Event-Driven Archives | Page 76 of 168 | Smartkarma

SBI Sumishin Net Bank (7163 JP) lowered its listing price vs what were already lowered expectations from a year prior. Then Rakuten Bank (5838 JP) lowered its IPO range.
SBI Sumishin dilly-dallied around IPO price for three days then went nuts, rising 40% as of Friday morning. Rakuten Bank’s IPO looks dirt cheap now.
But it is worthwhile comparing it on a spectrum of OTHER Japanese banks and neobanks.

Arclands (9842) Overpays for Arclands Service Holdings (3085)

On Friday Arcland Sakamoto (9842 JP) and restaurant franchise subsidiary Arcland Service (3085 JP), which it launched in 1993 and IPOed in 2007, announced they had agreed to merge.
Arcland SHD runs 18 restaurant brands, of which Katsuya is most well-known, with a total of 750 or so restaurants managed globally. It has grown consistently.
The merger ratio is at an all-time high for Arcland SHD. This should be a done deal but I might expect some complaints. I think Arclands is probably overpaying.

Merger Arb Mondays (17 Apr) – Newcrest, Essential, Healius, Lian Beng, Golden Energy, Arcland

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), Origin Energy (ORG AU).
Lowest spreads – Healius (HLS AU), Essential Metals (ESS AU), Liontown Resources (LTR AU), Lian Beng (LBG SP), Golden Energy & Resources (GER SP), Mincor Resources NL (MCR AU).

Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review

We should aim for price movement patterns with relatively low market exposure. One of them is the post-effective upward price movement of deletions.
The relative price performance for one week after the implementation compared to KOSPI 200 was consistently positive, ranging from 2.41% to 6.82%.
Given the recent price movement of four deletion candidates, there is again a high possibility that the price distortion caused by MSCI flow will revert after the effective date.

Rights Arbitrage

The rights issue is fully underwritten and should bolster the balance sheet. This is akin to a placing by market volume. There are arbitrage opportunities (although not limitless borrowing available).
The arbitrage is a long position on a synthetic put. Rights will trade up to 17:30 on 3 May.
The new shares coming is a giant block compared to the existing shares outstanding. There may be a wave of selling from 4 May, and the shares should drop then.

Weekly Deals Digest (16 Apr) – Lian Beng, Arcland, Essential, Genesis, Newcrest, Rakuten Bank, ZJLD

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 – Rakuten Bank (5838 JP), ZJLD Group (ZJLD HK), Mankind Pharma (6596876Z IN) and Merdeka Battery Materials (2012725D IJ) IPOs.
Event-Driven developments – Lian Beng (LBG SP), Arcland Service (3085 JP), Essential Metals (ESS AU), Genesis Minerals (GMD AU), Healius (HLS AU), Newcrest Mining (NCM AU).

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

Since mid-March, spreads have generally tightened across our liquid universe (6 have widened, 12 tightened, 1 at same level).
Possible trades long ordinary / short preferred shares: Fuchs Petrolub, Henkel, Handelsbanken, SSAB Svenska Stal.
Possible trades long preferred / short ordinary shares: Sixt, VW, Danieli, Grifols, Atlas Copco.

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Apr 16

Daily Brief Event-Driven: Arcland Service (3085 JP): Share Exchange Offer from Arclands Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Arcland Service (3085 JP): Share Exchange Offer from Arclands Corp
Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Nothing to See Here!
Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June
Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Liann Beng, Newcrest, OZ Minerals, Glory Star New Media

Arcland Service (3085 JP): Share Exchange Offer from Arclands Corp

Arcland Service (3085 JP)/Arcland SHD has recommended Arcland Sakamoto (9842 JP)/Arclands’ share exchange offer at 1.87 Arclands shares per Archland SHD share.
The implied offer value of JPY3,051.84 per share at Arclands’ last close price is a 35.3% premium to the undisturbed price of JPY2,256.00 per share (14 April).
The offer requires Arcland OGM (25 May) and Arcland SHD EGM (22 June) shareholder approval. Arcland SHD shareholders will be supportive as the deal metrics are attractive.

Last Week in Event SPACE: Tencent, Ecopro, Japan’s Governance, Jardines, Citizen

Prosus (PRX NA) moved 96mn shares of Tencent (700 HK) into CCASS. Tencent shares fell hard. If the share price fell because of a block offering, that would be unwarranted.
Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials.
Japan’s Finance Minister said that companies need to improve their PBRs, and that “increasing corporate value of listed companies would allow for Japan to realise sustainable growth.”

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Nothing to See Here!

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

Price/Flow Impact on Four Constituent Changes in KODEX Top 5 Plus ETF Rebalancing in June

Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&G Corporation are predicted to be excluded.
The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.

Index Rebalance & ETF Flow Recap: HSI, S&P/ASX, KOSDAQ150, TAMSCI, Kotak Mahindra Bank

The review period for the MSCI May QCIR starts on Monday. The most ~~changes~~ inclusions by far are expected to be in China.
There will be an ad hoc change for the S&P/ASX 100 Index, S&P/ASX 200 (AS51 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 18 April.
After a period of sustained outflows, there were some inflows to the IShares Core MSCI Asia Ex Japan ETF (3010 HK) during the week.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Liann Beng, Newcrest, OZ Minerals, Glory Star New Media

There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma this past week: Singaporean construction firm Lian Beng (LBG SP) announced a voluntary unconditional cash Offer from the controlling Ong family,
Key updates took place for Newcrest Mining (NCM AU) and OZ Minerals Ltd (OZL AU), and Glory Star New Media Group Holdings (GSMG US).

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Apr 15

Daily Brief Event-Driven: Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June
Ecopro BM: Considering on a CB Issuance of 500 Billion Won
Genesis Minerals (GMD AU): Alternate Transaction and Placement to Buy St Barbara’s Key Assets

Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways

In mid-February 2023, Citizen Watch (7762 JP) announced another buyback. It had averaged nearly two small buybacks a year for the past four years for a total of ¥10bn.
This new one was ¥40bn, which assuming a 20% share price jump was 12% of ADV for a year. Bigly! We got the 20% jump, then not much more.
But Citizen has been buying fiercely. In the first 25 days of trading they averaged 25.8% of volume and bought back 11.5% of shares out. There’s a story here.

A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June

WCP will likely be included in the rebalancing of Samsung KODEX Secondary Battery Industry ETF in June. And we should consider the possibility of this happening to be quite high.
We can expect a daily passive inflow of around 0.3x compared to WCP’s typical DTV. The practical correlation with the price should be higher than the theoretical level.
We should consider using SKIET, which engages in the same business in the same sector, as a hedge. WCP/SKIET Long Short achieved considerable performance within the past week’s window.

Ecopro BM: Considering on a CB Issuance of 500 Billion Won

By Douglas Kim

According to Hankyung Business Daily, Ecopro BM Co Ltd (247540 KS) is considering on issuing a CB worth 500 billion won to various private equity and asset managment companies.
We would be negative on the potential CB issuance of nearly 500 billion won by Ecopro BM.
The potential issuance of this CB is a signal from the management that it is trying to capitalize on the recent sharp increases in share price to raise more capital.

Genesis Minerals (GMD AU): Alternate Transaction and Placement to Buy St Barbara’s Key Assets

Genesis Minerals (GMD AU) and St Barbara Ltd (SBM AU) have dropped their merger plans. Instead, GMD will acquire SBM’s Leonora gold assets for a total consideration of A$600 million.
The transaction is favourable for GMD shareholders. GMD is getting the assets at an attractive price. GMD will fund the acquisition through a A$450 million placement at A$1.15 per share.
The transaction provides a way out for long-suffering SBM shareholders as they retain exposure to gold assets and have option value on the sale of SBM’s remaining assets.

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Apr 14

Daily Brief Event-Driven: S&P/ASX Adhoc Index Rebalance: SVW in ASX100 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200
MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions
KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)
Analysis of Adani Group Shareholder Structure Changes in Q1 – Stock Moved
Hong Kong CEO & Director Dealings (13 Apr): Melco, CMGE, Differ, Sino Biopharmaceutical
Jardine Strategic’s Dissentient Shareholders: The Sensible And Workable Approach
Temenos (TEMN SW; TMSNY US): M&A Looks Imminent
Quiddity Leaderboard NIFTY Sep 23: LTIMINDTREE Could Be an Intra-Review NIFTY 50 ADD

S&P/ASX Adhoc Index Rebalance: SVW in ASX100, BGL in ASX200

Shareholders have approved OZ Minerals Ltd (OZL AU)‘s acquisition by BHP Group Ltd (BHP AU) and OZL is expected to stop trading after the close on 18 April.
OZ Minerals Ltd (OZL AU) will be replaced by Bellevue Gold (BGL AU) in the S&P/ASX 200 (AS51 INDEX) and by Seven Group Holdings (SVW AU) in the S&P/ASX 100.
There has been huge short covering on Seven Group Holdings (SVW AU) and Bellevue Gold (BGL AU) over the last few months.

MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions

Based on closing prices from 12 April, we forecast 2 adds and 2 deletes for the MSCI Taiwan Index at the May QCIR.
Global Unichip (3443 TT) is a high probability index inclusion and that will drive the deletion of Giant Manufacturing (9921 TT) from the index.
Wistron Corp (3231 TT) is a potential inclusion and that could result in the deletion of Win Semiconductors (3105 TT) from the index.

KOSDAQ150 Ad Hoc Index Rebalance: Sun Kwang (003100) To Replace SK Oceanplant (100090)

Following SK Oceanplant (100090 KS) moving from the KOSDAQ to KOSPI Market, the stock will be deleted from the KOSDAQ 150 Index and replaced with Sun Kwang (003100 KS).
The change will be implemented at the close on 18 April and passive trackers will need to trade over 1x ADV on both stocks.
Sun Kwang (003100 KS) was a high probability index inclusion in June, so this brings forward the inclusion by a couple of months.

Analysis of Adani Group Shareholder Structure Changes in Q1 – Stock Moved

Every quarter, Indian companies report their “Shareholding Pattern” for all to see. They show holdings by category type, and holders over 1%.
The big news in Q1 in AdaniLand was the failed FPO, thwarted by the Hindenburg Research report, and the Adani Promoter sale of stakes in 4 companies to GQG Partners.
The details in the change of the shareholder structure are, however, interesting.

Hong Kong CEO & Director Dealings (13 Apr): Melco, CMGE, Differ, Sino Biopharmaceutical

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
Stocks mentioned in this insight include: Melco International Development (200 HK), CMGE Tech (302 HK), Differ Group Auto (6878 HK), and Sino Biopharmaceutical (1177 HK)

Jardine Strategic’s Dissentient Shareholders: The Sensible And Workable Approach

Back on the 8 March 2021, Jardine Matheson (JM SP) made a cash acquisition for the 15% of Jardine Strategic (JS SP)‘s share capital it did not already own.
The US$33/share Offer price was arguably light. But with the amalgamation requiring 75% approval and Matheson providing an irrevocable to vote its 84.89% stake for the transaction, it was done.
On the 20 April 2022, the Bermuda Court dismissed Jardine’s application to strike out dissenting shareholders who acquired shares after the Offer was announced. Last month, Jardine lost its appeal.

Temenos (TEMN SW; TMSNY US): M&A Looks Imminent

By Vijay Lohia, CFA

Temenos is an attractive takeover candidate with multiple M&A speculation in the media in the last 12-18 months.
The probability of Temenos being taken over continues to increase especially after the fresh round of banking industry turmoil witnessed in the last few weeks.
At a buy-out multiple of 10x EV/sales, Temenos would be worth CHF110 per share which is roughly 72% upside from here.

Quiddity Leaderboard NIFTY Sep 23: LTIMINDTREE Could Be an Intra-Review NIFTY 50 ADD

In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
A couple of these names could become intra-review additions if the HDFC Limited (HDFC IN) – HDFC Bank (HDFCB IN) Merger closes prior to the September 2023 Rebalance.
Apart from that, there could be five ADDs/DELs for the NIFTY 100 index which by definition will also be added/deleted from the NIFTY Next 50 index.

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Apr 13

Daily Brief Event-Driven: Tencent (700 HK) – This Is Not the Selldown You Are Looking For and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tencent (700 HK) – This Is Not the Selldown You Are Looking For
Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?
An Alternative Flow Trading Angle for K200 Rebalancing in June
Enchem: Block Deal Sale of 14% of Outstanding Shares
Quiddity Leaderboard for BSE/SENSEX Jun 23: Six BSE 100 Changes and Four BSE 200 Changes
Cash Call at 38% Discount

Tencent (700 HK) – This Is Not the Selldown You Are Looking For

On April 11, Prosus (PRX NA) made an Update on Repurchase Programme that it had repurchased shares in the market from the 3-7 April. They do so every week.
This one said they would move 96 million shares of Tencent (700 HK) currently held in non-transferrable shares into CCASS so they could be sold.
The ADRs dropped in New York time. Tencent shares fell hard today. If the share price fell because of a block offering, that would be unwarranted.

Hang Seng Index Rebalance Preview: A Year Later Than Planned – 80 Members at Last?

With no changes made at the March rebalance, we are still stuck at 76 index constituents. And it’s been a year later than originally planned to reach 80 index constituents.
We list 10 potential inclusions in June. Adding all 10 stocks will lead to around 5% one-way turnover, so there could be a mix of larger and smaller stocks added.
There will be at least 1x ADV to trade on nearly all inclusions. Short interest is over 4% of float on some stocks and there has been a recent jump.

An Alternative Flow Trading Angle for K200 Rebalancing in June

In KOSPI 200 IT Sector Index rebalancing in June, we should consider using Samsung SDS as a hedge for short positions on KakaoPay from a day trading perspective.
The expected performance of traditional flow trading based on passive impact has become uncertain due to flexible rebalancing trading by local pensions and short selling resumption on K200 new entrants.
As such, flow events on these sector indices that are still pretty much under the radar in the market could be a meaningful alternative for us.

Enchem: Block Deal Sale of 14% of Outstanding Shares

By Douglas Kim

Chosun Business Daily reported today that Enchem is considering on conducting a block deal sale of nearly 14% of its outstanding shares, representing about 160 billion won.
Brahman PS Investment is the likely seller in this block deal sale. If the block deal sale is successful, Brahman will have gained more than 6x on its original investment.
We would not be buyers of the block deal sale mainly due to unattractive valuations, volatile profitability, and not enough block deal sale discount.

Quiddity Leaderboard for BSE/SENSEX Jun 23: Six BSE 100 Changes and Four BSE 200 Changes

In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.
There are only few more days left in the reference period used for the constituent selection process for the June 2023 Rebalance.
Currently, I see 6 ADDs/DELs for the BSE 100 index and 4 ADDs/DELs for the BSE 200 index.

Cash Call at 38% Discount

The timing was ripe for a rights issue after the share price had gained 64% since 24 October and addresses the capital structure, a need to win relevant contracts.
The rights issue is priced at a 38.6% discount (with a negative impact on the share price). TERP is €8.8438, theoretical value of the right is €1.1762).
Exclusively considering the cash injection and new number of shares, TP would be €9.07/share, with the caveat of the large dilution and uncertainty about the execution of the restructuring.

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Apr 12

Daily Brief Event-Driven: Japan’s Governance Changes I – The PBR 1.0 Target and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Japan’s Governance Changes I – The PBR 1.0 Target
Newcrest: Newmont Bumps And Granted DD
StubWorld: Ecopro’s Spike Makes No Sense
Lian Beng (LBG SP): Ong Family’s Derisory Unconditional Offer at S$0.62
TOPIX Inclusions: Who Is Ready (Apr 2023)
Temenos (TEMN SW): World’s No.1; Improving Fundamentals; M&A Candidate
Newcrest Mining (NCM AU): Newmont Returns with a Revised Offer
Lian Beng: Family Takeout At <50% of NAV

Japan’s Governance Changes I – The PBR 1.0 Target

The TSE went through a multi-year period of planning a “Market Restructuring” which ended on 4 April 2022 as the TSE split into three Sections, TSE Prime, Standard, and Growth.
After that, the TSE formed a “Council of Experts” (some very senior people) that would follow up on the changes, and recommend new measures. In January, new rule proposals dropped.
There was talk of a hard end to the transition period. Also, the Council harped on Awareness of Capital Cost and Efficiency. Most notably, for companies with PBR < 1.

Newcrest: Newmont Bumps And Granted DD

Under the revised proposal, Newmont (NEM US) has bumped the all-scrip terms for Newcrest Mining (NCM AU) to 0.400 Newmont shares – from 0.380 – for each Newcrest share held.
Including a permissible franked special dividend of up to US$1.10/share, the revised proposal represents an implied value of A$32.87/share. Newmont indicated the revised bid represents its best and final price.
Newcrest has granted Newmont confirmatory due diligence to put forward a binding proposal.

StubWorld: Ecopro’s Spike Makes No Sense

Ecopro (086520 KS) is up an eye-watering 590% in the past three months, primarily on Ecopro BM (247540 KS)‘s outperformance, together with sentiment towards soon-to-be-listed 52.8% held Ecopro Materials.
Preceding my comments on Ecopro are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Lian Beng (LBG SP): Ong Family’s Derisory Unconditional Offer at S$0.62

Lian Beng (LBG SP)/LBG has disclosed a voluntary unconditional offer from the Ong family at S$0.62 per share, an 8.8% premium to the undisturbed price (6 April).
The offer price is unattractive in comparison to peer multiples and precedent transactions. The price is not final. As the family aims to privatise LBG, a bump is likely.
The offer will likely follow the Boustead Projects (BOCJ SP) playbook, where Boustead Singapore Limited (BOCS SP) tabled a take-it-or-leave-it derisory 5.6% bump to its low-balled offer.

TOPIX Inclusions: Who Is Ready (Apr 2023)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
In the last two months, Amvis Holdings Inc (7071 JP), AXXZIA Inc (4936 JP), and Sosei Group (4565 JP) have confirmed their moves to the Prime Market.
These names appeared in our lists (A or B) of candidates with high “readiness” for TOPIX Inclusions in our recent insights.

Temenos (TEMN SW): World’s No.1; Improving Fundamentals; M&A Candidate

By Vijay Lohia, CFA

Overall, the sentiments are extremely negative with most sell-side analysts having a Sell/Neutral rating on the stock.
We believe either A) Revenue and earnings growth will pick up under the new management team, or B) Temenos will be taken over by some private equity firm.
While revenue growth has remained subdued, the company’s moat remains intact in our view.

Newcrest Mining (NCM AU): Newmont Returns with a Revised Offer

Newcrest Mining (NCM AU) disclosed a revised non-binding indicative privatisation proposal from Newmont Mining (NEM US) at 0.400 Newmont shares per Newcrest share + US$1.10 special dividend.
Since the 6 February announcement, the average implied value of the revised offer is A$29.14 per share, which is 11.6% higher than the average of the previous offer of A$26.12.
The offer is attractive in terms of historical prices and VWAP ratios but carries the volatility risk around Newmont shares and FX rates. Expect a binding proposal.

Lian Beng: Family Takeout At <50% of NAV

Singaporean construction firm Lian Beng (LBG SP) has announced a voluntary unconditional cash Offer from the controlling Ong family, via investment holding company OSC Capital.
The Offer Price of S$0.62/share (not declared final) is a mediocre 8.8% premium to last close and a 59.7% discount to the 30 November 2022 NAV of S$1.538/share.
The announcement fails to mention the NAV/share. The IFA considered the 2021 Mandatory Offer of S$0.50/share not fair and not reasonable. Expect a similar conclusion

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Apr 11

Daily Brief Event-Driven: TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next
Kotak Mahindra Bank (KMB IN): Potential MSCI Upweight in May to Bring Close to US$1bn Passive Buying
Target May 15th for LONG Youlchon Chemical with Dongkuk Steel’s Split Approval
Caverion Switches to Triton’s Offer
New Unconditional Date

TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next

The TOPIX liquidity factor removal names (upweights) for April 2023 were announced after the close on Friday 7th April 2023 as expected.
According to the announcement, 22 names will see their Liquidity Factors removed and experience index inflows later this month.
Today was the first day of trading post-announcement and the 22 names gained +1.1% (+0.47% vs the TOPIX Index). I feel there could be more upside for some names.

Kotak Mahindra Bank (KMB IN): Potential MSCI Upweight in May to Bring Close to US$1bn Passive Buying

Kotak Mahindra Bank (KMB IN) was added to the MSCI India Index at the November 2020 SAIR. However, a LIF of 0.5 was applied due to the low foreign room.
The latest shareholding pattern as of end-March shows a foreign room higher than 25%. That should result in a removal of the LIF at the May QCIR.
The increase in foreign room is a result of FPIs selling the stock despite the inclusion of Kotak Mahindra Bank (KMB IN) in a global index in March.

Target May 15th for LONG Youlchon Chemical with Dongkuk Steel’s Split Approval

Through the regular rebalancing, Kum Yang and Cosmo Chemical will be included in KOSPI 200, and Youlchon Chemical will be included as an ad-hoc change due to Dongkuk Steel’s deletion.
We should prepare for an aggressive long position on Youlchon Chemical from a day trading perspective, targeting May 15th, the day after Dongkuk Steel’s general meeting.
If the meeting is scheduled for the morning, we should consider entering the position in the afternoon of the 12th.

Caverion Switches to Triton’s Offer

Triton’s consortium reduced the acceptance threshold to 2/3rds of all shares, and, as expected, the board of Caverion changed its recommendation in favour of the Triton consortium’s proposal.
Nearly a third of the shares supporting the offer are held by each party. Bain’s consortium hasn’t improved Triton’s offer and expects the latter will encounter antitrust hurdles.
Triton would make a cumulative IRR of about 20% if it sold the business for 7.5x EBITDA by year 7. Long and tender to Triton’s offer (spread is 2.63%/3.75% gross/annualised).

New Unconditional Date

On 6 April, Bidco and Dignity confirmed that the FCA Change in Control Condition had been satisfied on 5 April. The new Unconditional Date is 4 May 2023.
Bidco has so far irrevocables and letters of intent in respect of 39.12%. The end of the life of Dignity as a listed company is nigh.
Spread to cash offer is 3.6%/42% (gross/annualised, assuming settlement on 18 May). Long/tender to the cash offer. The Alternative Offers are either Valderrama D shares (unlisted) or Castelnau shares (illiquid).

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Apr 10

Daily Brief Event-Driven: Last Week in Event SPACE: ANZ/Suncorp and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Last Week in Event SPACE: ANZ/Suncorp, JCNC, Adani, Khan Bank/HS Holdings, Hong Kong Buybacks
Merger Arb Mondays (10 Apr) – Genesis, Estia, Newcrest, Pushpay, Mincor, Golden Energy, Toyo

Last Week in Event SPACE: ANZ/Suncorp, JCNC, Adani, Khan Bank/HS Holdings, Hong Kong Buybacks

In a dealbreak, ANZ (ANZ AU) will either have enough capital in a downturn or excess capital it could use to buy back stock. If behavioural remedies, SunCorp is cheaper.
Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
There is no good reason to be long Adani names, even if GQG is up 25% on his money so far.

Merger Arb Mondays (10 Apr) – Genesis, Estia, Newcrest, Pushpay, Mincor, Golden Energy, Toyo

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), Estia Health (EHE AU), Aag Energy Holdings (2686 HK), Origin Energy (ORG AU).
Lowest spreads – Healius (HLS AU), Golden Energy & Resources (GER SP), Liontown Resources (LTR AU), Norwest Energy NL (NWE AU), Mincor Resources NL (MCR AU), GK Goh.

Before it’s here, it’s on Smartkarma

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

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

Apr 09

Daily Brief Event-Driven: EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Calm Before the Storm? 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- Calm Before the Storm?
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Mincor, Toyo Construction, Pushpay, Breaker Resources

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Calm Before the Storm?

By Simon Harris

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

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Mincor, Toyo Construction, Pushpay, Breaker Resources

There are 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed on Smartkarma this past week: Breaker Resources Nl (BRB AU) all-scrip Offer from Ramelius Resources (RMS AU).
Key updates took place for Mincor Resources NL (MCR AU), Toyo Construction (1890 JP), and Pushpay Holdings (PPH NZ).

Before it’s here, it’s on Smartkarma

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

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

Apr 07

Daily Brief Event-Driven: Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
JCNC’s Logic-Defying Valuation
Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer
Industrivärden: Q1 Results and Discount to NAV

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?

There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
This implies an essential premise for us to set up a more aggressive preemptive position on KT.

JCNC’s Logic-Defying Valuation

Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
The simple ratio of JCNC/ Astra International (ASII IJ) is also the highest level outside the brief spikes post-Covid and during the 2008 GFC.
There is no apparent justification for the current valuation. And a takeover from Jardine Matheson Holdings (JM SP) at these levels appears unrealistic.

Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price

Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC – Mongolia’s largest bank – would IPO this month.
This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.

Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer

Golden Energy & Resources (GER SP)’s valuation is dependent on three key assets – Golden Energy Mines (GEMS IJ), Stanmore Coal (SMR AU) and Ravenswood. GEMS/SMR have observable values.
The valuation of GEAR’s 50% stake in Ravenswood gets little publicity largely as it is unlisted. However, the annual report provides data points to value this key gold asset.
Based on peer EV/Resource and EV/Reserve multiples, Ravenswood 50% stake is worth S$200-465 million. Using the midpoint valuation, the SoTP valuation is S$1.40 (39% upside to the last close).

Industrivärden: Q1 Results and Discount to NAV