In today’s briefing:
- Index Treatment of Sony (6758 JP)’s Spinoff of the Financial Services Business
- Nikkei 225 Proposal for Dealing With Sony’s (6758) Sony Finl Spinoff – A Non-Event but TOPIX Isn’t
- [Japan M&A] Carlyle Deal for TRYT (9164) – Great Exit for Speculators as HR Co Targets Are Desirable
- UK: Some Workshy Start Looking
- Xtalpi US$860m IPO Lockup Expiry – Last of the Lockup Release with Nearly All Shares in CCASS Now
- Austal (ASB AU): A Hanwha Bid Is Back In Play
- The Straight-Up Timelines on Three Big Econ Policy Bills Rattling Korea’s Local Market Right Now
- No, Hong Kong Won’t Abandon The Peg
- Virgin Australia (VGN AU): Touch & Go for Index Inclusion
- Foshan Haitian Flavouring & Food (3288 HK): Offering Details & Index Inclusion
Index Treatment of Sony (6758 JP)’s Spinoff of the Financial Services Business
- For each share of Sony Corp (6758 JP), shareholders will receive 1 share of Sony Financial Group. Ex-date for the dividend in-kind is 29 September.
- The Nikkei has started a market consultation on treatment of the spinoff in the Nikkei225 and that means the dividend in-kind will not be included in the Dividend Point Index.
- There will be some selling in SFGI from passive trackers and the company will buy back some stock following listing. Details of the buyback have not been announced yet.
Nikkei 225 Proposal for Dealing With Sony’s (6758) Sony Finl Spinoff – A Non-Event but TOPIX Isn’t
- A couple of years ago, Sony Corp (6758 JP) announced they would spin off Sony Financial Holdings (8729 JP) (called Sony Financial Group Inc). That spinoff is due in Sep-2025.
- The extra capital required for a tech/industrial to hold the financial business is significant, but some of the other reasons Sony has offered are just management-speak hogwash.
- The problem? It creates a new event in the Nikkei 225 paradigm for which there was no rule. Now the Nikkei has proposed a rule. It isn’t perfect.
[Japan M&A] Carlyle Deal for TRYT (9164) – Great Exit for Speculators as HR Co Targets Are Desirable
- In early February, articles suggesting the PE owner of TRYT (9164 JP) wanted to cash out. Performance post-IPO had been bad. Catching up to the IPO price would be tough.
- But a second round of bidding came about, so the stock went limit up. Then it settled in the ¥480 range for three weeks. Then started to climb.
- Now the company and its PE firm owner have announced a sale to a new PE Firm at ¥880/share. This is below IPO Price but it will get done.
UK: Some Workshy Start Looking
- A broadly softer labour market report could easily be used to overstate the fundamental significance. Unemployment’s rise was expected and only 0.2pp on the year.
- Employment is growing and redundancies are low, but when the inactive look for work, long-term unemployment rises. Yet the workshy will struggle to compete for jobs.
- Wage growth slowed despite a 0.5% m-o-m impulse. Costs are rising excessively fast, so the BoE still doesn’t have space to keep easing, and we expect no more rate cuts.
Xtalpi US$860m IPO Lockup Expiry – Last of the Lockup Release with Nearly All Shares in CCASS Now
- XtalPi Holdings (2228 HK) was listed in Hong Kong on 13th Jun 2024 after raising US$126m. Its one-year lockup will expire soon.
- QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Austal (ASB AU): A Hanwha Bid Is Back In Play
- The Hanwha Group has received approval from the US’ CFIUS to acquire up to a 100% stake in Aussie-based shipbuilding and defense firm Austal Ltd (ASB AU).
- Hanwha currently holds 9.9% and a further 9.9% via a cash settled total return swap. Apparently Hanwha had initially filed with CFIUS to approve a 19.9% stake acquisition.
- Hanwha has also applied to FIRB to lift its position to 19.9%. It’s unlikely the local regulator would block Hanwha subsequent to CFIUS’ nod. Note: Austal “disputes” CFIUS’ approval.
The Straight-Up Timelines on Three Big Econ Policy Bills Rattling Korea’s Local Market Right Now
- The Commercial Act passed committee but the floor vote set for the 12th was postponed unexpectedly today; inheritance tax and Samsung Life bills remain stuck at proposal stage.
- Presidential Office is pushing the Commercial Act reform hard; vote likely after new floor leader’s election. Passage is almost guaranteed, with enactment expected by early to late August.
- Inheritance tax bills face heavy backlog, delaying progress; the Samsung Life Law, proposed by another party, is pushed further back as the new government prioritizes easier wins.
No, Hong Kong Won’t Abandon The Peg
- A Bloomberg op-ed piece on the 5th June concludes it is time to move on from “from an archaic currency regime“. That conclusion appears presumptuous. And uninformed.
- A key tenent of this piece is that HK’s benchmark interest rates are (or were) significantly – and stubbornly – lower than US rates. Yet this “anomaly” is easily explained.
- The article fails to discuss the impact from CATL (3750 HK)‘s IPO on the peg; and even what would replace the peg (IF it were replaced).
Virgin Australia (VGN AU): Touch & Go for Index Inclusion
- Virgin Australia Holdings (VGN AU) is looking to raise A$685m in a secondary offering, valuing the company at A$2.27bn. The stock is expected to start trading on 24 June.
- Bain Capital and management are escrowed on their shares till early 2026. There is no escrow for Qatar Airways, but they have indicated that their shareholding is strategic.
- Virgin Australia Holdings (VGN AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.
Foshan Haitian Flavouring & Food (3288 HK): Offering Details & Index Inclusion
- Foshan Haitian Flavouring & Food (603288 CH)‘s global offering opens today and the raise could reach up to US$1.5bn if the offer-size adjustment option and the overallotment option are exercised.
- There is a large allocation to cornerstone investors. The discount of around 22% to the A-shares is attractive given the recent trend for Midea (300 HK) and CATL (3750 HK).
- The H-shares could be added to a global index and the FXI ETF in December. Inclusion in the HSCI should be in September and Southbound Stock Connect in July.
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