In today’s briefing:
- Toshiba – Thoughts On The Tender Opinion
- Tencent Meituan Dividend – The US$17bn Overhang Is Here – Not All Shares in CCASS, Here We Go Again!
- Nikkei 225 Index Rebalance: Passives Trade on Friday
- KOSPI200 Ad Hoc Index Rebalance: DGB Financial (139130 KS) To Replace Meritz Sec (008560 KS)
- Last Week in Event SPACE: Toshiba, Toyota Industries, Meituan, Kingsoft, Rakuten Bank
- Index Rebalance & ETF Flow Recap: MSCI KR, S&P/ASX, SSE50, ChiNext, NIFTY, KQ150, AMFI, Rakuten Bank
- Toyo Construction (1890) Plays Offence – A New Mid-Term Mgmt Plan with High Shareholder Payout
- KOSDAQ150 Ad Hoc Index Rebalance: Humasis (205470 KS) To Replace Cellivery (268600 KS)
- Rakuten Bank Vs SBI Sumishin Net Bank
- Good Morning Japan |SPX Rallies but Uncertainties Remain; NUGGET: 7&I-ValueAct Goes Full John Wick
Toshiba – Thoughts On The Tender Opinion
- Toshiba released documents on the tender and a notice that the FY end dividend would be cancelled shortly after our last report was published.
- They are interesting in that the Special Committee’s opinions are relatively frank but details on the valuation process are almost non-existent.
- In addition, the information regarding other bids and alternatives was a little surprising to us.
Tencent Meituan Dividend – The US$17bn Overhang Is Here – Not All Shares in CCASS, Here We Go Again!
- On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
- At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn
- We have covered the background of the event in our previous notes. In this note, we talk about the recent updates.
Nikkei 225 Index Rebalance: Passives Trade on Friday
- Oriental Land (4661 JP), Renesas Electronics (6723 JP), Japan Airlines (9201 JP) will replace Toyobo (3101 JP), Nippon Light Metal (5703 JP), Toho Zinc (5707 JP) in the Nikkei 225.
- Estimated one-way turnover at the rebalance is 1.08% and will result in a round-trip trade of JPY 412.8bn (US$3.16bn) at the close on 31 March.
- There has been recent pre-positioning on the stocks as well as movement in short interest over the last couple of months.
KOSPI200 Ad Hoc Index Rebalance: DGB Financial (139130 KS) To Replace Meritz Sec (008560 KS)
- As expected, DGB Financial Group (139130 KS) replaces Meritz Securities (008560 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 31 March.
- We estimate passive trackers will need to buy 5.15m shares (KRW 35.5bn; 12.1 days of ADV) of DGB Financial Group (139130 KS) at the close of trading on 31 March.
- DGB Financial Group (139130 KS) trades cheaper than its peers on forward PE and Price to Book. There could be relative outperformance over the next week.
Last Week in Event SPACE: Toshiba, Toyota Industries, Meituan, Kingsoft, Rakuten Bank
- Toshiba Corp (6502 JP)‘s Board is clearly giving this to shareholders and saying “We did our job. Now it’s up to you.”
- Toyota Industries (6201 JP) admits to falsifying some engine emission tests. But the market dinging the company ~20% is excessive.
- US$16bn of Meituan (3690 HK) shares from Tencent (700 HK) got delivered on 24 March 2023. That’s a lot.
Index Rebalance & ETF Flow Recap: MSCI KR, S&P/ASX, SSE50, ChiNext, NIFTY, KQ150, AMFI, Rakuten Bank
- There are a bunch of implementations in the coming week, the largest being the Nikkei 225 (NKY INDEX) March rebalance.
- There are some ad hoc changes to the KOSPI2 INDEX and KOSDAQ 150 Index following constituent stocks being designated as Administrative Issues and Investment Attention Issues.
- Inflows to the iShares MSCI Emerging Markets ex China ETF (EMXC US) have continued and has taken AUM to a new high.
Toyo Construction (1890) Plays Offence – A New Mid-Term Mgmt Plan with High Shareholder Payout
- YFO continues its fight on Board governance. Toyo Construction has shifted so the Board and a Special Committee will now examine the input Toyo says YFO has not provided.
- Toyo also objected because it said YFO’s bid could not be sustained based on Toyo’s economics. Toyo’s fight should have been offence. With a new Medium-Term Management Plan, it is.
- Toyo now promises strong revenue and double digit OP growth, and a ¥50/share (5.3%) dividend. Toyo is trying to pay off shareholders to support it against YFO. That’s fair/good.
KOSDAQ150 Ad Hoc Index Rebalance: Humasis (205470 KS) To Replace Cellivery (268600 KS)
- Following Cellivery Therapeutics (268600 KS) designation as an Administrative Issue and an Investment Attention Issue, the stock will be deleted from the KOSDAQ 150 Index and replaced with Humasis (205470 KS).
- The timing of the index change is currently uncertain but will be implemented latest by the close of trading on 17 April.
- Humasis (205470 KS) was limit up on Friday following the ex-date of a 1:3 scrip issue. The stock could continue to move higher over the next week.
Rakuten Bank Vs SBI Sumishin Net Bank
- Rakuten Bank (5838 JP) is an online bank in Japan. It is looking to raise about $870 million. The pricing is on 5 April and the listing is on 21 April.
- In Rakuten Bank IPO: The Investment Case, we highlighted the key elements of the investment case.
- SBI Sumishin Net Bank (7163 JP), the key peer, will list on 29 March. In this note, we compare Rakuten Bank and SBI Sumishin across several key metrics.
Good Morning Japan |SPX Rallies but Uncertainties Remain; NUGGET: 7&I-ValueAct Goes Full John Wick
- OVERSEAS. SPX +0.6% on intraday bounce; Defensives led w/Utilities; Financials lag as Banking fears persist; Rates down on recession view WHILE Fed signals more hikes; MSFT-ATVI deal closer to approval
- JAPAN. NKY Futs -0.9% vs Cash; Weaker USDJPY 130.7 ; Kishida Approval Rating Rises; Feb Inflation 3.1%; ValueAct takes off gloves with 7&i; Shippers in focus with ex-div this week.
- NUGGET. 7&i: Activist ValueAct goes Full John Wick calling for removal of 4 Directors, including Chairman/CEO Isaka. 2023 could be the year of accelerated reforms. Stock looks attractive post sell-off.
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