In today’s briefing:
- Taishin (2887 TT)/Shin Kong (2888 TT) Merger: Index Flows in July
- NTT DC REIT IPO: Trading Debut
- Merger Arb Mondays (14 Jul) – Shibaura, Topcon, Nissin, OneConnect, Insignia, PointsBet, ENN Energy
- ASX200 Index AdHoc Rebalance Preview: Potential Replacement for Spartan Resources (SPR AU)
- Mandatory Cancellation of Existing Treasury Shares: A Historic Stock Market Event in the Making
- Ohayo Japan | Tariff Tensions Rise, Markets Hold Steady
- Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.
- A/H Premium Tracker (To 11 July 2025): “Beautiful Skew” Continues – BIG AH Premia Compression
- Japan Activism Briefs | Casio, Nittoku
- Zijin Mining: Strong H1 Guidance, FY25 Upgrades Likely, Gold Listing Adds Catalyst
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.
NTT DC REIT IPO: Trading Debut
- NTT DC REIT (NTTDCR SP) is the exclusive S-REIT vehicle sponsored by NTT Group. It has raised US$773 million at the offer price of US$1.00 per unit.
- I discussed the listing in NTT DC REIT IPO: The Investment Case and NTT DC REIT IPO: Valuation Insights.
- NTT DC REIT has the third-highest international oversubscription rates among REIT SGX listings since 2020. The IPO price is attractive in comparison to peers’ multiples and yields.
Merger Arb Mondays (14 Jul) – Shibaura, Topcon, Nissin, OneConnect, Insignia, PointsBet, ENN Energy
- I summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Mayne Pharma (MYX AU), Yichang HEC Changjiang Pharma (1558 HK), ENN Energy (2688 HK), Insignia Financial (IFL AU), Seven & I Holdings (3382 JP), Santos Ltd (STO AU).
- Lowest spreads: Bright Smart Securities (1428 HK), New World Resources (NWC AU), Humm Group (HUM AU), Hainan Meilan International Airport (357 HK), Avjennings Ltd (AVJ AU).
ASX200 Index AdHoc Rebalance Preview: Potential Replacement for Spartan Resources (SPR AU)
- There will be an ad hoc inclusion for the S&P/ASX 200 (AS51 INDEX) at the close on 22 July following Spartan Resources (SPR AU)‘s acquisition by Ramelius Resources (RMS AU).
- There are a couple of stocks that are trading neck and neck on average free float market cap and one of them is likely to be added to the index.
- Both stocks have seen a big increase in cumulative excess volume over the last few weeks, indicative of positioning in the stock.
Mandatory Cancellation of Existing Treasury Shares: A Historic Stock Market Event in the Making
- The bill’s side notes clearly state that the mandatory cancellation rule applies retroactively to existing treasury shares without any exemptions.
- If this passes the Assembly as-is, it’ll trigger a historic forced cancellation of treasury stock across ~1,660 companies—about three-quarters of the K-equities market.
- Watch if this punchy bill clears committee and floor without cuts. Dems plan to fast-track it Sept 1, holding the majority to push it solo, aiming for year-end rollout.
Ohayo Japan | Tariff Tensions Rise, Markets Hold Steady
- US equities declined following Trump’s tariff threats; Dow fell 0.6%, S&P 500 down 0.3%, Nasdaq slipped 0.2%
- Trump proposed 35% tariffs on Canadian imports, and on Saturday, announced 30% tariffs on Mexico and the EU.
- Ryohin Keikaku projects a net profit of ¥47 billion for the fiscal year ending August 2025, marking a ¥1.5 billion upward revision from prior guidance and a 13% increase year-on-year.
Last Week In Event SPACE: Meituan/Prosus, China Medical System, Japanese Banks, New World Dev.
- The benefits of China Medical System (867 HK) China Medical System (867 HK)’s secondary listing on the SGX are more apparent than real.
- Should Meituan (3690 HK) continue its Brazil market launch, Prosus NV (PRX NA) will have little reason to continue to hold on to its Meituan stake.
- Look for value to be realised for Japanese banks with low PBRs and PERs, AND high cross-holdings as a percentage of market cap or book value through better capital allocation.
A/H Premium Tracker (To 11 July 2025): “Beautiful Skew” Continues – BIG AH Premia Compression
- AH premia flat among liquid names but “beautiful skew” of wide premia converging more than narrow premia continues bigly. It has paid well to be long wide H discounts.
- Weeks ago I said, “It has paid to be long the H on those H/A pairs with the biggest H discounts. I would continue to ride that trend.” Ride on.
- The data tables below update on a daily basis in the Tools section of Smartkarma. The SOUTHBOUND Flow Monitor and AH Monitor are both there free for SK readers.
Japan Activism Briefs | Casio, Nittoku
- Oasis Management disclosed a 5.2% stake, increasing pressure on Casio to improve capital efficiency and strategic clarity.
- City Index disclosed a 5.1% stake, signalling intent to drive value at Nittoku via capital return and improved governance.
- 3D Investment continue to add to Square Enix position. 3D and Dalton likely to target weak margins, bloated cash, and capital inefficiency – lots to work with.
Zijin Mining: Strong H1 Guidance, FY25 Upgrades Likely, Gold Listing Adds Catalyst
- Zijin has guided for a 54% YoY rise in H1 FY2025 net profit to RMB 23.2 billion, driven by strong copper and gold pricing and volume gains.
- Based on this, we see scope to revise our FY2025 PAT and EPS estimates up by 16–19%, and EBITDA by 35–50%.
- The proposed listing of Zijin Gold International in Hong Kong could unlock value from its high-margin overseas gold assets and enhance investor visibility.
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