Event-Driven Archives | Page 73 of 187 | Smartkarma

The day the basis spread disappears is this Friday, the 24th of November. This mirrors a comparable pattern observed during Korean Air’s rights offering in 2020.
If the spot price does not fall below the futures price of our entry until this Friday, we could potentially be in a profitable range.
There has been a notable pattern where the spread continues to exist until just before the moment when new share selling becomes feasible.

Hollysys (HOLI US): In Court Today …

A fortnight after co-COOs pitched a US$25/share indicative Offer for Hollysys (HOLI US), Ascendent Capital, holding 13.7%, tabled a US$26/share Offer. The Recco/Dazheng consortium offered US$26.50 a week later.
There is currently a dispute over the ownership and control of Ace Lead’s shares in Hollysys, which was subject to an injunction hearing in the Hong Kong High Court.
That hearing took place today. So I went along to hear first-hand the key arguments from both sides.

Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?

Alchip Technologies (3661 TT) could replace Feng Tay Enterprise (9910 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the December rebalance.
This ETF inclusion for Alchip Technologies (3661 TT) could come back-to-back with another index inclusion scheduled for the end of November.
Shorts in Alchip Technologies (3661 TT) have been building up while shorts in Feng Tay Enterprise (9910 TT) have surged over the last few months.

Haitong International (665 HK): Vote on 15 December

Haitong International Securities Group (665 HK)’s scheme meeting is on 15 December. The IFA considers Haitong Securities Co Ltd (H) (6837 HK)’s HK$1.52 per share offer fair and reasonable.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
The high takeover premium ensures a done deal. At the last close and for the 18 January 2024 payment, the gross and annualised spread is 2.7% and 18.2%, respectively.

Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date

Indian IT services giant Tata Consultancy Svcs (TCS IN) launched a US$2bn Buyback last week.
The company will buy up to 40,963,855 shares in a Tender Offer-style Buyback at a Buyback Price of INR4,150/share (an 18% premium to today’s close).
In this insight, we take a closer look at the indicative timeline of key events in this Buyback, the company’s Buybacks history, proration details, and what this means for investors.

Nice Holdings: Material Increase in Dividends and Share Cancellations

On 21 November, Nice Holdings (034310 KS) announced new shareholder return policies that included material increase in dividends and share cancellations.
First, Nice Holdings has decided to raise dividends by more than 10% every year for the next three years. Nice Holdings paid dividend per share of 410 won last year.
Nice Holdings also announced that it will cancel more than 1% of total outstanding shares every year for the next three years.

DMA ONE: JSE December ‘23 Rebalance Rankings

By Charlotte van Tiddens, CFA

We do not expect any constituent changes for the following indices: Top 40, Top 40 SWIX, FINI, FINDI or INDI.
HAR is expected to enter the RESI and AMS is expected to fall out.
After much anticipation, ANG’s indicative free float came in at 75%, 21.9 percentage points lower than the current SWIX float of 96.8%.

Haitong Sec (665 HK) 15th Dec Scheme Vote

Once the pre-cons were satisfied on the 15th November, it seemed pessimistic to stick to the delayed 29 December dispatch date for Haitong International Securities Group (665 HK)‘s Scheme Document.
And right on cue, the Doc was issued last night (21 Nov). The Court Meeting is the 15 December. with an expected cash despatch on or around the 18 January.
Trading at a gross spread to terms of 2.7%. The headcount test applies. But this should comfortably get up.

H.I.G./DX (Group): Recommended Offer with Possibility of Bump-Up

By Jesus Rodriguez Aguilar

DX Group PLC (DX/ LN) agreed to a 47.5p/share offer (plus 1p dividend, ex-dividend 16 November) from H.I.G., 33% premium, 8.8x 2023a EBITDA, to be conducted via scheme of arrangement.
DX had a substantial improvement in revenue and profitability in 2018-2023. Although irrevocables represent 33.1% of the share capital, some shareholders have some doubts and letters of intent total 21.5%.
Some shareholders will try to extract more: DCF-based 50p could be defended, 5.2% above current offer. Spread 1.05%/3% (gross/annualised, assuming 30 March settlement). I’d be long in case of bump-up.

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Nov 21

Daily Brief Event-Driven: Daito Trust (1878) Doing a ToSTNeT Buyback Which Is NOT a ToSTNeT Buyback… Unless It Is. and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Daito Trust (1878) Doing a ToSTNeT Buyback Which Is NOT a ToSTNeT Buyback… Unless It Is.
StubWorld: Prosus Trading “Rich”. And So It Should Be
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 18% One-Way Turnover & US$2.74bn Trade
Quiddity Leaderboard TDIV Dec 23: US$1.36bn One-Way, 20%+ Turnover, 2 Weeks to Announcement
Quiddity Leaderboard T50/100 Dec 23: Multiple Moves Could Affect TDIV Flows
FXI Rebalance Preview: One Potential Change in December
Hyundai Elevator: Hyun Jeong-Eun Resigns from the BOD Chairwoman Position
EQD | Modest ASX200 Rally Raises Questions About Direction
Healius Taps The Market. ACL Should Walk

Daito Trust (1878) Doing a ToSTNeT Buyback Which Is NOT a ToSTNeT Buyback… Unless It Is.

Back on 30 October, Daito Trust Construct (1878 JP) announced a large earnings, a new Shareholder Return policy, a higher payout this year, and a big buyback.
It said the buyback period would start two days later, but they did not specify the method (Daito Trust Construction (1878) – Big Buyback, Dense Register, 120% Payout This Year
Today they announced a ToSTNeT-3 purchase for “the whole size”, which is accompanied by a “Japan-style ASR.” Know your details.

StubWorld: Prosus Trading “Rich”. And So It Should Be

The accretion trade is going to plan as Prosus NV (PRX NA) sells Tencent (700 HK); and Prosus and Tencent both back their own shares.
Preceding my comments on Prosus/Tencent One 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%.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 18% One-Way Turnover & US$2.74bn Trade

Using data from the close on 20 November, there could be 6 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
There will also be capping and funding flows that will lead to a one-way turnover of 17.8% and a one-way trade of US$1.37bn.
There are 16 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1-day ADV to trade.

Quiddity Leaderboard TDIV Dec 23: US$1.36bn One-Way, 20%+ Turnover, 2 Weeks to Announcement

In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the December 2023 review.
There are some key changes to expectations since my last TDIV insight as a consequence of changes in share prices and/or dividend expectations.
I currently expect 6 ADDs and 5 DELs during the December 2023 review.

Quiddity Leaderboard T50/100 Dec 23: Multiple Moves Could Affect TDIV Flows

In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the December 2023 Rebalance.
While I do not expect to see any changes to the T50 index, I expect four index changes for the T100 index.
Some of the names involved in the T100 index changes could have significant influence on our TDIV index flow expectations for December 2023.

FXI Rebalance Preview: One Potential Change in December

With the review period complete, BeiGene (6160 HK) could replace Anhui Conch Cement (914 HK) in the iShares China Large-Cap (FXI) (FXI US) in December.
There will be over 2 days of ADV to buy in BeiGene (6160 HK) and nearly 2 days of ADV to sell in Anhui Conch Cement (914 HK).
Short interest has been increasing in BeiGene (6160 HK) and dropping in Anhui Conch Cement (914 HK) over the last few months.

Hyundai Elevator: Hyun Jeong-Eun Resigns from the BOD Chairwoman Position

On 17 November, Hyun Jeong-Eun resigned from the Hyundai Elevator Co Board of Directors Chairwoman and internal director positions, mainly due to strong pressures from other major shareholders.
With Hyun Jeong-Eun finally out of the company, Hyundai Elevator is likely to significantly emphasize on improving its corporate governance.
Hyundai Elevator is considering new shareholder return policies, including a potential 50%+ dividend payout, higher share buybacks, and a mandatory minimum dividend yield.

EQD | Modest ASX200 Rally Raises Questions About Direction

By Nico Rosti

The S&P/ASX 200 INDEX closed up last week (CC=+1), currently uptrending, but the rally is weak, there is a chance that it could fall already this week and close down.
The index has reached Q2 resistance, that’s the area where the index starts to be OVERBOUGHT, based on the current pattern.
We see a potential pullback between -1% and -2% from current levels, across 1-2 weeks, this would bring the index down to the 6990-6920 support area.

Healius Taps The Market. ACL Should Walk

Back on the 20 March, Australian Clinical Labs (ACL AU) announced a merger proposal for Healius (HLS AU), the completion of which would create Australia’s largest pathology provider.
In its Target Statement on the 4 May, Healius’ board unanimously recommended that Healius shareholders reject the Offer. A forthcoming ACCC decision may also conclude a merger is verboten.
Now Healius has announced a “capital restructure reset” via issuing new shares at $1.20/share, a hefty 34.6% discount to last close. This breaches a number of prescribed occurrences.

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Nov 20

Daily Brief Event-Driven: Understanding Extreme SSF Spreads in Korea & Trading Approaches and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Understanding Extreme SSF Spreads in Korea & Trading Approaches
HSI Dec23 Index Review/Flows – Li Auto & Wuxi Apptec IN, No Deletes; 100 Names a Distant Dream
Origin Energy (ORG AU): State of Play
Hang Seng Tech Dec23 Index Review/Flows – No Name Changes, Some Big Capping Flows
HSCEI Index Rebalance: Zhongsheng (881 HK) Uses Up Another Life
A/H Premium Tracker (To 17 Nov): H up Vs A Despite SOUTHBOUND Net Selling; High Div SOEs Normalising
HSCEI Dec23 Index Review/Flows – NO ADDs, No DELETEs; ~2.5% One Way
Merger Arb Mondays (20 Nov) – Eoflow, Origin, OreCorp, Azure, Hollysys, Toyo, Amara, Haitong Intl
HSCI Index Rebalance: Keep (3650 HK) & TUHU Car (9690 HK) Added
HK Connect SOUTHBOUND (To 17 Nov 23); High-Div SOEs Pause, Tech + ETFs Break 16wk Inflow Streak

Understanding Extreme SSF Spreads in Korea & Trading Approaches

Futures backwardation resulting from the short selling ban will persist. Also, the contraction of market making will lead to more widespread and frequent occurrences of extreme spreads.
The straightforward sell arbitrage (reverse cash and carry) is no longer viable. We must pay attention to the emergence of new price and trading patterns driven by these market conditions.
One potential pattern is the possibility of spot buying centered around those that exhibited extreme spreads at expiration. This has already been observed to some extent in this month’s expiration.

HSI Dec23 Index Review/Flows – Li Auto & Wuxi Apptec IN, No Deletes; 100 Names a Distant Dream

On Friday, Hang Seng Indices announced the changes to the benchmark Hang Seng Index, the index in the family with the largest AUM.
Li Auto (2015 HK) and WuXi AppTec (2359 HK) are added. There are no deletions.
I see 3.4% a side to trade and across the three major indices there are larger net flows, but few compelling ones given possible pre-positioning.

Origin Energy (ORG AU): State of Play

The Origin Energy (ORG AU) scheme vote is on 23 November. Brookfield/EIG’s best and final offer is A$6.59 and US$1.86 per share, currently worth A$9.45.
With AusSuper reportedly increasing its stake past 17% on Friday, the scheme vote remains too close to call. Brookfield/EIG will need a large YES vote turnout for a successful vote.
If the scheme is voted down, there are mainly three Plan Bs – Brookfield/EIG’s alternate transaction structure, Board-initiated strategic review or maintaining the status quo.

Hang Seng Tech Dec23 Index Review/Flows – No Name Changes, Some Big Capping Flows

The Dec 23 review results for the Hang Seng Tech Index were announced on Friday 17 November after the close.
There were no ADDs to or DELETEs from the index, in something of a surprise.
The “big flow” on HS TECH is the downweight on Xiaomi Corp (1810 HK) due to sharp capping after significant outperformance since the August review.

HSCEI Index Rebalance: Zhongsheng (881 HK) Uses Up Another Life

For a second review running, Zhongsheng Group (881 HK) has avoided being deleted from the Hang Seng China Enterprises Index (HSCEI INDEX).
That means China Unicom Hong Kong (762 HK) misses out on index inclusion, but there is still hope for the next one.
There does not appear to be any significant positioning on either stock and any large moves early in the coming week could be short lived.

A/H Premium Tracker (To 17 Nov): H up Vs A Despite SOUTHBOUND Net Selling; High Div SOEs Normalising

The New and Better (16 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
Hs with H/A pairs outperform their As on average with higher-liquidity Hs outperforming more. High Premium As not seeing shrinking premia on average.
SOUTHBOUND and NORTHBOUND were net sells overall. It looked like the combination of NORTHBOUND and SOUTHBOUND put on a long H short A in the non-bank financial sector.

HSCEI Dec23 Index Review/Flows – NO ADDs, No DELETEs; ~2.5% One Way

The HSCEI Review for December 2023 was announced on Friday 17 November.
There were no ADDs and no DELETEs, which was a bit of a surprise.
There is about 2.8% one-way to trade. Alibaba (ADR) (BABA US) is a sell across all three major indices.

Merger Arb Mondays (20 Nov) – Eoflow, Origin, OreCorp, Azure, Hollysys, Toyo, Amara, Haitong Intl

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Eoflow (294090 KS), 111 Inc (YI US), Irc Ltd (1029 HK), Hollysys Automation Technologies (HOLI US), Origin Energy (ORG AU), JSR Corp (4185 JP), Healius (HLS AU).
Lowest spreads – Azure Minerals (AZS AU), Pact Group Holdings (PGH AU), Tietto Minerals Ltd (TIE AU), T&K Toka Co Ltd (4636 JP), IJTT Co., Ltd. (7315 JP).

HSCI Index Rebalance: Keep (3650 HK) & TUHU Car (9690 HK) Added

Keep Inc (3650 HK) and Tuhu Car (9690 HK) will be added to the Hang Seng Composite Index (HSCI) after the close of trading on 1 December.
Keep (3650 HK) will be added to Southbound Stock Connect from the open on 4 December while Tuhu Car (9690 HK) will only be added to Stock Connect in April.
There are lock-up expiries on both stocks, prior to or after inclusion in Stock Connect, and trading strategies will need to take that into account.

HK Connect SOUTHBOUND (To 17 Nov 23); High-Div SOEs Pause, Tech + ETFs Break 16wk Inflow Streak

This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
SOUTHBOUND flows the last several weeks clearly indicated a momentum move. The top net sells were all down. The top buys were all up. This week that trend moderated significantly.
SOUTHBOUND breaks a 17-week inflow streak with HK$2.1bn of net outflows entirely driven, it appears, by relatively few accounts punting large size in local (HK-listed) ETFs

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Nov 19

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: FRTIB and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi
Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang
Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added
Last Week in Event SPACE: Zhejiang, Pasona, ENN Energy, Asahi Group, Azure Minerals
EQD | Here Is Why the S&P500 MONTHLY Rally Could Continue in December
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Benefit One, Japan Best Rescue System, IJTT, Ohizumi, VNET
SK Square: Two Remaining Credible Options for 11 Street
HSTECH Index Rebalance: No Constituent Changes; Round-Trip Trade of US$1.4bn
Weekly Deals Digest (19 Nov) – Benefit One, JBR, Eoflow, Haitong, Vinda, Asahi, Tata Tech, Zeekr

Index Rebalance & ETF Flow Recap: FRTIB, Japan, CSI300, CSI500, STAR50, WuXi XDC, Asahi

The FRTIB benchmark switch from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index will result in a round trip trade of around US$56bn.
The changes for the CSI 300, CSI 500, STAR50, SSE50 and a bunch of other mainland China indices will be announced after market close on Friday.
Relatively quiet week for ETF flows with no major creations or redemptions during the week.

Furuya Metal (7826 JP) TOPIX Inclusion: Big Impact but Even Bigger Overhang

On 16th November 2023, Tokyo-based Industrial-use precious metal products manufacturer Furuya Metal (7826 JP) announced they would be moving from TSE Standard to TSE Prime on 6th December 2023.
This move would trigger a TOPIX Index Inclusion event at the end of January 2024 which would require all the TOPIX-tracking passive funds to buy shares in the company.
The company also launched an offering in conjunction with the TSE Prime announcement. In this insight, we take a look at the flow dynamics of the upcoming TOPIX Inclusion event.

Hang Seng Index Rebalance: Li Auto (2015) & WuXi AppTec (2359) Added

Li Auto (2015 HK) and WuXi AppTec (2359 HK) will be added to the Hang Seng at the close on 1 December taking the number of index constituents to 82.
Neither inclusion is a surprise. The non-inclusion of primary listed foreign companies is a bigger surprise – that could take place at the next rebalance.
Estimated one-way turnover is 3.53%, estimated one-way trade is HK$6.88bn (US$882m). Capping leads to buying in Alibaba (9988 HK) and selling in Tencent (700 HK) and HSBC (5 HK).

Last Week in Event SPACE: Zhejiang, Pasona, ENN Energy, Asahi Group, Azure Minerals

Pasona Group (2168 JP) is massively net cash. And it’s ofloading Benefit One Inc (2412 JP). Though we don’t know what the future holds, Pasona is the wrong price.
ENN Energy (2688 HK) controlling shreholder announced it intends to increase it stake. And it’s been in the market almost everry day since the interims.
Zhejiang Expressway (576 HK) announced its rights offering. It’s at a long-term low price, and about to earn a long-term high net income, and have a long-term high payout ratio

EQD | Here Is Why the S&P500 MONTHLY Rally Could Continue in December

By Nico Rosti

The S&P 500 INDEX will probably continue to rally in December (as long as the November rally does not reach extreme OVERBOUGHT conditions.
The OVERBOUGHT condition begins at around 4600, so the index is NOT overbought (yet).
The index will probably pullback soon for 1 or 2 weeks and then you can buy to ride the continuation of the rally into December (classic Christmas Rally).

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Benefit One, Japan Best Rescue System, IJTT, Ohizumi, VNET

I tally 41 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Six new deals were discussed this week: Benefit One (2412 JP), Japan Best Rescue System (2453 JP), IJTT (7315 JP), Ohizumi (6618 JP), Amara (AMA SP), and Atlantic Lithium (A11 AU).
Key updates took place for: VNET (VNET US), Eoflow (294090 KS), Azure Minerals (AZS AU), Origin Energy (ORG AU), Haitong International Securities Group (665 HK) and Shidax Corp (4837 JP).

SK Square: Two Remaining Credible Options for 11 Street

We discuss the two remaining options for 11 Street post the cancellation of its sale to Qoo10 Pte.
As these strategic sale of 11 Street to Qoo10 Pte. has failed, the possibility of a forced sale of 11 Street by the financial investors has increased.
The higher probability event is for the Nile Holdings consortium to try to sell 11 Street to other financial investors.

HSTECH Index Rebalance: No Constituent Changes; Round-Trip Trade of US$1.4bn

As expected, there are no constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December. However, there are float and capping changes for a lot of stocks.
Estimated one-way turnover is 4.8% leading to a one-way trade of HK$5.29bn (US$679m). There are 4 stocks with over 1 day of ADV to trade.
The largest selling will be on Xiaomi Corp (1810 HK) offset by buying in Meituan (3690 HK), JD.com (9618 HK) and Alibaba Group Holding (9988 HK).

Weekly Deals Digest (19 Nov) – Benefit One, JBR, Eoflow, Haitong, Vinda, Asahi, Tata Tech, Zeekr

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 – Asahi Group Holdings (2502 JP)‘s US$1.3 billion secondary offering; ZEEKR (ZK US), Tata Technologies (TATATECH IN) and Cainiao Smart Logistics Network (1437124D HK) IPOs
Event-Driven developments Benefit One Inc (2412 JP), Japan Best Rescue System Co (2453 JP), Eoflow (294090 KS), Haitong International Securities Group (665 HK), Vinda International (3331 HK), Amara Holdings (AMA SP).

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Nov 18

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

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Ride the Wave

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

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Nov 17

Daily Brief Event-Driven: Pasona: The Wrong Price and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Pasona: The Wrong Price
New Phase in Korean Short Selling: Immediate Impact of MM and LP Short Selling Ban
EOFlow Craters. Medtronic Stays Mum
Asahi Group Holdings (2502) Offering – Some Index Demand But Needs Lots of Active Long-Onlies
Asahi Group (2502 JP): Big Placement with Limited Index Buying; Timing Is Key
Key Points We Should Know Regarding the Current Status of EOFlow
Asahi Group (2502 JP): US$1.3bn Secondary Placement
Quiddity Leaderboard ES50 Sep 24: The Race For Europe’s Multi-Billion Dollar Index Flows
Hong Kong CEO/Director Dealings (17 Nov): ENN’s Controlling Shareholder Buying; Li Buys More PCCW
DXN Holdings Lock-Up – PE Investor Could Sell Further Although Liquidity Is Weak

Pasona: The Wrong Price

As discussed here in a piece about the Partial Tender Offer, Pasona Group (2168) has agreed to sell its controlling stake in Benefit One (2412) to M3 (2413).
That will leave Pasona Group with a fair chunk of cash and possibly a residual stake in Benefit One, depending on the results.
Though we don’t know what the future holds, Pasona now is the wrong price for its future.

New Phase in Korean Short Selling: Immediate Impact of MM and LP Short Selling Ban

There is a prevailing sentiment in the local market that short selling by market makers (MM) and liquidity providers (LP) will effectively be prohibited very shortly.
The widening of the futures basis extends the influence of futures on the spot market prices. This is precisely where trading opportunities that we should be keenly observing may arise.
It also leads to a significant widening of ETF tracking errors due to the direct sell-off of underlying shares. We must capitalize on extreme spreads in ETFs.

EOFlow Craters. Medtronic Stays Mum

Five weeks after shares were suspended, EOFlow (294090 KS) shares resumed trading this morning, the 16 November. Wording is sparse on the resumption.
One small consolation was that EOFlow may benefit from the temporary ban on short selling. Irrespective, shares have declined ~27% at the open, as I type.
Elsewhere, Medtronic Plc (MDT US) provides no guidance. The only other news of note are the various court filings in the District Court of Massachusetts.

Asahi Group Holdings (2502) Offering – Some Index Demand But Needs Lots of Active Long-Onlies

Asahi Group Holdings (2502 JP) today announced a collection of 10 shareholders (mostly financial institutions) would sell a total of 33.48mm shares (6.6% of shares out) in Asahi Group.
This will become more of a thing going forward. Cross-holders “want” to unwind. And in many cases, the cross-held want to buy back stock (reduce E, raise ROE).
This deal is “good” in that it clears out a lot of the bank cross-holders in one fell swoop. But there are more crossholders behind.

Asahi Group (2502 JP): Big Placement with Limited Index Buying; Timing Is Key

Nine shareholders are looking to sell 33.48m shares of Asahi Group Holdings (2502 JP). That is US$1.28bn, 24x ADV and 6.6% of shares outstanding.
Given the recent run up in the stock, there could be downside over the next couple of weeks ahead of the pricing date.
There will be buying from global trackers but nothing from TOPIX trackers, so not a lot of stock will be mopped up. Passive buying before settlement could create a squeeze.

Key Points We Should Know Regarding the Current Status of EOFlow

It can be considered that the suspension of EOFlow’s trading and, furthermore, the risk of delisting have been completely eliminated at this point.
EOFlow emphasizes the possibility of circumventing sales of EOPatch by supplying EOPump to a JV in China. The key factors that initially sparked Medtronic’s interest in EOFlow are still valid.
If CEO Kim fails to repay a stock collateral loan of ₩20B or secure additional loans, approximately 4% of the total issued shares could be sold in the market.

Asahi Group (2502 JP): US$1.3bn Secondary Placement

Asahi Group Holdings (2502 JP) announced a pure secondary offering of 33.5 million or 6.61% of outstanding shares. At the last close, the placement was worth JPY194 billion (US$1.3 billion).
Notwithstanding Asahi’s explanation, the selling shareholders’ motivation for exiting their shareholding is likely to capitalise on the strong share price performance – Asahi shares are up 45% YTD.
Looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 28 November and 1 December (likely 28 November).

Quiddity Leaderboard ES50 Sep 24: The Race For Europe’s Multi-Billion Dollar Index Flows

The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
This annual index review usually results in some of the most significant index flow events in Europe every year typically amounting to billions of dollars.
In this insight, we take an early look the names leading the race to become ADDs/DELs for the upcoming index review in September 2024.

Hong Kong CEO/Director Dealings (17 Nov): ENN’s Controlling Shareholder Buying; Li Buys More PCCW

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.
The key stocks mentioned in this regular insight are ENN Energy (2688 HK), PCCW Ltd (8 HK) and Wuxi Biologics (2269 HK).

DXN Holdings Lock-Up – PE Investor Could Sell Further Although Liquidity Is Weak

By Clarence Chu

DXN Holdings (DXN MK) was listed on the Bursa Malaysia Exchange on 19th May 2023. Both promoters and Gano Global (KV Asia Capital), will come off lockup soon.
DXN Holdings (DXN) is a global health-oriented and wellness direct selling company.
Demand for the IPO was lukewarm and the shares had a turbulent debut. Aside from its weak momentum, liquidity on the stock is weak as well.

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Nov 16

Daily Brief Event-Driven: EOFLOW/Medtronic Tender: Trading Suspension Lifted and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EOFLOW/Medtronic Tender: Trading Suspension Lifted, Now for the Hard Part
FRTIB Switches Benchmarks: +EM/-DM; US$56bn Trade as Asia EM Benefits & HK Loses Out
StubWorld: Pasona’s Expanding Cash Pile
Aeon/DCM/Keiyo Deal Changes on DCM TOB for Keiyo – Watch for Market Impact
Eoflow: Outlook After Trading Resumes on 16 November
Atlantic Lithium (A11 AU) Knocks Back Major Shareholder’s Offer. Again
Haitong International (665 HK): Pre-Condition Satisfied
US Fed. Rtir’mt Thrift Board Changes Intl Benchmark, Excludes HK, US$1.6bn HK to Sell, $20bn 1-Way
Danaher/Abcam: Balanced Risk/Return
Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

EOFLOW/Medtronic Tender: Trading Suspension Lifted, Now for the Hard Part

The KRX has completed its review and excluded Eoflow (294090 KS) from the substantive review for listing eligibility. Therefore, trading will resume tomorrow, 16 November.
The shares should rise on trading resumption as Medtronic’s tender remains in play, KRX’s review supported Eoflow’s business continuity and the short-selling ban-driven market rally.
Deal break risks remain significant. Medtronic Plc (MDT US)’s long-dated closing date and lack of Eoflow integration job postings suggest it remains concerned about near-term unfavourable court rulings.

FRTIB Switches Benchmarks: +EM/-DM; US$56bn Trade as Asia EM Benefits & HK Loses Out

The FRTIB has decided to switch its benchmark for the International Stock Index Investment Fund from the EAFE Index to the ACWI IMI ex-USA ex-China ex-Hong Kong Index.
With around US$68bn invested in the I Fund, this will set off churn among the constituent stocks in 2024. One-way trade is around US$28bn with DM outflows and EM inflows.
The benchmark shift could be done over a 4 month period with higher trading during periods where liquidity opportunities arise.

StubWorld: Pasona’s Expanding Cash Pile

A double dose of StubWorld this week as Pasona Group (2168 JP) finally takes the hint to sell (if not exit altogether) its holding in Benefit One Inc (2412 JP).
Preceding my comments on Pasona/Benefit One 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%.

Aeon/DCM/Keiyo Deal Changes on DCM TOB for Keiyo – Watch for Market Impact

DCM Holdings (3050 JP) and Keiyo Co Ltd (8168 JP) and Aeon Co Ltd (8267 JP) signed capital and business tie-up agreements 30+yrs ago. Recently, DCM bought Keiyo.
Aeon got some money from this and has decided to put that money back into DCM shares.
That changes both the current dynamics and future shareholder structure. And that leads to interesting questions about the outcome.

Eoflow: Outlook After Trading Resumes on 16 November

On 15 November, the Korea Exchange announced that Eoflow (294090 KS) will start trading again on 16 November.
The fact that KRX has allowed Eoflow to trade again will be viewed positively by many investors. Plus, the recent temporary ban on short selling should also positively impact Eoflow.
We believe a higher probability event is for Medtronic to complete a tender offer of Eoflow sometime in 2Q 2024 at about 26,000 won.

Atlantic Lithium (A11 AU) Knocks Back Major Shareholder’s Offer. Again

Livent (LTHM US)‘s CEO recently said, regarding its merger with Allkem Ltd (AKE AU), that while falling lithium prices put pressure on marginal producers, the sector’s fundamental outlook remains strong.
And so, another week goes by, and another lithium Offer Down Under unfolds.
African-Focused lithium play Atlantic Lithium (A11 AU) announced this morning it has twice rejected Offers from South African-based Assore International, its major shareholder. Shares spiked 43% on the news.

Haitong International (665 HK): Pre-Condition Satisfied

The pre-condition relating to Haitong International Securities Group (665 HK)’s privatisation offer from Haitong Securities Co Ltd (A) (600837 CH) is satisfied. The offer is at HK$1.52 per share.
The key conditions are approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and the headcount test. The high takeover premium facilitates approval.
This is a done deal. At the last close and for an estimated early February 2024 payment, the gross and annualised spread is 5.6% and 26.4%, respectively.

US Fed. Rtir’mt Thrift Board Changes Intl Benchmark, Excludes HK, US$1.6bn HK to Sell, $20bn 1-Way

The Federal Retirement Thrift Investment Board which manages the four major funds in the Thrift Savings Plan for US federal government employees will change benchmark for its International Fund
This was announced on 14 November. The transition will take place “in 2024.” It entails moving from MSCI EAFE to MSCI All Country World ex-USA ex-China ex-HongKong Investable Market Index.
The explanation: double the countries, lots more stocks, BUT CHINA! This means selling ~US$1.6bn of HK stocks but US$20bn of one-way flow in total (lots of Japan/UK/Europe to sell)

Danaher/Abcam: Balanced Risk/Return

By Jesus Rodriguez Aguilar

Shareholders of Cambridge (UK)-based Abcam (ABCM US) followed Glass Lewis and ISS recommendations and approved (>84%) the scheme resolutions at both the Court Meeting and the GM.
The $24/share cash offer represents 10x EV/Fwd Revenue, 25x EV/Fwd NTM EBITDA. Danaher Corp (DHR US) and Abcam have guided that the transaction is expected to close by mid-2024.
Spread is 3.21%/6.21% (gross/annualised, assuming settlement by 30 May). From the current levels, I see a balanced risk/reward.

Aercap Secondary Offer: Overhang No More and It Is Cheap, BUY

By Mohshin Aziz

General Electric intends to offload its entire shareholding via a secondary offer, a positive development as it removes the share overhang
Opportune time to own Aercap as aircraft is in high demand and supply chain disruptions mean limited supply over the medium-term, ensuring high lease rates and strong profits
BUY with target price of $81.45 (+21% UPSIDE) pegged to FY24 P/BV of 0.94x, Aercap is the best in the pack with superior net lease margin, finance cost, and ROE

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Nov 15

Daily Brief Event-Driven: Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics
I Like Big Bank Buybacks And I Cannot Lie
Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea
Benefit One (2412 JP): M3’s Partial Tender Offer
CSI500 Index Rebalance Preview: Potential Adds Starting to Close the Gap
Amara Holdings (AMA SP): Albert Teo Family/Dymon Asia’s Unconditional S$0.60 Offer
KOSDAQ150 Rebalance in December 2023 Highlighted by Locals
Amara (AMA SP): Teo Family’s Lifetime High Offer
Quiddity Leaderboard DAX Dec 23: Aroundtown, Siltronic, ProSiebenSat.1, and Duerr

Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics

Today after the close with Benefit One Inc (2412 JP) reporting earnings, M3 Inc (2413 JP) announced a Partial Tender Offer to buy 81.21-83.31mm shares of Benefit One at ¥1600/share.
That cleans out Pasona, which owns 81.21mm shares. Or does it… Shareholder structure dynamics and the problems they cause later bear some detailed examination.
This one is going to be a fun special sit.

I Like Big Bank Buybacks And I Cannot Lie

Today, Sumitomo Mitsui Financial Group (8316 JP) and Mitsubishi UFJ Financial (MUFG) (8306 JP) reported H1 earnings. Mizuho Financial Group (8411 JP) reported yesterday.
Mizuho raised full-year NP guidance by ~5%, passing the Street. SMFG raised its FY NP guidance 12.2%, also beating the Street. MUFG didn’t raise guidance but H1 saw 71% progress.
Today, SMFG raised its div, and both SMFG (¥150bn) and MUFG (¥400bn) announced buybacks. Cross-holding unwind progress is waaay lower than we’d like, but capital stronger as a result.

Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea

We can check this on KIND, KRX’s disclosure site. As an example, SK Inc. disclosed this information on July 26, two weeks before the dividend record date, August 10.
We can capture this information in English without the need for Korean. The disclosure title we must hunt is “Decision on Closure of Shareholder’s Registry (including Record Date) for Dividends.”
The critical aspect here is that we need to identify disclosures from companies that still use the year’s last trading day as the dividend base date.

Benefit One (2412 JP): M3’s Partial Tender Offer

Benefit One Inc (2412 JP) announced a partial tender offer from M3 Inc (2413 JP) at JPY1,600 per share, a 40.0% premium to the undisturbed price.
The transaction facilitates Pasona Group (2168 JP)‘s exit. The offer is for a minimum of 81.2 million shares (51.16% ownership ratio) and a maximum of 87.3 million shares (55.00%).
Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The offer is light vs. historical multiples and share prices.

CSI500 Index Rebalance Preview: Potential Adds Starting to Close the Gap

With the review period for the December rebalance of the CSI500 Index complete, we forecast 50 changes (the maximum permitted) for the index at the close on 8 December.
Estimated one-way turnover is 9.66% at the December rebalance resulting in a one-way trade of CNY 6.36bn. There are 29 stocks with over 1 day of ADV to trade.
The potential deletes have outperformed the potential adds over the last 6 months though there has been a narrowing of the gap recently. Position for a further narrowing.

Amara Holdings (AMA SP): Albert Teo Family/Dymon Asia’s Unconditional S$0.60 Offer

Amara Holdings (AMA SP) has disclosed a voluntary unconditional offer from Dymon Asia and the Albert Teo Family at S$0.60 per share, a 30.4% premium to the last close price.
On 17 June, Amara received a written notification from Mr Albert Teo Hock Chuan (CEO) and Ms Susan Teo Geok Tin (Company Secretary) that they are mulling an offer.
The offer price is final. The offer is attractive and marginally below the ten-year high. Hitting the 90% compulsory acquisition threshold implies a minority acceptance rate of 79.3%.

KOSDAQ150 Rebalance in December 2023 Highlighted by Locals

This article discusses the potential inclusions and exclusions of KOSDAQ150 rebalance in December 2023 (especially those that are highlighted by the locals).
The potential inclusion candidates include Lunit, Shinsung Delta Tech, and JNTC. The eight potential inclusion candidates are up on average 122% YTD, sharply outperforming KOSDAQ in the same period.
Stocks that are expected to be excluded in the KOSDAQ150 index include Aju IB Investment, HFR, Danal, and Sangsangin.

Amara (AMA SP): Teo Family’s Lifetime High Offer

Back in mid-June, hotel and investment property play Amara Holdings (AMA SP) gained 38% over three consecutive days on news of a possible Offer from its controlling shareholders.
The Teo family controls ~51% of shares out. No price was mentioned. This development was discussed in Amara Holdings Gains On Possible Offer.
After shares were halted on the 10th November, Amara has now announced a best-and-final unconditional cash Offer at S$0.60/share, a chunky 53.8% to undisturbed and a lifetime high.

Quiddity Leaderboard DAX Dec 23: Aroundtown, Siltronic, ProSiebenSat.1, and Duerr

In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices in the December 2023 Rebalance.
I do not see any changes for the DAX index in December 2023 but Deutsche Lufthansa (LHA GR) is not very far away from triggering a change.
Separately, I see two changes for the MDAX index and two changes for the SDAX index.

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Nov 14

Daily Brief Event-Driven: WuXi XDC (2268 HK): Index Inclusion Possibility & Timelines and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

WuXi XDC (2268 HK): Index Inclusion Possibility & Timelines
Japan Best Rescue (2453) MBO at ¥1,000; High Premium, Low Multiple, No Money For Synergies or Growth
Zhejiang Expressway (576 HK) Rights Offering – The Dynamics May Be Interesting
Shidax (4837) – Mgmt Lowers F’casts So Family Can MBO Minorities Cheap. Offensive Governance.
CSI300 Index Rebalance Preview: 13 Potential Changes in December
Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders
StubWorld: Takara Trading “Rich” As Bio Cuts Forecast Earnings
KOSPI200 Rebalance in December 2023 Highlighted by Locals
KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years
Japan Best Rescue System (2453 JP): MBK Partners Backed MBO Tender Offer at JPY1,000

WuXi XDC (2268 HK): Index Inclusion Possibility & Timelines

WuXi XDC Cayman (1877628D HK) is looking to raise up to HK$4.07bn (US$521m) in its IPO by selling 197.6m shares at HK$20.6/share, valuing the company at HK$24.67bn (US$3.16bn).
WuXi XDC Cayman (1877628D HK) will not get Fast Entry to any indices but should be added to the HSCI and to Southbound Stock Connect in March.
Inclusion in other indices will take longer with the highest probability of index inclusion starting in September 2024.

Japan Best Rescue (2453) MBO at ¥1,000; High Premium, Low Multiple, No Money For Synergies or Growth

This MBO by MBK is a strong premium because of a low recent price, but it pays a low P/FCF multiple for growth, and no synergies counted.
Yet another MBO where insiders and friends take advantage of structural inferiority of minority shareholders. Something Should Be Done.
What do Minority Shareholders in Japan Say When They Meet Death? “OK, Today it is then.” (with apologies to Game Of Thrones).

Zhejiang Expressway (576 HK) Rights Offering – The Dynamics May Be Interesting

Last week, Zhejiang Expressway Co H (576 HK) announced its rights offering on both its H-Shares and its A-Shares, previously mooted on 23 May, and the Circular on 26 June.
The company applied, got CSRC approval on 5 Nov, announced the issuance on 6 Nov, and shares went ex- on 10 November. It’s probably unneeded, but it’s there.
The stock is cheap. The company will boost its payout ratio. And it isn’t that “heavy” a deal. The Rights Trading Dynamics may be interesting.

Shidax (4837) – Mgmt Lowers F’casts So Family Can MBO Minorities Cheap. Offensive Governance.

Shidax had a Good Governance Moment last year. The stock is up 40-odd% since last year’s GGM, but now the Board, so good last year, has tripped up.
The family and main shareholder – part of last year’s GGM – have decided to bully the Board into accepting an MBO at the wrong price.
Management lowers forecasts without telling anyone. Bidders say “Synergies LaLaLa!” Board says “Ohh la la!” Nobody counts the synergies. Bidder buys at low multiple of newly lowered forecasts. Minorities Lose.

CSI300 Index Rebalance Preview: 13 Potential Changes in December

With the review period for the December rebalance of the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) complete, there could be 13 changes for the index.
We estimate one-way turnover of 1.94% at the December rebalance leading to a one-way trade of CNY 6.98bn. There are a lot of stocks with over 1x ADV to trade.
Over the last 6 months, the potential adds and potential deletes have tracked each other and underperformed the index. Positioning has led to outperformance in the last week.

Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

Bloomberg reported Asia Pulp & Paper is the latest party to have expressed interest in acquiring Essity (ESSITYB SS)’s controlling Vinda International (3331 HK) stake at more than HK$20 per share.
Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.
Vinda’s recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.

StubWorld: Takara Trading “Rich” As Bio Cuts Forecast Earnings

On an implied stub and simple ratio, Takara Holdings (2531 JP) is at a decade-plus high to 60.9%-held Takara Bio Inc (4974 JP).
Preceding my comments on Takara 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%.

KOSPI200 Rebalance in December 2023 Highlighted by Locals

This article discusses the potential inclusions and exclusions of KOSPI200 rebalance inDecember 2023 (especially those that are highlighted by the locals).
Stocks that are expected to be added to the KOSPI200 index include Posco DX, HD Hyundai Electric, Sam-A Aluminum, TCC Steel, and Dentium.
Stocks that are expected to be excluded in the KOSPI200 index Include Zinus, Handsome, Cuckoo Homesys, Taekwang Industrial, and Hyundai Home Shopping.

KT&G: A New Shareholder Return Policy Worth 2.8 Trillion Won Over Next 3 Years

KT&G announced a new shareholder return policy worth 2.8 trillion won (including dividend payout of 1.8 trillion won and treasury shares purchase/cancellation of 1.0 trillion won) over next three years.
In addition, the company plans to cancel about 7.5% of the company’s existing treasury shares which represents about 142 billion won (1.2% of outstanding shares).
Although this 2.8 trillion won in shareholder return policy is large, the company could have announced even larger shareholder return policy, including cancellation of its entire treasury shares.

Japan Best Rescue System (2453 JP): MBK Partners Backed MBO Tender Offer at JPY1,000

Japan Best Rescue System Co (2453 JP)/JBR has recommended an MBK Partners-backed MBO tender offer of JPY1,000 per share, a 53.8% premium to the undisturbed price (13 November).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
Irrevocables to accept the offer represent a 53.62% ownership ratio. The minimum acceptance condition requires a 28.1% minority acceptance rate, which is helped by the significant premium.

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Nov 13

Daily Brief Event-Driven: Japan – Increase in Shorts on Some Interesting*** Stocks and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Japan – Increase in Shorts on Some Interesting*** Stocks
KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact
IJTT (7315 JP): SPARX Group’s Tender Offer at JPY812
Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC
IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book
Oizumi Mfg (6618) Gets Takeout from Parent Ferrotec (6890) – Probably Cheap, Disappointing Process
Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)
A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”
HK Connect SOUTHBOUND (To 10 Nov 23); High-Div SOEs AGAIN See Outflows, Tencent and ETFs Big Buys
STAR50 Index Rebalance Preview: Big Impact Expected on the Changes

Japan – Increase in Shorts on Some Interesting*** Stocks

Persol Holdings, Hakuhodo Dy Holdings, Welcia Holdings, GMO Payment Gateway, CyberAgent Inc, Kobayashi Pharmaceutical, NGK Insulators, Lixil Group, Kurita Water Industries and Keio Corp have underperformed the Nikkei 225 recently.
The underperformance could lead to selling from global passive trackers and liquidity events on some of the stocks at month-end.
There has been an increase in short interest on most stocks over the last week as positioning for the liquidity event ramps up.

KOSPI 200 December Rebalancing: Rule Change Clarifications & Possible Delay in Price Impact

Although not explicitly outlined, it appears practical to interpret that we should filter out stocks that have entered a trading suspension among those receiving a WARNING designation.
The dynamics of KOSPI 200 flow trading have become notably tumultuous due to the abrupt short selling ban and additional liquidity halts imposed on market makers in the futures market.
The manifestation of price impact due to passive flows may be significantly delayed. So, we should prepare for this week’s announcement day setup targeting the delayed impact of passive flows.

IJTT (7315 JP): SPARX Group’s Tender Offer at JPY812

IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s offer of JPY812 per share, an 18.5% and 16.0% premium to the undisturbed (9 November) and last close price, respectively.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 23.48% ownership ratio.
Despite the modest premium, the offer represents a high five-year share price. The minimum acceptance condition requires a 41.3% minority acceptance rate.

Weekly Deals Digest (12 Nov) – Eoflow, Benesse, Shidax, PS Mitsubishi, IRC, Hollysys, WuXi XDC

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 – EcoPro Materials (ECO123 KS), WuXi XDC Cayman (1877628D HK), Midea Group Co Ltd A (000333 CH) and Cainiao Smart Logistics Network (1437124D HK) IPOs
Event-Driven developments – Eoflow (294090 KS), Benesse Holdings (9783 JP), Shidax Corp (4837 JP), Ps Mitsubishi Construction (1871 JP), Hollysys Automation Technologies (HOLI US), Irc Ltd (1029 HK).

IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book

A Fund named Mirai Creation Fund, investing in five “fields” “vital to the future” (“intelligent technologies”, robotics, hydrogen-economy, electrification, and “new materials”) will buy out casting/forging mainstay IJTT.
The look and feel of this fund screams “lead me to the future”, so of course, the buy-out is being done with 26% equity, 74% debt. Levered is good.
That’s to buy at 0.46x PBR. Equity check is 12% of net assets. The Board says “yes” because it will lead to “improvement of corporate value”. Unfortunately, not for shareholders.

Oizumi Mfg (6618) Gets Takeout from Parent Ferrotec (6890) – Probably Cheap, Disappointing Process

Ferrotec Corp (6890 JP) on Friday announced a takeover for subsidiary Ohizumi Mfg (6618 JP) on Friday. There will be synergies and growth and corporate value increase.
The takeover price is not overly high, and includes no measure of synergies – not even the DCF value of delisting the company (no listing/filing/IR/legal fees/costs).
I think this gets done. It is too closely held, there are few foreigners in it, and it’s not large enough for an activist to care.

Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)

This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Wuliangye Yibin, Foxconn Industrial, and BYD. Nets are still smaller.
Last week, NORTHBOUND returned to net OUTflow after the previous week saw the first net buy in 3mos. This week saw RMB 7.95bn of net NORTHBOUND selling.

A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”

The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
HUGE underperformance of Hs vs As across the board. A horrible week and it is not clear why. I doubt it was the short-selling warning or increase in haircuts.
SOUTHBOUND was a net buy and NORTHBOUND a net sell and the largest net SB flows on H/A pairs were the high-div SOEs.

HK Connect SOUTHBOUND (To 10 Nov 23); High-Div SOEs AGAIN See Outflows, Tencent and ETFs Big Buys

This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
SOUTHBOUND flows the last four weeks clearly indicate a momentum move. The top net sells are all down. The top buys are all up.
Tencent and three ETFs see the top net buys as SOUTHBOUND bought HK$18.4bn this past week. Energy and Telco net sales persist. And persist. And persist.

STAR50 Index Rebalance Preview: Big Impact Expected on the Changes