Event-Driven Archives | Page 106 of 188 | Smartkarma

Back on the 30 September, O2Micro International (OIIM US), an integrated circuits play, announced a definitive privatisation from management at US$5.00/ADS, a 68.9% premium to the undisturbed price.
An EGM will take place on the 31 January. The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. 16.9% of shares out are supportive.
This Offer is expected to close in the 1Q23. The IFA considers the Offer fair.

Retrospectively Reviewing Prop Traders Vs. Retail on T±4 Ex-Date

This year is less intense compared to previous years. However, given this year’s overall market returns and the lower visibility of yearend dividends, it is still a reasonably aggressive flow.
Most of this PROP flow should have been dividend hunting aimed at the distortion of ex-date price correction caused by RETAIL’s tax avoidance-driven selling flow.
The performance of the individual stock position strategy (entering on T-4~1 ex-date) might not have been as juicy as expected, but it still managed to deliver a positive return.

JPX-Nikkei 400 Rebal 2023: End-Dec 2022

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-December 2022.

MergerTalk: Regulators May Be Hard Pressed To Prove The Amazon/IRobot Deal Harmful To Competition

By Robert Sassoon

Amazon’s pursuit of robotic vacuum manufacturer iRobot is being scrutinized by the FTC, a merger which we think the regulator will be hard pressed to prove is harmful to competition.
However, although unlikely, the pending ruling next month on the FTC’s unusual lawsuit against Meta’s acquisition of virtual reality start-up Within could rewrite regulatory guidelines for vertical mergers
The 27% spread offers a potentially lucrative trade generating double-digit IRR even if deal completion is delayed by regulatory review, although it might be wise to entertain some downside protection

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 29

Daily Brief Event-Driven: Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market
Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Fengxiang (9977 HK): Offer Doc Out. Tender Now Or Sell In The Market

The Composite Document for Shandong Fengxiang (9977 HK)‘s unconditional mandatory Offer from PAG Capital is now out.
Shareholders who tender will be paid within 7 business days.
An H-class meeting will be held on the 18 January to vote on whether to delist Fengxiang. There is no guarantee this will occur.

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 28

Daily Brief Event-Driven: Another Skyworth (751 HK) Partial Buyback and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Another Skyworth (751 HK) Partial Buyback
Launching KRX CSI Joint EV & Semiconductor ETFs

Another Skyworth (751 HK) Partial Buyback

Skyworth Group Limited (751 HK) has announced another partial buyback – this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.
On 17 June 2020, Skyworth announced a partial buyback – 12.83% of shares out or 392.8mn shares, at HK$2.80/share, a 32.1% premium to last close.
Upon successfully completing this partial offer, Stephen Wong & concert parties would hold >50%, prior to the excise of any outstanding options.

Launching KRX CSI Joint EV & Semiconductor ETFs

KRX listed ETFs tracking the KRX-CSI joint indexes: KODEX Korea China EV (450180), KODEX Korea China Semiconductor (450190), TIGER Synth Korea-China EV (449680), and TIGER Synth Korea-China Semiconductor (449690)
From a trading perspective, whether these newly introduced ETFs will replace the existing EV ETFs would be a key thinking point.
This means a shift in the fund size of more than 5 trillion won and will cause a significant price impact in terms of flow trading.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 27

Daily Brief Event-Driven: Toyo Construction (1890) Investors/Traders Beware and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toyo Construction (1890) Investors/Traders Beware
Takashimaya and H2O Cancel Tie-Up
XXXLutz Consortium/Home24: Additional Acceptance Period

Toyo Construction (1890) Investors/Traders Beware

On 13 December, Toyo Construction (1890 JP) suitor YFO issued a press release which was not to the liking of Toyo Construction. A day later, Toyo Construction offered its own.
YFO responded on the 21st, saying ToyoKen’s PR was inaccurate. Not quite a week after that, ToyoKen announced one tiny subsidiary(Tecos) would absorb another (portable toilet rental co Orient Ecology).
Synergies? None. Growth? None. Scale? Nope. Was this for some other reason investors need to worry about? Maybe.

Takashimaya and H2O Cancel Tie-Up

By Michael Causton

Takashimaya and H2O Retailing entered what felt like a forced engagement of convenience in 2008 when all their other competitors were busy merging.
Although discussions for a full merger were held, in truth, thea agreement was more about practical collaboration to create more efficiencies.
With both firms now more secure and cross-shareholdings more problematic, they will sell off their equity in each other but continue to work on joint projects.

XXXLutz Consortium/Home24: Additional Acceptance Period

By Jesus Rodriguez Aguilar

XXXLutz consortium secures 80.94% of home24 shares. The Additional Acceptance Period runs until 28 December. More shares will be tendered and delisting will eventually take place in 2023, in my view.
My updated fair value estimate is €7.44/share (average of DCF and comparables, as per the tables below), just 0.8% below the offer price, hence my TP remains unchanged at €7.50.
Gross spread is 0.93%. The risk of being stranded with a delisted stock encourages tendering at €7.50.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 26

Daily Brief Event-Driven: Merger Arb Mondays (26 Dec) – Nippon Steel Trading and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals
S&P/ASX All Technology Index: GICS Changes, Market Consultation & Potential Index Changes
Weekly Deals Digest (26 Dec) – JAFCO, Nippon Steel Trading, Conexio, Origin Energy, Warrego

Merger Arb Mondays (26 Dec) – Nippon Steel Trading, Conexio, Origin Energy, Warrego, OZ Minerals

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 – Genex Power Ltd (GNX AU), Alliance Aviation Services (AQZ AU), 21Vianet Group (VNET US), Nippon Steel Trading Corporation (9810 JP), Conexio Corp (9422 JP), Golden Energy.
Lowest spreads – Nitro Software Ltd (NTO AU), Shandong Fengxiang (9977 HK), Chip Eng Seng Corp (CHIP SP), Elmo Software (ELO AU), OZ Minerals Ltd (OZL AU), Norwest Energy.

S&P/ASX All Technology Index: GICS Changes, Market Consultation & Potential Index Changes

Global Industry Classification Standard (GICS) structure updates will lead to changes to the S&P/ASX All Technology Index at the March rebalance.
To better reflect the GICS changes and reduce constituent turnover, S&P DJI has proposed changes to the index universe for constituent selection.
We expect there will be 4 deletions from the index in March, but that could increase to 10 if the changes are not adopted.

Weekly Deals Digest (26 Dec) – JAFCO, Nippon Steel Trading, Conexio, Origin Energy, Warrego

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 – Very quiet week as VinFast (1905332D VN) continues to pre-market a US$1bn IPO.
Event-Driven developments Conexio Corp (9422 JP), Jafco Co Ltd (8595 JP), Nippon Steel Trading Corporation (9810 JP), Origin Energy (ORG AU), OZ Minerals Ltd (OZL AU), Warrego Energy (WGO AU).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 25

Daily Brief Event-Driven: EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades
Last Week in Event SPACE: Oz Minerals, Warrego, JAFCO, Swire Pac’s A&Bs, Korean Mandatory Offers
Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI
Estimating Fund Size Tracking KOSPI MID Cap Index

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

Last Week in Event SPACE: Oz Minerals, Warrego, JAFCO, Swire Pac’s A&Bs, Korean Mandatory Offers

For OZ Minerals (OZL AU), look elsewhere unless you are VERY bullish copper. But if you are VERY bullish copper, buy copper options rather than the embedded option in OZL.
Game on as Warrego Energy (WGO AU) shareholders weigh the pros and cons of Hancock’s all-cash Offer against Strike Energy (STX AU)‘s “superior” scrip proposal.
Jafco Co Ltd (8595 JP) succumbed to greenmail and tried to boost the price to explain the exit they were going to give Murakami-san. It didn’t work.

Index Rebalance & ETF Flow Recap: SET50, Stock Connect, Kanzhun, Futu, AMFI

The announcement of the changes to the Stock Exchange of Thailand SET 50 Index was made on 20 December and will be implemented at the close on 30 December.
There are a lot of review cutoffs for different indices in the coming week with announcements in January and February.
There were big inflows to Vanguard FTSE Emerging Markets ETF (VWO US) and big outflows from IShares Core MSCI Asia Ex Japan ETF (3010 HK) during the week.

Estimating Fund Size Tracking KOSPI MID Cap Index

About ₩3T trillion is presumed to flow from NPS to KOSPI MID. Then, ₩0.8T from local publicly raised funds should be sitting in KOSPI MID. Adding these two alone amounts ₩4T.
Of course, this is ACTIVE. In other words, they do not need to proceed with universe changes due to rebalancing at the same pace as ETFs.
Nevertheless, we should note that the domestic fund industry does not allow a large gap with BM. Hence, at least ₩4T of funds follow KOSPI MID quite tightly.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 23

Daily Brief Event-Driven: BHP & OZL Enter Scheme Implementation Deed – Timing and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

BHP & OZL Enter Scheme Implementation Deed – Timing, Risk, & Index Effects
Swire Now Buying Back B Shares Only
Nojima (7419) Launches Buyout of Conexio (9422)
JAFCO (8595 JP): Murakami Gets His Way with a JPY2,500 Tender Offer
Futu (FUTU US / 3588 HK): Dual Primary Listing, Stock Connect & Potential HSCI/HSTECH Inclusion
Conexio Corporation (9422 JP) JPY1,911 Tender Offer from Nojima
OZ Minerals (OZL AU)’s SID with BHP at A$28.25
Revised CGT/SST in Korea: Intense Selling Flow on T-1 Ex-Date Will Be Intact Until 2024
MergerTalk:Why Black Knight May Be As Safe As Houses Even If Regulators Stop Its Merger With ICE
EQD | HSI Index:-Chinese Equities Have Held up into Year End and We Revisit the December Call Ratio

BHP & OZL Enter Scheme Implementation Deed – Timing, Risk, & Index Effects

This morning, BHP Group Ltd (BHP AU) and OZ Minerals Ltd (OZL AU) announced they had entered into a Scheme Implementation Deed at A$28.25/share (5wks after I said 3-6 weeks).
All terms are confirmed and there may be a fully-franked dividend up to A$1.75/share which would reduce terms to A$26.50. The OZL Directors unanimously recommend.
Anti-Trust approvals are needed in Brazil & Vietnam, other standard conditions, and the OZL Scheme Meeting should be late March early April. I expect this is done.

Swire Now Buying Back B Shares Only

In August this year, Swire Pacific started a buyback programme for up to HK$4.0 billion worth of their shares (Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK)).
The shares went up. And B briefly outperformed A, but since then, the B/A ratio has fallen and my impression was Swire may have been misinterpreting the buyback rules.
Swire had been buying both every day. But they’ve been Buying Bs but no As for the last ten days in a row. This begs a few questions.

Nojima (7419) Launches Buyout of Conexio (9422)

Nojima Corp (7419 JP) is buying out Conexio Corp (9422 JP) majority owner Itochu Corp (8001 JP) along with minorities. At a 59% premium, it looks good.
However, in terms of normalised EV/EBITDA or EV/FCF multiple, this is not expensive.
And while the major seller/target and friendlies are oh so close, the register is more interesting than the yuho top 10 shareholder list suggests.

JAFCO (8595 JP): Murakami Gets His Way with a JPY2,500 Tender Offer

Jafco Co Ltd (8595 JP) and Murakami have reached an agreement on a revised tender offer for 16.8 million shares (23.60% of outstanding shares) at JPY2,500 per share.
The revised tender offer’s primary purpose remains to facilitate Murakami to tender his 19.53% shareholding at the expense of other shareholders and the misallocation of JPY42 billion (tender cost).
The justification for the transaction is weak as most of the benefits could have been achieved without it. This calls into question the Board’s ability to enhance value.

Futu (FUTU US / 3588 HK): Dual Primary Listing, Stock Connect & Potential HSCI/HSTECH Inclusion

Futu Holdings Ltd (FUTU US) will Dual Primary list on the HKEX (388 HK) by Way of Introduction and the stock is expected to start trading on 30 December.
Following the changes to the handling of Dual-Primary-listed companies, Futu Holdings Ltd (FUTU US) should be added to the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
Futu Holdings Ltd (FUTU US) should also be added to the HSCI at the March rebalance and should be added to Southbound Stock Connect late July/ early August.

Conexio Corporation (9422 JP) JPY1,911 Tender Offer from Nojima

Conexio Corp (9422 JP) has recommended Nojima Corp (7419 JP)’s tender offer of JPY1,911 per share, an 59.1% premium to the undisturbed price (22 December).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
The tender offer was set in motion due to Itochu Corp (8001 JP)’s desire to exit. Itochu tendering its 60.34% stake and an attractive offer, suggests a done deal.

OZ Minerals (OZL AU)’s SID with BHP at A$28.25

OZ Minerals Ltd (OZL AU) has entered into a SID with BHP Group Ltd (BHP AU) at A$28.25 per share, a 49.3% premium to the undisturbed price (5 August).
The offer price is attractive. The key conditions are shareholder and regulatory (Brazil and Vietnam) approvals. The scheme meeting is in late March/early April 2023.
The key risk is the rise in copper prices. At last close and for the end-April payment, the gross and annualised spread to the offer is 1.6% and 4.8%, respectively.

Revised CGT/SST in Korea: Intense Selling Flow on T-1 Ex-Date Will Be Intact Until 2024

The all-inclusive CGT will be implemented in 2025. The current partial capital gains tax will be maintained until 2024. And the STT will drop from 0.23% to 0.15% in 2024.
The critical cause of an arb opportunity on ex-date price correction+dividend yield has been the yearend selling flow on T-1 ex-date for the purpose of tax avoidance by majority shareholders.
So, from this year to 2024, we should keep an eye on this arbitrage opportunity, which will continue to arise.

MergerTalk:Why Black Knight May Be As Safe As Houses Even If Regulators Stop Its Merger With ICE

By Robert Sassoon

We think that a ~40% spread overstates the risk of this deal not moving to completion.
The horizontal integration aspects of this transaction can be remedied, but this is a largely vertical merger transaction which regulators may struggle to prove will lead to monopolistic behavior.
Even if the ICE merger is ultimately blocked, BKI has other supporting factors that could drive upside – an attractive valuation and a potential revival of interest from other parties

EQD | HSI Index:-Chinese Equities Have Held up into Year End and We Revisit the December Call Ratio

By Simon Harris

Chinese equities have continued to outperform versus other global markets
The HSI Index 200dma has proved to be a barrier to the upside
We evaluate the call ratio we suggested in November and recommend action

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 22

Daily Brief Event-Driven: JAFCO (8595) Succumbs to Even Worse Greenmail – SPECTACULARLY BAD Governance and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JAFCO (8595) Succumbs to Even Worse Greenmail – SPECTACULARLY BAD Governance
Appier (4180) – Down But Not Out; Shareholder Structure Still The Biggest Risk
Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium
ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium
Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel
Warrego Energy: Reinhart Disses Strike’s “Superior” Offer
Mandatory Offer Arrives in Korea: Detailed Rules & Trading Ramifications
Thailand SET 50 Dec 22 Rebal: Good Hit Rate, Successful Pre-Event Trade, Unwind Now
AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations
TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

JAFCO (8595) Succumbs to Even Worse Greenmail – SPECTACULARLY BAD Governance

Jafco Co Ltd (8595 JP) was the target of activist Murakami-san in August 2022. They threatened a poison pill. Murakami-san sold, then bought to 19.5%. They negotiated. He won.
His result excluded others. The market did not take it well. Murakami-san rejected taking a 1% hit to original terms (vs reference NAV). JAFCO went back to the drawing board.
Then submitted to greenmail at a higher price. The first buyback was agreed at ¥2,500 vs ¥2,651 NAV. The new one? ¥2,730-2,840 vs ¥2,513 NAV. Inexplicable – Spectacularly Bad Governance.

Appier (4180) – Down But Not Out; Shareholder Structure Still The Biggest Risk

Appier Group (4180 JP) had been among our picks for TSE Prime promotion and we had recommended positioning for it. That worked. On 8 Dec they announced the promotion.
The company is now part of TSE Prime which means a TOPIX Inclusion at end-January and an upweight in April. More than 20% of TSE float to buy by end-April.
Share price performance has not kept pace with potential, and yesterday’s BOJ decision saw a flurry of volume selling (bailing). Pre-IPO holder overhang may be the biggest “risk” here.

Nippon Steel & Mitsui & Co to Buy Out Nippon Steel Trading (9810) At 87% Premium

Nippon Steel Corporation (5401 JP) and Mitsui & Co Ltd (8031 JP) today announced they would buy out Nippon Steel & Sumikin Bussan (9810 JP), their steel-trading subsidiary.
The shares trade near an all-time high, but Nippon Steel is paying an 87% premium. (Interestingly, the high end of the DCF ranges suggest a 280% premium)
On fundamentals, this could have been higher, but given the shareholder structure, I expect it is a done deal as-is. The Tender Offer should start in February 2023.

ENEOS to Buy Out Tatsuta Electric (5809) At 74% Premium

ENEOS Holdings (5020 JP) and subsidiary JX Nippon Mining & Metals Corporation announced today it would buy out minorities in miner and refiner Tatsuta Elec Wire & Cable (5809 JP).
The Tender Offer comes at a 74% premium for their 37% sub. 5% off a 2yr high, 10% off a 20-year high. This is likely to be a “done deal”.
JX probably starts with ~55% in the bag out of the 66.7% minimum. But the tender doesn’t start for ~ 6 months. Separately, importantly, there is a precedent here.

Nippon Steel Trading’s (9810 JP) JPY9,300 Tender Offer from Nippon Steel

Nippon Steel & Sumikin Bussa (9810 JP) has recommended Nippon Steel Corporation (5401 JP)’s tender at JPY9,300 per share, an 87.5% premium to the undisturbed price and an all-time high.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
Mitsui & Co Ltd (8031 JP) will retain its 19.93% stake and together with Nippon Steel account for 55.01% of outstanding shares. Tender starts in late-February subject to antitrust clearances.

Warrego Energy: Reinhart Disses Strike’s “Superior” Offer

After the Gina Reinhart-backed Hancock bumped its Offer for Warrego Energy (WGO AU) to A$0.28/share, in cash, Beach Energy (BPT AU) declined to match the revised Offer.
With Hancock seemingly in the driver’s seat, Strike Energy (STX AU), with 19.9% of shares out, proposed a one-for-one scrip Offer, with an indicative price of A$0.335/share.
Hancock has responded that its Offer provides certainty, with cash, whereas Strike’s proposal does not. Now 15.84% of the register has come out in support of Hancock’s Offer.

Mandatory Offer Arrives in Korea: Detailed Rules & Trading Ramifications

The target is those who purchase 25% or more of the shares of a listed company and become the largest shareholder with management rights.
The minimum volume of a mandatory offer is [(50% of total shares + 1 share) – the management right purchase volume].
We will be exposed to pro-rata risk, so it will be essential to figure out the nature and propensity of the shareholder composition to estimate the tendering rate in advance.

Thailand SET 50 Dec 22 Rebal: Good Hit Rate, Successful Pre-Event Trade, Unwind Now

The index changes for the Thailand SET Index (SET INDEX) for the December 2022 Rebalance were announced yesterday (20th December 2022) after the close.
There will be four ADDs/DELs for the SET 50 index.
In this insight, we take a closer look at our expectations for index flows and potential trading ideas.

AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations

Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.
One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.
Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.

TIGER (WISE) Secondary Battery ETF Rebalancing in January: Names to Watch

The key to this rebalancing is the inclusion of WCP, which satisfies the requirements of minimum listing period and secondary battery sales amount.
As a hedge for the LONG WCP position, we can use Soulbrain and Solus Advanced, whose passive outflow is relatively high among those of a similar size to WCP.
Among large caps, we should pay attention to L&F, Posco Chemical, and Iljin Materials. However, we should be cautious about approaching them as an active trading target.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 21

Daily Brief Event-Driven: KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR
SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out
Northbound Stock Connect Expansion: Potential Changes in 2023
Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO
S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore
KOSPI 200 Rebalancing Early Preview: Few Names Stand Out
Fengxiang (9977 HK)’s Share Transfer to PAG Complete, Unconditional MGO
Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications
Selected European Holdcos and DLC: November/Mid-December‘22 Report

KLINE (9107) CEO Comes Out Swinging – More LPG Carriers and More Shareholder Returns THIS YEAR

The Nikkei reported this AM that Kawasaki Kisen Kaisha (9107 JP) CEO was considering increasing shareholder returns this fiscal year. It already has a juicy div and a ¥100bn buyback.
The company announced its buyback, and an agreement by two holders of 39% to sell in a ToSTNeT-3 buy, then started buying in the market. Results are impactful.
The shares are up today on this news, though they gave some back after the BOJ news. The outlook for more share price impact is not bad.

SET50 Index Rebalance: CENTEL, COM7, DELTA, RATCH Added; BLA, IRPC, KCE, SAWAD Out

Central Plaza Hotel, Com7 PCL, Delta Electronics Thai and Ratch Group will replace Bangkok Life Assurance, IRPC PCL, KCE Electronics PCL and Srisawad Power in the SET 50 Index.
Passive trackers will need to buy between 2-4 days of ADV on the adds while selling between 0.6-3 days of ADV on the deletes.
The adds have significantly outperformed the deletes over the last few months. We’d use any big moves over the next couple of days to trim positions.

Northbound Stock Connect Expansion: Potential Changes in 2023

On Monday, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Northbound Stock Connect, the eligible universe has been widely expanded to include constituents of the SSE A Share Index and the SZSE Composite Index.
There are 1,112 stocks that join the eligible universe, and 938 stocks currently meet the criteria for Northbound Stock Connect inclusion. There are implications for inclusion in global indices.

Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO

A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions.
This is done. The timing for approving the SPA was bang-on with my expectation.

S&P/ASX Quiddity Leaderboard Mar 23: Index Changes Galore

In this insight, we take a look at the potential index changes for S&P ASX 300, 200, 100, 50, and 20 in the run up to the March 2023 Rebalance.
Pendal Group (PDL AU)‘s deletion is expected in early-January 2023 and this could trigger an intra-review addition to the ASX 200 index.
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.

KOSPI 200 Rebalancing Early Preview: Few Names Stand Out

One name is screened to newly join the index. That is Kum Yang (001570 KS). With a YTD performance of over 400%, it is currently in very safe territory.
Two constituents stand out as likely deletes at this point: Zinus (013890 KS) and Hwaseung Enterprise (241590 KS). The market cap gap with the next ones in line isn’t small.
Kum Yang’s passive impact is substantially low due to the recent surge in TV. But if it moves sideways and TV stabilizes downward, we should build preemptive flow trade setups.

Fengxiang (9977 HK)’s Share Transfer to PAG Complete, Unconditional MGO

PAG completed the auction procedures for the acquisition of a 70.92% stake in Shandong Fengxiang (9977 HK). This will trigger an unconditional MGO at HK$1.5132 per H Share.
As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
The composite document is to be despatched on or before 28 December. At last close and for an end-of-January payment, the gross and annualised spread is 5.1% and 65.9%, respectively.

Korea FSC: Official Mandate of Appraisal Rights in Split-Offs & Trading Ramifications

The exercise price is the arithmetic average of weighted average prices for the past two months, the past month, and the past week from the day before the board resolution.
Considering the governance structure of most local companies, a split-off will still be more likely to be preferred than a spin-off. Split-offs will emerge despite the mandate of appraisal rights.
We should look into staggering spread openings, with the pricing done on a two-month window, as a downward price revision will likely intensify toward the announcement with mandatory appraisal rights.

Selected European Holdcos and DLC: November/Mid-December‘22 Report

By Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos have showed a mixed performance during November and the first half of December, with the same number of spreads widening and tightening.
Discounts to NAV (31 October): C.F.Alba, 49.5%; GBL, 35.7%; Heineken Holding, 18%; Industrivärden C, 13.5%; Investor B, 15.5%; Porsche Automobile Holding 40.4%. The spread of Rio Tinto DLC widened to %.
Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: GBL, Rio Tinto (DLC), CF Alba (long position).

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Dec 20

Daily Brief Event-Driven: Fujitec (6406) Activism Levelling Up – A Board Spill to Come? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Fujitec (6406) Activism Levelling Up – A Board Spill to Come?
Boss Zhipin (2076 HK | BZ US) HK Dual Primary Listing on 22 Dec – Index, Southbound, and SPECIAL
Southbound Stock Connect Expansion: Potential Adds in 2023
IPet Holdings (7339 JP) – Tender Offer Extended But No Biggie
Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion
Warrego (WGO AU): Strike Energy (STX AU) Strikes with a Revised Offer
SARIA/Devro: Agreed Offer
GoTo IPO Lockup Expiry Follow-Up – Has Corrected but Has Traded Relatively Little Volume

Fujitec (6406) Activism Levelling Up – A Board Spill to Come?

Two years ago, I wrote about the history of activist attention on what was then the 8th largest elevator maker in the world Fujitec Co Ltd (6406 JP).
In Activist Pressure FINALLY Works on Fujitec (6406)- Going Up? (Albeit Slowly) I discussed what were still nascent efforts by Oasis to trigger change at the top.
On 30 November 2022, Oasis – which officially went above 5% only this past March but on 30 November reported 16.52% – called an EGM. It’s worth a look.

Boss Zhipin (2076 HK | BZ US) HK Dual Primary Listing on 22 Dec – Index, Southbound, and SPECIAL

Kanzhun (BZ US) a.k.a. has been listed in the US since about the same time as DiDi Global (DIDI US), and it had similar but minor tech issues pre-listing.
On Friday 16 December, the company announced it would conduct a Listing by Introduction in Hong Kong under the ticker Zhipin (2076 HK), listing on 22 Dec.
That creates an interesting launch supply/demand dynamic, likely HS Tech inclusion in March 2023, and then Southbound much later in 2023.

Southbound Stock Connect Expansion: Potential Adds in 2023

Last evening, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
For Southbound Stock Connect, eligible foreign companies primary-listed in Hong Kong will become eligible. That could mean 5 additions to Stock Connect.
Additionally, Southbound access via Shanghai Stock Connect will be expanded to being it in alignment with Shenzhen Stock Connect. That could see 131 stocks added to Shanghai Stock Connect.

IPet Holdings (7339 JP) – Tender Offer Extended But No Biggie

On 8 November, major Japanese life insurer Dai Ichi Life Insurance (8750 JP) announced it would buy out leading pet insurer ipet Holdings (7339 JP). Yes, you read that right.
Japanese listed VC/PE firm and incubator Dream Incubator Inc (4310 JP) owns 55% and agreed to tender. Tender success is dependent on getting 66.7%.
Today the buyer extended for 10 days because it had received approval under Article 271-22 Para 1 of the Insurance Business Act, triggering a requirement to refile/extend.

Straits Times Index Quiddity Leaderboard Mar 23: SMM Addition Could Cause SATS or KDCREIT Deletion

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
The Sembcorp Marine (SMM SP) – Keppel Corp (KEP SP) deal seems likely to complete in 1Q 2023.
Below is a look at the potential index flow consequences of this deal and other potential index changes between now and the March 2023 Rebalance.

Warrego (WGO AU): Strike Energy (STX AU) Strikes with a Revised Offer