Event-Driven Archives | Page 77 of 187 | Smartkarma

The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
The October rebalance will result in a one-way turnover of ~45% and in a one-way trade of US$1.24bn. There are ~300 stocks with over 1 day of ADV to trade.
With only 4 trading days to implementation, there could be large moves on stocks with large flows and impact over the next few days.

Shinko Electric (6967) – Waiting for a Package

Shinko Electric Industries (6967 JP) has been on the block. 2nd Round Bids were apparently due last month, but with “Economic Security” considerations, one wonders if that stretches a bit.
The stock is now at the low end of its range vs Ibiden, and the timing is right for a deal which could give it a pop.
A “split price” takeover seems reasonable as a structure. I expect upside. Still.

WisdomTree Emerging Markets High Dividend Index Rebalance: Huge Turnover & Trade Next Week

The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
The October rebalance will result in a one-way turnover of ~37% and in a one-way trade of US$926m. There are 92 stocks with over 1 day of ADV to trade.
In Asia, the largest buy flows are expected on Astra International (ASII IJ) and the largest sell flows on POSCO Holdings (005490 KS).

Fast Retailing (9983) Beats Guidance, Stronger Forecasts, STILL Has a Nikkei 225 Problem

Fast Retailing (9983 JP) today announced better than guided results, and 10% revenue growth, 18% OP growth to August 2024. NP is light, but still well higher than street consensus.
At 10.37% Nikkei 225 weight, it is still above the target for 31 July 2024. If it does not underperform Nikkei 225 between now and then, US$2bn to sell end-Sep24.
If people like the growthiness, that can be absorbed. But if the stock were to go up 10% vs Nikkei, there’d be US$2bn, then maybe another US$2bn to sell.

NWS Holding (659 HK): Offer Opens with NWD Vote on 2 November

Nws Holdings (659 HK)’s IFA opines that the conditional voluntary general offer from the Cheng family is fair and reasonable. The offer + 2H dividend is HK$9.46 per share.
The key condition is (majority vote) approval by independent NWD shareholders (EGM on 2 November). The timetable is designed such that the shareholders will also receive the NWS final dividend.
NWD has a high but declining AGM minority participation rate. Retail forums suggest support for the transaction. On balance, we believe that this deal gets up.

Korea Finally Offers Reliable Data Channel on Companies with Improved Dividend Procedures

The Obligatory Corporate Governance Report Disclosure System will stand as the only source for furnishing trustworthy data on the proportion of listed companies that have genuinely adopted enhanced dividend procedures.
From a dividend strategy perspective, the companies of primary interest for strategic trading are predominantly those falling under the scope of this disclosure obligation.
Next year, it’s anticipated that with dependable data, we will have the means to craft dividend strategies aimed at this specific group.

Zomato Lock-Up – A US$240m+ Softbank Linked Lockup Release

By Sumeet Singh

In Aug 2022, Zomato (ZOMATO IN) completed the acquisition of 91% of Blinkit’s outstanding shares via issuing its own shares. These shares were released from their lockup in Aug 2023.
Softbank then sold a part of its stake in Aug 2023, the rest of its stake will come out of lockup soon.
In this note, we will talk about the lock-up dynamics and recent updates.

WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: 16% Turnover, US$660m Trade

The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
The October rebalance will result in a one-way turnover of ~16% and in a one-way trade of US$329m. There are 16 stocks with over US$3m to trade.
HDFC Bank (HDFCB IN) will be added to the index while there will be selling in Taiwan Semiconductor (TSMC) (2330 TT).

Estia & Bain: 15th Nov Shareholder Vote

On the 7 August, aged care provider Estia Health (EHE AU) and Bain Capital entered into a Scheme Implementation Agreement at A$3.20/share (less any dividends), a 50% premium to undisturbed
The Scheme Booklet is now out. A shareholder meeting will be held on the 15th of November with implementation expected on the 30th of November.
Estia paid a fully franked dividend of A$0.12/share on the 15th of September. Currently trading tight to the adjusted terms of A$3.08/share. This still needs FIRB approval.

Quiddity Leaderboard CSI 300/500 Dec 23: Basket Trade Off to A Positive Start; US$2.8bn One-Way

CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in December 2023.
A couple of baskets I suggested in my last insight have both outperformed the CSI 300 index by more than 2% in less than a month.

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Oct 12

Daily Brief Event-Driven: JMDC (4483) Partial Offer Results – Tough Tender and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)
EOFlow’s Suspension Is Not (All) Negative
Eoflow: Temporary Trading Suspension
EOFLOW/Medtronic Tender: On Life Support
POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer
A Noteworthy ETF Flow Trading Opportunity Targeting the Pair Comprising Kia & Posco Future M
Estia Health (EHE AU): Scheme Meeting on 15 November

JMDC (4483) Partial Offer Results – Tough Tender, I’d Watch For “THE Block” (Maybe)

Results for the Omron Corp (6645 JP) Partial Tender Offer for JMDC (4483 JP) are out.
The Pro-Ration was 51.63%, at the lower end of my initial estimate of 50-58% range, and at the higher end of my revised range (42-56%).
The pro-ration, the nature of the shapes (technical term) tendered, and what that suggests for Noritsu Koki’s position suggests the back end could be more squeezy than not.

EOFlow’s Suspension Is Not (All) Negative

On the 6th of October, a US district court judge entered a preliminary injunction (PI) against EOFlow (294090 KS), pending a trial. This development should have been expected.
Less expected was the suspension of EOFlow shares today, and the cessation of sales globally.
The latter measure appears extreme, noting the PI addresses only sales in the US, which EOFlow is not permitted anyway, without FDA approval. There’s clearly more than meets the eye.

Eoflow: Temporary Trading Suspension

By Douglas Kim

On 10 October, the Korea Exchange announced a temporary suspension of trading of Eoflow (294090 KS) shares starting 11 October.
Eoflow decided at its board of directors meeting the previous day (10th) to suspend production and sales of Eoflow patches until the outcome of the lawsuit is resolved.
In this insight, we provide various scenario analysis including the worst case, best case, and in-between cases of the Eoflow M&A tender offer process.

EOFLOW/Medtronic Tender: On Life Support

In reaction to the preliminary injunction, Eoflow (294090 KS) shares were suspended as it is reviewing whether it is subject to a substantive review for KOSDAQ listing eligibility.
Medtronic Plc (MDT US) is in an unprecedented situation of potentially acquiring a company whose shares are suspended, has a preliminary injunction against it and exposure to possible liabilities.
Medtronic could have prevented this development by reaffirming its commitment to the deal. The transaction is on increasingly shaky grounds, which is reflected in the 38.2% gross spread.

POSCO DX (022100 KS): Index Impact of KOSDAQ to KOSPI Transfer

Posco DX (022100 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
Based on history, the approval for the transfer and the listing change could take place in the next two months.
That means a deletion from the KOSDAQ 150 Index (KOSDQ150 INDEX) and inclusion in the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX). But the timeline is important.

A Noteworthy ETF Flow Trading Opportunity Targeting the Pair Comprising Kia & Posco Future M

Kia is set to make a comeback, while the exclusion of Posco Future M is on the horizon.
The screening date is set for November 30th, and the effective date is December 18th, which means the ETF rebalancing will take place on December 15th.
The exposure period to the market is relatively short, so it’s essential to acknowledge the limited accumulation of learning effects. This suggests we can anticipate a notably substantial price impact.

Estia Health (EHE AU): Scheme Meeting on 15 November

The Estia Health (EHE AU) IE considers Bain’s A$3.20 (A$3.08 excluding paid dividends) offer fair and reasonable as it is above its valuation range of $2.83 to A$3.21 per share.
The offer is subject to FIRB and possibly aged care industry approvals. The MAC clause risk, particularly around material regulatory events, is diminishing.
This is a done deal. At the last close price and for the 30 November payment, the gross and annualised spread is 1.3% and 9.7%, respectively.

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Oct 11

Daily Brief Event-Driven: NWS (659 HK): Pre-Cons Done. Now and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie …
Origin/Brookfield: ACCC Rubber Stamped. Now Shareholders Will Have Their Say
TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights
HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December
Kenedix Merger: Significant Passive Inflows Expected in Three Weeks
Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump
Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup
CMB/Euronav: Mandatory Offer
Quiddity Leaderboard BSE/SENSEX Dec 23: Bandhan Bank Could Underperform State Bank

NWS (659 HK): Pre-Cons Done. Now, About That Final Divvie …

Back on the 26 June, Chow Tai Fook (CTFE) made a pre-conditional voluntary Offer for New World (17 HK)‘s 60.88%-held NWS (659 HK) at HK$9.15/share, a 22.2% premium to undisturbed.
The Cheng-family-backed CTFE and connected parties held 45.24% of NWD, therefore the parent was effectively injecting ~US$2.75bn of cash into NWD for its NWS stake.
The pre-cons are now done, with a 13 October despatch date for the Composite Document. Technically, this could be wrapped up before NWS’ final dividend ex-date. That’s worth exploring further.

Origin/Brookfield: ACCC Rubber Stamped. Now Shareholders Will Have Their Say

Brookfield Asset Management/MidOcean Energy’s tilt for Origin Energy (ORG AU), faced two major hurdles.
The first was ACCC approval. Not just over competition issues, but also the perceived/apparent public benefit from Brookfield’s future commitment to renewable generation. ACCC has now cleared the transaction.
The second is currying favour with shareholders, several of whom, including AustralianSuper (13.68% stake), reckon the Offer is substantially below long-term value. This needs a bump.

TOPIX October 2023 Rebalance: Round Trip Trade of US$20bn; Upweights Outperform Downweights

At the October rebalance, Free Float Weight (FFW) will be reduced on 284 stocks and increased on 458 stocks. 43 stocks will be removed from Phased Weight Reduction.
Estimated one-way turnover is 1.77% resulting in a one-way trade of ¥1.45tn. 364 stocks have over 4 days ADV to trade, 97 stocks have over 8 days ADV to trade.
Over the last 6 months, the stocks with inflows (>US$25m) have outperformed the stocks with outflows (>US$25m) with most of the outperformance coming in the last three months.

HSTECH Index Rebalance Preview: Round-Trip Trade of US$556m in December

With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
Capping changes will result in a one-way turnover of 2.16% and that will result in a round-trip trade of US$556m.
The impact of capping changes has doubled over the last month and there will be more changes from now till the official capping is done on 28 November.

Kenedix Merger: Significant Passive Inflows Expected in Three Weeks

The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.

Origin Energy (ORG AU): ACCC Approves, Shareholders Justifiably Want a Bump

The ACCC has approved Brookfield/EIG’s proposed acquisition of Origin Energy (ORG AU). The Brookfield/EIG offer is A$5.78 and US$2.19 per share, worth A$8.83 at the last close.
The bidders now face the challenge of convincing shareholders to accept the offer and avoid incurring ticking fees. The scheme booklet will be despatched in the coming weeks.
Several shareholders have justifiably argued that the offer is light. Our SoTP valuation is A$9.46 per share, 7.1% above the implied offer price of A$8.83.

Rakuten Bank IPO Lock-Up – Parent and Company Will Come Out of Lockup

By Sumeet Singh

Rakuten Bank (5838 JP) (RB), the online banking arm of Rakuten Group (4755 JP), raised around US$630m in its Japan IPO. Its IPO linked lockup will expire soon.
RB is the largest internet bank in Japan, by number of accounts. As of Jun 23, it had 14.0m deposit accounts with a total deposit base of JPY9.4tn.
In this note, we will talk about the lock-up dynamics and updates since our last note.

CMB/Euronav: Mandatory Offer

By Jesus Rodriguez Aguilar

CMB and Frontline Ltd (FRO US) smoke the peace pipe: CMB will buy Frontline out of Euronav NV (EURN US) at $18.43/share (25% premium) and agree to Euronav selling 24 VLCCs to FRO.
After an EGM gives the green light, CMB will launch a mandatory $18.43/share cash offer for Euronav. The three-way transaction is fairly priced (1.0x P/NAV) for all players, including the Euronav minorities.
There shouldn’t be any antitrust issues. Spread is 4.02%/7.66% (gross/annualised assuming settlement by 30 April 2024). Recommendation is long and tender (there won’t be any squeeze-out).

Quiddity Leaderboard BSE/SENSEX Dec 23: Bandhan Bank Could Underperform State Bank

In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
At present, I do not see any changes for the SENSEX index. For the BSE 100 and BSE 200 indices I see six and five changes respectively.
Some of these changes are different from those expected in my last insight. However, the changes expected in this insight will be my final expectations for the December 2023 Rebalance.

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Oct 10

Daily Brief Event-Driven: October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie
Korea – Positioning in Stocks That Could Have Global Passive Flows
TOPIX Inclusions: Who Is Ready (Oct 2023)
Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing
HSCEI Index Rebalance Preview: One Change; Capping Impact Increases
ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues
No Danger in Being Long
EQD | HSI WEEKLY Resistance Levels UPDATED

October 2023 TOPIX Free Float Review – $22.6bn to Trade and JPB (7182) The Biggie

The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it’s $11.3bn a side.
As discussed in Japan Post Bank (7182) – The October TOPIX FFW Adjustment, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.
There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.

Korea – Positioning in Stocks That Could Have Global Passive Flows

Posco DX (022100), Kum Yang (001570), SK Telecom (017670), Lotte Energy Materials (020150), Kakao Games (293490), Pan Ocean (028670), BGF retail (282330), Netmarble (251270) have been on investors/traders radars recently.
There could be liquidity events in some of the stocks next month as passive index trackers look to buy/sell the stocks.
Foreign investors have sold Lotte Energy Materials (020150 KS), Kakao Games (293490 KS), Pan Ocean (028670 KS) and Netmarble (251270 KS) while buying BGF retail (282330 KS).

TOPIX Inclusions: Who Is Ready (Oct 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.
Since my last insight, CellSource (4880 JP) and Kasumigaseki Capital (3498 JP) have confirmed they will move to TSE Prime which means they will be included in TOPIX at end-November.
FP Partner (7388 JP) and I-NE (4933 JP) will get included in TOPIX at the end of October.

Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing

Posco DX’s KOSPI 200 fast entry effective date will likely coincide with the December regular rebalancing date.
We should focus on the ad-hoc change deletion as we can expect more pronounced price impact near the effective date due to lower chances of premature exposure than regular reviews.
The following three candidates are screened: K Car, Daesang Corporation, and Shinsegae International. They are all likely to exhibit a significant passive impact (x ADTV).

HSCEI Index Rebalance Preview: One Change; Capping Impact Increases

Zhongsheng Group (881 HK) is in deletion zone and could be deleted. China Unicom Hong Kong (762 HK) could be added to the index as the highest ranked non-index constituent.
Estimated one-way turnover at the rebalance is 2.14% resulting in a one-way trade of HK$1.38bn. Meituan (3690 HK), Alibaba Group (9988 HK) and Tencent (700 HK) will be capped higher.
China Unicom Hong Kong (762 HK) is supported on its 50/100 day moving averages and could move higher. Zhongsheng Group (881 HK) has been trading below its moving averages.

ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues

Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
Given stock selection uses liquidity as a major input, the impact of passive trading will be much larger on the deletions as compared to the additions.
The potential adds have outperformed the potential deletes, but relative performance has been drifting lower over the last few months. There are stocks that will have flows from other indices.

No Danger in Being Long

By Jesus Rodriguez Aguilar

The 1,350p offer for Ergomed Plc (ERGO LN) (28% premium, 18.9x EV/Fwd NTM EBITDA using IBES estimated) seems optically attractive considering share underperformance, and in line with closest peer Medpace at 19.06x.
Nevertheless there’d be synergies available to a trade buyer and other than 18% from the Founder, there aren’t any other irrevocables, which indicates the offer price is far from knock-out.
I set my TP at 1,350p. Spread turned negative last week, now 0.59%/1.71% (gross/annualised, assuming settlement by mid-February). I would be long considering there’s still time for a competing offer.

EQD | HSI WEEKLY Resistance Levels UPDATED

By Nico Rosti

The HSI INDEX has fallen for 2 more weeks since our last insight – current CC is =-5, and Q3 support was breached last week, the index is clearly OVERSOLD.
If the HSI bounces this week, it could be an occasion to go SHORT – take note that the index could take 3 weeks to rally before rolling down again.
The target price area where to enter SHORT trades,to benefit from a continuation of the downtrend is: 17598-18784.

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Oct 09

Daily Brief Event-Driven: NWS Holding (659 HK): Pre-Condition Satisfied and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

NWS Holding (659 HK): Pre-Condition Satisfied
Liontown Resources (LTR AU): Passive Selling on Lower Float
Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys
HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium
SSE50 Index Rebalance Preview: Consolidating After Big Outperformance

NWS Holding (659 HK): Pre-Condition Satisfied

The pre-condition for the Nws Holdings (659 HK) voluntary general offer from the Cheng family is satisfied. The total offer (HK$9.15 + 2H dividend) is HK$9.46 per share.
The key condition is (majority vote) approval by independent NWD shareholders. NWD’s share price decline and dependency on NWS earnings/cash flow support a NO vote.
A reasonable offer which reduces NWD’s gearing, results in a special dividend and helps reduce the holding company discount supports the YES vote. We think that the YES vote prevails.

Liontown Resources (LTR AU): Passive Selling on Lower Float

Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.

Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys

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 – Haitong International Securities Group (665 HK), 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), IMAX China Holding (1970 HK), BPLANT.
Lowest spreads – Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Seiko Pmc Corp (4963 JP).

HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium

Foreign shareholding in HDFC Bank (HDFCB IN) has dropped to 59% and the HDFC Bank (ADR) (HDB US) premium to the local line has dropped to 7%.
HDFC Bank (HDFCB IN) has underperformed its peers and the local indices on expectations of lower NIMs and higher NPAs.
There will be passive buying in HDFC Bank in December and March. Further passive buying will require foreign room to increase above 25% which will first require foreign investor selling.

SSE50 Index Rebalance Preview: Consolidating After Big Outperformance

Over 90% of the way through the review period, we see 9 potential adds/10 potential deletes in December. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 6.1% at the December rebalance leading to a one-way trade of CNY 5.27bn. Index arb balances could increase the impact on the stocks.
The adds have outperformed the deletes this year though there has been a deterioration in performance over the last few months.

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Oct 08

Daily Brief Event-Driven: Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52
Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick
Index Rebalance & ETF Flow Recap: Taiwan Div+, Nifty50, Cainiao IPO, Delta Electronics
Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex
(Mostly) Asia-Pac Weekly Risk Arb Wrap: EOFlow, Newcrest, JMDC, Boustead Plantation, Symbio, Aeon
Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI
Reshaping South32’s Low-Carbon Footprint

Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52

Haitong International Securities Group (665 HK) announced a pre-conditional privatisation offer from Haitong Securities Co Ltd (H) (6837 HK), the controlling shareholder, at HK$1.52, a 114.1% premium to the undisturbed price.
The pre-condition related to regulatory approvals are a formality as Haitong Securities’ largest shareholder is the Shanghai SASAC. The offer price is final.
The key conditions are approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and headcount test. The highest HKEx takeover premium in a year facilitates approval.

Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick

When Haitong International Securities Group (665 HK) was suspended on the 27 September, a punchy premium was expected if controlling shareholder Haitong Securities Co (600837 CH) was launching an Offer.
And that is what we got: a $1.52/share Offer, by way of a Scheme, and a 114% premium to last close. Terms have been declared final.
This is a pre-conditional Offer, requiring approvals from approvals from Shanghai SASAC, CSRC, NDRC, and the Shanghai branch of the PBOC.

Index Rebalance & ETF Flow Recap: Taiwan Div+, Nifty50, Cainiao IPO, Delta Electronics

The Philippines Stock Exchange PSEi Index (PCOMP INDEX) rebalance was implemented last week and there were interesting moves at the close on implementation day.
The focus this week will be on pre-positioning for a global index rebalance where the review period commences next week.
Units outstanding on iShares Emerging Markets (EMXC US) are at a new high while there continue to be redemptions in iShares Emerging Markets (EEM US).

Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex

Monex (8698 JP) and Docomo announced an agreement. It is not clear ANY of this has to happen at prices favourable to minorities. But equally, it won’t be egregiously bad.
People’s Insurance (PICC) (1339 HK)‘s implied stub is at a lifetime low. The market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
JMDC (4483 JP) is a growth stock, growing organically. It is a rare enough thing. If you want to buy the back end, wait until it gets here.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: EOFlow, Newcrest, JMDC, Boustead Plantation, Symbio, Aeon

I tally 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed on Smartkarma this week: Haitong International Securities Group (665 HK)‘s Scheme; and Aeon Co (8267 JP)‘s partial. Arguably, Boustead Plantations (BPLANT MK)received another offer.
Key updates took place for: EOFlow (294090 KS), Newcrest Mining (NCM AU), JMDC (4483 JP), Boustead Plantations (BPLANT MK), Symbio Holdings (SYM AU), and T&K Toka Co Ltd (4636 JP).

Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI

In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2023.
The index changes for the December 2023 rebalance will be announced in mid-November (17 Nov) and implemented in early-December (with effect from 4 Dec).
Although the Hang Seng index has a highly subjective constituent selection process and index changes are somewhat unpredictable, we will continue sharing our thoughts for each quarterly review.

Reshaping South32’s Low-Carbon Footprint

Since being spun out from BHP in 2015, South32 Ltd (S32 AU) has doggedly addressed its vast asset portfolio.
This strategy has not been without issue, such as the US$1.3bn writedown in Hermosa base metals project (zinc, lead) earlier this year due to inflationary pressure from inputs (steel, cement).
Not unlike other major miners, commodities tethered to the energy transition form a key cornerstone of South32’s forward objective, potentially leading to coal asset divestment and further copper (lithium?) acquisitions.

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Oct 07

Daily Brief Event-Driven: EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition
Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
Long Short Flow Trading Opportunity: TIGER Semicon Top 10 ETF Rebalancing Next Friday
Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Good News Is Good News

EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition

After Insulet Corp (PODD US) lodged a lawsuit against EOFlow (294090 KS), Flex, inter alia, on the 3rd August, the judge has thrice extended the temporary restraining order.
But the big (ger) news is that a preliminary injunction comes into force today. Shares are down 2.5% as I type.
This latest development should have been expected. And put simply: a proposed preliminary injunction doesn’t prevent Medtronic Plc (MDT US) from acquiring EOFlow.

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

Long Short Flow Trading Opportunity: TIGER Semicon Top 10 ETF Rebalancing Next Friday

LX Semicon and Tokai Carbon Korea will be excluded, and these two positions will be filled by Eo Technics and either HPSP or ISC Co Ltd.
The effective date is October 16th, and the rebalancing trading by the TIGER ETF occurs towards the closing (likely to start around 2 p.m.) on Friday, October 13th.
The practical setup would entail an EO Technics-TCK Long Short pair. For a more aggressive strategy, we could explore the inclusion of HPSP in this setup.

Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer

Aeon Co Ltd (8267 JP) has announced a partial tender offer for Inageya Co Ltd (8182 JP) to make it a consolidated subsidiary. Aeon flagged this intention on 25 April.
The tender offer is for a maximum of 15.7 million shares (33.78% ownership ratio) at JPY1,610, a 23.2% premium to the undisturbed price. There is no minimum acceptance condition.
The offer price is reasonable. Longer-term, Aeon aims to make Inageya a wholly-owned subsidiary of United Super Markets (3222 JP) by November 2024.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Good News Is Good News

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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Oct 06

Daily Brief Event-Driven: EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
PICC’s (1339 HK) Lifetime Low Implied Stub
Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights
Boustead Plantations (BPLANT MK): LTAT Emerges as a White Knight

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem

The US judge has proposed a preliminary injunction which prevents Eoflow (294090 KS) from using Insulet Corp (PODD US)’s trade secrets and disclosing them to any third party.
Eoflow and other defendants must respond by 5 October. The court hearing is set for 16 October. The potential trial is to be discussed in Spring of 2024.
Medtronic Plc (MDT US) faces a difficult choice. If the injunction is enforced, Medtronic would acquire a ring-fenced asset exposed to potential court-determined liabilities.

PICC’s (1339 HK) Lifetime Low Implied Stub

People’s Insurance (PICC) (1339 HK) is currently trading at an all-time low implied stub.
Stripping out PICC’s 68.98% stake in PICC Property & Casualty H (2328 HK), the market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
PICC is outperforming the HSI. It’s just that PICC P&C is on a hot streak, possibly driven (pun intended) by EV insurance.

Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights

KRX approved the listing of ACE POSCO Group Focus. This fund mirrors the performance of the FnGuide POSCO Group Focus Index. KRX will announce the listing date next week.
This index encompasses 6 Posco affiliates and 4 non-Posco stocks. The top 3 constituents, each assigned a 25% weight, are POSCO Holdings, Posco International, and Posco Future M.
We should explore various long-short setups for stocks within the local battery sector (long Posco affiliates and short others), starting with the listing of this ACE POSCO Group Focus ETF.

Boustead Plantations (BPLANT MK): LTAT Emerges as a White Knight

Boustead Plantations (BPLANT MK) shares have been on a rollercoaster ride. As Kuala Lumpur Kepong (KLK MK) pulls its offer, LTAT has emerged as an unlikely white knight.
LTAT aims to launch a general offer at RM1.55 per share, in line with KLK’s aborted MGO price. The government will backstop LTAT’s funding for the offer.
LTAT is vague on approvals and timing. Regulatory approvals should be a formality as LTAT is the Armed Forces pension fund. At the last close, the gross spread was 10.7%.

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Oct 05

Daily Brief Event-Driven: JMDC (4483) Partial Offer Update (Updated Pro-Ration Range) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)
NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet
Proposals, Sweetened Offers & Synergies
CALB IPO Lock-Up – US$2.6bn Lockup Release but Mostly SOE Owned

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)

When this was launched, it traded more a fair bit on the first day, but then more volume traded than I expected. This could mean a couple of things.
Re-Reading the original doc leaves nuances. The change in management responsibilities this past summer make some holders less certain. It’s complicated.
There have been several blocks traded, and a large short instantiated. And if one has a more conservative estimate at a higher top-end participation, the back end gets uglier.

NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet

Today, Monex Group Inc (8698 JP) and NTT (Nippon Telegraph & Telephone) (9432 JP)‘s NTT Docomo announced a Capital and Business Alliance Agreement. It is a complicated deal.
Monex GROUP will create a holdco which owns Monex Inc (the broker) and sell 51% to Docomo. Docomo will consolidate. Monex Group will own 49% as an equity method affiliate.
Monex GROUP will then double its dividend, maybe buy back shares, and expects to grow as Docomo pushes and Monex invests. But what remains is a mixed bag.

Proposals, Sweetened Offers & Synergies

By Jesus Rodriguez Aguilar

The game is on with the sweetened offer from Lithia, valued at 35.4p/share (24.5p divi + stake in Pinewood). Pendragon PLC (PDG LN)‘s shares are trading just below, at 35.2p.
It is now the turn of either Hedin or AutoNation to raise their offers. 32p/share seems a fair value for the standalone business. Synergies could be worth up to 10.54p/share.
Assuming a bidder distributes 60% of synergies to Pendragon shareholders, a potential offer price of 38.3p/share, in cash, 8% above Lithia’s offer, could still be value enhancing.

CALB IPO Lock-Up – US$2.6bn Lockup Release but Mostly SOE Owned

By Sumeet Singh

CALB Group (3931 HK) raised around US$1.2bn in its Hong Kong IPO in Oct 2022. The lockup on its pre-IPO shareholders will expire tomorrow.
CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products in China.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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Oct 04

Daily Brief Event-Driven: Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All
NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd
UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise
Cainiao IPO: Index Inclusion Timeline
Setting up to Target Exclusion Stock Post Doosan Robotics’ KOSPI 200 Fast Entry

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

Midsize residential JREIT Daiwa Securities Living (8986 JP) (“DSLIC“) launched a follow-on equity offering to partially fund their recently-announced acquisitions.
The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.
In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC’s previous follow-on equity offerings.

NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd

There should be two changes for the NIFTY Index (NIFTY INDEX) in March. That could increase to three, but that would take some big price moves from now to January.
Impact on the potential changes is pretty large at over 6 days of ADV to trade from passive trackers. The impact is over 11 days of delivery volume.
Inclusion of Avenue Supermarts Ltd (DMART IN) in the F&O segment before January could lead to another change.

UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise

Over the weekend I wrote about Kasumigaseki Capital (3498 JP)‘s move to TSE Prime and then move to TOPIX. I noted earnings would be out 3 October.
I talked about the possibility of a surprise. They had revised full-year to end-Sep to ¥2bn. They got ¥2.05bn.
But after growing revenue 79% last year, and growing net profit 101%, this year they expect revs +60% and Net Profit +144%.

Cainiao IPO: Index Inclusion Timeline

Cainiao Smart Logistics (1437124D HK) has filed an application proof to list on the HKEX (388 HK) and could raise US$1bn at a valuation between US$15bn-20bn.
Cainiao Smart Logistics (1437124D HK) could get Fast Entry to the HSCI and be included in Southbound Stock Connect once the price stabilisation period is complete.
Inclusion in other indices will take longer with the highest probability of index inclusion in June. Earlier inclusion will depend on the IPO timing, size and allocation to strategic/cornerstone investors.

Setting up to Target Exclusion Stock Post Doosan Robotics’ KOSPI 200 Fast Entry