Event-Driven Archives | Page 81 of 187 | Smartkarma

Carlyle Group is buying Seiko Pmc Corp (4963 JP) from 54+% owner Dic Corp (4631 JP) and minorities in a Tender Offer with optical premium of 89%.
It looks good, takes advantage of tax code particularities, and the nature of the company disguises some value. Shareholder structure means this is basically a done deal before it starts.
With minimal foreign active investor ownership, and significant crossholder, ESOP, and director ownership, only a bit of retail actually needs to tender to make this successful.

S&P/ASX Index Rebalance (Sep 2023): Mostly Expected with a Few Surprises

There is 1 change for the S&P/ASX100 Index, 5 adds/ 6 deletes for the S&P/ASX 200 INDEX, and 10 adds/ 8 deletes for the S&P/ASX300 Index at the September rebalance.
There will be 4-14 days of ADV to trade on the S&P/ASX100 Index and S&P/ASX 200 INDEX adds while the impact on the deletions is between 3-12 days of ADV.
On average, the adds to the S&P/ASX 200 (AS51 INDEX) and S&P/ASX 300 Index have outperformed the deletes over the last few months.

Yuanta ETFs Rebalance: AI-Frenzy Means Tech Replaces Industrials; Shorts Surge; Big Positioning

There are 4 changes to the Yuanta/P-Shares Taiwan Top 50 ETF and 1 deletion for the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
The impact on the inclusions is larger in terms of flow but smaller in terms of days to ADV to buy. Shorts are higher on the deletions.
There appears to be big positioning on a lot of the stocks. But the ETF adds could move higher in the short-term on short covering.

China ETFs: Inflows Continue to Support the Market

Money continues to flow into mainland China ETFs taking the total inflows since 18 July to over US$25bn. This has likely helped stabilise the market and prevent a bigger fall.
The inflows continue to be largest on ETFs tracking headline indices – CSI 300, STAR50, CSI1000, CSI 500, SSE50, ChiNext. Plus there are inflows on some sectoral and thematic ETFs.
The skew between stocks gaining 20%+ over the period vs those dropping -20% or more has improved significantly over the last week.

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: Review Period Complete

The review period for the MVIS Global Rare Earth/Strategic Metals Index ended 31 August. The changes will be announced on 8 September and implemented at the close on 15 September.
Coming in around the 85% cutoff, Rising Nonferrous Metals Share (600259 CH) is a potential inclusion. There are two stocks that are very close to the 98% deletion threshold.
Lake Resources Nl (LKE AU) is a deletion from the S&P/ASX 200 (AS51 INDEX) at the September rebalance and there could be more to sell if deleted from this index.

Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!

The September 2023 index changes for the ES50 index was confirmed after the close on Friday 1st September 2023.
There will be two ADDs and two DELETEs. One set of changes was well anticipated by us. The other set comes as a major surprise to us.
Collectively, the two ADDs could see ~US$2.4bn index flows and the two DELs could see ~US$2.9bn index flows, with US$500mm of reverse funding flows.

Quiddity TDIV/50/100 Sep 23 Rebal: ALL 15 Changes Expected; US$420mn One-Way

The September 2023 index changes for the TDIV, T50, and T100 Indices were confirmed after the close on Friday 1st September 2023.
In this insight, we take a look at our final flow expectations for these index changes and the capping flow expectations for the TDIV index.
There could US$420mn one-way flows across these three indices during this rebalance event.

Merger Arb Mondays (04 Sep) – Eoflow, JSR, Seiko PMC, ENM, NWS, Costa, Symbio, Origin

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 – Seiko Pmc Corp (4963 JP), 111 Inc (YI US), Costa Group Holdings (CGC AU), Symbio Holdings (SYM AU), Eoflow (294090 KS), Orecorp Ltd (ORR AU).
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Pacific Current (PAC AU), T&K Toka Co Ltd (4636 JP), Allkem Ltd (AKE AU), Celltrion Healthcare (091990 KS).

Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move

The Brand-Spanking New (three weeks old) A-H Monitor has tables, charts, measures galore.
Last week was slightly disappointing but the Recommendations Outperformed the universe.
New stimulus measures are partly supply side, and a little bit demand side, but they’re not big enough yet to move the needle. Mainland ETF buying smells like National Team.

Seiko PMC (4963 JP): Carlyle’s JPY1,070 Tender Offer

Seiko Pmc Corp (4963 JP) has recommended Carlyle Group / (CG US)’s tender offer of JPY1,070 per share, an 88.7% premium to the undisturbed price.
Dic Corp (4631 JP) will not tender but vote for the share consolidation at the EGM. Post consolidation, DIC will sell its 54.51% stake to Carlyle at JPY799 per share.
Achieving the minimum ownership ratio (12.16%) requires a 26.7% acceptance rate, which is doable as the offer is attractive. The tender offer runs from 4 September to 17 October.

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Sep 03

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: STAR50 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF
Last Week In Event SPACE: Vingroup/VinFast, Prosus/Naspers, STAR CM
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Energy One, Costa Group, DDH1, ENM, Penguin
JPX-Nikkei 400 Rebal 2024: End-Aug 2023
Quiddity ASX Sep 23 Rebal: 15 Inflow/Outflow Names; Beware of Short Buildup; US$450mn One-Way
SBI Shinsei Bank (8303) EGM Done. TOPIX Removal on Weds, Last Day Is 27 Sep, Money Comes Next Year.
26 Sept Scheme Vote For ENM (128 HK)

Index Rebalance & ETF Flow Recap: STAR50, KOSPI200, Hang Seng, MVIS, AMFI, Jio, China ETF

The HSI, HSCEI, HSTECH and HSCI rebalances will take place at the close on 4 September since the market was closed on 1 September due to Typhoon Saola.
There will be a few announcements next week with Nikkei 225 early in the week and the MVIS series post close on Friday. Plus the STAR50 rebalances on Friday.
Another week of huge inflows into mainland China ETFs focused on the CSI 300 Index, STAR50 INDEX and CSI Smallcap 500 Index.

Last Week In Event SPACE: Vingroup/VinFast, Prosus/Naspers, STAR CM

Marginal float helped fuel the VinFast (VFS US) bubble. Then it popped.
The Prosus (PRX NA)/Naspers (NPN SJ) Circularity Detour and subsequent unwind created the B-Share construct which means they can maintain the voting control in South Africa without maintaining economic control.
The backlash against Star CM Holdings (6698 HK) calls into question the broader Chinese entertainment industry, and how it strikes a balance between viewership/profitability and ethical boundaries.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Energy One, Costa Group, DDH1, ENM, Penguin

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Quiet week – only one new deal: STG’s Offer for Energy One Ltd (EOL AU).
Key updates took place for Costa Group Holdings (CGC AU), DDH1 (DDH AU), ENM Holdings (128 HK), and Penguin International (PBS SP).

JPX-Nikkei 400 Rebal 2024: End-Aug 2023

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2024 based on trading data as of end-August 2023.

Quiddity ASX Sep 23 Rebal: 15 Inflow/Outflow Names; Beware of Short Buildup; US$450mn One-Way

The September 2023 review results for ASX indices were announced after the close on Friday 1st September 2023.
There will be 15 ADD names and 15 DELETE names across ASX 100, ASX 200, and ASX 300. Collectively, the ADDs could see one-way flow of roughly US$450mn.
Many names have a significant number of days to trade. Some of these names have seen a spike in short interest recently. This should be an interesting flow event.

SBI Shinsei Bank (8303) EGM Done. TOPIX Removal on Weds, Last Day Is 27 Sep, Money Comes Next Year.

Today, the EGM to approve the share consolidation (resulting in minority squeezeout and delisting) took place.
It was a done deal. So now it is done.
All that remains is for the technically adept to do what they expect they need to do.

26 Sept Scheme Vote For ENM (128 HK)

Back on the 2 June, small-cap fashion wear retailer ENM Holdings (128 HK) received a delisting Offer from major shareholder, Chinachem, at HK$0.58/share, in cash.
The Scheme Doc is now out after thrice being delayed. The EGM/Court Meeting will be held on the 26 September with expected payment around the 14 November.
There’s a whiff of opportunism embedded in the Offer. But being loss-making and illiquid, I’d expect the vote to still get up.

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Sep 02

Daily Brief Event-Driven: ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September

ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September

ENM Holdings (128 HK)‘s scheme document is out, with the vote scheduled for 26 September. The IFA considers Chime Corporation’s HK$0.58 per share offer fair and reasonable.
The spread of 7.4% reflects vote risk – cash required for the proposal is lower than the net cash, and the offer price is below the IFA’s SoTP valuation (HK$0.658).
Shareholder approval of the scheme is aided by no shareholder holding a blocking stake, a low AGM minority participation rate and no visible retail opposition to the offer.

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Sep 01

Daily Brief Event-Driven: End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2023 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2023
MVIS Australia A-REITs Index Rebalance Preview: Abacus Group Could Be Deleted
Unveiling the Potential of Korea Zinc’s Emerging Proxy Battle
MVIS Australia Equal Weight Index Rebalance Preview: Potential Deletes & Capping Increase Turnover
(Mostly) Asia M&A, Aug 2023: Celltrion Inc/Healthcare, Itochu Techno, UMW, Boustead, SK Rent
Georg Fischer/Uponor: Extension of Offer Period

End of Mandatory Lock-Up Periods for 49 Companies in Korea in September 2023

By Douglas Kim

We discuss the end of the mandatory lock-up periods for 49 stocks in Korea in September 2023, among which 7 are in KOSPI and 42 are in KOSDAQ.
These 49 stocks on average could be subject to further selling pressures in September and could underperform relative to the market.
Among these 49 stocks, top five market cap stocks include Kakao Games (293490 KS), SK Oceanplant (100090 KS), Korea Zinc (010130 KS), Fadu (440110 KS), and Vaxcell-Bio Therapeutics (323990 KS).

MVIS Australia A-REITs Index Rebalance Preview: Abacus Group Could Be Deleted

The review period for the September rebalance ended yesterday. There could be one deletion from the index and a bunch of capping changes.
The index changes will lead to a one-way turnover of 3.4% resulting in a one-way trade of A$21m. There are two stocks with over A$5m to trade.
Short interest has increased on a few REITs recently while decreasing on most of the other names.

Unveiling the Potential of Korea Zinc’s Emerging Proxy Battle

Korea’s local market is perceiving the present HMG investment as a crucial indicator, signaling the initiation of an intense proxy battle for Korea Zinc.
Given the relatively constrained nature of the neutral minority stakes, falling below 30%, there is considerable attention on the potential for a immediate-term share buying race.
This is expected to trigger momentum trading flows directed at Korea Zinc. Such a scenario might lead the stock price to venture into an overshooting zone.

MVIS Australia Equal Weight Index Rebalance Preview: Potential Deletes & Capping Increase Turnover

JB Hi-Fi Ltd (JBH AU) and Charter Hall (CHC AU) could be deleted as the lowest ranked current index constituents.
There are three other stocks that are close to the deletion threshold and a change in the free float could result in the stocks being deleted.
Short interest has been increasing on JB Hi-Fi Ltd (JBH AU), Charter Hall (CHC AU) and Lendlease Group (LLC AU) and could be partially driven by potential index deletions.

(Mostly) Asia M&A, Aug 2023: Celltrion Inc/Healthcare, Itochu Techno, UMW, Boustead, SK Rent

For the month of August 2023, 11 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$29bn.
The average premium for the new deals announced (or first discussed) in August was 25%. The average YTD is 34%.
This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Georg Fischer/Uponor: Extension of Offer Period

By Jesus Rodriguez Aguilar

Georg Fischer AG (FI/N SW) has so far purchased a 9.5% stake of Uponor OYJ (UNR1V FH) in the market. Georg Fischer’s shareholding plus irrevocable undertakings represent in total 46.4% (30 August).
There has been no disclosure about the shares tendered so far. Georg Fischer has extended the offer period until 31 October, while waiting to receive clearance from the European Commission.
Gross spread is 0.03%, so probably it is not worth becoming involved. The reason for this low spread is the acquisition of shares in the market by Georg Fischer.

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Aug 31

Daily Brief Event-Driven: STAR CM (6698 HK): Grave Accusations and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

STAR CM (6698 HK): Grave Accusations
Ichigo (2337) Buyback – History and Shareholder Structure Give an Edge
REIT Pair Trade: Long DCREIT SP/ Short KDCREIT SP
GS AM Consortium/ Kahoot!: Extension of Acceptance Period, Spread

STAR CM (6698 HK): Grave Accusations

STAR CM Holdings (6698 HK), a variety program intellectual property creator and operator, was listed last December and promptly gained 475% by early August. All good so far.
Shares cratered on the 18 August (-23.4%) and are currently 76% adrift from its recent high. The reason? A viral clip from late pop diva Coco Lee discussing unfair treatment.
The music competition show, in which Coco appeared, pushed back on any impropriety; however, its broadcaster has temporarily suspended the program. This is no easy fix.

Ichigo (2337) Buyback – History and Shareholder Structure Give an Edge

Today after the close, Ichigo Inc (2337 JP) announced a stock buyback to go through the next 6 months. It is ¥3bn, which is not huge, but not nothing.
It seems like a constant refrain, but shareholder structure matters.
Ichigo has a history of doing buybacks (10% of shares out are in treasury), and the historical patterns are interesting when comparing announced intention and actual result.

REIT Pair Trade: Long DCREIT SP/ Short KDCREIT SP

After underperforming since listing, Digital Core REIT (DCREIT SP) has outperformed Keppel DC REIT (KDCREIT SP) over the last few months.
However, Digital Core REIT (DCREIT SP) still trades at cheaper valuations as compared to Keppel DC REIT (KDCREIT SP).
There could be relative outperformance over the next few weeks and any underperformance can be used to enter positions in the pair. There is an important catalyst.

GS AM Consortium/ Kahoot!: Extension of Acceptance Period, Spread

By Jesus Rodriguez Aguilar

It may take some time before shareholders can see how Kahoot’s significant investments in market share and business growth pay off in a positive bottom line.
GS AM already has c.59% and the current extension lasts until 8 September. Spread is 2.9%/15.4% (gross/annualised, assuming settlement by 13 November).
Taking a NOK 31.2 break, the last closing share price implies just 74% probability of deal completion, however I believe the spread will close following. I’d be long the shares.

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Aug 30

Daily Brief Event-Driven: Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros! and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!
Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)
Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts
Energy One: Busby Baulks At STG’s Offer
Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional
Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion
Zeus Co: Listing of JET Co Japanese Subsidiary and NAV Valuation
Zeus Co (079370 KS): Is J.E.T.’s Spin-Off Priced In?
AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

Prosus/Naspers – The ουροβóρος Is Dead! Long Live The Ouroboros!

Shareholders of Prosus NV (PRX NA) and Naspers (NPN SJ) approved AGM agenda items late last week to enable the two Capitalisation Issues and Naspers’ Share Consolidation to move forward.
What Will Happen: Prosus will issue new N shares to its shareholders and Naspers will reject them. Naspers will issue new shares to its shareholders, and Prosus will reject them.
Naspers will own ~42.9% of Prosus, Prosus will own 0.02% of Naspers. Sales of Tencent shares will continue. Share Buybacks too. But the ouroboros will have spit out its tail.

Final Hang Seng Index Flows for 1 Sep Rebal (AAC, EastBuy, BABA, Sinopharm, Trip.com)

The Hang Seng announces changes along with prospective flows 2wks before the actual change. Capping flows are calculated off the close three days before implementation. That was today.
There have been some minor movements in the rankings. Nothing major. There is still just over US$1bn to trade, one-way.
Enclosed are totals for each of the three major indices (Hang Seng, HSCEI, and HS Tech) and then netted flows. The biggest is US$470mm of BABA to sell. Spreadsheet attached.

HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Sep 2023)

The September rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
The largest passive inflows will be on East Buy (1797 HK), JD.com (9618 HK), Ping An (2318 HK), Sinopharm (1099 HK), BYD (1211 HK), Lenovo (992 HK) and Trip.com (9961).
The largest passive outflows will be on Alibaba (9988 HK), Li Auto (2015 HK), Meituan (3690 HK), AAC Technologies (2018 HK), Kuaishou (1024 HK), COGARD (2007) and CG Services (6098).

Korea’s First Sector Inverse ETF: Discussing Flow Trading Impacts

KB Asset Management has announced the release of an inverse ETF, containing the top 10 core stocks in the secondary battery sector.
Given the substantial fluctuations in SSF trading volume in Korea, the flow increase of this ETF might temporarily lead to an unusually high level of backwardation.
Also, we may observe a phenomenon known as ‘wag-the-dog’ as the flow of this inverse ETF could act as a triggering factor for a temporary spark.

Energy One: Busby Baulks At STG’s Offer

Yesterday (28 August) software provider Energy One Ltd (EOL AU) announced an indicative Offer, by way of a Scheme, from STG at A$5.85/share, a solid 44% premium to last close.
Energy One has granted STG due diligence on an exclusive basis and the board is supportive if terms are firmed. All looks good. However …
… Vaughan Busby, a NED and founding CEO of Energy One, is not aligned with the board. And he holds ~14%.

Shougang Fushan Resources (639 HK): Partial Offer Is Unconditional

Shougang Fushan Resources (639 HK) shareholders approved the partial offer to acquire a maximum of 125.0 million shares (2.47% of outstanding shares) at HK$2.40 per share and the whitewash waiver.
The partial offer is now unconditional and will close on 12 September. Considering the irrevocables not to tender, a 100% minority participation rate implies a minimum proration of 2.98%.
If the partial offer’s acceptance rate mirrors today’s general meeting minorities participation rate of 63.6%, it would imply a minimum proration of 4.69%.

Core Concept Technologies (4371 JP) – A BIGLY 2ndary Offering (Re-IPO), and Eventual TOPIX Inclusion

Last week I wrote about another situation, noting Equity Offering Into TOPIX Inclusion is a standard construct. Here we have another.
DX and HR Support company Core Concept Technologies Inc (4371 JP) today announced a large (it ups Real World Float by 64%, and is 33 days of ADV) secondary offering.
The “reason” for the offering mentions a desire to move to TSE Prime in future.

Zeus Co: Listing of JET Co Japanese Subsidiary and NAV Valuation

By Douglas Kim

Our NAV valuation of Zeus Co suggests an implied price target of 32,991 won, which is 13% lower than current share price.
Given the lack of upside, we would avoid Zeus shares at current prices.
Currently, JET Co is listed on Tokyo PRO Market Exchange. JET Co is expected to switch its listing to the Tokyo Standard Market Exchange.

Zeus Co (079370 KS): Is J.E.T.’s Spin-Off Priced In?

Zeus Co Ltd (079370 KS), a maker of semiconductor equipment, flat panel display equipment, and facility automation solutions, intends to spin off 95%-held J.E.T. Co (6228 JP) next month.
J.E.T., a semiconductor etching equipment play, will list on the 25 September. Pricing is expected around the 5 September.
Zeus’ share price has fallen 33% in the past month. That may be justified.

AMFI Stock Reclassification Preview (Dec 2023): Overlap Between Active & Passive Flows

We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.

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Aug 29

Daily Brief Event-Driven: China: Huge ETF Inflows & Impact on Stocks and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

China: Huge ETF Inflows & Impact on Stocks
Positioning for the Timing of HLB, the Latest Target in the KOSDAQ Exodus
StubWorld: China Conch Plumbs New Lows
KOSPI200 Index Rebalance Preview: Increasing Number of Changes in December
Vingroup: VinFast’s Valuation Makes No Sense
Seven & I: An Update on Investor Activism
EQD | Nikkei 225 (NKY) Rising but for How Long?
Quiddity Leaderboard ES50 Sep 23: US$1.3bn Flow for Ferrari Likely; Announcement Soon
EQT/SUSE: Terms and Spread

China: Huge ETF Inflows & Impact on Stocks

Nearly US$20bn has flowed into mainland China listed ETFs since 18 July and could be driven by the National Team supporting the market.
Most of the inflows have been focused on large cap indices including CSI 300, STAR50, CSI 500, SSE50, ChiNext and other sectoral and thematic ETFs.
The largest impact has been on the SSE STAR50 (STAR50 INDEX) constituents, but that has not stopped the slide in the stocks.

Positioning for the Timing of HLB, the Latest Target in the KOSDAQ Exodus

HLB’s process of selecting a lead underwriter for the KOSPI listing has been witnessed in Yeouido.
The price impact becomes most evident on the board approval date as the point at which this impact is most pronounced is substantially accelerated due to the market’s learning effect.
There is a strong likelihood that HLB will have its board decision by mid-September, necessitating our preparation for a position setup targeting this timing.

StubWorld: China Conch Plumbs New Lows

The China Conch Venture Holdings (586 HK)/ Anhui Conch Cement (600585 CH) ratio, and the implied stub, are now at all-time lows.
Preceding my comments on China Conch/Anhui 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 Index Rebalance Preview: Increasing Number of Changes in December

Nearly two-thirds of the way through the review period, we see nine potential changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
The potential adds are dominated by the Materials sector while the potential deletions are mainly from the Consumer Discretionary sector.
The impact on the potential inclusion ranges from 0.14-12 days of ADV while the impact on the potential deletions varies from 3.1-30 days of ADV.

Vingroup: VinFast’s Valuation Makes No Sense

VinFast (VFS US), the EV arm of Vietnamese conglomerate Vingroup Jsc (VIC VN), commenced trading on the 14 August. And promptly took off.
VinFast’s current market cap is ~4x General Motors (GM US)‘s, twice that of Mercedes-Benz (MBG GR)‘s, and the second-largest pure-play EV-maker after Tesla (TSLA US).
Vingroup’s holding in VinFast is worth 13x its market cap. This is not sustainable.

Seven & I: An Update on Investor Activism

By Oshadhi Kumarasiri

Sogo & Seibu’s labor union threatens strike if job protection talks stall. This emphasizes the number of considerations Seven & I Holdings (3382 JP) had to consider during changes.
Had ValueAct shown more patience, they might have worked with Seven & I to improve the struggling Eto Yokado supermarkets business.
Thus, ValueAct’s investor activism campaign seem unlikely to achieve a full restructuring of underperforming businesses at Seven & I.

EQD | Nikkei 225 (NKY) Rising but for How Long?

By Nico Rosti

Rebound on Nikkei 225 INDEX may not last for long, 2-3 weeks tops, it will encounter resistance no later than mid of September (most unfavorable month for stocks gains).
Resistance levels to watch vary, depending on number of weeks up. For this week and the next, a new pullback could start from 32476 and 32817.
If the index goes =>33000, it means it is rallying and will not correct into September, the rally then could last into October.

Quiddity Leaderboard ES50 Sep 23: US$1.3bn Flow for Ferrari Likely; Announcement Soon

The ES50 Index is one of the most highly-tracked indices in mainland Europe and the annual index review takes place in September.
The index changes will be confirmed after the close on 1st September 2023.
In this insight, we take a final look the names leading the race to become ADDs/DELs for the upcoming index review.

EQT/SUSE: Terms and Spread

By Jesus Rodriguez Aguilar

EQT offers €16/share to delist SUSE (SUSE GR) (split into consideration and interim dividend) and merge it into a Luxembourg SA. On 24 August, EQT published the offer document.
There will be no squeeze-out. The multiples offered (4.8x EV/NTM Fwd Revenue, 14x EV/Fwd NTM EBITDA, source: IBES) are generally consistent with European software companies.
With the stock trading at a 3% gross spread, I see limited upside from here and no interloper risk. Annualised spread is 33.4%. Long and tender.

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Aug 28

Daily Brief Event-Driven: Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing
STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light
Merger Arb Mondays (28 Aug) – Eoflow, UMW, Boustead, Costa, Estia, Pacific Current, Golden Eagle
EQD | KOSPI 200 Index’s Decisive Week: New WEEKLY LONG Supports

Jio Financial (JIOFIN IN): Upcoming Passive Selling & Timing

Jio Financial Services (JIOFIN IN) started trading on 21 August following its demerger from Reliance Industries (RIL IN). The stock was locked limit down on its first four trading days.
Passive NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers hold Jio Financial Services (JIOFIN IN) stock and will need to sell over the next few days.
We estimate passive trackers will need to sell around 188m shares (US$487m) of Jio Financial Services (JIOFIN IN) next week and the stock could head lower in the short term.

STAR50 Index Rebalance: Two Changes; Pre-Positioning Appears Light

As expected, the index committee has used a 6-month minimum listing history and that results in two changes to the SSE STAR50 (STAR50 INDEX) in September.
Piotech (688072 CH) and Hwatsing Technology (688120 CH) will replace Suzhou Nanomicro Technology (688690 CH) and Zhuhai CosMX Battery (688772 CH) in the index.
One-Way turnover is estimated at 2.83% and will result in a one-way trade of CNY 3,562m. There does not appear to be a lot of pre-positioning on the stocks.

Merger Arb Mondays (28 Aug) – Eoflow, UMW, Boustead, Costa, Estia, Pacific Current, Golden Eagle

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 – 111 Inc (YI US), Costa Group Holdings (CGC AU), Eoflow (294090 KS), ENM Holdings (128 HK), Symbio Holdings (SYM AU), Mason Group Holdings (273 HK), JSR.
Lowest spreads – Healius (HLS AU), Toyo Construction (1890 JP), Celltrion Healthcare (091990 KS), T&K Toka Co Ltd (4636 JP), Yaizu Suisankagaku Industry (2812 JP), Sanei Architecture Planning (3228 JP).

EQD | KOSPI 200 Index’s Decisive Week: New WEEKLY LONG Supports

By Nico Rosti

The KOSPI 200 INDEX has reached a tipping point: the previous Bull run trend is cracking, there is a high chance the index will drop.
The current MRM WEEKLY pattern is bearish: if the index falls for more than 1 week it may tailspin into a 4-6 weeks correction in September.
Cover your LONG holdings, support can be found at 325 (Q2), 315 (Q3) and 297 (Inner Fence).

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Aug 27

Daily Brief Event-Driven: Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity
Lunit (Specializes in AI-Based Cancer Diagnosis and Treatment): Rights Offering of 202 Billion Won
Index Rebalance & ETF Flow Recap: HSCEI, HSI, HSTECH, Yuanta ETFs, China ETFs, REMX, KOSPI
(Mostly) Asia-Pac Weekly Risk Arb Wrap: SK Rent A Car, UMW, BPlant, E Guardian, EOflow, Oishi
Quiddity A/H Premium Monitor 🦄 (As of 25 Aug 2023)
Last Week In Event SPACE: JSR, Intouch/Thaksin, Softbank/ARM, M&A Research, Premier
Weekly Deals Digest (27 Aug) – Golden Eagle, Costa, Boustead, UMW, ARM, Integral, S.F. Holding

Medical Data Vision (3902) – SBI Upping Their Stake Means Opportunity

On Friday after the close, SBI Holdings (8473 JP) – which currently owns 24.63% of Medical Data Vision (3902 JP) – announced it would buy another 2,043,200 shares.
This market purchase would lift them to just under 30% by year-end.
There have been similar trades done by others in the past and they were worth looking at.

Lunit (Specializes in AI-Based Cancer Diagnosis and Treatment): Rights Offering of 202 Billion Won

By Douglas Kim

On 24 August, Lunit announced a rights offering capital increase of 202 billion won.
Lunit’s current share price is 155,700 won and its market cap is 1.9 trillion won. The expected rights offering price is 30% discount to current price.
We have a positive view of Lunit and its rights offering. Lunit is one of the leading companies in Korea that specializes in AI-based cancer diagnosis and treatment solutions.

Index Rebalance & ETF Flow Recap: HSCEI, HSI, HSTECH, Yuanta ETFs, China ETFs, REMX, KOSPI

The JPX Nikkei 400 index rebalance will take place on Wednesday, MSIC on Thursday and HSI, HSCEI, HSTECH and HSCI on Friday.
There are review cutoffs for the MVIS family of indices, and multiple announcements of changes to various indices during the week.
There were inflows to mainland China ETFs, iShares India ETF (INDA), Ishares India Small-Cap (SMIN) and iShares EmergingMarkets ex China (EMXC) while there were outflows for iShares Emerging Markets (EEM).

(Mostly) Asia-Pac Weekly Risk Arb Wrap: SK Rent A Car, UMW, BPlant, E Guardian, EOflow, Oishi

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals this week: SK Rent A Car (068400 KS)‘s Tender Offer; Sime Darby (SIME MK)‘s Offer for UMW (UMWH MK); KLK‘s Offer for Boustead Plantations (BPLANT MK).
Key updates took place for Golden Eagle Retail (3308 HK), JSR Corp (4185 JP), E Guardian Inc (6050 JP), Eoflow (294090 KS), and Oishi Group PCL (OISHI TB).

Quiddity A/H Premium Monitor 🦄 (As of 25 Aug 2023)

This week it is changed from H/A Discount to A/H Premium, by popular demand. Some Northbound data is added. We kept the unicorn.
Last week saw a win/loss ratio of 21:13. Average recommended pair on the week earned 0.9% if Sunday recos executed Monday close, 1.35% if executed Monday VWAP.
6 Unwinds and 3 new trades recommended this week. As always, feedback desired to make this even better.

Last Week In Event SPACE: JSR, Intouch/Thaksin, Softbank/ARM, M&A Research, Premier

Why is JSR Corp (4185 JP) trading wide? FUD and Flows.
Intouch Holdings (INTUCH TB) plumbs new 12-month lows for its implied stub, and NAV discount as the former PM returns from exile.
You would NOT want to short M&A Research Institute (9552 JP) into the inclusion. But the ascension to TOPIX is not a surprise.

Weekly Deals Digest (27 Aug) – Golden Eagle, Costa, Boustead, UMW, ARM, Integral, S.F. Holding

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 – ARM Holdings (1822695D US), Integral Corporation (5842 JP) and S.F. Holding (002352 CH) IPOs.
Event-Driven developments – Boustead Plantations (BPLANT MK), UMW Holdings (UMWH MK), Eoflow (294090 KS), Golden Eagle Retail (3308 HK), Costa Group Holdings (CGC AU), Metro Pacific Investments Co (MPI PM).

💡 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

Aug 26

Daily Brief Event-Driven: Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea
Boustead Plantations’ Lifetime High Offer Price

Overlooked by the Market: A Compelling Long Short Opportunity in Newly-Listed ETF Rebal in Korea

In the inaugural constituent selection, FnGuide revealed a noteworthy pattern. Given the smaller market capitalization of the electrolyte suppliers, FnGuide has included only the largest among them in this ETF.
SoulBrain, categorized by FnGuide as an electrolyte supplier like Chunbo, has significantly outperformed Chunbo. As a result, there is a considerable likelihood that SoulBrain will replace Chunbo in December.
The price impact from ETF rebalancing trading has disappeared substantially in Korea. We should focus on the first rebalancing of newly listed ETFs that haven’t yet established a learning effect.

Boustead Plantations’ Lifetime High Offer Price