Event-Driven Archives | Page 100 of 187 | Smartkarma

The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in March.
One way turnover is estimated at 4.95% and will result in a one-way trade of CNY 4,413m. The estimated impact on the deletes is higher than that on the adds.
The inclusions have outperformed the deletions over multiple time periods. There will be pre-positions on the stocks and those could be unwound over the next week or two.

Fujitec (6406) EGM – It WAS a Close-Run Thing, Glass Lewis Was the Big Winner, and SCANDAL?

The Fujitec Co Ltd (6406 JP) EGM where activist Oasis Management wanted to spill the independent board members took place Friday.
Results were mixed, but generally a success for Oasis, with 9 of the 13 votes won. Preliminary analysis of “uncertain voter” split interesting, and “Glass Lewis Effect” stronger than expected.
The real shocker, however, was a footnote at the end of the announcement. This could (and should) have further repercussions.

HSTECH Mar23 Index Review/Flows – Weibo IN, Ming Yuan Cloud OUT, BIGLY Flows on Li Auto & Xpeng

On Friday 24 February 2023, the Hang Seng Index Committee announced changes for the HSTECH Index – Weibo Corp (9898 HK) IN, Ming Yuan Cloud Group (909 HK) OUT.
Notably, the changes in FAF due to the new treatment for Dual Primary Companies means decent boosts in weight for XPeng (9868 HK) and Li Auto (2015 HK).
Of the three “major” indices, this one produces the most fun – US$900mm+ and 8.7% flow one-way. And the big flows are additive to the other indices.

Halcyon Agri (HACL SP): Offer Document Out, Offer Closes 24 March

China Hainan Rubber Industry (601118 CH) has despatched the offer document relating to its Halcyon Agri (HACL SP) MGO at US$0.315 or S$0.413 per share. The offer closes on 24 March.
The MGO has a 50%+ minimum acceptance condition which requires around 40% of minorities’ acceptance rate (47% excluding the Gondobintoro Family).
We think that this is achievable as the offer is attractive. At the last close and for an early-April payment, the gross and annualised spread is 0.7% and 7.3%, respectively.

HSCEI Mar23 Index Review/Flows – Xpeng Added, China Feihe Deleted, Li Auto Sees A Bump Up

HSCEI keeps its constituent count at 80 names, adds XPeng (9868 HK) and deletes China Feihe (6186 HK).
There are decent flows in this rebal, with Tencent (700 HK) and Alibaba Group (9988 HK) seeing selling, Meituan (3690 HK) seeing buying. Li Auto (2015 HK) sees FAF upweight.
Janaghan Jeyakumar, CFA had called the deletion of China Feihe, but had another name higher on the ADD list. 3.2% and HK$2.6bn one-way flow.

HSI Mar23 Index Review/Flows – No Changes But Flows; 100 Names a Loooong Way Off

There are no index changes, in what comes as a surprise given the index is now 9 months late getting to 80 names, with a target to get to 100.
There are, however, several capping changes, leading to nearly 3 days to sell on HSBC Holdings (5 HK) and 2.6% one-way turnover.
The lack of name changes is disappointing. They don’t need to find names to delete, just names to add to improve tracking and coverage. This portends further slowness to change.

Merger Arb Mondays (27 Feb) – Jiangnan, Origin Energy, Pushpay, Nitro, Norwest, Halcyon, Boustead

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Golden Energy & Resources (GER SP), Origin Energy (ORG AU), Toyo Construction (1890 JP).
Lowest spreads – Ihara Science (5999 JP), Tyro Payments (TYR AU), Nitro Software Ltd (NTO AU), Boustead Projects (BOCJ SP), Nissin Electric (6641 JP), Techno Associe (8249 JP).

Weekly Deals Digest (26 Feb) – Sembcorp Marine, Jiangnan, Origin Energy, Nitro, Boustead, Fujitec

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Pertamina Geothermal Energy (PGEO IJ) has a flat debut and Star Entertainment Group (SGR AU) aims to raise A$800 million to fix its balance sheet.
Event-Driven developments – Sembcorp Marine (SMM SP), Halcyon Agri (HACL SP), Fujitec Co Ltd (6406 JP), Jiangnan (1366 HK), Techtronic Industries (669 HK), Origin Energy (ORG AU), Nitro, Pushpay.

Halcyon Agri: Offer Doc Out. No New News Otherwise

The Offer Document for China Hainan Rubber Industry (601118 CH)‘s mandatory Offer for Halcyon Agri (HACL SP) has been dispatched.
Hainan Rubber holds 36% and needs 14% out of 34.8% available – or ~40% to tender. The first close is the 24 March.
There is no IFA opinion in the Offer Doc. This will be present in the Circular which is expected to be sent out by the 10th March, at the latest.

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Feb 26

Daily Brief Event-Driven: HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target
Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)
HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect
HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer
Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI
Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine
Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote
Dividend Record Date Changes Already in Progress in Korea: Trading Ramifications
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay

HSI Index Rebalance: No Changes & Further Delays to Reaching the 80 Member Target

In a surprise, the Hang Seng index committee has decided not to make any changes to the Hong Kong Hang Seng Index (HSI INDEX) at the March rebalance.
This further delays the timeline for the index to reach 80 constituents. The earliest we will reach the target now is June 2023 (a year later than targeted).
Despite no changes to the index constituents, capping and float changes will lead to a one-way turnover of 2.61% resulting in a one-way trade of HK$5.1bn.

Toshiba (6502) – Funding Unsecured! (This Is Getting To Be a Habit)

A Bloomberg article out Friday evening suggests the JIP Consortium funding plan submitted as the final package to Toshiba Corp (6502 JP) is no longer secure.
Apparently Orix Corp (8591 JP), which with ROHM Co Ltd (6963 JP) was planning to invest equity and pref for total ¥300bn, wants to lower its investment to ¥200bn.
Other equity tranche participants apparently want to reduce exposure as well.

HSCI Index Rebalance: 35 Adds, 28 Deletes & Changes to Southbound Stock Connect

There are 35 adds and 28 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents up to 527.
We expect 29 of the 35 inclusions to the HSCI will be added to Stock Connect, while 20 of the 28 HSCI deletions will be removed from Southbound Stock Connect.
19 stocks could be deleted from Stock Connect only since their average market cap has dropped below HK$5bn- unless the new threshold of HK$4bn is approved in the next week.

HSCEI Index Rebalance: Xpeng (9868) Replaces China Feihe (6186); Li Auto (2015) Biggest Gainer

As expected, XPeng (9868 HK) replaces China Feihe (6186 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close on 10 March.
Using prices from the close on 24 February, estimated one-way turnover is 3.28% and will result in a one-way trade of HK$2,162m at the close on 10 March.
Short interest on XPeng (9868 HK), Li Auto (2015 HK), China Feihe (6186 HK) is quite high in terms of days of ADV to cover and in terms of float.

Index Rebalance & ETF Flow Recap: KOSPI200, SET50, SMM SP, HSI, HSCI

The changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX) were announced post market close on Friday.
Busy start to the coming week with the MSCI implementation at the close on 28 February and a few announcements to other indices later in the week.
There were outflows from Tracker Fund of Hong Kong Ltd (2800 HK) during the week taking the YTD outflows to over US$1bn.

Last Week in Event SPACE: Japan Post, Origin Energy, SATS, China Renaissance, Sembcorp Marine

There is no good reason to buy Japan Post Bank (7182 JP)‘s dip until the offering. It’s unlikely to earn the ROE to deserve the PBR it has versus peers.
Brookfield and EIG/MidOcean’s revised NBIO will garner Origin Energy (ORG AU) board support; however, the terms are weird and unfair to investors holding fewer than 100k shares.
SATS (SATS SP) rights offer is not actually a surprise. Not at all. Passive funds will exercise.

Fujitec (6406 JP): Oasis Scores a Victory in a Tight EGM Vote

At the Fujitec Co Ltd (6406 JP) EGM, Oasis successfully secured approval for four out of six candidates for outside directors. The tight vote shows that shareholders desire change.
Oasis fell short of its nominations constituting up to two-thirds of the Board. However, Oasis-aligned directors will represent 67% of outside directors which still can drive meaningful change.
The EGM results will spur optimism that Fujitec can close the performance gap with peers, resulting in a rerating. Fujitec remains attractive on a cash-adjusted P/E basis.

Dividend Record Date Changes Already in Progress in Korea: Trading Ramifications

Notable names that have proposed amendments to their articles of association for changing the dividend record date at this year’s AGM include Hyundai Motor Group, POSCO Holdings, and Kakao Corp.
There were skeptical views on how much response local big-name companies would show to Korea FSC’s plan. However, the response from large companies has been unexpectedly positive and aggressive.
We should consider the possibility that the preferred stock premium of companies whose dividend visibility has improved through this may continue to improve compared to those that have not.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

(Mostly) Asia-Pac Weekly Risk Arb Wrap: New Century Resource; AAG Energy; Jiangnan, Nitro, Pushpay

There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals was discussed on Smartkarma this past week: New Century Resources (NCZ AU)off-market Offer;AAG Energy Holdings’ (2686 HK) ‘s Scheme; and Jiangnan (1366 HK)‘s MBO.
Key updates took place for: Nitro Software Ltd (NTO AU), Origin Energy (ORG AU), Pushpay Holdings (PPH NZ), Sembcorp Marine (SMM SP), and Boustead Projects (BOCJ SP).

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Feb 25

Daily Brief Event-Driven: Sino Oil (702): Possible Jiangxi Jovo Offer and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sino Oil (702): Possible Jiangxi Jovo Offer
AMT/Cellnex: Lower Chances of a Bid
A Good Old Fashioned Bidding War
IAG Acquires Air Europa

Sino Oil (702): Possible Jiangxi Jovo Offer

Troubled coalbed methane play Sino Oil And Gas Holdings (702 HK) is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
Sino Oil is burdened with a large convertible note and a winding-up petition. Its auditor has disclaimed accounts since 2017 over its ability to continue as a going concern.
Jiangxi Jovo Energy (605090 CH) is interested in taking more than 50% of Sino Oil (via new shares), but less than 75%. Sino Oil is up >100% in the past month.

AMT/Cellnex: Lower Chances of a Bid

American Tower stated during FY 2022 results presentation that debt reduction is its main priority. The probability of a takeover bid for Cellnex by American Tower and Brookfield is reduced.
Cellnex on 14.7x EV/NTM EBITDAe is trading cheaply vs. AMT on 19.5x and below private equity deals at 25-30x. I believe that Cellnex’s fundamentals are solid, and would be long.
Cellnex is the undisputed European leader in telecommunications towers with both high cash flow visibility (growth forecasted at 18% for the period 2021-2025e) and trading at 7.3% 22e FCF yield.

A Good Old Fashioned Bidding War

Triton has raised its offer price to €8.95 in cash, 5.3% above the Alternative Consideration of the Bain’s consortium improved offer (vs. my €9.01/share fair value estimate, comps-based).
Gross spread is +0.78%. It seems that now it is the turn of the Bain’s consortium to make a move, at least match and probably bid over Triton’s offer.
Bain has the main shareholders on board. As of 24 February, I estimate the paper profits of Triton to be around €31 million (minus the costs of preparing the offer).

IAG Acquires Air Europa

IAG Presents better than expected Q4 2022 results and announces that it will acquire the remaining 80% of Air Europa for €400 million in a cash and shares deal.
The purchase price implies valuing 100% of Air Europa at €500 million, which is in line with expectations and is half of the €1,000 million agreed in November 2019.
Air Europa and IAG finally reach an agreement and clear an uncertainty. It makes strategic sense to create a larger intercontinental hub between Europe and Latin America in Madrid,

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Feb 24

Daily Brief Event-Driven: Techtronic Industries (669 HK): JR Puts Down That Tool and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Techtronic Industries (669 HK): JR Puts Down That Tool
Star Entertainment (SGR AU): A$800m Equity Raise to Buy Some Time
Oasis Management Invests in KT&G
Star Entertainment’s A$800mn Buffer
Never-Seen Price Pattern Detected in a Split-Off Event Granting Appraisal Rights in Korea
Boustead Projects: Boustead Singapore Bumps. Still Underwhelming
Trophy Asset
Quiddity Leaderboard for SET Jun 23: DTAC-TRUE Intra-Review Changes
Nitro (NTO AU): Potentia Comes Good with a Three-Part Offer
Ihara Science (5999 JP) – Here Comes The Bumpitrage

Techtronic Industries (669 HK): JR Puts Down That Tool

Jehoshaphat Research (JR) argues the case that Techtronic Industries (669 HK) has been engaged in “snowballing” to maintain margin growth.
JR flags TTI is the only public company in the world (with over $1bn in revenues) exhibiting positive sequential gross margin change in every semi-annual period over ten years.
Short interest had been picking up ahead of the short sell report. Shares fell 19% before being suspended in the afternoon session.

Star Entertainment (SGR AU): A$800m Equity Raise to Buy Some Time

Star Entertainment Group (SGR AU) is looking to raise A$685m via an ANREO of 3 shares in The Star for every 5 shares at a fixed price of A$1.2/share.
The A$1.2/share price is a 21.1% discount to the last close and a 14.3% discount to the Theoretical Ex-Rights Price (TERP) of A$1.4/share.
Short interest is near the highs and there is an index deletion pending. We’d look to buy the stock on a move lower, especially closer to index deletion.

Oasis Management Invests in KT&G

By Douglas Kim

It was reported on 22 February in numerous local Korean media that Oasis Management has invested about 1.5% stake in KT&G Corporation (033780 KS).
This investment in KT&G is reportedly Oasis Mgmt’s first investment in Korea. For now, Oasis Mgmt has not made any public announcement about its investment in KT&G.
With Oasis Mgmt investing 1.5% stake in KT&G, we believe it is increasingly likely that it could start its activist campaign on KT&G sometime in 2023.

Star Entertainment’s A$800mn Buffer

Star Entertainment Group (SGR AU)‘s announced it intends to raise $800mn after reporting a statutory $1.26bn 1H23 loss.
This equity raising will be broken down into a A$685mn non-renounceable entitlement Offer and a A$115mn institutional placement. The equity raising is fully underwritten.
Star also announced it has secured covenant relief through to June 2025. Star’s immediate focus is to get its house in order and prove its suitability to hold casino licences.

Never-Seen Price Pattern Detected in a Split-Off Event Granting Appraisal Rights in Korea

A rather unusual price movement came out on February 20 for HLB. On the first trading day after the board of directors’ decision, the price reached the upper daily limit.
The short covering got to a temporarily excessive level in the process of securing appraisal rights should be the reason that led to the upper limit.
We should design a trading setup targeting excessive short covering-triggered price overheating in split-off events. At this point, the most likely candidate to pursue a split-off is DB Hitek.

Boustead Projects: Boustead Singapore Bumps. Still Underwhelming

On the 6 Feb, Boustead Projects (BOCJ SP), a high-spec facilities designer and builder, announced an unconditional Offer from Boustead Singapore Limited (BOCS SP) at S$0.90/share.
The Offer price was low-balled. Taking into account net cash of S$154mn, this was being done cheaply. It needed to be bumped and shares traded up to S$0.99 in expectation.
BOCS has now bumped to S$0.95/share and declared terms final. Not a great outcome for minorities.

Trophy Asset

At 6.2x EV/Sales, ManU’s shares are trading well above any other listed European football club, which may increase if the Glazers manage to cash in at a trophy asset valuation.
Suitors are queuing and prospective bids as high as about £5 billion ($6 billion, 8.4x EV/Sales) been made to restore the club to its former glory.
Unlimited wealth and investments in players don’t guarantee winning a European Champions League, but Manchester United is still a unique asset, with more chances than not of changing hands.

Quiddity Leaderboard for SET Jun 23: DTAC-TRUE Intra-Review Changes

The completion of the Total Access Communication (DTAC TB) – True Corp Pcl (TRUE TB) merger could cause an intra-review change next week.
There could be two more index changes in the regular review in June 2023.
In this insight, we take a look at the current rankings of potential ADDs and potential DELs and their recent price and volume performance.

Nitro (NTO AU): Potentia Comes Good with a Three-Part Offer

Potentia has returned with an improved three-part offer for Nitro Software Ltd (NTO AU). The base offer of A$2.17 is 0.9% higher than Alludo’s A$2.15 offer.
The offer could rise to A$2.20 or A$2.25 per share based on hitting additional conditions. There is a clear path for the final offer to reach A$2.20 per share.
A A$2.25 per share offer is unlikely due to the onerous 25% scrip acceptance condition. At the last close, the gross spread to the likely final A$2.20 offer is 0.5%.

Ihara Science (5999 JP) – Here Comes The Bumpitrage

In my first piece, Ihara Science (5999 JP) Sees the Chairman Launch an MBO. I Might Expect Excitement I noted that the price was too low. I expected activist efforts.
The price did not trade below the Tender Offer Price after it opened for trading. That was a sign this wasn’t going to go easy.
This morning I am made aware of a letter from one of the “active if not activist” shareholders saying the price is too low. Hint: It is.

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Feb 23

Daily Brief Event-Driven: SATS SP: S$800m Rights Issue to Fund WFS Acquisition and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SATS SP: S$800m Rights Issue to Fund WFS Acquisition
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
Boustead Projects (BOCJ SP): Boustead Singapore’s Final S$0.95 Offer to Call Minorities’ Bluff
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms
EQD | Alibaba (BABA US): Playing the Earnings Via Derivatives
SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao
Nitro Software: Potentia’s Tiered-Bump. Expect Alludo To Cash In

SATS SP: S$800m Rights Issue to Fund WFS Acquisition

SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer

Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

Boustead Projects (BOCJ SP): Boustead Singapore’s Final S$0.95 Offer to Call Minorities’ Bluff

Boustead Projects (BOCJ SP)/BPL has disclosed an improved final unconditional offer from Boustead Singapore Limited (BOCS SP) at $0.95 per share, a 5.6% premium to the previous S$0.90 offer.
In response to SIAS’ call to table a fairer offer closer to 1x P/NAV, Boustead Singapore has marginally increased its offer from 0.71x to 0.75x P/NAV.
Boustead Singapore’s approach is to call minorities bluff by tabling a “take it or leave it” proposal instead of a fair offer. The shares are currently trading 4.2% above terms.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

By Sumeet Singh

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms

The Brookfield/EIG consortium has reduced its Offer for Origin (ORG AU) to ~A$8.90/share, down from A$9.00/share, after conducting due diligence in the wake of the Aussie government’s gas price intervention.
Oddly, this revised proposal remains non-binding, suggesting a number of political kinks still need to be ironed out.
For its part, Origin’s board reckons the revised proposal has the potential to deliver significant value to shareholders, all but guaranteeing board support, assuming a firm Offer unfolds.

EQD | Alibaba (BABA US): Playing the Earnings Via Derivatives

By Simon Harris

Alibaba (BABA US) is set to report earnings tomorrow on the 23rd
Stock has pulled back from the highs but earnings could be the next catalyst to determine direction
We use the derivatives market to extract market expectations and suggest some suitable trades

SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao

By Douglas Kim

Today (22 February), S.M.Entertainment Co (041510 KS) provided a detailed analysis of the strategic partnership with Kakao from shareholders and fans perspectives.
The timing of this detailed strategic partnership announcement is a bit unusual since it comes BEFORE the actual tender offer announcement and potential capital injection into SM Entertainment by Kakao.
Our call on this M&A remains consistent. In the last week of February/early March, Kakao could make a tender offer at prices of at least 140,000/150,000 won, in our view.

Nitro Software: Potentia’s Tiered-Bump. Expect Alludo To Cash In

After Alludo stated its $2.15/share Offer price was ‘best and final’, even if a superior proposal emerges, the ball was in Potentia’s court to just sneak in above those terms.
And so they have, with a $2.17/share unconditional Offer for Nitro (NTO AU), increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
Expect Nitro’s board to announce its unanimous support for Potentia’s revised Offer. Expect Alludo to cash in as tendering nears 75%.

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Feb 22

Daily Brief Event-Driven: Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising
Jiangnan Group (1366 HK): Chairman/CEO’s Privatisation Offer at HK$0.40
Pushpay Holdings: ACC & Nikko Say No To Scheme
KOSPI200 Index Rebalance Preview: Changes in April & June
Nitro Software: KKR’s Offer Unconditional. This Is Potentia’s For The Taking
Pushpay (PPH NZ): Proxy Advisors Say Yes but Several Shareholders Say No
Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations
Origin Energy (ORG AU): Recut Deal Is a Win-Win
Sibanye-Stillwater Raids New Century Resources (NCZ AU)
Quiddity TWSE 50 & 100 Mar 23 Final Expectations: There Could Be a Surprise Index Change!

Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising

Looking at the recent pattern, SKT’s fast-rising is quite noticeable. Its foreign room rose to 12.08%. On the other hand, KT’s foreign room growth seems to be slowing somewhat.
SKT’s pace is fast. If the current pace continues, there will be even the possibility of inclusion with a full adjustment factor of 1.0, exceeding 25%, by the August review.
We should design a momentum trading setup targeting the point when SKT’s foreign room decline trend will be reflected into an MSCI re-inclusion momentum.

Jiangnan Group (1366 HK): Chairman/CEO’s Privatisation Offer at HK$0.40

Jiangnan (1366 HK) disclosed a scheme privatisation offer from Mr Chu Hui (Chairman and CEO) at HK$0.40 per share, a 107.3% premium to the undisturbed price (HK$0.193 on 13 February).
The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The shareholder with a blocking stake will be supportive.
The price is final and attractive in the context of historical prices and multiples. The scheme meeting is likely in mid-May. At last close, the gross spread is 12.7%.

Pushpay Holdings: ACC & Nikko Say No To Scheme

The Scheme Meeting for BGH/Sixth Street’s NZ$1.34/share Offer for church donor management play Pushpay Holdings (PPH NZ) will take place on the 3 March.
Accident Compensation Corporation (ACC), holding 6.2% of shares out, said it will vote against the Scheme. Nikko Asset Management (1.4%) also said they will reject the Offer.
Shares have wobbled and are now 5.5% adrift of terms. BGH/Sixth Street still has the flexibility to bump.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

Nitro Software: KKR’s Offer Unconditional. This Is Potentia’s For The Taking

Alludo has declared its Offer of A$2.15 cash per Nitro Software Ltd (NTO AU) share free from all remaining conditions.
Separately, Potentia’s due diligence is expected to conclude tomorrow, the 22 February, with the expectation it bumps its current offer of A$2.00/share.
Currently trading at A$2.20 per share suggesting limited upside from here.

Pushpay (PPH NZ): Proxy Advisors Say Yes but Several Shareholders Say No

Shareholders representing around 12.6% of outstanding shares have stated that they will vote against Pushpay Holdings (PPH NZ)’s NZ$1.34 offer from Sixth Street/BGH (scheme vote on 3 March).
The NO votes will need a less than 63% turnout to block the scheme. A 5% bump (NZ$1.41) would be in line with the IE’s valuation mid-point at current FX.
Sixth Street/BGH have taken issue with the IE’s valuation (unsuitable FX rates and optimistic forecasts) and have got proxy advisors’ support. Therefore, a bump is not a sure thing.

Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations

The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review.
Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday’s close (they weren’t going to change as of Friday).
In this insight, we take a look at Quiddity’s expectations for index flows resulting from these events.

Origin Energy (ORG AU): Recut Deal Is a Win-Win

Origin Energy (ORG AU) has disclosed a revised non-binding proposal from Brookfield/EIG. The headline price has been lowered by -1.1% from A$9.00 to A$8.90 per share.
Under the revised proposal, shareholders’ first 100,000 shares get A$8.90. Beyond that ownership, the offer is A$4.334 plus US$3.194 per share (currently worth A$8.99 per share).
While the recut introduces FX rate risk, the average implied value is A$9.01 since 10 November. Both the offeror and the Board seem keen to get a binding offer.

Sibanye-Stillwater Raids New Century Resources (NCZ AU)

Sibanye-Stillwater (SGL SJ), the holder of 19.9% of shares, has made an off-market takeover for Queensland zinc miner New Century Resources (NCZ AU) at $1.10/share, a 42.9% premium to last close.
Sibanye-Stillwater said it was concerned about the change in the strategic direction of NCZ under the current management.
Concurrently, Sibanye-Stillwater has made an on-market buy order for 10.92% (14.4mn shares) of shares out to take its stake to ~30%. Shares closed at $1.095. ~32mn shares changed hands.

Quiddity TWSE 50 & 100 Mar 23 Final Expectations: There Could Be a Surprise Index Change!

The reference period for the March 2023 index review for TWSE 50 and 100 indices just came to an end on 20 February.
Previously, it looked like there would not be any index changes during the March 2023 review for these two indices.
However, now it looks like there could be a change.

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Feb 21

Daily Brief Event-Driven: Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge
Ecopro Co: Shorting Entry Points on CB Conversion Event
China Renaissance (1911 HK): Loss of Face
Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!
SM Entertainment Mgmt’s Response on Its Opposition to HYBE’s Tender Offer
Fujitec EGM Coming 24 Feb – It’s a Close-Run Thing

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge

Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

Ecopro Co: Shorting Entry Points on CB Conversion Event

For the recent conversion, the listing date is March 3rd, involving 500K shares. Despite the ongoing rally, there is a possibility of a significant price impact due to the volume.
We still have 1,632,333 shares to be converted. This represents 6.5% of the SO. There is a high likelihood that these will also be applied for conversion soon.
Assuming that it occurs in increments of 400-500K, there could be roughly 3-4 opportunities for shorting.

China Renaissance (1911 HK): Loss of Face

China Renaissance (1911 HK) was once touted as a “leading investment bank and asset manager dedicated to the new economy“. At the time of its 1Q21 post-IPO high, it was.
Late last Thursday, the 16 February, CR said it was unable to contact (hours, days, weeks?) Bao Fan, its chairman, CEO, and controlling shareholder. Shares subsequently fell 28%.
Bao is the face of CR and instrumental in client dealing and complex large-scale deal making. Clarification is recommended before investors dip their toe back in the water.

Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!

Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic.
It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.

SM Entertainment Mgmt’s Response on Its Opposition to HYBE’s Tender Offer

By Douglas Kim

In this insight, we discuss our thoughts on S.M.Entertainment Co (041510 KS) management’s official response on why it is opposing HYBE (352820 KS)’s tender offer offer.
Currently, about 85% of SM’s employees oppose HYBE’s proposed acquisition of nearly 40% stake in SM Entertainment.
In the last week of February/early March, Kakao Group could make an official tender offer at prices of at least 140,000/150,000 won, in our view.

Fujitec EGM Coming 24 Feb – It’s a Close-Run Thing

Fujitec management is under the gun. Last week, both major international proxy advisors – ISS and Glass Lewis – generally favoured Oasis’ Spill The Board candidate slates.
Fujitec Co Ltd (6406 JP), of course, had their opinion on the matter (Additional Explanatory Material, Response re ISS, Response re Glass Lewis)
How this breaks is a question. Shareholder structure analysis may take us there, but this could end mixed.

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Feb 20

Daily Brief Event-Driven: Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value
SET50 Index Rebalance Preview: Changes from Now to June
Merger Arb Mondays (20 Feb) – AAG Energy, Yashili, Toyo, Nitro, Origin Energy, Newcrest, O2Micro
NIFTY Mar 23 Rebal: Quiddity Flow Expectations
Weekly Deals Digest (19 Feb) – Fujitec, Toyo, AAG Energy, Yashili, Newcrest, Keppel, Pertamina

Sembcorp Marine (SMM SP): Short-Term Share Overhang Vs the Long-Term Value

The transaction completes on 28 February and the distribution in-specie of 49% new Sembcorp Marine (SMM SP) shares will be credited to Keppel Corp (KEP SP)‘s shareholders on 1 March.
While the potential index inclusions are likely to support new SMM shares, there is likely to be greater short-term downward pressure from the overhang created by the distribution in-specie.
New SMM trades at a premium P/NAV multiple of 1.81x vs peers. However, New SMM’s order book of S$18.1 billion implies an undemanding EV/order book of 0.60x vs historical ranges.

SET50 Index Rebalance Preview: Changes from Now to June

Srisawad Power 1979 (SAWAD TB) is likely to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in early March following the DTAC/TRUE merger.
Then there should be one change in June with Thai Life Insurance (TLI TB) replacing Jaymart PCL (JMART TB) in the index.
There is one stock close to failing the liquidity test and that could lead to another change with a few stocks vying for index inclusion.

Merger Arb Mondays (20 Feb) – AAG Energy, Yashili, Toyo, Nitro, Origin Energy, Newcrest, O2Micro

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Origin Energy (ORG AU), 111 Inc (YI US), Golden Energy & Resources (GER SP), Genesis Minerals (GMD AU).
Lowest spreads – Boustead Projects (BOCJ SP), Ihara Science (5999 JP), Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), Essential Metals (ESS AU), Warrego Energy (WGO AU).

NIFTY Mar 23 Rebal: Quiddity Flow Expectations

The March 2023 Rebalance results for the NIFTY broad market Indices were announced after the close on Friday 17th February 2023.
In my previous insights, I highlighted Pidilite Industries (PIDI IN) as a potential ADD for NIFTY 50 but it will not be added in March 2023. There are no changes.
However, for NIFTY 100 (& NIFTY Next 50), 4/5 Expected ADDs and 5/5 Expected DELs were predicted correctly.

Weekly Deals Digest (19 Feb) – Fujitec, Toyo, AAG Energy, Yashili, Newcrest, Keppel, Pertamina

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Pertamina Geothermal (0125738D IJ) raised US$597 million by pricing the IPO at the low end of the price range of IDR875-880 per share.
Event-Driven developments – Fujitec Co Ltd (6406 JP), Toyo Construction (1890 JP), Keppel Corp (KEP SP), Aag Energy Holdings (2686 HK), Newcrest Mining (NCM AU), Origin Energy (ORG AU).

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Feb 19

Daily Brief Event-Driven: Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF! and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!
AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer
Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group
AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer
Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy
Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG

Sembcorp Marine (SMM SP): Keppel O&M Takeover Completion Next Week = OOF!

This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
This insight discusses the dynamics of Sembcorp Marine (SMM SP) as the takeover of Keppel O&M nears. The deal goes effective 28 February after last week’s SMM shareholder approval.
That will mean overhang. Lots of active overhang. There WILL be some index upweights, but index treatment remains nebulous, and one has to expect a lot more net index outflow.

AAG Energy (2686 HK): Xinjiang Xintai’s Light but Final HK$1.85 Offer

Aag Energy Holdings (2686 HK) disclosed a pre-conditional privatisation offer from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.85 per share, a 10.1% premium to the undisturbed price.
The pre-condition is Xinjiang Xintai shareholder approval. Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The price is final but light.
The total privatisation cost is HK$2,704 million vs AAG’s net cash of HK$2,270 million. The offeror is betting that minorities will not be able to launch a concerted NO vote.

Index Rebalance & ETF Flow Recap: S&P/ASX, KOSPI, NIFTYJR, Kakao Pay, HK Electric, Adani Group

The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX).
There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.

AAG Energy (2686 HK): Xinjiang Xintai ‘s Underwhelming Scheme Offer

On the 14 May 2018, coalbed methane producer AAG Energy Holdings (2686 HK) announced a partial offer (50.5%) from Xinjiang Xintai Natural Gas (603393 CH) at HK$1.75/share.
Xinjiang Xintai has returned to the pit with a $1.85/share Offer by way of a Scheme. The Cancellation Price will NOT be increased.
This is hardly a knockout price, at a 10.1% premium to undisturbed; and just a 2.2% premium over the highest closing price of HK$1.81/share in the past year.

Keppel Goes Ex- SMM Spinoff This Week – NEWKEP Is Still A Buy

This insight comes as one-half of a pair. The problem: I cannot label one insight as a pair trade, and there are different dynamics at play.
This insight discusses the dynamics of Keppel Corp (KEP SP) as the SMM takeover of Keppel O&M nears. The deal goes effective 28 February but KEP trades ex- on 23 February.
While not as egregiously mis-priced as SCI vs SMM in autumn 2021, NEW KEPPEL appears under-priced here.

Last Week in Event SPACE: S.M.Entertainment, Adani Group, Star Entertainment, Dai Nippon, Citizen

S.M.Entertainment Co (041510 KS) is trading through the partial offer terms as HYBE (352820 KS) and Kakao Corp (035720 KS) jostle for control.
The political noise around the Adani Group situation will continue to be significant. Part of India believes this is a hatchet job against PM Modi and the BJP.
Star Entertainment Group (SGR AU) is an extraordinarily toxic company. But just how much negative news is already baked into the share price?

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Toshiba, Jingnan, Newcrest, Yashili, Sembcorp, O2Micro, AAG

There are 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal
Onr new deals was discussed on Smartkarma this past week – AAG Energy (2686 HK)‘s Scheme. Jiangnan (1366 HK) also suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
Key updates took place for: Toshiba Corp (6502 JP), Newcrest Mining (NCM AU), Yashili International Holdings (1230 HK), Sembcorp Marine (SMM SP), and O2Micro International (OIIM US).

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Feb 18

Daily Brief Event-Driven: Adani Group – MSCI’s Special Treatment Gets More Special and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse
Index Corporate Actions for Hanwha Solutions Split: Passive Flow Size & Schedule
Jiangnan Group (1366 HK): Powering Up
Mori Trust Sogo REIT (8961) Small Index Upweight on 27 Feb
NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover
Jiangnan Group (1366 HK): Is the Chairman/CEO Reattempting Privatisation?
SARIA/Devro: Increased and Final

Adani Group – MSCI’s Special Treatment Gets More Special, and Partially Delayed, and Possibly Worse

On 8 February, MSCI announced special treatment for the Adani names in its indices, discussed in Adani Group – MSCI Will Treat Very Adani Funds as a Very Special Case.
Late on 15 February they came out with a revision of their implementation – which was problematic because some stocks had gone limit down many days in a row.
The stocks responded. But it clearly isn’t an easy implementation, and it clearly isn’t over.

Index Corporate Actions for Hanwha Solutions Split: Passive Flow Size & Schedule

Hanwha Solutions received shareholder approval for its proposed demerger on February 13. The demerger will split Hanwha Solutions into two separate entities: Hanwha Galleria and Hanwha Solutions.
Hanwha Solutions will experience a passive outflow of 0.92x ADTV at the closing price on February 24 for KOSPI 200. A similar passive inflow will occur on March 31.
MSCI Standard will deliver an outflow of 0.43x ADTV at the close on March 31 as the weight of Hanwha Solutions, an existing constituent, will be reduced.

Jiangnan Group (1366 HK): Powering Up

Jiangnan (1366 HK), a manufacturer of wires and cables for power transmission and distribution systems, was suspended yesterday at lunchtime pursuant to Hong Kong’s Code on Takeovers and Mergers.
But not before the share price gained 63% on clear news leakage.
Chu Hui, the chairman, CEO, and major shareholder, mulled taking the private six years ago.

Mori Trust Sogo REIT (8961) Small Index Upweight on 27 Feb

Mori Trust Sogo Reit (8961 JP) and Mori Trust Hotel Reit (3478 JP) will merge at the end of this month.
They pay divs, there is a unit split, then NEWCO.
If you are in the biz and you care, there is a small index thing to do.

NIFTY NEXT50 / NIFTY100 Index Rebalance: 5 Changes + Capping = Big Turnover

ABB India Ltd (ABB IN), Adani Wilmar (AWLTD IN), Canara Bank (CBK IN), Page Industries (PAG IN) and Varun Beverages Ltd (VBL IN) will be added to the index.
Bandhan Bank Ltd (BANDHAN IN), Biocon Ltd (BIOS IN), Gland Pharma Ltd (GLAND IN), Mphasis Ltd (MPHL IN) and Paytm (PAYTM IN) will be deleted from the index.
Given the large drop in the stock prices of the Adani Group companies, capping changes will result in buying on all non-F&O stocks in the index.

Jiangnan Group (1366 HK): Is the Chairman/CEO Reattempting Privatisation?

Jiangnan (1366 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 16 February.
It is likely that Mr Chu Hui (Chairman and CEO), the largest shareholder representing 34.99% of outstanding shares is reattempting to privatise Jiangnan.
The 83.9% share price run prior to the trading halt suggests that the offeror is very close to finalising a formal proposal at a hefty premium to the undisturbed price.

SARIA/Devro: Increased and Final