In today’s briefing:
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Five Changes; US$5.2bn Trade; Other Index Flows
- CSI Hong Kong Connect Internet Index Rebalance Preview: 6 Changes & US$700m Trade
- [Japan M&A] Makino Milling (6135) – MBK as White Knight Appears To Have Made a Binding Bid
- A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!
- [Japan Activism/M&A] Taiyo Holdings (4626) Now an MBO Target? KKR and One More Bidding
- HK Strategy: Some Consumer IPO Pipelines and Their Proxies
- MAC Copper (MAC AU/MTAL US): Harmony Makes A Move
- Taiyo Holdings (4626 JP): Privatisation Interest as Oasis Agitates
- Capitaland Ascendas REIT Placement: DPU and NAV Accretive
- Nufarm (NUF AU): Seed Sale Or Full Takeover – Something May Have To Give
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Five Changes; US$5.2bn Trade; Other Index Flows
- There should be 5 changes for the Yuanta/P-Shares Taiwan Dividend Plus ETF in June. Most changes are due to missing dividend forecasts for constituent stocks.
- Constituent changes along with capping changes will lead to a one-way turnover of 17.6% and in a round-trip trade of TWD 157bn (US$5.2bn).
- There are multiple stocks that have same-way or opposite flow from trackers of other Taiwan dividend yield weighted indices and presents some interesting trading opportunities.
CSI Hong Kong Connect Internet Index Rebalance Preview: 6 Changes & US$700m Trade
- There could be 3 constituent changes for the CSI Hong Kong Connect Internet Index in June. Plus there are some fairly large capping changes for some stocks.
- Estimated one-way turnover is 4.9% and the round-trip trade is HK$5.4bn (US$694m). The impact on the deletes will be a lot larger than the impact on the adds.
- The forecast adds have outperformed the forecast deletes over the near-term, though the trade has been quite volatile over the medium term.
[Japan M&A] Makino Milling (6135) – MBK as White Knight Appears To Have Made a Binding Bid
- In December, Nidec Corp (6594 JP) made an unsolicited bid for Makino Milling Machine Co (6135 JP). Makino wanted more time. Nidec wanted to squeeze. Makino proposed a poison pill.
- Makino appeared to act slowly but white knight bidders were mooted in the media. Nidec launched, but apparently approvals may have been hard. They withdrew. Makino cancelled the poison pill.
- Shares fell sharply. Yesterday, they rose because it appears Effissimo owns 3%. Today, we got news post-close that MBK may be close to making an ¥11,000+ bid.
A/H Premium Tracker (To 23 May 2025): AH Premia Contract, H Premia Names Perform Best; Batteries!
- AH spreads are slightly narrower, but performance is concentrated in fewer names and broad spread volatility is up. BYD (1211 HK) now 5% through. CATL 10% through will help.
- It feels like there were some concentrated shorts on H vs A. BYD performance on CATL and Hang Seng upweight/inclusion exacerbate the issue. CATL H less liquid than people think.
- 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/M&A] Taiyo Holdings (4626) Now an MBO Target? KKR and One More Bidding
- Taiyo Holdings (4626 JP) has an interesting background, embroiled in a separate activist event via its equity affiliate sponsor Dic Corp (4631 JP), and recently an activist target itself.
- Today a Bloomberg article said KKR and one other PE fund had made acquisition proposals via TOB. Taiyo confirmed, establishing a Special Committee. A deal is months away, at earliest.
- Shares shot up to limit up, opened briefly, then resumed at limit up. The question here and now is valuation.
HK Strategy: Some Consumer IPO Pipelines and Their Proxies
- Hong Kong’s IPO market has gathered momentum lately, especially with the overwhelming response to CATL (3750 HK). Consumer IPOs are the next ones to gather interest.
- Foshan Haitian Flavouring & Food Co (FHF HK) is the most imminent one, potentially seeking up to US$1bn. Without significant peers in Hong Kong, it should attract good attention.
- The other interesting ones include Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH), Three Squirrels (TRS HK), and Eastroc Beverage Group (EBG HK).
MAC Copper (MAC AU/MTAL US): Harmony Makes A Move
- Dual-Listed MAC Copper (MAC AU/MTAL US), a NSW copper miner, has entered into a Scheme Implementation Deed with Johannesburg-based Harmony Gold Mining (HAR SJ).
- Harmony is offering A$18.93/share (US$12.25/share), a 20.7% premium to last close, or a A$1.6bn/US$1.03bn value. The A$ consideration pivots off the USD/AUD exchange rate. The Offer requires FIRB signing off.
- The Offer has the unanimous backing of both boards, and also has the backing from shareholders holding 20.1% of shares out. Implementation is October/November. This may need more gruel.
Taiyo Holdings (4626 JP): Privatisation Interest as Oasis Agitates
- Taiyo Holdings (4626 JP) shares were up 19.1% based on a Bloomberg report that it received privatisation proposals from KKR and Nippon Sangyo Suishin Kiko.
- Taiyo confirmed that it has received privatisation offers. The Board would view privatisation as a solution to rid itself of Oasis, which has recently waged an activist campaign.
- At the last close price of JPY6,230, Oasis would be up 45.9% on its highest price of JPY4,720. My analysis suggests that an offer around JPY7,000 can be justified.
Capitaland Ascendas REIT Placement: DPU and NAV Accretive
- CapitaLand Ascendas REIT (CLAR SP) is looking to raise at least S$500M in a private placement, to fund the acquisition of some valuable properties.
- These acquisitions will expand the firm’s portfolio exposure to Singapore and data centers.
- In this note, we comment on the deal dynamics and run the deal through our ECM framework.
Nufarm (NUF AU): Seed Sale Or Full Takeover – Something May Have To Give
- Nufarm (NUF AU), an agricultural chemical company , is down ~40% since it announced a 39.5% decline in 1H25 profit. The share price is at the lowest level since Covid.
- Concurrent with this results, Nufarm announced a review of its seed technology ops. Reportedly Advanta, BP – amongst others- are vying for the est. A$900mn business.
- Elsewhere, it is being reported that key shareholders recommend the Nufarm board explore a full takeover.
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