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Event-Driven Archives | Page 135 of 187 | Smartkarma

Feb 23
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Event-Driven: Mapletree Commercial Trust, Razer Inc, LG Energy Solution, Noritsu Koki, JMDC Inc, G J Steel PCL, Meritz Fire & Marine Insurance, Apollo Tourism & Leisure Ltd and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • SIAS Also Questions MCT/MNACT Merger, Countering/Supporting Quarz
  • Razer Inc (1337 HK): Pre-Conditions Done
  • KOSPI200 Index Rebalance (March): LG Energy IN; Dongwon F&B Out
  • Noritsu Koki (7744) – PAAAAYDAAAAY!
  • JMDC (4483 JP) – A Change of Ownership, and Future Path
  • GJ Steel: Nippon Steel’s Offer Opens On The 23 February
  • KOSPI 200: LG Energy Solution Inclusion and Dongwon F&B Exclusion
  • Razer’s Offer Spread Risk/Reward – Pre-Conditions Fulfilled
  • Meritz Financial & Meritz Fire Buybacks: Flow Estimations with MSCI/K200 Inclusion Factored
  • Apollo – THL: Scheme Booklet Out, Meeting on 20th April 2022

SIAS Also Questions MCT/MNACT Merger, Countering/Supporting Quarz

By Travis Lundy

  • Quarz wrote an open letter questioning the Mapletree North Asia Commercial Trust (MAGIC SP) deal with MCT for MNACT shareholders, discussed here. They wrote another letter last Thursday.
  • Now, Securities Investors Association (Singapore) SIAS has come out with an open letter to MCT management questioning the deal. 
  • There are now activists on both sides questioning this deal. That is not necessarily a bad thing. 

Razer Inc (1337 HK): Pre-Conditions Done

By David Blennerhassett

  • Razer Inc (1337 HK) has announced the remaining pre-conditions have now been fulfilled.
  • The next step is the Scheme vote, which may be held in early May, with possible completion in early June.
  • Despite SAMR approval last month, this transaction continues to trade wide to terms on concerns retail investors will disrupt the headcount test.

KOSPI200 Index Rebalance (March): LG Energy IN; Dongwon F&B Out

By Brian Freitas

Noritsu Koki (7744) – PAAAAYDAAAAY!

By Travis Lundy

  • Noritsu Koki (7744 JP) just sold two-thirds of its stake in subsidiary JMDC Inc (4483 JP) to Omron Corp (6645 JP) for ¥112bn – pretty good for a ¥61bn marketcap.
  • This is the payday for those who have been long NK as a proxy for JMDC and possibly short JMDC against it. Now the shape of the company is different.
  • A closer look at the pro-forma financial profile is warranted. It’s a lot of money. BUT… if you look today and buy today you do NOT get the special div!

JMDC (4483 JP) – A Change of Ownership, and Future Path

By Travis Lundy

  • JMDC Inc (4483 JP) or formerly Japan Medical Device Corp was incubated then IPOed by Noritsu Koki (7744 JP). Noritsu Koki is now selling two-thirds of its stake to OMRON. 
  • OMRON’s heft should help JMDC grow better with larger clients. That’s the bet OMRON is making too.
  • The sale by Noritsu Koki reduces potential overhang from a share sale which heretofore had been a possibility. 

GJ Steel: Nippon Steel’s Offer Opens On The 23 February

By David Blennerhassett

  • Both G J Steel PCL (GJS TB) and G Steel (GSTEL TB) have announced Form 247-4, the Notification on Receipt of the Tender Offer for Securities, from Nippon Steel.
  • As expected, the Offer period is for 25 days, between 23 February and 29 March. The payment is the 31 March. 
  • GJS is trading tight to terms. The Offer is unconditional.

KOSPI 200: LG Energy Solution Inclusion and Dongwon F&B Exclusion

By Douglas Kim

  • On 22 February, the KRX announced that LG Energy Solution (373220 KS) will be included in numerous local indices including KOSPI 200, KOSPI 100, and KRX 100 effective 3/11/2022.
  • This has been widely expected by the market. Due to the inclusion in KOSPI 200, investors will be able to short LG Energy Solution starting 11 March. 
  • Once Dongwon F&B is excluded from the KOSPI 200 index, this could be a key buying opportunity on this stock, given the company’s solid fundamentals. 

Razer’s Offer Spread Risk/Reward – Pre-Conditions Fulfilled

By Arun George

  • Razer Inc (1337 HK) announced that all the pre-conditions were fulfilled. The scheme document will be released after the FY21 results (scheduled on or before 17 March).  
  • The headcount test is a key challenge. While the deal’s success benefits from the de-rating of technology shares, it is also undermined by Logitech International SA (LOGN SW)’s strong 3Q. 
  • The shares are broadly fairly valued at last close both on a SoTP and deal probability basis. We would be buyers up to HK$2.5 per share (implies 65% deal probability).

Meritz Financial & Meritz Fire Buybacks: Flow Estimations with MSCI/K200 Inclusion Factored

By Sanghyun Park

  • Meritz Financial Group and Meritz Fire once again announced stock buybacks worth 100 billion won each. Like last time, this will likely be completed within 2-3 months.
  • This buyback size is not small: 1.86% and 1.95% of SO. Assuming that the buyback completes with equal volume for 60 trading days, it is 0.08x and 0.06x ADTVs, respectively.
  • Of particular note is Meritz Fire. It is because the KOSPI 200 inclusion is waiting even after March 1. Approximately ₩0.10T of passive money will flow in.

Apollo – THL: Scheme Booklet Out, Meeting on 20th April 2022

By Janaghan Jeyakumar, CFA

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Feb 22
0

Event-Driven: SK Square, CK Infrastructure Holdings, Postal Savings Bank Of Chi-A, Nice Holdings, China Development Financial, China Overseas Land & Investment, Siemens Gamesa Renewable Energy, S.A., Caregen Co Ltd, Jyske Bank A/S, SK Telecom and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • StubWorld: SK Square And LG Chem’s Unjustified NAV Discounts
  • FTSE GEIS March 2022 SAIR: Share/Float Changes
  • FTSE China A50 Index Rebalance Preview (March 2022): Big Impact of FOL Changes
  • Buybacks in Progress at KOSPI/KOSDAQ: Stocks to Watch From a Trading Perspective
  • FTSE TWSE Taiwan 50 Index Rebalance Preview: China Dev Fin (2883) Should Replace Pegatron (4938)
  • FTSE China 50 Index Rebalance Preview (March): Nongfu, COLI, XPeng Potential Adds
  • Siemens Energy/Siemens Gamesa: Takeover Conundrum
  • KOSDAQ 150 Special Change: Momentum Trading on Caregen Right Before Inclusion
  • STOXX Europe Indices: Quiddity Leaderboard for March 2022 Rebalance (Final)
  • KOSPI/KOSDAQ Quarterly Dividend Stocks: DPS & Yield Estimations

StubWorld: SK Square And LG Chem’s Unjustified NAV Discounts

By David Blennerhassett

  • SK Square (402340 KS) was inexpensive after its November listing. Now it’s even cheaper. 
  • Preceding my comments on SK Square – and LG Chem Ltd (051910 KS) – 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%.

FTSE GEIS March 2022 SAIR: Share/Float Changes

By Brian Freitas

  • FTSE announced the changes to the All-World/All-Cap indices post market close on Friday. There were changes to the number of shares and free floats for quite a few stocks too.
  • There are a few stocks where the passive flow and impact is large and quite a few of these stocks have moved today. They could move more till implementation.
  • At the close on 4 March, HSI trackers will sell CK Infrastructure Holdings (1038 HK) due to a float reduction. Then the FTSE trackers will sell on 18 March.

FTSE China A50 Index Rebalance Preview (March 2022): Big Impact of FOL Changes

By Brian Freitas

  • Todays closing prices will be used to determine the inclusions and exclusions at the March rebalance. We see PSBC and Bank of Ningbo replacing EVE Energy and Aier Eye.
  • There will also be changes to the investability weight of the stocks following the Ground Rule change that will cap stocks at their Foreign Ownership Limits.
  • Change to the index constituents and FOL changes will result in a one-way turnover estimated at 16.64% and will result in a one-way trade of CNY 9,322m.

Buybacks in Progress at KOSPI/KOSDAQ: Stocks to Watch From a Trading Perspective

By Sanghyun Park

  • I filtered 42 buybacks currently in progress at KOSPI/KOSDAQ, which have a market cap of over 200 billion won.
  • Of these, 15 buybacks have their buyback volume exceeding 1% compared to SO, and buyback completion % is currently below 50% at present.
  • Among these, we should pay attention to those whose buybacks are being completed relatively early. These names also show a good correlation with stock prices.

FTSE TWSE Taiwan 50 Index Rebalance Preview: China Dev Fin (2883) Should Replace Pegatron (4938)

By Brian Freitas

FTSE China 50 Index Rebalance Preview (March): Nongfu, COLI, XPeng Potential Adds

By Brian Freitas

  • We expect Nongfu Spring (9633), China Overseas Land & Investment (688) and XPeng (9868) to replace Geely Auto (175), China Tower (788) and JD Health (6618) in the index.
  • There will also be some big capping changes that will result in one-way turnover estimated at 9.2% and in a one-way trade of HK$4,910m.
  • Nongfu Spring (9633 HK) is a triple inclusion – HSI at the close on 4 March, FTSE All-World at the close on 18 March and possibly the FTSE China50 too.

Siemens Energy/Siemens Gamesa: Takeover Conundrum

By Jesus Rodriguez Aguilar

  • Investors are pressing Siemens Energy (67% owner of Siemens Gamesa Renewable Energy, S.A. (SGRE SM))  to act in the wake of a downwards sliding share price.
  • DFC valuation (WACC 7.5%, 5y EV/EBITDA exit multiple of 5.5x, which conservatively implies no growth rate, which I consider adequate in a low visibility environment) gives a fair value of €16.4/share. 
  • An exclusion bid could be on the cards, and the premium need not be high, 20% could be enough, but that would still amount to c. €3.7 billion.

KOSDAQ 150 Special Change: Momentum Trading on Caregen Right Before Inclusion

By Sanghyun Park

  • KOSDAQ 150 will replace Osstem with Caregen at the close on March 16.
  • Even if we conservatively assume KOSPI 150’s direct rebalancing trading funds at ₩1.5T, Caregen will likely face a passive inflow of 4.76x ADTV.
  • So, it seems appropriate to approach this event as a short-term momentum trading with a small volume on Caregen right before the inclusion effective date.

STOXX Europe Indices: Quiddity Leaderboard for March 2022 Rebalance (Final)

By Janaghan Jeyakumar, CFA

  • The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
  • The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
  • Below is a look at the Potential Adds and Deletes for the STOXX Europe 600 Index and the EURO STOXX Index in the upcoming index review in March 2022.

KOSPI/KOSDAQ Quarterly Dividend Stocks: DPS & Yield Estimations

By Sanghyun Park

  • There are 71 interim dividend stocks on KOSPI and KOSDAQ. Of these, 9 stocks pay quarterly dividends: 7 KOSPI and 2 KOSDAQ.
  • All except POSCO and Shinhan Financial employ an equal quarterly split. As expected, SKT offers the highest quarterly dividend yield. At the last closing price, it is 1.55%.
  • Since the absolute yield level is tight, it may not be appropriate to consider a dividend arb play, except for SKT. Nevertheless, it may act as short-term price momentum.

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Feb 21
0

Event-Driven: HomeCo Daily Needs REIT, AGL Energy Ltd and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • ASX200 Index Rebalance: HDN AU Inclusion Is a Matter of Time (Or Timing)
  • Brookfield/Cannon-Brookes Lowball Bid for AGL (AGL AU) Likely to Get the Kibosh.

ASX200 Index Rebalance: HDN AU Inclusion Is a Matter of Time (Or Timing)

By Brian Freitas

  • Aventus Group (AVN AU) received the ATO tax ruling on 18 February. This creates some uncertainty around the timing of the HomeCo Daily Needs REIT inclusion in the ASX200 Index.
  • Given the ‘latest available shares in issue’ are used, we think there is a better than even chance of the stock being included in the index at the March rebalance.
  • If HomeCo Daily Needs REIT (HDN AU) is not included in March, then it could replace Crown Resorts in May. Else, the stock will be added at the June rebalance.

Brookfield/Cannon-Brookes Lowball Bid for AGL (AGL AU) Likely to Get the Kibosh.

By Travis Lundy

  • AFR revealed late Saturday that Brookfield and Atlassian billionaire and recent green warrior Mike Cannon-Brookes had lobbed an A$8bn (4.7% premium) bid for AGL ahead of its vote to split.
  • The bid is too low, and would be fraught with competition issues, but it begs the question of whether the company would be better un-split and made greener, faster.
  • Other megacaps out there have expressed interest in owning Australian integrated utilities, and there are plans on the drawing board which would allow greening if more firming capacity investment arrived.

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Feb 20
0

Event-Driven: Orient Overseas International, Osstem Implant, HomeCo Daily Needs REIT, Emtek, Nongfu Spring, Hyundai Heavy Industries, SBI Sumishin Net Bank, Crown Resorts and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • HSCI Index Rebalance: 29 Adds, 12 Deletes & Changes to Stock Connect
  • KOSDAQ150 Ad Hoc Index Rebalance: Osstem Implant OUT; Caregen IN
  • The Weird Ways of the Aventus/HomeCo Daily Needs Index Rebalances (ASX200)
  • FTSE GEIS March 2022 SAIR: Changes, Switches & Same-Way Index Flow
  • Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown
  • KOSPI Lockup Releases: Details & Trading Approaches
  • Last Week in Event SPACE: SBI Sumishin Net Bank, Western Areas, Keisei Electric, Crown Resorts
  • KOSDAQ150: Details of Osstem Implant Exclusion & Caregen Inclusion and Case Study of SillaJen
  • Asia-Pac Weekly Risk Arb Summary: Crown Resorts, GJ Steel, Western Areas, Aussie Pharma, DTAC/True

HSCI Index Rebalance: 29 Adds, 12 Deletes & Changes to Stock Connect

By Brian Freitas

  • There are 29 inclusions and 12 deletions for the HSCI at the March rebalance. 26 of the inclusions will be added to Connect while all deletes will leave Stock Connect.
  • Some of the Stock Connect deletions have a lot of mainland holdings and there could unwinding of some of the positions ahead of becoming sell-only on the link.
  • Orient Overseas International, United Energy, Cloud Village and Gcl Poly Energy Holdings Limited could also move higher over the next couple of weeks before the stocks enter Stock Connect.

KOSDAQ150 Ad Hoc Index Rebalance: Osstem Implant OUT; Caregen IN

By Brian Freitas

The Weird Ways of the Aventus/HomeCo Daily Needs Index Rebalances (ASX200)

By Travis Lundy

  • When the Aventus Group (AVN AU) / HomeCo Daily Needs REIT (HDN AU) Scheme was announced four months ago, it looked to complete in late January or very early February. 
  • Because of an ATO staff shortage, the Second Court Hearing was delayed by nearly three weeks, pushing implementation back. The calculation of S&P/ASX index rankings may not be as expected.
  • Most or all of the AVN downweight is covered by a HDN upweight next Wednesday but whither ASX200 in March?

FTSE GEIS March 2022 SAIR: Changes, Switches & Same-Way Index Flow

By Brian Freitas

  • FTSE announced the results of the March SAIR for the FTSE All-World/All-Cap indices on Friday. There are 337 changes (adds, deletes, migrations across AW/AC) across Asia-Pac.
  • Nongfu Spring (9633 HK) will have the largest inflows and is a high probability inclusion to the FTSE China 50 index. Its inclusion in the HSI INDEX was announced Friday.
  • FTSE will switch index membership from the US ADRs to the HK listings for ZTO Express, GDS Holdings, Baidu and Bilibili. This should result in larger CCASS holdings.

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, S&P/ASX, SET50, LIC, SBI Sumishin, Crown

By Brian Freitas

  • Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.
  • An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an ‘Administrative Issue’. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.
  • Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.

KOSPI Lockup Releases: Details & Trading Approaches

By Sanghyun Park

  • The stocks worth our attention are mostly IPO institutional lockup releases. In particular, LG Energy, Iljin HySolus, and Hyundai Heavy Industries will be of the most interest.
  • Most of these have undergone significant price corrections. Nevertheless, current prices significantly outperform the offering prices. So, the incentives for IPO institutional investors to realize profits should be pretty intense.
  • Kakao Pay’s volume isn’t that much. Even with a heavier release last time, it didn’t meet our expectations. Probably it is because it is bottoming out at the current level.

Last Week in Event SPACE: SBI Sumishin Net Bank, Western Areas, Keisei Electric, Crown Resorts

By David Blennerhassett

KOSDAQ150: Details of Osstem Implant Exclusion & Caregen Inclusion and Case Study of SillaJen

By Douglas Kim

  • On 18 February, the KRX announced that the deletion of Osstem Implant (048260 KS) and the inclusion of Caregen Co Ltd (214370 KS) in KOSDAQ150.
  • The South Korean Presidential election will be held on 9 March and the KRX is not likely to make sensitive decisions such as the delisting of Osstem Implant in March.
  • We continue to like the pair trade (long KOSPI200 and short KOSDAQ150) which has worked out well in the past month and we expect continued gains on this trade.

Asia-Pac Weekly Risk Arb Summary: Crown Resorts, GJ Steel, Western Areas, Aussie Pharma, DTAC/True

By David Blennerhassett

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Feb 19
0

Event-Driven: HomeCo Daily Needs REIT, Hock Seng Lee, Western Areas, KB Financial, Nongfu Spring, Xinyi Solar Holdings, SenseTime Group and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • S&P/​​ASX Indices: Quiddity Leaderboard for March 2022 Rebalance (Final)
  • Hock Seng Lee (HSL MK): Unconditional Offer
  • Investors Caught Out As Twiggy Backs IGO’s Offer For Western Areas
  • Korean Companies Announcing Share Cancellations Are Outperforming the Market
  • HSI Index Rebalance: Nongfu Spring & Lenovo IN; Still Tiptoeing Towards 80 Index Members
  • HSCEI Index Rebalance: Another Evergrande Stock Is Deleted; Xinyi Solar IN
  • Hang Seng TECH Index Rebalance: Forced Changes Lead to BIG Turnover

S&P/​​ASX Indices: Quiddity Leaderboard for March 2022 Rebalance (Final)

By Janaghan Jeyakumar, CFA

  • The S&P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies. 
  • In March 2022, Index rebalance events will take place for the S&P/ASX capitalization-weighted indices including ASX 300, ASX 200, ASX 100, ASX 50, and ASX 20. 
  • In this insight, we take a look at the leading candidates who could become Adds/Deletes during the March 2022 Rebalance and other potential irregular changes.

Hock Seng Lee (HSL MK): Unconditional Offer

By David Blennerhassett

  • Hock Seng Lee (HSL MK) has announced an unconditional voluntary take-over offer of RM1.35/share.  
  • The joint ultimate offerors, led by director Yu Chee Hoe, currently hold 84.2%. 
  • HSL is already in non-compliance with  Bursa’s 25% free float. The Offeror does not intend to main HSL’s listing

Investors Caught Out As Twiggy Backs IGO’s Offer For Western Areas

By David Blennerhassett

  • Andrew Forrest’s Wyloo Consolidated, with 9.8% of shares out, will now support the IGO Ltd (IGO AU) / Western Areas (WSA AU), just three weeks after paying through terms. 
  • That pledge pivots off a newly-inked side agreement between IGO and Wyloo to jointly evaluate opportunities for nickel downstream processing in Australia.
  • This removes the immediate prospect of a competing Offer from Wyloo, and in turn, IGO’s need to bump terms. Yet BHP Group (BHP AU) still waits in the wings.

Korean Companies Announcing Share Cancellations Are Outperforming the Market

By Douglas Kim

  • In this insight, we have identified 16 Korean companies that have announced common shares cancellations in 4Q 2021 and 1Q 2022.
  • There has been a tremendous outperformance of KOSDAQ listed companies that have announced shares cancellations in this period. 
  • Given the continued outperformance of Korean companies that are outperforming the market after announcing treasury shares cancellation, this reflects an alpha generating trend that bears close scrutiny. 

HSI Index Rebalance: Nongfu Spring & Lenovo IN; Still Tiptoeing Towards 80 Index Members

By Brian Freitas

  • The Hang Seng Index was meant to have 80 constituents by mid-2022 before moving to 100 members. At 66 constituents post the March review, we are not gonna make it.
  • Nongfu Spring (9633 HK) and Lenovo (992 HK) will be added to the index. Nongfu’s inclusion was expected while Lenovo is a relative surprise.
  • Nongfu Spring (9633 HK) will also be added to the FTSE AW Index at the March SAIR at the close on 18 March. The stock should move higher.

HSCEI Index Rebalance: Another Evergrande Stock Is Deleted; Xinyi Solar IN

By Brian Freitas

Hang Seng TECH Index Rebalance: Forced Changes Lead to BIG Turnover

By Brian Freitas

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Feb 18
0

Event-Driven: JMT Network Services, Appier Group Inc, LG Chem Ltd, Tomson, Ultra Electronics Holdings and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • SET50 Index Rebalance Preview (June): Two Changes, Maybe Three
  • TOPIX Inclusion Pre-Event: Appier Group (4180 JP)
  • FnGuide & KRX K-New Deal Batteries: Combined Passive Flows Preview on March 10-15
  • Tomson Group (258 HK): The Next Rivera
  • Cobham/​Ultra Electronics: Updated Valuation and Spread

SET50 Index Rebalance Preview (June): Two Changes, Maybe Three

By Brian Freitas

TOPIX Inclusion Pre-Event: Appier Group (4180 JP)

By Janaghan Jeyakumar, CFA

  • Japan-Based AI company Appier Group Inc (4180 JP) announced they had resolved to prepare to apply to change its listing on the Tokyo Stock Exchange to the Prime Market.
  • Appier has confirmed that it meets the criteria for the TSE Growth Market but if they move to the Prime Market, that would trigger a TOPIX Inclusion Event.
  • Below is a look at Appier’s potential to satisfy the Section Transfer Requirements and the upside potential of this event.

FnGuide & KRX K-New Deal Batteries: Combined Passive Flows Preview on March 10-15

By Sanghyun Park

  • FnGuide Battery Index overlaps with the rebalancing of the KRX K-New Deal. K-New Deal is March 11. As for FnGuide Battery, it will be three trading days on March 14-16.
  • Among the top-cap stocks, Samsung SDI will be the biggest beneficiary, and we need to consider a setup that utilizes Samsung SDI as a long/short partner for LG Chem.
  • LG Chem’s staying significant distorts mid-caps’ index weight in KRX Battery. The extent of passive outflows would be pretty substantial. So, outright short these mid-caps should deserve our attention.

Tomson Group (258 HK): The Next Rivera

By David Blennerhassett

  • At 0.3x price to book, PRC property play Tomson (258 HK) is cheap. 
  • It is even cheaper when factoring in its net cash worth 90% of the market cap.
  • And it might continue to trade cheaply if not for the fact the controlling family recently privatised a connected company of Tomson’s.

Cobham/​Ultra Electronics: Updated Valuation and Spread

By Jesus Rodriguez Aguilar

  • The deal is expected to be referred for thorough analysis given political sensitivities as Ultra Electronics Holdings (ULE LN) is a key supplier to the UK’s army. Shorts are increasing.
  • The review should fall under the old rules though. My standalone fair value estimate (DCF based) is 3,184p. (vs. 2,950p comps-based implied valuation and 3,325p median Capital IQ consensus TP).
  • Long ULE LN, TP 3,500p, plus 16p interim. Upside is 17.2%. I just don’t see the UK Government blocking a friendly defence deal from an investor coming from a key ally.

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Feb 17
0

Event-Driven: Kadoya Sesame Mills, SBI Sumishin Net Bank, Gungho Online Entertainment, Champion Microelectronic Corp, KT Corp, Australian Pharmaceutical Industries, Enchem and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Deciphering the Dynamics of a Tachiaigai Bunbai Offering
  • SBI Sumishin Net Bank (7163 JP) IPO: Listing in March, TPX Inclusion Possibly in April
  • Gungho Is Gungho for Gungho (3765 JP)
  • Pan Jit Hostile/Unsolicited Partial Offer for Champion Micro (3257 TT)
  • KT Corp: Announces a Spin-Off of the Cloud and IDC Business
  • Aussie Pharma (API AU): Scheme Booklet Out. Meeting On The 17 March
  • Potential Additions and Deletions to KOSDAQ150 Rebalance in June 2022
  • SBI Sumishin NetBank (7163 JP) IPO Details, Fundamentals Tearsheet, and Likely Index Treatment

Deciphering the Dynamics of a Tachiaigai Bunbai Offering

By Travis Lundy

  • In Japan, there is a type of offering called a tachiaigai bunbai offering which is used by companies to conduct small, relatively low-cost, offerings to increase liquidity or shareholder breadth.
  • These are conducted with a bit over a week of warning, and there are usually very low limits of shares purchasable per applicant.
  • There are certain dynamics surrounding such tachiaigai bunbai which are worth understanding. 

SBI Sumishin Net Bank (7163 JP) IPO: Listing in March, TPX Inclusion Possibly in April

By Brian Freitas

  • SBI Sumishin Net Bank (7163 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on 24 March. 
  • News reports indicate a raise of US$1bn (JPY 115.5bn). This translates to an IPO price of JPY 1,920/share, valuing the company at JPY 300bn (US$2.59bn).
  • The stock should be added to the TPX INDEX at the close on 27 April where trackers will need to buy over 14% of the stock issued in the IPO.

Gungho Is Gungho for Gungho (3765 JP)

By Travis Lundy

  • Gungho on Monday announced results, with both revenues and earnings up.
  • They also announced a buyback, which at current price means about 2.8% of shares out. 
  • That doesn’t sound like a lot, but context matters. It may matter a great deal. 

Pan Jit Hostile/Unsolicited Partial Offer for Champion Micro (3257 TT)

By Travis Lundy

  • Pan Jit International (2481 TT) appears to have launched an unsolicited/hostile partial Tender for 5.0-30.0% of the shares out of power management IC maker Champion Microelectronic Corp (3257 TT). 
  • The price is near but not at a medium-term (and all-time) high, and is made “for investment purposes but hoping for more.”
  • Insiders officially hold ~13.7% of the target. It would seem done, which means a defence effort and/or white knight is not out of the question. We will watch it develop.

KT Corp: Announces a Spin-Off of the Cloud and IDC Business

By Douglas Kim

  • On 15 February, KT Corp (030200 KS) announced that it will spin off the cloud and IDC business. 
  • KT will spin off the cloud and internet data center (IDC) business to set up subsidiary tentatively named KT Cloud starting 1 April.
  • KT’s valuations remain attractive and the spin-off of KT Cloud Business is also likely to aid on the continued outperformance of KT shares in the coming months. 

Aussie Pharma (API AU): Scheme Booklet Out. Meeting On The 17 March

By David Blennerhassett

  • Australian Pharmaceutical Industries (API AU)‘s Scheme Booklet is now out. The Scheme Meeting will be held on the 17 March with possible implementation on the 31 March.  
  • The Independent Expert has concluded this US$600mn Offer is fair and reasonable and in the best interest of Senex shareholders.
  • The Offer price is full. And trading very tight to terms.

Potential Additions and Deletions to KOSDAQ150 Rebalance in June 2022

By Douglas Kim

  • In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSDAQ150 rebalance.
  • The top 10 potential inclusions of KOSDAQ150 are on average down 2.8% YTD, outperforming KOSDAQ which is down 15.1% YTD. 
  • The top 10 potential exclusions of KOSDAQ150 are down on average 21.6% YTD, underperforming KOSDAQ which is down 15.1% in the same period. 

SBI Sumishin NetBank (7163 JP) IPO Details, Fundamentals Tearsheet, and Likely Index Treatment

By Travis Lundy

  • On 15 February, SBI Holdings (8473 JP) and Sumitomo Mitsui Trust Holdings (8309 JP) announced the likely details/schedule of the IPO of their joint venture online bank.
  • Pre-Announcement media commentary had suggested an IPO of US$1bn in size and a potential market cap in the range of ¥300-400bn. 
  • The stock is likely to see significant interest because of its growthy business model, and non-negligible index buying at end-March and end-April, especially if it prices at the high end.

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Feb 16
0

Event-Driven: James Hardie Industries Cdi, SMC Corp, Resonant, Tata Consultancy Svcs, Dentsu Inc, Bukwang Pharmaceutical, Mapletree North Asia Commercial Trust, Sixt SE, Naturgy Energy Group SA, Lg Innotek and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • S&P/ASX Index Rebalance Preview (March 2022): A Busy Rebalance Across Indices
  • SMC (6273) Buyback – Small Short Sharp
  • There Are Offer Premiums. And Then There’s Resonant’s
  • Tata Consultancy Services (TCS IN): US$2.4bn Mega Buyback
  • Dentsu BIG Buyback – Both Larger and Smaller Than It Appears
  • Initial Thoughts on the KOSPI200 Rebalance in June 2022
  • MCT and MNACT’s Options for Dealing with Quarz’s Campaign
  • Liquid Universe of European Ordinary and Preferred Shares: February ‘22 Report
  • Demerger Plans for Naturgy
  • Korea Local Metaverse ETFs: Passive Flow Preview

S&P/ASX Index Rebalance Preview (March 2022): A Busy Rebalance Across Indices

By Brian Freitas

  • There are just 3 trading days to go in the review period for the March rebalance of the S&P/ASX family of indices. There will be plenty of changes.
  • We see one change for the ASX20, one change for the ASX50, up to four changes for the ASX200 and up to 15 adds/11 deletes for the ASX300.
  • There will be a large impact from passive trading on quite a few stocks. There will be same way flow on some stocks from the FTSE AW/AC trackers.

SMC (6273) Buyback – Small Short Sharp

By Travis Lundy

  • SMC Corp (6273 JP) announced better Q3 and an upward revision to still-below consensus for this year. Consensus is for up-and-to-the-right the next few years (but implied Q4 looks light).
  • The company raised its dividend so now it is 1% yield.
  • And the company announced a small but intriguing buyback. If you own the stock or trade in the space, it is worth understanding

There Are Offer Premiums. And Then There’s Resonant’s

By David Blennerhassett

  • A 266% premium to last close. That is what Murata Manufacturing (6981 JP) is Offering for 4.2%-held Resonant (RESN US).
  • The $4.50/share Offer price was last exceeded a little under a year ago. Shares have rolled over 84% since last February following an exuberant, meteoric spike over Resonant’s RF capabilities. 
  • The Offer is conditional on attaining ownership of 50% of shares out, including Murata’s stake.  

Tata Consultancy Services (TCS IN): US$2.4bn Mega Buyback

By Janaghan Jeyakumar, CFA

  • Indian IT giant Tata Consultancy Svcs (TCS IN) released their public announcement document for their latest buyback after market close on 14th February 2022. 
  • The company is planning to spend up to INR180bn (~US$2.4bn) which is one of the largest amounts spent in Tender Offer-style Buybacks in India.
  • Below is a closer look at the details of this Buyback.

Dentsu BIG Buyback – Both Larger and Smaller Than It Appears

By Travis Lundy

  • Yesterday 14 February, Dentsu announced bte profits, and guidance for 2022 which appears in-line to slightly strong in terms of revenue, slightly weak/conservative in terms of IFRS/GAAP OP.
  • The company also announced what appears to be a BIG buyback. 
  • Looks are deceiving, but somehow not, but there are catches in both directions. If you have a flow axe, it is worth knowing the flow details.

Initial Thoughts on the KOSPI200 Rebalance in June 2022

By Douglas Kim

  • In this insight, we discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance.
  • These top 10potential inclusionsare down on average 4.4% YTD, outperforming KOSPI which is down 10.1% YTD.
  • These top 10 potential exclusions are down on average 12.3% YTD, underperforming KOSPI which is down 10.1% YTD.

MCT and MNACT’s Options for Dealing with Quarz’s Campaign

By Arun George

  • Quarz Capital’s open letter urges Mapletree North Asia Commercial Trust (MAGIC SP)’s (MNACT) board to protect unitholders’ interest and negotiate for a higher offer from Mapletree Commercial Trust (MCT SP).
  • MCT has three options – keep the terms unchanged, improve the terms or support MNACT’s board benchmarking the merger vs alternative transactions.   
  • MCT’s likely move is to keep terms unchanged and seek shareholder approval. MNACT’s board can appease unitholders by exploring alternative transactions.   

Liquid Universe of European Ordinary and Preferred Shares: February ‘22 Report

By Jesus Rodriguez Aguilar

  • Spreads have generally tightened across our liquid universe, 410 bps in the case of Volkswagen. Spreads in Sixt (45.7%) and Schroders (37%) are worth mentioning.
  • Recommendations Long ords / short prefs: Fuchs Petrolub, Henkel, Handelsbanken.
  • Recommendations Long prefs / short ords: BMW, Grifols, Roche, Telecom Italia (takeover interest), Volkswagen.

Demerger Plans for Naturgy

By Jesus Rodriguez Aguilar

  • Naturgy Energy Group SA (NTGY SM) surprised the market by announcing its division into two listed companies: one for regulated network assets, and the other for liberalised businesses (generation & commercialisation/marketing).
  • Naturgy is trading at 10.1x EV/2021a EBITDA and at a demanding 21.9x P/E, higher than Iberdrola SA (IBE SM)’s 16.3x and Endesa SA (ELE SM)’s 11.5x.
  • Strategies: pair trades long REE SM/short NTGY SM or long ENG SM/short NTGY SM. Risk: this strategy assumes that both CriteriaCaixa and IFM will stop acquiring shares of Naturgy.

Korea Local Metaverse ETFs: Passive Flow Preview

By Sanghyun Park

  • Among Korea’s local metaverse ETFs, the Big Three have significant AUMs. At yesterday’s closing prices, their AUMs are ₩0.41T, ₩0.40T, and ₩0.20T, respectively. Their total is now 1 trillion won.
  • Those on which we can perform stable momentum trading are the 14 stocks included in all three ETFs. Passive funds account for +3% of MC in half of these names.
  • Weighting adjustment uses keyword relevance. So, estimation is not easy. Nevertheless, since the absolute value does not change significantly, we can reduce the error by using the previous rebalancing weighting.

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Feb 10
0

Event-Driven: Grab, Toyota Industries, Nippon Road, LG Energy Solution, Hotel Shilla, I O Data Device, Country Garden Services Holdings, Meritz Financial Group, Kumho Petro Chemical, Aareal Bank AG and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • MSCI Feb 2022 Index Rebalance: Day 1 Chosen Again
  • Toyota Industries Back To Covid Lows Vs. Toyota Motors
  • Shimizu Corp Partial Offer for Nippon Road (1884 JP) May Get Interesting
  • LG Energy IN/LG Chem OUT: TIGER (WISE) Done on Feb 8 & KODEX (FnGuide) Under Progress Until Feb 22
  • KOSPI Size Index Series Rebalancing Screening Results
  • I O Data Device (6916) MBO – Not as Clean And Nice As One Would Like
  • MSCI Feb 2022 Index Rebalance: Float/Share Changes
  • MSCI Korea February 2022 Review: Sell the News
  • Kumho Petrochemical: Restart of the M&A Fight Between Uncle and Nephew
  • Advent & CenterBridge/Aareal Bank AG: Lapsed Offer

MSCI Feb 2022 Index Rebalance: Day 1 Chosen Again

By Brian Freitas

Toyota Industries Back To Covid Lows Vs. Toyota Motors

By David Blennerhassett

  • Toyota Industries (6201 JP)‘s implied stub and simple ratio with 8.5%-held Toyota Motor (7203 JP) has significantly bifurcated in the last 12 months. 
  • Yet recent and forward earnings at the stub level indicate this dislocation is unjustified. 
  • Toyota Industries is a set up at this current level. 

Shimizu Corp Partial Offer for Nippon Road (1884 JP) May Get Interesting

By Travis Lundy

  • Shimizu Corp (1803 JP) has held ~25% of Nippon Road (1884 JP) and has now announced a Partial Tender Offer to go to 50.1%. It’s a 20-year high, but…
  • … it’s the wrong price. And it has been. And a quasi-activist has built a 16% stake in recent years. 
  • The question is whether this gets done. They only need to buy 25.25% out of the 75% they don’t own, but it’s a question.

LG Energy IN/LG Chem OUT: TIGER (WISE) Done on Feb 8 & KODEX (FnGuide) Under Progress Until Feb 22

By Sanghyun Park

  • For KODEX (FnGuide), the actual rebalancing trading must have begun yesterday, Feb 8, and runs until Feb 22, presumably at an equal daily weighting.
  • TIGER (WISE) announced that its implementation of LG Energy IN/LG Chem OUT was completed as of the end of yesterday.
  • As for the daily passive impact from KODEX until Feb 22, LG Energy is expected to receive an inflow of 0.03x DTV, whereas LG Chem’s outflow should be -0.10x ADTV.

KOSPI Size Index Series Rebalancing Screening Results

By Sanghyun Park

  • KOSPI Size Index Series rebalances twice a year in March and September. The base date is February 28. It is a three-month review, so, from December 1 to February 28.
  • In the KOSPI size index rebalancing, an increase in the buying volume of local institutions for stocks moving from LargeCap to MidCap is generally detected. 
  • 14 new MidCap entrants are expected to have a sizable passive impact.

I O Data Device (6916) MBO – Not as Clean And Nice As One Would Like

By Travis Lundy

  • This MBO is designed to for the 77-year-old Founder to take the company private.
  • The evolution of the balance sheet the last 12-18 months has been a little strange, and may not be benign. It has certainly changed the fair value lower. 
  • The question, as always, is whether someone will take this up.

MSCI Feb 2022 Index Rebalance: Float/Share Changes

By Brian Freitas

  • MSCI announced the changes to the Standard Index pre market open in Asia today. There were changes to the number of shares and free floats for stocks too.
  • The increase in the IIF on Sea Ltd (SE US) was known, while the increase in FIF on SK Square (402340 KS) was expected.
  • There are quite a few stocks that have over US$10m to trade or over a days ADV to trade from passive funds. These could be interesting to watch.

MSCI Korea February 2022 Review: Sell the News

By Douglas Kim

  • MSCI announced the additions and deletions to the MSCI Korea Index today. The two additions include Meritz Financial Group (138040 KS) and Meritz Fire & Marine Insurance (000060 KS). 
  • The two deletions include Shinpoong Pharmaceutical (019170 KS) and Douzone Bizon (012510 KS). 
  • These changes have been mostly expected by the market. As a result, sell the news (ie, sell Meritz Financial Group & Meritz F&M Insurance and Buy Douzone Bizon).

Kumho Petrochemical: Restart of the M&A Fight Between Uncle and Nephew

By Douglas Kim

  • Kumho Petro Chem’s price rose by 9.3% to 164,000 won on 9 February due to a renewed potential M&A fight between Park Chul-Wan (nephew) and his uncle Park Chan-Koo (uncle).
  • It was announced that Park Chul Wan had sent a shareholder proposal ahead of next month’s AGM, recommending candidates to replace outside directors.
  • The sharp decline in share price of the company in the past 8 months is likely to encourage some minority shareholders to demand more changes in the company.

Advent & CenterBridge/Aareal Bank AG: Lapsed Offer

By Jesus Rodriguez Aguilar

  • By considering both Advent’s valuation of Aareon and Aareon’s multiple implied valuation, the consortium was paying 0.43x P/BV for the banking business, well below comparables trading at 1.4x.
  • It is no surprise then that the offer lapsed. According to my SOTP, by conservatively applying 0.8x P/BV for the banking business, upside for the shares ranges from 52-62%.
  • Recommendation is long ARL GR. The shares represent good value and the catalyst is the future spin-off.

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Feb 09
0

Event-Driven: Alibaba Group, LG Energy Solution, Hogy Medical, Toa Corp, Cineworld, SK Inc and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact
  • Solactive Global Lithium Index (LIT): Earlier Implementation Expected for LG Energy & LG Chem
  • Huge Hogy Medical (3593) Buyback from the Founding Family
  • Toa Corp (1885 JP) – Another Big Buyback for a Murakami Company
  • FTSE UK Index Series: Leaderboard for March 2022 (2.0)
  • SK Inc: Significant Gains of Nearly 1.1 Trillion Won in Londian Wason Holdings

Alibaba (9988 HK/BABA): Possible Softbank Sale and Passive Impact

By Brian Freitas

  • Alibaba Group (9988 HK) has filed a F-6EF Registration Statement to register an additional 1bn ADS. This will most likely be Softbank Group selling part (or all) of the stake.
  • There is a possibility that Softbank Group (9984 JP) is looking to use the stock as collateral for a financing trade and moving their holdings to a more liquid market.
  • If Softbank Group (9984 JP) sells some of their shares, there will be buying from MSCI and FTSE trackers. There will be minimal buying from HSI, HSCEI and HSTECH trackers.

Solactive Global Lithium Index (LIT): Earlier Implementation Expected for LG Energy & LG Chem

By Sanghyun Park

  • As for LG Energy’s inclusion timing, Solactive made a rule change, presumably designed for LG Energy’s earlier entry on April 29.
  • Since LG Chem also has a battery-related business, LG Chem may remain in this index. However, the possibility should be low because its battery business is small in total sales.
  • LG Chem will experience an outflow of ₩250B (1.0x ADTV). And assuming that LG Energy receives 4.75%, a passive impact of 0.31x at a DTV of 1.5M shares is expected.

Huge Hogy Medical (3593) Buyback from the Founding Family

By Travis Lundy

  • Hogy Medical’s founder passed and there was a re-arranging of deckchairs among the Hoki family ownership in 2021.
  • Earnings are not growing yet, but the mix is improving on a forward basis and consensus is decidedly more bullish than trend would suggest.
  • Now the company is buying back a LOT of stock from the Hoki family. This changes things.

Toa Corp (1885 JP) – Another Big Buyback for a Murakami Company

By Travis Lundy

  • Toa Corp (1885) is a niche infrastructure construction play with a decent growing business and a recent change in shareholder return policy. 
  • They bought back back 6% of shares in 2019. Then launched another 6% buyback in 2021. And now have announced another 6% buyback for 2022.
  • The shareholder structure and the return profile bear closer investigation.

FTSE UK Index Series: Leaderboard for March 2022 (2.0)

By Janaghan Jeyakumar, CFA

  • The FTSE UK Index Series is a widely tracked family of sub-indices representing the  performance of the public equity market in the UK. 
  • These indices are reviewed on a quarterly basis in March, June, September, and December. 
  • In this insight, we take a look at the potential constituency changes that can happen in the March 2022 Rebalance for the FTSE 100 and FTSE 250 Indices.

SK Inc: Significant Gains of Nearly 1.1 Trillion Won in Londian Wason Holdings

By Douglas Kim

  • It has been confirmed that Londian Wason Holdings Co, a Chinese copper foil material producer, is pushing for a listing on the Hong Kong Stock Exchange in 2022.
  • Londian Wason Holdings’ value could reach nearly 5 trillion won. SK Inc’s 30% stake could be valued at about 1.5 trillion won. 
  • Our updated SoTP valuation of SK Inc suggests implied price of 294,591 won per share, representing a 34% upside from current levels.

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