In today’s briefing:
- Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?
- FXI ETF: Potential Changes in the Year of the Snake
- India: Potential Free Float Changes & Passive Flows in February
- Osaka Steel (5449) Large Buyback At a Discount Ruins Fun For Activists
- Kyocera (6971) – Changes Policies – Will Sell KDDI Faster and Buy Back Shares
- KRX New Deal Index Rebalance Preview: Smaller Deal Than Usual
- Lee Jae-Yong’s Appeal Verdict: Unpacking the Drivers Behind Samsung Life’s Big Price Action
- Vesync (2148 HK): Antitrust Condition Satisfied, and the Scheme Vote Remains Low-Risk
- Fosun Tourism (1992 HK): No Love For The Scrip Alternative
- KOSPI200 Index Rebalance Preview: 6 Potential Changes in June; LG CNS Listing Could Increase That
Shinko Electric (6967) – All Approvals In, JIC Says “Mid-Feb” So Cash Is 19-21 March?
- JIC gave an official statement yesteday about the expected start of its Shinko Electric Industries (6967 JP) Tender Offer. A later-than-expected start has people asking questions.
- It has traded tighter since the SAMR approval news (I warned on 16 Dec it was coming and the next day it closed 6.6% gross).
- Below I discuss the language of the Conditions Precedent which would allow a MAC.
FXI ETF: Potential Changes in the Year of the Snake
- There could be 1/2 changes to the iShares China Large-Cap (FXI) (FXI US) in March. Then there will be more changes as large Chinese companies list H-shares on the HKEX.
- Fast Entries and regular inclusion of newly listed H-shares will change the characteristics of the FXI and there could be further deviations from the Hang Seng China Enterprises Index (HSCEI INDEX).
- That will provide opportunities for index rebalance traders as well as volatility traders that are active on the iShares China Large-Cap (FXI) (FXI US) options.
India: Potential Free Float Changes & Passive Flows in February
- Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-June.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- Depending on the date that the shareholding was published, there could be 13 stocks with passive inflows from global trackers while 4 could see passive outflows in February.
Osaka Steel (5449) Large Buyback At a Discount Ruins Fun For Activists
- Osaka Steel (5449 JP) is 65% owned by Nippon Steel Corporation (5401 JP). They make a relatively simple set of steel products used by shipbuilders, construction companies, and warehouse builders.
- Activist Effissimo Capital went over 5% in October 2016 and is still a top holder. Activist Strategic Capital went over 5% in December 2023 and now owns 10+% of votes.
- The “hope” had been that Nippon Steel buy out minorities and Osaka Steel would be rescued from mediocre capital returns. That was not to be. Activists are disappointed.
Kyocera (6971) – Changes Policies – Will Sell KDDI Faster and Buy Back Shares
- Today, in conjunction with the release of Q3 earnings, Kyocera Corp (6971 JP) announced a change in its Corporate Governance Code doc, a change in Cross-holding Policy, and Buyback Policy.
- Full-Year earnings guidance revision was non-salutary. Revs -1%, OP -69%, Net Profit -72% vs previous predictions from 30 October (those were -1.5%, -38.2%, -36.6% vs April guidance at the time).
- Based on this disappointment, they announced they would speed up the sale of crossholdings and buy back shares this year and over the following three years.
KRX New Deal Index Rebalance Preview: Smaller Deal Than Usual
- The review period for the March rebalance ended on 31 January, changes will be announced first week of March and implemented at the close of trading on 13 March.
- We forecast two changes for the Bio Index and one change for the Internet Index. Plus there will be capping changes for all indices.
- The largest flows will be in Samsung SDI, LG Energy Solution, POSCO Holdings, Alteogen, Naver Corp, Legochem Biosciences, Netmarble and Celltrion Inc.
Lee Jae-Yong’s Appeal Verdict: Unpacking the Drivers Behind Samsung Life’s Big Price Action
- Once Samsung F&M burns treasury shares, Samsung Life’s stake hits 16.93%. If they avoid a subsidiary, they’ll need to dump ~817K shares. Today’s ruling makes that move much less likely.
- Samsung Life’s value-up announcement could be major, likely dropping around their earnings call on February 20, with solid intel backing this move.
- The balance of dividends vs. buybacks, plus Samsung Life’s 10% stake ceiling, will drive volatility for Samsung Electronics. Samsung Life’s value-up release, before Samsung Electronics’, will boost market clarity.
Vesync (2148 HK): Antitrust Condition Satisfied, and the Scheme Vote Remains Low-Risk
- On 27 December 2024, Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60. On 28 January, the antitrust condition was satisfied.
- Despite a light offer, the scheme vote is low-risk. No disinterested shareholder holds a blocking stake, there is a scrip option with no cap, and there is no retail opposition.
- The scheme document will be despatched by 11 April. At the last close and for an end-of-May payment, the gross and annualised spread is 6.9% and 22.7%, respectively.
Fosun Tourism (1992 HK): No Love For The Scrip Alternative
- Back on the 10th December 2024, Fosun Tourism (1992 HK) announced a rare Scheme buyback, with a Cancellation Price of $7.80/share (not declared final), a punchy 95% premium to undisturbed.
- A successful Scheme would result in Fosun International (656 HK) and concert parties holding 100% in Fosun Tourism – without having to outlay a cent.
- A scrip alternative was afforded IF expressions of interests from 1% of shares out occurred. That didn’t happen. Still a clean deal. Scheme Doc dispatch is the 14th Feb.
KOSPI200 Index Rebalance Preview: 6 Potential Changes in June; LG CNS Listing Could Increase That
- Halfway through the review period, there could be 6 changes for the Korea Stock Exchange KOSPI200 (KOSPI2 INDEX) in June. The LG CNS (LGCNSZ KS) listing could increase that number.
- The impact on the potential inclusions ranges from 2.1-26 days of ADV while the impact on the potential deletions varies from 5-11 days of ADV.
- The forecast adds have outperformed the forecast deletes over the last few months and the performance gap is near its widest point.
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