talk about the IPO pricing.
UK: GDP Seasonal Surge Before Slowing
- Fundamental causes should not be assigned to UK GDP surging far beyond consensus expectations again in February, despite the notability of Q1 growth tracking 0.7% q-o-q.
- Residual seasonality has dominated the post-pandemic growth profile, and the recent resilience merely matches it. Stagnation for the rest of the year is the consequence.
- Disruptive and volatile US trade policy will also depress the underlying economic trend beneath the spurious seasonals. We now bake both more fully into our modal forecasts.
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