Most Read Archives | Page 4 of 91 | Smartkarma

With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.

Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade

With the review period now complete, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
Price changes and changes to dividend estimates have led to names dropping off the list of potential adds and deletes over the last week.
Constituent changes, capping and funding flows will lead to a one-way turnover of 12.7% and a one-way trade of US$1.17bn. There are 12 stocks with over 4x ADV to trade.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)

The June rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$32bn (US$4.1bn).
Li Auto, Alibaba, NetEase, Zijin Mining, SenseTime and BYD Electronics are the largest buys while Tencent, Meituan, JD.com, Kuaishou Technology, Xiaomi and HSBC Holdings are the largest sells.

Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling

Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.

Softbank (9984 JP): This Time, It’s Different

By Victor Galliano

Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount

What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?

FSS wants Nikke’s MAU data to address revenue concerns. They also seek April and May sales data for Stellar Blade to address valuation concerns despite its recent launch.
Shift Up updated the prospectus with Nikke’s increasing MAU data but didn’t include Stellar Blade sales data. FSS may request further revisions, possibly delaying the IPO again.
Nikke’s MAU has risen but plateaued versus the previous quarter, and uncertainty surrounds Stellar Blade’s April-May sales, potentially impacting IPO pricing.

TOPIX Inclusions: Who Is Ready (June 2024)

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.
There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.

MV Australia Equal Weight Index Rebalance Preview: Close Deletions in June

With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the June rebalance.
Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.6% and a one-way trade of A$83m.
There are 6 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.

Guzman Y Gomez IPO – The Negatives – Lawsuits and Management Churn

Guzman Y Gomez plans to raise around US$160m in its Australian IPO.
GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
In this note, we talk about the not-so-positive aspects of the deal.

Altium (ALU AU)’s 12th July Scheme Vote. Renesas’ Done Deal

Back on the 15th Feb, Renesas Electronics (6723 JP), a supplier of advanced semiconductors, entered into a Scheme with Altium Ltd (ALU AU).
Altium shareholders are being offered A$68.50/share, in cash, a lifetime high.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 12th July. Expected implementation on the 1 August. The IE says fair & reasonable.

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Jun 07

Most Read: Asia Cement China, Lasertec Corp, CK Asset Holdings, Softbank Group, Toyota Industries, Shift Up, Meituan, CELSYS and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Asia Cement (743 HK): $3.22/Share Offer – Really?
Lasertec (6920): Some of the Accusations Are Disgraceful, Some Not
CK Asset Holdings (1113 HK): First Down, Then Up?
Softbank (9984 JP): This Time, It’s Different
Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?
Meituan Is the Biggest Beneficiary of China’s Domestic Travel Recovery
MT/ Meituan (3690 HK): 1Q24, Total Revenue Up by 25% and Initiatives Loss Down by 45%
TOPIX Inclusions: Who Is Ready (June 2024)

Asia Cement (743 HK): $3.22/Share Offer – Really?

After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected.
Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.

Lasertec (6920): Some of the Accusations Are Disgraceful, Some Not

By Michael Allen

Lasertec shares dropped nearly 8% following a scathing 53-page report by Scorpion Capital, accusing management of “colossal fraud.”
The SC report is shrill, in our view, and therefore, we think we add value by contributing a second opinion.
In our view, Lasertec is due for a correction even if SC’s report is inundated by hyperbole.

CK Asset Holdings (1113 HK): First Down, Then Up?

CK Asset Holdings (1113 HK) has traded lower recently and shorts have exploded in the stock in the last few months.
CK Asset Holdings (1113 HK) has underperformed its peers in the last 6 months and trades cheaper on forward PE and price to book.
There will be passive selling in the stock in just over two weeks. There will be positioning, but not enough to meet passive supply. Expect a further move lower.

Softbank (9984 JP): This Time, It’s Different

By Victor Galliano

Elliott Management has emerged as a 2%+ shareholder in SoftBank group and is driving for share buybacks of upto USD15bn; we see this as a game changer for minority shareholders
Recent moves to enhance corporate governance in Japan have taken root, yet we see Softbank group as a laggard on corporate governance which been targeted by an experienced activist
Softbank shares trade at a 54% discount to the estimated NAV; an activist like Elliott on board could meaningfully drive shareholder value creation and a narrowing of the NAV discount

Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling

Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.

Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?

By William Keating

Activist short seller Scorpion alleges Lasertec is a “colossal fraud” and “ticking time bomb”
Most of their allegations relate to problems with Lasertec’s EUV mask inspection tools
Lasertec achieved Intel’s distinguished supplier ward for the past six years and last December landed an award from TSMC for “Distinguished EUV Mask Inspection and Metrology Collaboration”. What gives?

What Did FSS Point Out to Shift Up? & What Impact Would It Have on Bookbuilding Sentiment?

FSS wants Nikke’s MAU data to address revenue concerns. They also seek April and May sales data for Stellar Blade to address valuation concerns despite its recent launch.
Shift Up updated the prospectus with Nikke’s increasing MAU data but didn’t include Stellar Blade sales data. FSS may request further revisions, possibly delaying the IPO again.
Nikke’s MAU has risen but plateaued versus the previous quarter, and uncertainty surrounds Stellar Blade’s April-May sales, potentially impacting IPO pricing.

Meituan Is the Biggest Beneficiary of China’s Domestic Travel Recovery

By Andy Fu

During the upcoming Dragon Boat Festival, both flight and railway traffic seems sluggish, indicating a cooled-down enthusiasm for long-distance trips due to budget constraints.
Data points to booming short-distance travel with self-driving as the major means, helped by lower price;
Benefiting from hotel booking and catering, Meituan is the biggest beneficiary of such consumption downgrade.

MT/ Meituan (3690 HK): 1Q24, Total Revenue Up by 25% and Initiatives Loss Down by 45%

By Ming Lu

Total revenue increased by 25% YoY and all business lines grew strongly.
In 1Q24, the operating losses from new initiatives decreased by 45% YoY, but new initiatives revenue still grow.
We conclude that the price target can be double of the market price.

TOPIX Inclusions: Who Is Ready (June 2024)

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.
There have been no TOPIX Inclusions in 2024 so far although dozens of companies have been able to meet the key Section Transfer requirements on paper for several months.
However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.

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Jun 06

Most Read: Shinko Electric Industries, China Traditional Chinese Medicine, JD.com , Sumitomo Mitsui Financial Group, Asia Cement China, Shift Up, Sakura internet, Hyundai Motor, CK Asset Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update
China TCM (570.HK) Privatization Update – Investors May Need to Prepare for a Longer Wait
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)
SMFG Cross-Shareholding – At Least US$17bn of Cross-Shareholding to Sell, Planning to Speed It Up
Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail
Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April
Sakura Internet Placement – Beneficiary of the AI-Wave Looking to Double Down
Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries
CK Asset Holdings (1113 HK): First Down, Then Up?
Asia Cement (743 HK): $3.22/Share Offer – Really?

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
Nearly 5mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 12wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 2.6% wider than at narrowest. In May, gap risk narrowed as Shinko underperformed Ibiden.

China TCM (570.HK) Privatization Update – Investors May Need to Prepare for a Longer Wait

By Xinyao (Criss) Wang

The approval/filing process of China TCM’s privatization is complicated and would take some time, but there’re almost no cases of disapproval. It also depends on the adequacy of materials submitted.
Due to the extension of time for the despatch of Scheme Document, this process would be delayed for more months.But we should receive clear information by October at the latest.
For arbitrageurs, China TCM is an investment opportunity of high success rate, which becomes more attractive if HK stock market is depressed.It’s better suited to idle funds considering potential risks/returns.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)

The June rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$32bn (US$4.1bn).
Li Auto, Alibaba, NetEase, Zijin Mining, SenseTime and BYD Electronics are the largest buys while Tencent, Meituan, JD.com, Kuaishou Technology, Xiaomi and HSBC Holdings are the largest sells.

SMFG Cross-Shareholding – At Least US$17bn of Cross-Shareholding to Sell, Planning to Speed It Up

Following up on our earlier cross-shareholding notes, in this note we look at Sumitomo Mitsui Financial Group (8316 JP) cross-shareholding.
SMFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$17bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

Asia Cement China (743 HK): A Low-Balled Offer Set up to Fail

Asia Cement China (743 HK) disclosed a Cayman scheme privatisation offer from Asia Cement (1102 TT) at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close.
The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break.

Shift Up Delays the IPO and Stellar Blade Tops Number One Game in the US in April

On 5 June, Shift Up announced that it will be postponing its IPO to July. The original book building period for the institutional investors was from 3 to 13 June.
The final book building date has been postponed to 27 June. The subsequent public offering subscription for general investors was also postponed to 2 to 3 July.
A major investment positive of Shift Up is enormous initial success of Stellar Blade which was the best selling game in the U.S. and numerous other countries in April 2024.

Sakura Internet Placement – Beneficiary of the AI-Wave Looking to Double Down

By Clarence Chu

Sakura internet (3778 JP) is looking to raise US$127m from its primary follow-on. Proceeds will be used towards purchasing GPU servers, and constructing new data center facilities.
While 11% of total shares outstanding are offered here, the deal would be easily digested by the market, representing just 0.8 days of its three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.
Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.
Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.

CK Asset Holdings (1113 HK): First Down, Then Up?

CK Asset Holdings (1113 HK) has traded lower recently and shorts have exploded in the stock in the last few months.
CK Asset Holdings (1113 HK) has underperformed its peers in the last 6 months and trades cheaper on forward PE and price to book.
There will be passive selling in the stock in just over two weeks. There will be positioning, but not enough to meet passive supply. Expect a further move lower.

Asia Cement (743 HK): $3.22/Share Offer – Really?

After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected.
Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.

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Jun 05

Most Read: Mmg Ltd, SK Inc, Shinko Electric Industries, Kakaopay , JD.com , Great Eagle Holdings, Tencent, BYD Electronics, Northern Mining and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MMG (1208 HK) – $1.1bn+ Rights Offering – Expect Regular Rights Trading Dynamics
Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won
Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update
Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)
StubWorld: What Now With Langham (1270 HK)?
MSC May Rebalance: SA & China Net Sells, NPN, PRX & Tencent Sold Down on Buybacks
HSI/HSCEI/HSTECH June 2024 Rebal Final Re-Capping (Or Re-Re-Capping) Flows
MMG (1208 HK): US$1.2bn Highly Dilutive Rights Issue
Northern Minerals (NMI AU): Chinese Investors Forced To Exit

MMG (1208 HK) – $1.1bn+ Rights Offering – Expect Regular Rights Trading Dynamics

Mmg Ltd (1208 HK) today announced a 2:5 Rights Offering to raise US$1.15bn at HK$2.62/share in order to pay down debt from their recent Botswanan copper mine acquisition.
It was a sizeable acquisition, and the near-term EV/EBITDA of the acquisition is 10x or above. The longer-term EV/EBITDA is in the 3s based on expansion later this decade.
The Rights Offering is underwritten, supported by its 67.5% owner. SOUTHBOUND holds 10+%. There are short dynamics, arb dynamics, “don’t wanna spend more” dynamics. There’s a path here.

Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won

We discuss the outlook for the likely impact on SK Inc post record divorce ruling for the SK Group Chairman Chey Tae-Won and his estranged wife Roh So-Young.
Last week, a South Korean appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh. Chey is appealing this case and the Supreme Court’s ruling is still pending.
It is in the best interest of SK Inc to raise the overall value of the company since the payment of the divorce is mostly based in cash.

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
Nearly 5mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 12wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 2.6% wider than at narrowest. In May, gap risk narrowed as Shinko underperformed Ibiden.

Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay

Alipay will come out of its placement linked lockup for its remaining stake in Kakaopay (377300 KS) today.
Alipay (i.e. Alibaba Group (9988 HK)) had earlier sold some of its stake in Jun 2022 and Mar 2024. It still has over US$1bn worth of shares left to sell.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)

The June rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$32bn (US$4.1bn).
Li Auto, Alibaba, NetEase, Zijin Mining, SenseTime and BYD Electronics are the largest buys while Tencent, Meituan, JD.com, Kuaishou Technology, Xiaomi and HSBC Holdings are the largest sells.

StubWorld: What Now With Langham (1270 HK)?

Unexpectantly, Great Eagle Holdings (41 HK) said it would not proceed with an Offer; and Hong Kong hotel-play Langham Hospitality (1270 HK) promptly cratered. But why the flip flop?
Preceding my comments on GE, Langham and Champion REIT (2778 HK), 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%.

MSC May Rebalance: SA & China Net Sells, NPN, PRX & Tencent Sold Down on Buybacks

By Charlotte van Tiddens, CFA

MSC indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R41.9bn, R25bn traded in the closing auction (60%).
Turnover at the February rebalance was R25.6bn. Most SA constituents were pushed lower in the closing auction and for the day, consistent with the downweighting of SA Inc.
China was downweighted in the ACWI and EM indices for a second straight quarter, reducing the country weight in ACWI by 6bps to 2.69%.

HSI/HSCEI/HSTECH June 2024 Rebal Final Re-Capping (Or Re-Re-Capping) Flows

The HSI added BYD Electronics (285 HK) and deleted Country Garden Services (6098 HK). HSCEI added Zijin Mining Group Co Ltd H (2899 HK) deleted Xinyi Solar Holdings (968 HK)
HSTECH had no changes, but lots of flow. The index team sets capping levels, then resets them a three days before the actual rebalancing. There were some capping/recapping changes.
Below we offer tables showing all the changes and flows across the indices for each stock, ranked by Flows, ADV, and Ticker. And a spreadsheet with all the relevant data.

MMG (1208 HK): US$1.2bn Highly Dilutive Rights Issue

Mmg Ltd (1208 HK) will raise HK$9.1bn (US$1.2bn) through 2 rights shares for every 5 existing shares rights offering. The rights price is HK$2.62, a 24.7% discount to the TERP.
The rights proceeds will be used to repay existing debt, which will allow it to use other funds to better support the ongoing development of the operating mines.
MMG shares should continue to decline heading into the ex-rights date. The shares go ex-rights on 11 June, and the rights start trading from 24 June to 2 July (inclusive).

Northern Minerals (NMI AU): Chinese Investors Forced To Exit

Back in February last year, the Aussie Treasurer prohibited Yuxiao Fund from buying an additional 9.92% in Northern Minerals (NTU AU) which would have increased its stake to 19.9%.
On the 20th November 2023, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis resigned his post and the EGM cancelled.
The Aussie Treasurer has now made orders requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days.

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Jun 04

Most Read: Vanguard Intl Semiconductor, United Nova Technology , Yunnan Aluminium Co Ltd A, Biwin Storage Technology Lt, Guosen Securities , Victory Giant Technology -A, Yankuang Energy Group, Webtoon Entertainment, Nagatanien Holdings, Beijing Strong Biotechnolo-A and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade
CSI All Share Semiconductor Index Rebalance: Lots of Changes in June
CSI All Share IB & Brokerage Index Rebalance: Couple of Large Flow & Impact Names
ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade
Yankuang Energy Placement – Doesn’t Appear Well Flagged Although Deal Size Is Large
Webtoon Entertainment IPO Preview
Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.
United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.
United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.

CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade

There are 12 changes for the CSI 300 Index (SHSZ300 INDEX) and 50 changes for the CSI Smallcap 500 Index (SH000905 INDEX) in June. Most changes were expected.
There are a lot of stocks with over 1 day of ADV to trade. The round-trip trade in June is estimated to be US$5bn.
The adds have outperformed the deletes for both indices but the return profile of a long adds/ short deletes trade for the CSI500 Index is a lot smoother.

CSI All Share Semiconductor Index Rebalance: Lots of Changes in June

The changes to the CSI All Share Semiconductors & Semiconductor Equipment Index were announced after market close on 31 May and will be implemented at the close on 14 June.
There are 17 adds and 5 deletes for the index.
The adds and deletes have underperformed the index over the last 6 months but the adds have outperformed the deletes over the last 3 months.

CSI All Share IB & Brokerage Index Rebalance: Couple of Large Flow & Impact Names

The changes to the CSI All Share Investment Banking & Brokerage Index were announced after market close on 31 May and will be implemented at the close on 14 June.
Guosen Securities (002736 CH) will be added to the index while Northeast Securities (000686 CH) will be deleted from the index.
There is a lot of flow and impact for both stocks and the stocks could outperform/underperform their peers over the next couple of weeks.

ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade

There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 5/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the one-way trade across both indices is estimated to be CNY 3.69bn (US$508m).

Yankuang Energy Placement – Doesn’t Appear Well Flagged Although Deal Size Is Large

By Ethan Aw

Yankuang Energy Group (1171 HK) is looking to raise up to US$608m through a primary follow-on, via selling 270m H-shares.
The deal is a somewhat large one to digest, at 10.6 days of three month ADV and 2.7% of current mcap.
In this note, we will talk about the placement and run the deal through our ECM framework.

Webtoon Entertainment IPO Preview

Webtoon Entertainment is getting ready to complete its IPO on the NASDAQ exchange in 2H 2024. Webtoon Entertainment is a subsidiary of Naver Corp (035420 KS).
Webtoon is seeking to raise as much of US$500 million at a valuation of US$3 billion to US$4 billion.
Webtoon Entertainment is one of the largest Korean company related IPOs in 2024.

Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100

Nagatanien Holdings (2899 JP) recommended a Marunouchi Capital-sponsored MBO at JPY3,100, a 38.4% premium to the undisturbed price.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The offer period is from 4 June to 16 July.
While not a knockout bid, the offer represents a five-year high and requires a 58% minority acceptance rate. This is a done deal with payment commencing from 23 July.

CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock

We have already discussed our flow expectations for the mainstream indices in the CSI family such as CSI300/500, SSE50/100, and the STAR50/100 for the June 2024 index rebal event.
In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance of some of the lesser known indices in the CSI family.
The indices covered in this insight are All Share Brokerage, China Internet, Medical Devices, National Defense, and Livestock Breeding indices.

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Jun 03

Most Read: Helios Techno Holding, Teijin Ltd, Beijing Strong Biotechnolo-A, ZX, Vanguard Intl Semiconductor, United Nova Technology , Bank of Communications , Shenzhen New Industries Biomedical Engineering-A, Biwin Storage Technology Lt, Hanwha Ocean and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap
Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out
TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap

On Friday, acquisitive wafer technology firm Rs Technologies (3445 JP) announced it would buy lamp and printing equipment maker Helios Techno Holding (6927 JP) at a 74% premium.
The premium is big, but Helios is a steal at the price. Granted, it is a small potatoes steal.
The register is not controlled by any one party or group of investors other than retail. That makes this interesting.

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender

Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion.
If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out

ZX (9890 HK) will replace Fenbi Ltd (2469 HK) in the KraneShares CSI China Internet ETF (KWEB US) at the close on 14 June.
There will be over 6 days of ADV to sell in Fenbi Ltd (2469 HK) and we estimate over 2 days of ADV to buy in ZX (9890 HK).
There are other ETFs that track very similar indices and there could be a lot more to trade in the stocks at the close on 14 June.

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.
United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.
United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.

SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance

There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%.

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.

Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

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Jun 02

Most Read: Infocom Corp, Chilled & Frozen Logistics Holdings, Greatview Aseptic Packaging, Hanwha Ocean , BHP Group Ltd, Mitsui Matsushima, China Yangtze Power Co, Ltd. and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake
SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win
Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer
GAPack (468 HK): Shandong Xinjufeng Offer Progesses
End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024
Portfolio Watch – Adjusting equity and commodity risks as the reflation story stalls
(Mostly) Asia-Pac M&A: Huafa Prop, Asia Cement, QV Equities, Sciclone, Chilled & Frozen Logistics
Weekly Deals Digest (02 Jun) – Infocom, CF Logistics, Asia Cement, GA Pack, Huafa, Shift Up
Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma
Mainland Connect NORTHBOUND Flows (To 31 May 2024): Net Sell Flows on Weak Gross Volumes

Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake

Bloomberg reports that Blackstone (BX US) has agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a rumoured valuation of JPY260 billion.
The potential minority offer price depends on whether the rumoured valuation refers to market cap or enterprise value and whether Teijin will share TOB tax benefits.
The most likely scenario is that the valuation refers to the market cap, with Teijin sharing TOB tax benefits, resulting in a minority offer of around JPY5,720 per share.

SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win

Chilled & Frozen Logistics Holdings (9099 JP) was near an all-time high in late March when it closed at ¥2,041 the day AZ-Com Maruwa Holdings (9090 JP) bid ¥3,000/share.
That was hostile, and C&F’s Board reacted swiftly, looking for a market check and competitive process. It got one. It was VERY successful in getting the best bid.
SG Holdings (9143 JP) has bid ¥5,740 – a very full multiple and 91% higher than AZ-Com’s price. I don’t expect an overbidder. Huge governance win for Japan minorities.

Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer

Chilled & Frozen Logistics Holdings (9099 JP) has recommended SG Holdings (9143 JP)’s JPY5,740 tender offer, a 91.3% premium to AZ-Com Maruwa Holdings (9090 JP)’s JPY3,000 hostile offer.
SG Holdings’ offer premium is stupendous. However, the offer values C&F at a CY2024 EV/EBITDA of 27.2x vs. Alps Logistics (9055 JP) offer at a CY2024 EV/EBITDA of 29.2x.
The Board deserves credit. AZ-COM Maruwa is unlikely to engage in a bidding war as SG Holding’s offer has the Board’s recommendation and comes with a hefty takeover premium.

GAPack (468 HK): Shandong Xinjufeng Offer Progesses

On the 9th May, Shandong Xinjufeng (301296 CH) (XJF) made a pre-conditional voluntary general Offer at $2.65/share (best & final), contingent on a 50% acceptance. Final/special dividends to be added.
GAPack(468 HK) has made it clear that XJF is a competitor of GAPack. And Mengniu (2319 HK) may review its relationship if pre-cons are satisfied/waived; or the Offer gets up.
XJF has announced the necessary applications have been sent to NDRC, MoC, and SAMR; and it prepping for a shareholder meeting to approve the Offer.

End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024

We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2024, among which 5 are in KOSPI and 40 are in KOSDAQ.
These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in June include Hanwha Ocean, LS Materials, and Komico.

Portfolio Watch – Adjusting equity and commodity risks as the reflation story stalls

By Andreas Steno

Hello everyone, and welcome back to our weekly portfolio watch, where we shed light on the most important factors driving our Macro and Crypto portfolio over the past week.
Macro Portfolio – Reflation bets have lost momentumWe have been banging the drum on a combination of slightly higher prices and a continuation of the rebound in manufacturing on a more global scale, placing bets in broad commodities and cyclical equities like Materials.
The recent rally in BCOM has however been put to a halt over the past week, and it looks like we are in for a smaller correction in industrial metals, where clustering risks have turned more profound in copper and silver especially, as right about everyone has placed longs in the copper July contract.

(Mostly) Asia-Pac M&A: Huafa Prop, Asia Cement, QV Equities, Sciclone, Chilled & Frozen Logistics

I tally 51 – 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 week:Huafa Property Services Group (982 HK)‘s Scheme. Asia Cement China (743 HK) also suspended pursuant to the Takeovers Code.
Key updates took place on: QV Equities (QVE AU), Boral (BLD AU), Greatview Aseptic Packaging (468 HK), Sciclone Pharmaceuticals (6600 HK), and Chilled & Frozen Logistics Holdings (9099 JP).

Weekly Deals Digest (02 Jun) – Infocom, CF Logistics, Asia Cement, GA Pack, Huafa, Shift Up

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: Shift Up (462870 KS) seeks to raise up to US$320 million.
Event-Driven developments: Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK), Huafa Property Services Group (982 HK), Chilled & Frozen Logistics Holdings (9099 JP), Infocom Corp (4348 JP).

Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma

Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
Two activist shareholders. And long only upping its stake. Heavily discounted China Merchants China Direct Investments (133 HK) is in play.
A HUGE new buyback for Kansai Paint (4613 JP). Really big. Buy Kansai Paint vs Nippon Paint. One can buy the pop. One can buy any dips after the pop.

Mainland Connect NORTHBOUND Flows (To 31 May 2024): Net Sell Flows on Weak Gross Volumes

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net SELL RMB 5.7bn of A-shares on lower gross volumes. NORTHBOUND bought Zijin, Yangtze Power, and renewables and sold SOEs.
Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

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Jun 01

Most Read: Infocom Corp, Shift Up, Legend Holdings Corp H, Chilled & Frozen Logistics Holdings, Greatview Aseptic Packaging, Hanwha Ocean , Korea Stock Exchange KOSPI 200, Mitsubishi Motors and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
Shift Up IPO: Valuation Insights
How to Own Lenovo at a Discount: BUY Legend Holdings Corp (3396 HK)
SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win
GAPack (468 HK): Shandong Xinjufeng Offer Progesses
Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake
End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024
Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer
Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing
Quiddity JPX-Nikkei 400 Rebal 2024: End-May 2024 Estimates

Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints

The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press.
There is reportedly a new piece of writing out late Thursday which suggests an approach.
I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.

Shift Up IPO: Valuation Insights

Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
We previously discussed the IPO in Shift Up IPO: The Investment Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that Shift Up is attractively valued in the IPO price range. We would participate in the IPO.

How to Own Lenovo at a Discount: BUY Legend Holdings Corp (3396 HK)

By David Mudd

Legend Holdings Corp H (3396 HK) owns 31% of Lenovo (992 HK) , the number one global PC maker
Lenovo is a leader selling AI enabled PC’s globally. Its server business is growing rapidly through strong demand for generative AI. Legend is the leading AI seed investor in China.
Technical pattern strong for Lenovo reaching a 9 year high. Legend showing increasing momentum from an historic trough valuation level

SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win

Chilled & Frozen Logistics Holdings (9099 JP) was near an all-time high in late March when it closed at ¥2,041 the day AZ-Com Maruwa Holdings (9090 JP) bid ¥3,000/share.
That was hostile, and C&F’s Board reacted swiftly, looking for a market check and competitive process. It got one. It was VERY successful in getting the best bid.
SG Holdings (9143 JP) has bid ¥5,740 – a very full multiple and 91% higher than AZ-Com’s price. I don’t expect an overbidder. Huge governance win for Japan minorities.

GAPack (468 HK): Shandong Xinjufeng Offer Progesses

On the 9th May, Shandong Xinjufeng (301296 CH) (XJF) made a pre-conditional voluntary general Offer at $2.65/share (best & final), contingent on a 50% acceptance. Final/special dividends to be added.
GAPack(468 HK) has made it clear that XJF is a competitor of GAPack. And Mengniu (2319 HK) may review its relationship if pre-cons are satisfied/waived; or the Offer gets up.
XJF has announced the necessary applications have been sent to NDRC, MoC, and SAMR; and it prepping for a shareholder meeting to approve the Offer.

Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake

Bloomberg reports that Blackstone (BX US) has agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a rumoured valuation of JPY260 billion.
The potential minority offer price depends on whether the rumoured valuation refers to market cap or enterprise value and whether Teijin will share TOB tax benefits.
The most likely scenario is that the valuation refers to the market cap, with Teijin sharing TOB tax benefits, resulting in a minority offer of around JPY5,720 per share.

End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024

We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2024, among which 5 are in KOSPI and 40 are in KOSDAQ.
These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in June include Hanwha Ocean, LS Materials, and Komico.

Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer

Chilled & Frozen Logistics Holdings (9099 JP) has recommended SG Holdings (9143 JP)’s JPY5,740 tender offer, a 91.3% premium to AZ-Com Maruwa Holdings (9090 JP)’s JPY3,000 hostile offer.
SG Holdings’ offer premium is stupendous. However, the offer values C&F at a CY2024 EV/EBITDA of 27.2x vs. Alps Logistics (9055 JP) offer at a CY2024 EV/EBITDA of 29.2x.
The Board deserves credit. AZ-COM Maruwa is unlikely to engage in a bidding war as SG Holding’s offer has the Board’s recommendation and comes with a hefty takeover premium.

Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing

Local institutional investors were disappointed Kiwoom omitted COE from their value-up disclosure. They seek clearer plans to address low-yield assets and reduce COE.
Rapidly rising interest in COE among local institutional investors is now shaping the screening criteria for the Korea Exchange’s value-up index, possibly using COE as a primary factor for inclusion.
Competition likely centers on selecting and weighting stocks, including those beyond KOSPI 200. Key metric: COE linked with ROE.

Quiddity JPX-Nikkei 400 Rebal 2024: End-May 2024 Estimates

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 rankings of the potential ADDs/DELs every month.
In this insight, we take a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-May 2024.

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May 31

Most Read: Vanguard Intl Semiconductor, Exedy Corp, Infocom Corp, Mitsui Matsushima, SK Bioscience , SK Inc, Kansai Paint, Shift Up, Zomato, Shinsegae and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade
Exedy (7278) Huge Offering Resized – Watch the Dynamics Here
Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
JAPAN ACTIVISM: Murakami-Père Ran Up Mitsui Matsushima (1518 JP), Now Murakami-Fille Selling Down
Block Deal Prospects Arising from SK Group’s Corporate Reshuffle
Detailed Summary of Today’s Second Trial Ruling in Chey Tae-Won’s Divorce Case Involving SK Inc
Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond
Shift Up IPO: Valuation Insights
Zomato Placement Lockup Expiry – US$800m Overhang
Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae

TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 209bn (US$6.5bn).
There could be 14 changes for the ETF in June with an estimated one-way turnover of around 40% and a round-trip trade of around US$5bn.
The potential adds have outperformed the potential deletes over the last couple of months and there could be more to go heading into announcement and implementation.

Exedy (7278) Huge Offering Resized – Watch the Dynamics Here

On Monday 27 May, Aisin (7259 JP) announced an offering to sell ALL of its 36+% stake in equity affiliate Exedy Corp (7278 JP) for likely ¥40bn+.
Exedy announced a big buyback to go with it. It bought back 30% of the total on Weds morning, and that reduced the size of the offer.
I had expected “short-term games” but we haven’t really had them. Which is a bit weird. This update shows the details and dynamics (they differ).

Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints

The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press.
There is reportedly a new piece of writing out late Thursday which suggests an approach.
I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.

JAPAN ACTIVISM: Murakami-Père Ran Up Mitsui Matsushima (1518 JP), Now Murakami-Fille Selling Down

Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
The earliest buyer was NOMURA Aya. She bought early, slowly, then aggressively, then onshore buyers bought aggressively at higher prices. But she has now sold 6 days straight.
The pattern is confusing but it will become clearer in coming days.

Block Deal Prospects Arising from SK Group’s Corporate Reshuffle

The declining appeal of the separator business prompts SK to seek buyers for SKIET through block deals amid financial pressures. The first deal is anticipated despite recent stock price drops.
SK Ecoplant looks to sell its 37.6% stake in SK Oceanplant. Negotiations stall over the former major shareholder’s 20% stake, prompting consideration of a block deal.
SK Bioscience, under SK Discovery, faces possible sale amid SK’s bio company reshuffle. SK Chemicals may bring SK Biopharm under its wing to help SK Inc focus on semiconductors/batteries.

Detailed Summary of Today’s Second Trial Ruling in Chey Tae-Won’s Divorce Case Involving SK Inc

The first trial in December 2022 ordered Chey to pay 67.5 billion KRW; today’s ruling increased this to 1.38 trillion KRW plus 2 billion KRW, including splitting SK Inc. shares.
The increased settlement and SK Inc. share split could spark a management rights battle, causing SK Inc.’s stock price to jump as investors and shareholders react.
It may take a year for the final verdict, making a sustained stock price increase unlikely. Yet, differences between trial rulings could alter Chey’s SK Inc. stake, sustaining market interest.

Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond

24mos ago, Kansai Paint (4613 JP) announced a new MTMP, a large buyback, and plans to unwind cross-holdings. Big. 15mos ago a large secondary offering kicked off the festivities.
Key was Toyota sold. Then KP could sell its Toyota shares – two-thirds of its cross-holdings. The offering was one to buy. A buyback followed. KP vs Nippon Paint doubled.
KP offered a CB recently with the delta hedge done by TN-3. Now there is a HUGE new buyback. Really big. This gets rid of more cross-holders. And there’s more.

Shift Up IPO: Valuation Insights

Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
We previously discussed the IPO in Shift Up IPO: The Investment Case.
We examine the syndicate’s valuation methodology. Our analysis suggests that Shift Up is attractively valued in the IPO price range. We would participate in the IPO.

Zomato Placement Lockup Expiry – US$800m Overhang

Antfin will come out of its placement linked lockup for its remaining stake in Zomato soon.
Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024. It still has over US$800m worth of shares left to sell.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae

Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors’ investment in SSG.com nearly six years ago.
From AEP and BRV’s point of views, they want to get their money back through put options since an IPO is not likely in the near term.
The most probable result appears to be that this is likely to be dragged on for some time, which will cause continued concerns on both Emart and Shinsegae.

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May 30

Most Read: Square Enix Holdings, Baidu , Deep Yellow Ltd, Asia Cement China, Vanguard Intl Semiconductor, Mitsui Matsushima, Korea Stock Exchange KOSPI 200, SK Bioscience , Cummins India and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan – Another Big Round of Passive Selling
Baidu: Priced to Fail
S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June
Asia Cement (743 HK): Parent’s Ready-Mixed Offer?
TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade
Asia Cement China (743 HK): Privatisation by Asia Cement?
JAPAN ACTIVISM: Murakami-Père Ran Up Mitsui Matsushima (1518 JP), Now Murakami-Fille Selling Down
Latest Info on Value-Up Index Involving KRX & NPS: Potential Flow Trading Patterns
Block Deal Prospects Arising from SK Group’s Corporate Reshuffle
NIFTY200 Momentum30 Index Rebalance Preview: 49% Turnover; US$850m Trade; Election Results Coming

Japan – Another Big Round of Passive Selling

There are 15 stocks in Japan that will be sold by passive trackers at the close on 31 May.
Short interest has been increasing in these stocks over the last few months and there will be covering on implementation date.
Cumulative excess volume on all stocks has risen in the last couple of months though the pace of the increase has varied.

Baidu: Priced to Fail

By Wium Malan, CFA

Since late 2020, Search’s share of digital advertising revenue has stabilised at around 8-10%, seemingly retaining its core advertising customers and industries.
Baidu management expects AI Cloud to maintain strong revenue growth momentum in the upcoming quarters.
Baidu trades on a 3.6x NTM EV/EBITDA multiple, well below one standard deviation lower than its 5-year historical average trading range and the lowest it has ever been.

S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June

With the review period complete, we take a look at the potential index changes at the June rebalance as well as potential index inclusions due to M&A.
Timing is key for the ad hoc inclusions to the S&P/ASX 200 (AS51 INDEX) with an ad hoc inclusion being announced prior to the regular announcement.
Passive trackers will need to buy 1.3-27x ADV on the expected adds and have 0.8-4.7x ADV to sell on the expected deletes. Shorts have built up on the potential deletes.

Asia Cement (743 HK): Parent’s Ready-Mixed Offer?

Chinese cement play Asia Cement China (743 HK) (ACC) is currently suspended pursuant to the Takeovers Code.
Asia Cement (1102 TT) has been ACC’s majority shareholder since its 2008 IPO. Asia Cement currently holds 73.07%.
Shares gained ~50% this week. On serious volume. With net cash of US$1.03bn vs. a market cap of US$66mn, a privatisation should command a punchy premium to the last close.

TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 209bn (US$6.5bn).
There could be 14 changes for the ETF in June with an estimated one-way turnover of around 40% and a round-trip trade of around US$5bn.
The potential adds have outperformed the potential deletes over the last couple of months and there could be more to go heading into announcement and implementation.

Asia Cement China (743 HK): Privatisation by Asia Cement?

Asia Cement China (743 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. Bloomberg reports that Asia Cement (1102 TT) is considering a buyout.
Privatisation interest is unsurprising, as ACC’s EV has been negative since 6 July 2022 due to headwinds from the weak Chinese property sector and uncertainty about cash use.
An offer price of HK$5.18 would imply a zero EV. However, due to the difficult trading conditions, we think an offer would be around HK$4.00 per share.

JAPAN ACTIVISM: Murakami-Père Ran Up Mitsui Matsushima (1518 JP), Now Murakami-Fille Selling Down

Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
The earliest buyer was NOMURA Aya. She bought early, slowly, then aggressively, then onshore buyers bought aggressively at higher prices. But she has now sold 6 days straight.
The pattern is confusing but it will become clearer in coming days.

Latest Info on Value-Up Index Involving KRX & NPS: Potential Flow Trading Patterns

The value-up index aims to align closely with the KOSPI 200’s composition, adjusting stock weights based on factors from KRX Governance Leaders 100 and KRX ESG Dividend Opportunities Index.
Insiders confirm NPS will create new funds to track the value-up index, needing SAA adjustments and Fund Management Committee approval. Despite hurdles, government backing suggests smooth NPS involvement.
Buybacks could cause passive outflows in KOSPI 200 rebalancing and inflows in value-up index rebalancing. This timing discrepancy could create a consistent passive flow pattern for these stocks.

Block Deal Prospects Arising from SK Group’s Corporate Reshuffle

The declining appeal of the separator business prompts SK to seek buyers for SKIET through block deals amid financial pressures. The first deal is anticipated despite recent stock price drops.
SK Ecoplant looks to sell its 37.6% stake in SK Oceanplant. Negotiations stall over the former major shareholder’s 20% stake, prompting consideration of a block deal.
SK Bioscience, under SK Discovery, faces possible sale amid SK’s bio company reshuffle. SK Chemicals may bring SK Biopharm under its wing to help SK Inc focus on semiconductors/batteries.

NIFTY200 Momentum30 Index Rebalance Preview: 49% Turnover; US$850m Trade; Election Results Coming