In today’s briefing:
- Taishin (2887 TT)/Shin Kong (2888 TT) Merger: Index Flows in July
- Lens Technology (6613 HK): Offering Details & Index Inclusion
- AMFI Stock Reclassification Preview (Jun 2025): Active Flows Lead to Passive Flows
- KOSPI Size Indices: Overlaps Between Active & Passive Flows
- 7&I (3382 JP) – Alimentation Couche-Tard Walks, Lobbing a Letter Bomb
- [Japan Activism] Mitsui Matsushima (1518 JP) Buyback Tender – Surprising Results and Implications
- Ryohin Keikaku (7453 JP): Global Index Inclusion Likely in August
- HEW: Inflation Persists, But Cuts Loom
- Dickson Concepts (113 HK): A Necessary HK Arbageddon
- Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (18 July to 1 August 2025)
Taishin (2887 TT)/Shin Kong (2888 TT) Merger: Index Flows in July
- Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) announced a Merger of Equals in August 2024 and completion is expected on 24 July.
- Taishin Financial Holding (2887 TT) has underperformed its peers over the last 18 months while Shin Kong Financial Holding (2888 TT) has underperformed its peers following the merger announcement.
- There will be passive flows in the merged entity following the completion of the merger and could help reverse some of Taishin Financial Holding (2887 TT)‘s underperformance.
Lens Technology (6613 HK): Offering Details & Index Inclusion
- Lens Technology (6613 HK)‘s global offering opened yesterday, and the raise could reach up to US$800m if the offer-size adjustment option and the overallotment option are exercised.
- The allocation to cornerstone investors is smaller than in other recent AH listings. The discount of over 25% to the A-shares is attractive given the recent trend for large listings.
- Lens Technology (6613 HK) could be added to a global index in December. Inclusion in Southbound Stock Connect in August and HSCI inclusion could take place in March 2026.
AMFI Stock Reclassification Preview (Jun 2025): Active Flows Lead to Passive Flows
- We forecast 10 stocks moving from MidCap to LargeCap, 11 stocks moving from LargeCap to MidCap, 10 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
- From the new listings, 1 stock is expected to be added to Large cap, 2 stocks are expected to be added to Mid Cap, and multiple stocks to Small Cap.
- There are multiple stocks among the AMFI changes that will be changes for global indices, NIFTY Index, NSE Nifty Next 50 Index and/or Nifty Midcap 150 Index in September.
KOSPI Size Indices: Overlaps Between Active & Passive Flows
- The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
- Nearing halfway in the review period, we forecast 53 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 3 to MidCap and 1 to SmallCap.
- Two potential downward migrations could be deleted from a global index in August. The new listing that is a potential LargeCap add could be added to a globalindex in September.
7&I (3382 JP) – Alimentation Couche-Tard Walks, Lobbing a Letter Bomb
- Alimentation Couche-Tard (ATD CN) which proposed a takeover to Seven & I Holdings (3382 JP) almost a year ago, has walked. They delivered a letter bomb on the way out.
- The letter is titled “ALIMENTATION COUCHE-TARD ANNOUNCES WITHDRAWAL OF PROPOSAL TO ACQUIRE SEVEN & I HOLDINGS DUE TO LACK OF ENGAGEMENT.” This is not the first time they have complained.
- The letter is not aimed at the 7&i Board or at ATD stakeholders. It is meant to drive a wedge between 7&i active shareholders and its management team. We’ll see.
[Japan Activism] Mitsui Matsushima (1518 JP) Buyback Tender – Surprising Results and Implications
- Today, Mitsui Matsushima (1518 JP) announced the results of its Buyback Tender Offer to repurchase up to 3,999,999 shares (35.8% of shares out ex-Treasury) at ¥5,000/share.
- Murakami-San owned 42% of the voting rights at announcement, then bought more on the dip just below ¥5,000/share.
- The Tender Offer Buyback was “successful” in that it bought back 3.3mm shares. But the result was FAR more interesting than I expected. Surprising Results with Surprising Implications
Ryohin Keikaku (7453 JP): Global Index Inclusion Likely in August
- Ryohin Keikaku (7453 JP)‘s stock price has more than doubled this year and the increased market cap could now result in a global index inclusion.
- Ryohin Keikaku (7453 JP) has outperformed its peers by a BIG margin since its inclusion in the Nikkei 225 (NKY INDEX) in September 2024.
- There appears to be significant positioning in the stock. Given the huge outperformance over the last few months, trim into strength.
HEW: Inflation Persists, But Cuts Loom
- Persistent upside inflation surprises and sticky wage growth are lifting hawkish market narratives, defying central bank and consensus hopes for a quick return to target.
- UK inflation jumped well above forecast in June, strengthening the hawkish case, while US core inflation shows tariffs adding to excessive underlying price pressures.
- Next week, attention turns to the ECB decision, July flash PMIs, and UK public finances, as markets weigh central banks’ willingness to ignore resurgent inflation.
Dickson Concepts (113 HK): A Necessary HK Arbageddon
- Dickson Concepts Intl (113 HK) shareholders have voted against Sir Poon’s HK$7.20 per share offer. The vote marginally failed the <10% of all disinterested shareholders’ rejection threshold.
- While painful, this deal break was arguably the correct outcome as the offer was below the net cash and Dickson is cash generative on an underlying basis.
- Unlike the last HK deal break (Soundwill), the price action over the last two days indicated a done deal. My estimated break price is HK$5.00 (30% downside to last close).
Top 10 Korean Stock Picks and Key Catalysts Bi-Weekly (18 July to 1 August 2025)
- In this insight, we provide the top 10 stock picks and key catalysts in the Korean stock market for the two weeks (18 July to 1 August 2025).
- Our top 10 picks were up on average 4.5% in the past two weeks, slightly outperforming KOSPI which was up 4.4% in the same period.
- The top 10 picks in this bi-weekly include Hanil Cement, LG CNS, KCC Corp, Poongsan, Paradise, Samsung Electronics, Naver, SM Entertainment, LG Chem, and SK Inc.
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