Event-Driven Archives | Page 104 of 187 | Smartkarma

On the 9th of January, 2023, the Republic of Djibouti signed an MOU with Hong Kong Aerospace Technology (1725 HK) (HKAT) to develop a (reported) US$1bn international commercial “spaceport”.
In the middle of last year, Djibouti announced plans to launch two nanosatellites to facilitate farming and other related activities.
HKAT, a recent back-door listing, has a market cap of US$258mn. Wholly-owned subsidiary Gang Hang Ke (Shenzhen) Space Technology, has been successfully involved in the launch of ten satellites.

Meritz Fire & Marine Insurance: Treasury Shares Cancellation of 5.9% of Outstanding Shares

After the market close today, Meritz Fire & Marine Insurance announced that it will cancel 6.57 million treasury shares, representing 5.9% of its outstanding shares.
This treasury shares cancellation by Meritz F&M Insurance should have a continued positive impact on its share price.
Share cancellation by Meritz F&M Insurance and the need to adjust to higher merger ratio are likely to lead to Meritz F&M Insurance outperforming MFG in the next few days.

Kingston Financial’s (1031 HK) Vote on 9 February

The Kingston Financial (1031 HK) scheme document is out with the scheme meeting scheduled for 9 February. The IFA considers the offer to be fair and reasonable.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and the headcount test. No shareholder holds a blocking stake.
Peer re-rating increases the headcount test risk. At the last close and for the 10 March payment, the gross and annualised spread is 5.3% and 42.2%, respectively.

DAX/MDAX/SDAX Quiddity Leaderboard Mar 23: Vantage Tower and Other Interesting Names

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices.
Vantage Towers (VTWR GR) is currently undergoing a Tender Offer and this could have interesting index consequences over the next few weeks.
As it stands, there seems to be one change between MDAX and SDAX and there are multiple names hovering close to the border for DAX, MDAX, and SDAX.

ETF Arbitrage in Korea: Names Suitable for Pair Trades

As for the one using the creation/redemption mechanism, the tracking error (market value – NAV) is still too tight to call this an arbitrage opening.
Then, at this point, we need to pay attention to ETF arbitrage from a pair trade perspective. There are a total of 3 pairs we can consider for this.
The mean reversion cycle is still not short. However, the diversion range is not extensive, so we can aim for a relatively stable setup in a market with increased volatility.

Kingston Financial (1031 HK): 9th Feb Scheme Vote. IFA Says Fair

The Scheme Booklet is now out and Kingston Financial (1031 HK)‘s shareholders can vote on Chu Yuet Wah’s Offer on the 9 February.
The Cancellation price of HK$0.30/share was a 47.78% premium to the undisturbed prices. It will not be increased.
Currently trading at a gross/annualised spread of 5.3%/44.4%, assuming payment on the 10 March.

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Jan 17

Daily Brief Event-Driven: Thinking About Japanese Banks – Go Big and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
Quiddity Primer for HSCEI Rebalance Events
EQD | Alibaba (BABA US): Leverage up Longs Using Call Ratios
Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi
Liquid Universe of European Ordinary and Preferred Shares: January ‘23 Report
WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement

Thinking About Japanese Banks – Go Big, Go Small, Go Insurance

Japanese Banks have had a good run recently. From the day before the BOJ changed the 10yr yield target in December in its YCC programme to today, +30% vs TOPIX.
The question is how that is spread out. There are lots of banks. Some are cheaper than others. Some are better than others. Can we draw conclusions to trade better?
If you are looking at Japanese Banks to play a change in BOJ policy when Governor Kuroda’s term ends shortly, there are definitely conclusions one can draw. I offer comments.

Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP

Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
This is one of those times when I can reiterate, Japan Needs More Cowbell.

Quiddity Primer for HSCEI Rebalance Events

By Janaghan Jeyakumar, CFA

The Hang Seng China Enterprises Index (HSCEI INDEX) is one of the most widely discussed indices in the Hang Seng Indices family.
The HSCEI serves as a benchmark to reflect the overall performance of “Mainland” Securities listed in Hong Kong.
In this insight, we take a brief look at the selection criteria and the historical price performance of past Rebalance Events.

EQD | Alibaba (BABA US): Leverage up Longs Using Call Ratios

BABA US is up 85% from October lows and continues to trade well in 2023 up 32% in January
Stock has benefitted from not only improved economic sentiment but also an end to the 2-year crack down on the Internet Sector
We suggest using call ratios to increase upside leverage prior to earnings release

Osstem Implant: Potential M&A Fight Between KCGI And Founder Choi

The case involving KCGI (a local corporate activist private equity fund) and Osstem Implant (048260 KS) is one of the more interesting situations rising in the Korea’s M&A/corporate activism markets.
Osstem Implant is the number one dental implant company in Korea/Asia and the fourth largest player in this segment globally.
We believe Osstem Implant could outperform the market in 2023 due to improving fundamentals, cheap valuations, and a potential M&A fight between KCGI and Chairman Choi.

Liquid Universe of European Ordinary and Preferred Shares: January ‘23 Report

Since mid-December, spreads have shown a mixed performance across our liquid universe (9 have widened, 9 tightened, 1 at same level).
Trade recommendations long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
Trade recommendations long prefs / short ords: Sixt, VW, Danieli, MFE-Media for Europe, Grifols, Atlas Copco, Ericsson.

WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement

By Sumeet Singh

On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) .
WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.
In this note, we will talk about the deal dynamics and take an early look at its implications.

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Jan 16

Daily Brief Event-Driven: Bank of Kyoto (8369) – Not a Normal Regional Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Bank of Kyoto (8369) – Not a Normal Regional Bank
Misunderstandings & Truth About Samchully & Daesung Holdings Entering KOSPI 200

Bank of Kyoto (8369) – Not a Normal Regional Bank

Bank of Kyoto (8369 JP) is a classic “deep value” trade. It has a low PBR, and… “Dude, it’s equity portfolio alone is worth more than the whole bank.”
It has a larger market cap than most super-low PBR Japanese regional banks, is more liquid, and the narrative is quite easy to tell.
Japanese Banks are the hottest new thing but unless you think This Particular Leopard is going to change its spots, it is still best thought of as a range trade.

Misunderstandings & Truth About Samchully & Daesung Holdings Entering KOSPI 200

Hankyung’s report is a clear misunderstanding under the current index methodology. The possibility of Samchully and Daesung Holdings’ KOSPI 200 inclusion is NONE.
However, the issue of deteriorating the market representation of the K200 index, which is caused by the top stocks outside the index, is gaining attention in the local financial space.
So, we should prepare for the possibility that KRX will revise the methodology. In this case, an intense preemptive flow for the top names outside the KOSPI 200 can appear.

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Jan 15

Daily Brief Event-Driven: Last Week In SPACE: Cosmo and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Last Week In SPACE: Cosmo, Olam, Yamada Denki, Jardine Cycle/Astra, Tianneng Power/Battery, Fujitsu
DearU’ Bubble + NCsoft’s Universe = The Largest K-Pop Fandom Platform in Korea
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Esso Thailand, Essential Met, Norwest Energy, Halcyon Agri
Hong Kong CEO & Director Dealings (15 Jan): WWPKG, Tianyun International, Yeahka, Flat Glass

Last Week In SPACE: Cosmo, Olam, Yamada Denki, Jardine Cycle/Astra, Tianneng Power/Battery, Fujitsu

Given the likelihood of more buybacks and pressure on capital allocation and structuring of the renewable energy business, Cosmo Energy (5021 JP) is more of a buy than a sell.
Olam Group (OLG SP) is a tricky beast to analyze. A key issue for investors is valuing Olam, ex- Olam Agri, ex- OFI.
Unloved as it is, Yamada Denki (9831 JP) is still cheap.

DearU’ Bubble + NCsoft’s Universe = The Largest K-Pop Fandom Platform in Korea

DearU’s acquisition of NCSoft’s Universe K-Pop fandom platform will expand DearU Bubble’s number one position in the K-Pop fandom platform in Korea.
The sale of Universe by NCSoft is a win-win situation for both DearU and NCsoft.
Applying a 25x P/E to an estimated net profit of 50 billion won in 2024 would suggest an market cap of 1.25 trillion won for DearU, representing a 52% upside.

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

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: Esso Thailand, Essential Met, Norwest Energy, Halcyon Agri

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.
Two new deals were discussed on Smartkarma in the past week: Bangchak Corporation (BCP TB)‘s takeunder for Esso Thailand (ESSO TB); Tianqi/OGO’s Offer for Essential Metals (ESS AU).
Key updates took place for: Norwest Energy NL (NWE AU) and Halcyon Agri (HACL SP).

Hong Kong CEO & Director Dealings (15 Jan): WWPKG, Tianyun International, Yeahka, Flat Glass

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
Stocks mentioned include WWPKG Holdings Co Ltd (8069 HK), Tianyun International Holdings (6836 HK), Yeahka Limited (9923 HK), GHKGBA (1396 HK), and Flat Glass (6865 HK).

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Jan 14

Daily Brief Event-Driven: Melco Trading “Cheap” As Macau Opens Up and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Melco Trading “Cheap” As Macau Opens Up
IFM Increases Its Stake in Naturgy

Melco Trading “Cheap” As Macau Opens Up

After Macau’s government renewed the concession periods for the city’s six incumbent gambling concessionaires for another 10 years, the key players are up 86% on average
Both Melco International Development (200 HK) and Melco Resorts & Entertainment (MLCO US) have gained a little over 100%.
Melco’s NAV discount is back out to 36%. The simple ratio – Melco/MCLO – is around the lowest level since Melco began consolidating MCLO in early 2017.

IFM Increases Its Stake in Naturgy

Australian institutional investor IFM has informed the Spanish National Securities Market Commission (CNMV) that it has increased its stake in Naturgy Energy Group SA (NTGY SM) to just over 14%.
Corporate politics: IFM is still far from the 17% threshold that would grant two sits on the Board of Naturgy (and the initial minimum acceptance condition in the partial offer).
Speculative buy (TP €27.42, DCF-based). IFM’s intention of increasing its stake may continue to drive up the share price.

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Jan 13

Daily Brief Event-Driven: Cosmo Energy (5021) Vs Murakami – It’s On! and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Cosmo Energy (5021) Vs Murakami – It’s On!
Japan Excellent (8987). It WAS Most Excellent. That’s Now Done.
Tianneng (819 HK): EV Battery Play Seeks Swiss Listing
Esso Thailand: Bangchak Corp’s Takeunder
Selected European Holdcos and DLC: New Year‘23 Report
EQD | FXI (FXI US): – Could Chinese Equities Lead the Way Higher? Use Options for Delta-Follow Up

Cosmo Energy (5021) Vs Murakami – It’s On!

In March 2022, longtime Cosmo Energy Holdings (5021 JP) holder Mubadala sold the last 15.7% of Cosmo Energy in a block sale after having sold 5% 8 months earlier.
A month later it was revealed noted Japanese activist Murakami-san had bought 5.1%. A week later it was 8.3%. Then he bought more. Cosmo announced a buyback in May 2022.
By November Murakami-san had 19.8%. But behind the scenes there had been discussions and those are now coming to light. Cosmo has announced possible defence measures.

Japan Excellent (8987). It WAS Most Excellent. That’s Now Done.

4.5 months ago I wrote about a possible “Sustained Flow Event” on Japan Excellent (8987 JP). Since then, the stock has outperformed every other Office REIT. It’s up since then.
Outperformance within Office REITs has been a minimum of 3.5%, and a maximum of ~20.8% vs the biggest peer, with an average and median outperformance of 11.7% and 13.4% respectively.
This idiosyncratic story has come to an end. It may be a temporary end, but I don’t see the next catalyst.

Tianneng (819 HK): EV Battery Play Seeks Swiss Listing

In January 2021, Tianneng Power (819 HK)‘s (TPI) battery unit Tianneng Battery (688819 CH) (TBG) was listed on China’s Star Market, as discussed in Tianneng: Star Market Battery Spin-Off Priced.
TBG is now proposing the issuance of GDRs, accounting for 10% of existing shares out, to be listed on the SIX Swiss Exchange.
A circular has been issued and TPI shareholders go to the vote on the 31 January. TPI currently holds 86.53% in TBG worth >300% of its market cap.

Esso Thailand: Bangchak Corp’s Takeunder

Refiner/retailer Bangchak Corporation (BCP TB)‘s board has approved the purchase of a 65.99% stake in Esso Thailand (ESSO TB) from Exxon Mobil (XOM US).
The purchase price is subject to a price adjustment mechanism and will only be known upon completion of the SPA. The indicative Offer Price is THB 8.84, 20% below undisturbed.
Once completed – tentatively anticipated in the 3Q23 – a mandatory tender offer will be triggered for the remaining 34.01% of shares out in Esso.

Selected European Holdcos and DLC: New Year‘23 Report

Discounts to NAV of covered holdcos have generally widened since mid-December.
Discounts to NAV (11 January): C.F.Alba, 48.9%; GBL, 36.3%; Heineken Holding, 19.5%; Industrivärden C, 14.3%; Investor B, 15.9%; Porsche Automobile Holding, 45%. The spread of Rio Tinto DLC tightened to 10.8%.
Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: GBL, Porsche Automobile Holding, Rio Tinto (DLC), CF Alba (long position).

EQD | FXI (FXI US): – Could Chinese Equities Lead the Way Higher? Use Options for Delta-Follow Up

On 30th November we proposed a restructure of a bullish FXI US trade
Since then FXI US has rallied 12% and implied vols have decreased significantly
We evaluate the call ladder that we highlighted and consider what to do next

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Jan 12

Daily Brief Event-Driven: Fujitsu (6702) Subsidiary Selldowns To Come and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fujitsu (6702) Subsidiary Selldowns To Come
JCNC Is Even More Overstretched Vs. Astra
January TOPIX FFW Review – Some Big Sells
LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons
Petrodollars Fan Olam’s Agri Listing In Singapore And Saudi Arabia
Triton/Caverion: Hostile Competing Offer
K200 ETFs’ Swap Trading on Meritz & Fresh Buy-In JB Financial on Jan 27
EQD | HSI Index Vs SPX Index: Sell Chinese Equity Vol to Buy US Equity Vol
PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

Fujitsu (6702) Subsidiary Selldowns To Come

Three years ago I wrote Fujitsu Subsidiary Selldowns or Buy-Ins? My choice then was Fujitsu Frontech which was bought out 8 months later.
A Bloomberg article today with quotes from an interview with the CEO of Fujitsu fuelled some movement today.
The “obvious” trade is Shinko Electric Industries (6967 JP) but you have to buy the new dream.

JCNC Is Even More Overstretched Vs. Astra

Jardine Cycle & Carriage (JCNC SP)‘s is currently trading tight at a ~6% discount to NAV.
The implied stub and JCNC/Astra International (ASII IJ) ratio are the highest outside the 2008 financial crisis.
Key catalysts for JCNC’s outperformance, such as the SIMSCI Index inclusion, have passed. JCNC is trading rich. Look to reverse the stub.

January TOPIX FFW Review – Some Big Sells

The January 2023 TOPIX FFW Trade was announced today. The two-way trade is worth about ¥325bn.
There are four ADDs previously discussed: Sun* (4053 JP), Appier Group (4180 JP), Chubu Steel Plate (5461 JP), and Chubu Steel Plate (5461 JP).
There are 57 downweights, 11 upweights (but only seven FFW buys). The rest is reverse funding to buy. There are 10 names with >$10mm AND >3 days ADV to sell.

LG Energy Solution: Trading Strategy on End of ESOP Lockup & Valuation Comparisons

This insight provides a trading strategy on LG Energy Solution (373220 KS) with a focus on the end of the ESOP shares lockup period on 27 January.
Currently, LG Energy Solution is trading at P/E of 46.5x in 2024 which is more than 100% higher than the P/E multiples of CATL (20.4x) and Tesla (19.2x) in 2024.
Our view is that in the long-term, LG Energy Solution should not trade at such high valuation premium to Tesla given the latter company’s higher return on capital.

Petrodollars Fan Olam’s Agri Listing In Singapore And Saudi Arabia

After selling a 35.43% stake in Olam Agri to Saudi Arabia’s Public Investment Fund last month, Olam Group (OLG SP) intends to dual list the company in Singapore and Saudi Arabia.
The stake sale implied a US$3.5bn value for the agricultural arm, or ~50% of OGL’s current market cap based on its remaining position in Olam Agri.
Olam Agri may raise up to US$1bn via the listing. A separate London listing of OGL’s food ingredient business is expected to occur subsequent to Olam Agri’s listing.

Triton/Caverion: Hostile Competing Offer

On 10 January, former significant shareholder Triton gatecrashed the Bain Capital consortium offer with an €8/share hostile competing offer, 14.3% premium to Bain’s). There could be upside up to c.€9.01.
Shareholder families have a c.27% (thus blocking) stake. Either they cash out in Triton’s offer, with a possible sweetener (a small increase could be likely) or will raise over Triton’s.
The shares are trading 0.62% above Triton’s offer on expectations of a bidding war and/or that offer is not declared unconditional by 30 June. Risk/return looks again positive. Long.

K200 ETFs’ Swap Trading on Meritz & Fresh Buy-In JB Financial on Jan 27

KOSPI 200 ETFs will have to sell Meritz FIRE and buy Meritz FINANCIAL at the close on January 27. JB Financial, the top reserved issue, will replace FIRE.
We should consider a Long Short for two Meritz companies just before the 27th. As a follow-up setup, we should aim for a potential widening of the swap arb spread.
As for the Long JB Financial, I would set the entry timing one week towards the implementation at the latest and look into Kodex Banks ETF (091170) for a hedge.

EQD | HSI Index Vs SPX Index: Sell Chinese Equity Vol to Buy US Equity Vol

Chinese equity vol has been high over the last few months with extreme market moves on a number of headlines but is starting to calm down
US equity volatility continues to screen cheap despite calls for a challenging year and likely recession
We consider 2 relative vol trades to play a narrowing of the spread

PIF and GIC Combined Invest About 1.2 Trillion Won in Kakao Entertainment

On 11 January, it was announced that Kakao Entertainment (103260 KS) has attracted large scale investments from Saudi Arabia’s Sovereign Fund (Public Investment Fund – PIF) and GIC (Singapore).
Maekyung Business Daily reported that PIF and GIC combined invested about 1.1 trillion won to 1.2 trillion won in Kakao Entertainment, valuing the company at about 10 trillion won.
This major investment in Kakao Entertainment by PIF and GIC should have a positive impact on Kakao Corp (035720 KS), the controlling shareholder of the company.

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Jan 11

Daily Brief Event-Driven: MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period
StubWorld: Swire And China’s Opening
Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight
Bubble Warning: China Internet Investment (810 HK) Suspended
Norwest Energy Rejects MinRes’ Offer
Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV
Discussing the Currently Widened Pref-Ord Disparity in Korea
EQD | SPX and NDX : Its US CPI Time and We Look at Trading Opportunites in the Options Market
XXXLutz Consortium/Home24: Final Results and Delisting

MSCI Feb 2023 QCIR Preview: Nearing the Start of the Review Period

By Brian Freitas

We expect a number of changes to the MSCI Standard indices for the Asia Pacific region at the first Quarterly Comprehensive Index Review to be implemented on 28 February.
As usual, most changes are expected in China with a smattering of adds and deletes for the other markets.
On average, the adds have outperformed the deletes over the last few weeks and months and pre-positioning should continue for the next couple of weeks.

StubWorld: Swire And China’s Opening

Retailers /hoteliers will welcome the return of Chinese travellers, with ~US$250bn in annual spending. That should bode well for mall operators like Swire Properties and, in turn, Swire Pacific.
Preceding my comments on Swire are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Foreign Ownership Limit Stocks in Korea: KT Is Again in the Limelight

KT’s foreign room has been rising since early September last year. If this trend continues, it will likely approach the inclusion borderline of 15% within a month or two.
This trend is expected to continue for the time being as the tough relationship between the KT CEO and the government seems unlikely to be resolved in the short term.
The February inclusion is pretty tight, but May seems like we could be looking out for it.

Bubble Warning: China Internet Investment (810 HK) Suspended

China Internet Investment Finance Holdings (810 HK) (CII), an investment manager, is currently suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
CII has thrice responded to unusual price action in its share price in the past four months. Shares are up a staggering ~1,000% in the past six months.
This insight provides some background information on CII. Trading at 64x book value, this is one avoidable company.

Norwest Energy Rejects MinRes’ Offer

In its Target Statement released this afternoon, Norwest Energy NL (NWE AU) has rejected Mineral Resources (MIN AU)‘s off-market scrip Offer.
Norwest concluded the Offer was opportunistic and did not boast an appropriate premium for control.
MinRes’ Offer closes on the 6 February – unless extended.

Korea Kolmar Holdings: Shares Cancellation of 17% of Market Cap + Deep Discount to NAV

On 10 January, Korea Kolmar Holdings (024720 KS) announced that it plans to cancel 1.1 million shares to be acquired through redemption of redeemable convertible preferred shares.
Korea Kolmar Holdings currently has a market cap of 314 billion won so this share cancellation represents nearly 17% of its market cap.
This large shares cancellation should have a positive impact on Korea Kolmar Holdings’ share price. It is also trading at 40% discount to its NAV.

Discussing the Currently Widened Pref-Ord Disparity in Korea

Many of the PREFERRED shares in Korea entered the short-term oversold territory versus ORDINARY (on a 20-day moving average).
The liquidity boom that started in the local bond market at the beginning of the year seems to have led to the relative outperformance of ORDINARY.
We should consider collective trading, which utilizes the oversold condition across the entire PREF zone, rather than an individual approach to a specific PREF at this point.

EQD | SPX and NDX : Its US CPI Time and We Look at Trading Opportunites in the Options Market

US CPI data is due on Thursday 12th January and is likley to be another important data point
SPX Index is down nearly 5% since November and NDX Index is down nearly 8% over the same period
We look for short-term trading opportunities in the options market

XXXLutz Consortium/Home24: Final Results and Delisting

The offer has ended. The bidding consortium has secured 92.67% of home24 shares (including capital increase and share purchases). Completion still remains subject to customary antitrust approvals.
Unsurprisingly, the shares are now trading at a 8.07% discount to the offer price. Delisting is looming and holdouts have not a sell-out right.
It is still puzzling to me why >7% of shares have not been tendered. The bidders might make a delisting offer, but not necessarily at the offer price.

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Jan 10

Daily Brief Event-Driven: Essential Metals (ESS AU)’s Enters a SID at A$0.50 with a Tianqi/IGO JV and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Essential Metals (ESS AU)’s Enters a SID at A$0.50 with a Tianqi/IGO JV
Quiddity Leaderboard-S&P/ASX Mar 23: Multiple Names with Decent Impact
How Should We Play with Kakao Pay’s MSCI Inclusion Event?
Norwest Energy (NWE AU): Valuation Read Across from Warrego’s Takeover Battle
Oak Holdings/Vantage Towers: Tendering Vs. Domination Agreement

Essential Metals (ESS AU)’s Enters a SID at A$0.50 with a Tianqi/IGO JV

Essential Metals (ESS AU) has entered a SID with a Tianqi Lithium (002466 CH)/IGO Ltd (IGO AU) JV at A$0.50, a 44.9% premium to the undisturbed price (6 January).
The scheme is subject to shareholder and FIRB approval. The FIRB should approve a 49% Aussie-owned offeror for a project to be processed in Australia.
There is a possibility of a competing bid as the offer is far from a knockout bid and ESS lacks substantial shareholders. The scheme meeting is in April.

Quiddity Leaderboard-S&P/ASX Mar 23: Multiple Names with Decent Impact

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for S&P ASX 20, 50, 100, 200, 300 in the run up to the March 2023 Rebalance.
I expect there to be one, two, and four changes, respectively, for the ASX 20, ASX 100, and ASX 200 indices in the March 2023 Rebalance.
For ASX 300, there could be 14 ADDs and 12 DELs in the March 2023 Rebalance including some high impact names based on days-to-trade.

How Should We Play with Kakao Pay’s MSCI Inclusion Event?

Kakao Pay is the only possibility to be included in the February MSCI IR. It comfortably beats both the full market cap and float market cap hurdles.
It can be assumed that the full-fledged emergence of local institutional flows targeting MSCI inclusion contributed to some extent to Kakao Pay’s outperformance early this year.
More extreme reverse flow trading could emerge. In other words, there is a possibility that the share price will turn into a sell-off even before the MSCI announcement.

Norwest Energy (NWE AU): Valuation Read Across from Warrego’s Takeover Battle

Mineral Resources (MIN AU)‘s off-market takeover offer at 1 MIN share for every 1,367 NWE shares closes on 6 February. The target’s statement will be despatched by early to mid-January.
The Norwest Energy NL (NWE AU) Board recommends shareholders take no action. The timing is opportunistic and motivated by recent Perth Basin consolidation activity.
Hancock’s latest bid for Warrego Energy (WGO AU) suggests that Norwest is worth at least 20% more than MinRes’ offer. Expect the Board to reject the offer.

Oak Holdings/Vantage Towers: Tendering Vs. Domination Agreement

The agreement between Vodafone and the consortium values the company at a generous 24x EV/Fwd EBITDA, 19% premium over the 3-month VWAP (14.7% above my DCF-based fair value estimate).
Nevertheless the spread (+0.44%) signals that Oak Holdings may not obtain the necessary 95% to squeeze-out. Risk arb funds are betting on higher returns from a Domination Agreement.
On rather aggressive assumptions (90% payout, 4.5% rate of return, 2.5% growth) a dividend-discount model provides a €39.6/share valuation. This could still turn into another messy Kabel Deustschland scenario.

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Jan 09

Daily Brief Event-Driven: Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited. and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.
PEXA (PXA) Replaces Pendal (PDL) In the S&P ASX 200, Getting into the Distro Mix
Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event
Merger Arb Mondays (09 Jan) – Origin Energy, Warrego, Nitro, Norwest, Halcyon, Kingston
Dissecting KRX Annual ETF Market Report & Noteworthy Trends for ETF Arbitrages
Essential Metals (ESS AU): Scheme With Tianqi/IGO

Yamada Denki (9831) – GINORMOUS Buyback 2/3 Done. Stock Price Reaction Limited.

Yamada Denki (9831 JP) has bought back nearly 16% of shares out ex-Treasury in the 7.5 months since last fiscal year earnings were announced. It went limit up on Day1.
Then it stopped – despite the buyback being 15% of expected volume every day for a year and a HUGE piece of Real World Float.
There is 8% left to buy at current prices – 16-18% of volume the next 4.5mos. And it is still a dirt cheap capital structure and somewhat sticky shareholder structure.

PEXA (PXA) Replaces Pendal (PDL) In the S&P ASX 200, Getting into the Distro Mix

On Friday after the close, S&P DJI Indices announced that PEXA Group (PXA AU) would replace Pendal Group (PDL AU) in the S&P ASX 200 on 12 January at close.
This is unsurprising. Pendal was scheduled to exit in January due to takeover. PEXA was already an interim S&P ASX 200 member after the distribution by Link Administration (LNK AU).
The timing is conveniently in the timeframe for the LNK distribution of PXA shares to its shareholders implemented on the 10th.

Sun* (Sun Asterisk – 4053 JP) TOPIX Inclusion Event

In mid-December, digital UX creation agency (90% of revenues) and “talent agency” (10%) announced it would move from TSE Growth to TSE Prime mid-December 2022.
This was in Janaghan’s “Not Ready” list in TOPIX Inclusions: Who Is Ready (Dec 2022) because it did not meet two of the requirements. But it turns out it did.
This is therefore a TOPIX inclusion event at end-January 2023.

Merger Arb Mondays (09 Jan) – Origin Energy, Warrego, Nitro, Norwest, Halcyon, Kingston

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 – Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), 21Vianet Group (VNET US), Golden Energy & Resources (GER SP), Tyro Payments (TYR AU), Origin Energy (ORG AU).
Lowest spreads – Norwest Energy NL (NWE AU), Nitro Software Ltd (NTO AU), Chip Eng Seng Corp (CHIP SP), Conexio Corp (9422 JP), Nippon Steel Trading Corporation (9810 JP).

Dissecting KRX Annual ETF Market Report & Noteworthy Trends for ETF Arbitrages

Korea’s ETF market achieved top-line growth last year as well. AUM increased by 7% YoY, a significant achievement considering that global ETF AUM has shrunk by 8%.
Since one-third of local ACTIVE ETFs are equity types (particularly SECTOR), we can conclude that the local equity ETF market has not shrunk but has migrated to ACTIVE.
Recently listed sector ETFs are expected to play an accelerating role in expanding the scope of these arb opportunities as they expand beyond electric vehicles/secondary batteries to groups/defense.

Essential Metals (ESS AU): Scheme With Tianqi/IGO