Most Read Archives | Page 65 of 91 | Smartkarma

Socionext (6526 JP) is looking to raise up to US$463m in its Japan IPO.
Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation.
In this note, we will look at the updated deal dynamics, our earlier assumptions, and share our thoughts on valuation.

Bilibili (9626 HK): Implications of Dual Primary Listing

Earlier today, Bilibili (9626 HK) announced the voluntary conversion of its Secondary Listing on the HKEX (388 HK) to a Dual Primary Listing effective 3 October.
Though the timing is tricky, this could result in the stock not being deleted from the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance.
This could also lead to inflows at the December rebalance from Hang Seng China Enterprises Index (HSCEI INDEX) and Hang Seng Tech Index (HSTECH INDEX) trackers.

SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits

SATS (SATS SP) has announced that it is buying Worldwide Flight Services (WFS) from an affiliate of Cerberus Capital Management at an Enterprise Value of €2.25bn (S$3.107bn).
The cash consideration is €1.187bn (S$1.639bn) and will likely be financed by an equity fund raising. This could be a rights issue and could be combined with a private placement.
Expect the stock to drop once it resumes trading. A significant drop from current levels could provide a buying opportunity as the rights issue could be backstopped.

SATS/WFS: The Future Is Cargo

Last week, SATS (SATS SP), a leading inflight catering and gateway service provider in Asia, confirmed media reports it was in talks to buy Cerberus Capital Management-backed Worldwide Flight Services.
Yesterday, SATS announced it will acquire WFS, the world’s largest air cargo handler, for €1.187bn or S$1.639bn (9.7x EV/EBITDA). Funding is to be primarily sourced from a S$1.7bn equity fundraising.
The transaction appears all stitched up with SATS’ 40% shareholder Temasek backing the deal. The acquisition is expected to close in March 2023, subject to regulatory clearance.

Accenture Japan Bids a 120% Premium for Datascience Company ALBERT (3906)

By Shifara Samsudeen, ACMA, CGMA

Accenture Japan has just bid a 120% premium for fast-growing smallcap ALBERT Inc (3906 JP) which provides data science solutions to a focused client base.
Revenues are growing fast. EBIT is growing faster. EBIT is expected to be 300% higher in 3 years.
This is 50+% corporate-held. Retail decides the rest. This is probably a done deal.

Leapmotor IPO: Thoughts on First Day Trading

Leapmotor (9863 HK) has priced its IPO at HK$48 per share, at the lower end of the indicative IPO price range of HK$48-62 per share.
At the above price, the company raised net proceeds of approx. HK$6,057.4m at a market capitalisation of HK$54.9bn and a post-money EV of HK$45.9bn.
The HK offering was undersubscribed while the international offering was initially oversubscribed by 2.33x and the unsubscribed portion of the HK offering was later reallocated to international offering.

JPX-Nikkei 400 Rebal 2023: End-Sep 2022

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 2023 based on trading data as of end-September 2022.

WCP IPO Trading – Peer Correction Means Price Cut Still Wasn’t Enough

WCP raised around US$314m via selling a mix of primary and secondary shares in its Korean IPO.
WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries.
In this note, we will talk about the demand for the deal and other trading dynamics.

KOSPI 200 Rebalancing: Recent Changes in the Race

In addition to Lotte Confectionery, Samyang Foods is also in the inclusion zone. As for deletions, Samyang Holdings and Boryung are the most likely deletes at this point.
Samyang Foods and Boryung have a small passive impact but have way more liquidity than Lotte and Samyang Holdings. We should approach them differently depending on the target trading window.
Samyang Foods is in a tight situation, and Boryung’s fate depends on Samyang Foods. But given the recent price trends, Samyang Foods appears to have a good shot.

CALB IPO: First Day Trading Strategy Amid Market Turmoil

In this insight, we discuss the first day trading strategy of CALB (3931 HK) amid market turmoil.
CALB priced its IPO at HK$38 per share, which is at the low end of the IPO price range. CALB raised US$1.3 billion in this IPO.
Unlike recent disappointing IPOs for Leapmotor and Onewo, we believe CALB’s IPO could perform better in its IPO debut.

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Sep 29

Most Read: Nidec Corp, Swire Pacific (B), Leapmotor, SATS, Bilibili, Taiwan Cement, Poly Real Estate Group Co., Ltd, Onewo and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

About A Gajillion Yen of Index Flows At the Close
Swire B Vs A – Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile
Leapmotor IPO – Weak Demand but Concentrated Allocation
SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits
Bilibili (9626 HK): Implications of Dual Primary Listing
Taiwan Cement Placement- Suffers from Weak Momentum but Deal Is Well Flagged and SI Has Been Growing
Onewo Space-Tech IPO Trading – Weak but Relatively Better Demand
FTSE China A50 Index Rebalance Preview: Tight Margins
Leapmotor IPO: Trading Debut
Onewo IPO: Trading Debut

About A Gajillion Yen of Index Flows At the Close

Today is a day which happens twice a year in Japan.
It is Day Before Divs Go Ex- Day. Which theoretically means a fair bit of buying.
Nikkei 225 is pretty neutral. But there is a Nikkei 225 buy of Nidec Corp (6594 JP). TOPIX and other float market cap indices are a buy on the close.

Swire B Vs A – Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile

The Swire buyback has been impressive. In 27 trading days they have bought back 26.8% of teh HK$4bn promised. In that period, participation has been aggressive.
Swire has bought back As at a pace of 52% of pre-buyback one-year ADV. For Bs, it has been 105%. But Bs have dramatically underperformed As on “HK Re-opening” trades.
Historically, when B/A gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%. I’d buy B vs A.

Leapmotor IPO – Weak Demand but Concentrated Allocation

Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
In this note, we will talk about the demand for the deal and other trading dynamics.

SATS to Buy Worldwide Flight Services (WFS) As Private Equity Exits

SATS (SATS SP) has announced that it is buying Worldwide Flight Services (WFS) from an affiliate of Cerberus Capital Management at an Enterprise Value of €2.25bn (S$3.107bn).
The cash consideration is €1.187bn (S$1.639bn) and will likely be financed by an equity fund raising. This could be a rights issue and could be combined with a private placement.
Expect the stock to drop once it resumes trading. A significant drop from current levels could provide a buying opportunity as the rights issue could be backstopped.

Bilibili (9626 HK): Implications of Dual Primary Listing

Earlier today, Bilibili (9626 HK) announced the voluntary conversion of its Secondary Listing on the HKEX (388 HK) to a Dual Primary Listing effective 3 October.
Though the timing is tricky, this could result in the stock not being deleted from the Hang Seng China Enterprises Index (HSCEI INDEX) at the December rebalance.
This could also lead to inflows at the December rebalance from Hang Seng China Enterprises Index (HSCEI INDEX) and Hang Seng Tech Index (HSTECH INDEX) trackers.

Taiwan Cement Placement- Suffers from Weak Momentum but Deal Is Well Flagged and SI Has Been Growing

Taiwan Cement (1101 TT) is looking to raise US$437m from its GDS offering.
The firm is offering 84m GDSs, or 420m common shares (1:5 conversion), at a 5.1-7.8% discount to its last close.
While momentum hasn’t been the greatest, the deal is well flagged and short covering could support share price in the near term.

Onewo Space-Tech IPO Trading – Weak but Relatively Better Demand

Onewo (2602 HK) (OST) raised around US$733m in its Hong Kong IPO. OST is a property management service provider primarily owned by China Vanke Co Ltd (H) (2202 HK) .
As per Frost & Sullivan, amongst the residential community service providers in China, OST ranked first. It also ranked first in the commercial space integrated services market in China.
In this note, we will talk about the demand for the deal and other trading dynamics.

FTSE China A50 Index Rebalance Preview: Tight Margins

Poly Real Estate Group Co., Ltd (600048 CH) sits at the edge of the inclusion zone for the FTSE China A50 Index (XIN9I INDEX) December rebalance.
That inclusion could result in the deletion of any one of four stocks since they are all clustered within 0.7% of each other on full market cap.
There are a few other stocks that are close to inclusion zone and a 5-10% rally in these stocks could result in more changes to the index in December.

Leapmotor IPO: Trading Debut

Leapmotor (9863 HK) priced its H Share at HK$48.00 per share to raise net proceeds of HK$6,057.4 million (US$772 million). The H Share will start trading tomorrow.
The H Shares of peers posted no first-day gains and are currently below the listing prices. Market sentiment on peers has remained weak since the release of the prospectus.
Leapmotor, at best, should trade in line with median peer multiples. Leapmotor is fairly valued at the IPO price. We continue to remain on the sidelines.

Onewo IPO: Trading Debut

Onewo (2602 HK) priced its H Share at HK$49.35 per share to raise net proceeds of HK$5.6 billion (US$713 million). The H Share will start trading tomorrow.
Notwithstanding the industry headwinds, the H Shares of peers with financially sound parentco backgrounds are trading above the listing prices.
Despite peer multiple derating, the IPO price remains attractive compared to peers with financially sound parentco backgrounds.

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Sep 28

Most Read: Nidec Corp, Shinsei Bank, Monadelphous, Tencent, Socionext, Jinke Smart Services, Delta Electronics Thai, Swire Pacific (B) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Two Days Left Til Nikkei 225 Juggled Review Starts
The October TOPIX FFW Review and Shinsei Bank (8303)’s Future Float
S&P/ASX Index Rebalance Preview: A Few High Impact Adds
Tencent Investee Selldown – The US$120bn Global Overhang
Socionext IPO – Ample Upside Even After Discount
Jinke Smart (9666 HK)’s Low-Balled But Virtually Unconditional Offer
SET50 Index: Market Consultation & DTAC/TRUE Merger Impact
About A Gajillion Yen of Index Flows At the Close
Swire B Vs A – Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile
Jinke Smart’s VGO of HK$12.00 from Boyu Capital

Two Days Left Til Nikkei 225 Juggled Review Starts

The Nikkei announced its Annual Nikkei 225 Average Review on 5 September. It was 3 OUT 3 IN as expected. Then they added Shizuoka Bank (8355 JP) to the mix.
ShizuGin will form a holding company, so out it goes on Wednesday. NIDEC (6594) goes in. Then SMC (6273) and (7741) replace Unitika (3103) and Oki Electric (6703) Friday.
Then ShizuGin goes back in Monday, and Maruha Nichiro (1333) is deleted. The “big trade” here? The ¥550bn+ funding trade. But the change in ADDs’ Real World Float is Real.

The October TOPIX FFW Review and Shinsei Bank (8303)’s Future Float

This is a hybrid insight on the upcoming TOPIX FFW Review to be announced 7 October, and the situation around Shinsei Bank (8303 JP).
Shinsei Bank is in “limbo” post control-acquisition by SBI Holdings (8473 JP) and an attempt to go over 50% should be in the works. When is not known.
The TOPIX FFW Review should see ¥2.0-2.2trln of one-way flow, and amongst that flow, a large sell on Shinsei to increase Real World Float by 60+% and 25d of ADV.

S&P/ASX Index Rebalance Preview: A Few High Impact Adds

At the December rebalance, we expect changes to the S&P/ASX 50 Index and S&P/ASX 200 (AS51 INDEX). Announcement is on 2 December with implementation on 16 December.
If added to the S&P/ASX 200 (AS51 INDEX), passive trackers will need to buy over 9 days of ADV on Monadelphous (MND AU) and ioneer Ltd (INR AU).
Shorts have dropped on nearly all potential adds and deletes over the last couple of months. With shorts at low levels, short covering will have limited impact at the rebalance.

Tencent Investee Selldown – The US$120bn Global Overhang

Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year.
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.

Socionext IPO – Ample Upside Even After Discount

Socionext (6526 JP) is looking to raise up to US$463m in its Japan IPO.
Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation.
In this note, we will look at the updated deal dynamics, our earlier assumptions, and share our thoughts on valuation.

Jinke Smart (9666 HK)’s Low-Balled But Virtually Unconditional Offer

PRC-Incorporated property management play Jinke Smart Services (9666 HK) has announced a voluntary cash offer at HK$12/share, a 33.04% premium to last close.
The Offeror (Boyu) and concert parties collectively hold more than 50%. The Offer is contingent on regulatory approvals and 7.71% of shares out tendering. The tendering condition can be waived.
The Offer appears geared to bring Boyu’s stake in line with Jinke Property Group (000656 CH)‘s.

SET50 Index: Market Consultation & DTAC/TRUE Merger Impact

The SET has commenced a market consultation on lowering the turnover ratio level from 5% to 2% while selecting stocks to be added to and deleted from the SET50 INDEX.
The change to the turnover ratio level could lead to three changes in December that result in one-way turnover of 7.44% and in a one-way trade of THB 6.79bn.
Separately, the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger could result in an ad hoc inclusion prior to the regular rebalance in December.

About A Gajillion Yen of Index Flows At the Close

Today is a day which happens twice a year in Japan.
It is Day Before Divs Go Ex- Day. Which theoretically means a fair bit of buying.
Nikkei 225 is pretty neutral. But there is a Nikkei 225 buy of Nidec Corp (6594 JP). TOPIX and other float market cap indices are a buy on the close.

Swire B Vs A – Surprising on Regs, Surprising on Risk; Short-Tm Displacement Now in 99th Percentile

The Swire buyback has been impressive. In 27 trading days they have bought back 26.8% of teh HK$4bn promised. In that period, participation has been aggressive.
Swire has bought back As at a pace of 52% of pre-buyback one-year ADV. For Bs, it has been 105%. But Bs have dramatically underperformed As on “HK Re-opening” trades.
Historically, when B/A gets more than 6% from 3mo Avg VWAP Ratio, there is statistically significant reversion. We are now at 6.8%. I’d buy B vs A.

Jinke Smart’s VGO of HK$12.00 from Boyu Capital

Jinke Smart Services (9666 HK) announced a voluntary conditional general offer from Boyu Capital at HK$12.00 per share, a 33.0% premium to the undisturbed price.
The offer is conditional on 7.71% valid acceptances (such that Boyu represents 30.40% of outstanding shares) and anti-trust approval. The conditions can be waived.
The offer is designed to flush out minorities unwilling to wait for the industry headwinds to dissipate. A low threshold suggests that the offer will be declared unconditional.

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Sep 27

Most Read: Taiwan Glass Industry, Nidec Corp, Hitachi Metals, CALB, Alibaba Group, DB Hitek Co., Ltd., Swire Pacific (A), Monadelphous, Onewo, Nikkei 225 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Market Consultation Could Cause Massive Flows
Two Days Left Til Nikkei 225 Juggled Review Starts
Bain Launches Hitachi Metals (5486) Tender Offer
CALB (3931 HK) IPO: Earliest Passive Flows & Stock Connect Inclusion in 2023
Alibaba (9988 HK): A Visit to ‘Freshippo Outlets’, a Discount Grocery Store of Freshippo
New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek
StubWorld: Swire/Cathay And Hong Kong’s “Opening”
S&P/ASX Index Rebalance Preview: A Few High Impact Adds
Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion
Late-Stage Capitulation in Asia

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Market Consultation Could Cause Massive Flows

The FTSE Taiwan Dividend+ Index is a fascinating index. The rebalance works the opposite way from most float market cap-weighted indices, but maintains a grounding in positive fundamentals.
It has issues, shown in the recent non-constituent review which nonetheless saw ~10% one-way flow. And more flows has meant more impact to changes.
FTSE Russell has commenced a consultation closing shortly, with the goal of increasing members from 30 to 50. This provides for some interesting potential changes.

Two Days Left Til Nikkei 225 Juggled Review Starts

The Nikkei announced its Annual Nikkei 225 Average Review on 5 September. It was 3 OUT 3 IN as expected. Then they added Shizuoka Bank (8355 JP) to the mix.
ShizuGin will form a holding company, so out it goes on Wednesday. NIDEC (6594) goes in. Then SMC (6273) and (7741) replace Unitika (3103) and Oki Electric (6703) Friday.
Then ShizuGin goes back in Monday, and Maruha Nichiro (1333) is deleted. The “big trade” here? The ¥550bn+ funding trade. But the change in ADDs’ Real World Float is Real.

Bain Launches Hitachi Metals (5486) Tender Offer

We had the heads up days (or a week plus) ago, and now it is official. Bain launches its Tender Offer for Hitachi Metals (5486 JP) tomorrow at ¥2,181/share.
The company’s trade name will be changed to PROTERIALS (i.e. losing “Hitachi”) which should be fine. It was non-core anyway.
This is still a large-ish deal – up to ¥434bn. MktCap is ¥930bn. But minimum is only 56.8mm shares because they get the parent vote anyway. Done deal.

CALB (3931 HK) IPO: Earliest Passive Flows & Stock Connect Inclusion in 2023

CALB (3931 HK) is looking to raise between US$1.29bn-US$1.73bn by selling 265.85m shares at a price range of HK$38-51/share.
CALB (3931 HK) will not get Fast Entry to any indices but should be added to the HSCI and Stock Connect in March and to the FTSE All-World in June.
Peer performance has been fairly mixed in the recent past. Stock trading weak post listing could provide buying opportunities ahead of the passive inflows.

Alibaba (9988 HK): A Visit to ‘Freshippo Outlets’, a Discount Grocery Store of Freshippo

By Ming Lu

We visited a store of Freshippo Outlets in Shanghai in workhour.
We believe the store is popular and accumulating more customers.
However, the digitalized services bring some difficulties to old customers.

New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek

A South Korean lawmaker introduced legislation that would mandate that appraisal right exercise prices in split-off listings (equity carve-out) be based on asset/earnings value rather than market price (stock price).
We may find an arb opening in DB Hitek. The appraisal price based on the asset/earnings value is at an 11.31% premium to the last close.
If DB HiTek postpones the split-off listing to next year, FY22 earnings should be reflected. In this case, the appraisal price will be at a 90% premium.

StubWorld: Swire/Cathay And Hong Kong’s “Opening”

After Hong Kong announced abandoning hotel quarantine for inbound travellers, Cathay Pacific (293 HK) gained 2.6% last Friday, but finished up just 1%. That probably sums up the situation.
Preceding my comments on Cathay and Swire Pacific (19 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%.

S&P/ASX Index Rebalance Preview: A Few High Impact Adds

At the December rebalance, we expect changes to the S&P/ASX 50 Index and S&P/ASX 200 (AS51 INDEX). Announcement is on 2 December with implementation on 16 December.
If added to the S&P/ASX 200 (AS51 INDEX), passive trackers will need to buy over 9 days of ADV on Monadelphous (MND AU) and ioneer Ltd (INR AU).
Shorts have dropped on nearly all potential adds and deletes over the last couple of months. With shorts at low levels, short covering will have limited impact at the rebalance.

Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion

Onewo (2602 HK) is looking to raise between US$700m-US$784m by selling 116.714m shares at a price range of HK$47.1-52.7/share. Indications are that the IPO will be priced close to mid-point.
Given the domestic shares and unlisted foreign shares will not be converted to H-shares, there is no chance of MSCI inclusion and a small chance of FTSE inclusion.
Onewo (2602 HK) is also unlikely to be added to the HSCI and consequently will not be added to Stock Connect.

Late-Stage Capitulation in Asia

By Thomas Schroeder

Call for markets that held up in Asia to buckle in late September (NKY, ASX, Nifty) is unfolding. Following our core short group – HSI, Taiwan and Korea.
DJI new low a lead signal for the SPX and RTY to test sub-June lows in late September/early October on capitulation that sets up a tactical long strike.
NKY and ASX are the first two markets in Asia to buy back into at lower range levels with undershoot risk.

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Sep 26

Most Read: Toshiba Corp, Taiwan Glass Industry, Pine Care Group, Onewo, Greatek Electronics, Shandong Fengxiang, DB Hitek Co., Ltd., Hanwha Solutions and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba Bidders Switching Partners May Be Bullish
FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Market Consultation Could Cause Massive Flows
Pine Care Group – Another MGO, Still Wrong Price Making One Wonder…
Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming
ECM Weekly (25th Sep 2022) – Onewo, Leapmotor, CALB, Socionext, WCP, Sula, Jenscare, EbixCash, Atlas
FTSE TWSE 50 & 100 Quiddity Leaderboard Dec 22: Greatek in a Pickle
Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek
Hanwha Solutions: Biggest Restructuring Measures in 50 Years
Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion

Toshiba Bidders Switching Partners May Be Bullish

When the Bidding started, at least 10 parties were in the data room. It ended up with 4 parties moving from Round1 to Round2 where binding bids come.
The Final Four: Brookfield, Bain, JIC+JIP, and CVC. Bidders advancing to Round2 weren’t allowed to join together. But JIC+JIP are apparently splitting, and now JIC wants to partner with Bain.
They’d need an exception but this keeps four in the same format. It also likely makes more bids competitive.

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Market Consultation Could Cause Massive Flows

The FTSE Taiwan Dividend+ Index is a fascinating index. The rebalance works the opposite way from most float market cap-weighted indices, but maintains a grounding in positive fundamentals.
It has issues, shown in the recent non-constituent review which nonetheless saw ~10% one-way flow. And more flows has meant more impact to changes.
FTSE Russell has commenced a consultation closing shortly, with the goal of increasing members from 30 to 50. This provides for some interesting potential changes.

Pine Care Group – Another MGO, Still Wrong Price Making One Wonder…

In early Feb2020, the #1 shareholder of HK-based elderly home care provider Pine Care Group (1989 HK) sold a 52% stake at HK$1.647, keeping 14.99%. That triggered an Unconditional MGO.
In Aug2022, much of the shareholder consortium which bought in 2020 agreed to sell 56.15% at HK$0.89/share to local privately-held developer Chinachem. That will trigger another Unconditional MGO.
The business has suffered under covid, but it is not clear why the business would be better now. Revenues will spike when Causeway Bay opens, but…. Sell.

Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming

By Michael J. Howell

Daily Liquidity has tanked lower, causing bond term premia to worryingly collapse to near all-time lows
S&P500 (SPX) likely to test 3200 because of skidding Liquidity, but may even drop below 3000 as earnings get crushed.
Lower term premia are already set-in-stone and have always led to much weaker reported corporate earnings some 15 months later. US S&P500 earnings could skid by over 20% in 2023

ECM Weekly (25th Sep 2022) – Onewo, Leapmotor, CALB, Socionext, WCP, Sula, Jenscare, EbixCash, Atlas

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, a few large Hong Kong IPOs managed to launch their bookbuild over the past week.
There were no large placements launched this week, although Atlas Arteria (ALX AU) kept many occupied.

FTSE TWSE 50 & 100 Quiddity Leaderboard Dec 22: Greatek in a Pickle

In this insight, we take a look at the names leading the race to become ADDITIONs/DELETIONs for the Taiwan 50 and Taiwan Mid-Cap 100 Indices for the December 2022 Rebalance.
Based on current prices, Via Technologies (2388 TT) is an ADD and AP Memory Technology (6531 TT) is a DEL to the Taiwan Mid-Cap 100 index.
While there are currently no ADDs/DELs expected for the Taiwan 50 index, there are a couple of names that are close to triggering index changes in the December 2022 review.

Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
Highest spreads – Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), Infomedia Ltd (IFM AU), Ramsay Health Care (RHC AU), 21Vianet Group (VNET US), 111 Inc (YI US).
Lowest spreads – OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), MACA Ltd (MLD AU), Link Net (LINK IJ), Dongzheng Automotive Finance (2718 HK).

New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek

A South Korean lawmaker introduced legislation that would mandate that appraisal right exercise prices in split-off listings (equity carve-out) be based on asset/earnings value rather than market price (stock price).
We may find an arb opening in DB Hitek. The appraisal price based on the asset/earnings value is at an 11.31% premium to the last close.
If DB HiTek postpones the split-off listing to next year, FY22 earnings should be reflected. In this case, the appraisal price will be at a 90% premium.

Hanwha Solutions: Biggest Restructuring Measures in 50 Years

On 23 September, Hanwha Solutions announced a set of restructuring measures which are probably the biggest ever moves by the company in the past 50 years.
The spin-off of the Hanwha Galleria is a good move. Clearly, having both the renewable energy and a luxury department store business under one roof does not make much sense.
We also like the company’s move expand its U.S. solar module production capacity. The total amount of potential benefit could be nearly US$2 billion over the next decade.

Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion

Onewo (2602 HK) is looking to raise between US$700m-US$784m by selling 116.714m shares at a price range of HK$47.1-52.7/share. Indications are that the IPO will be priced close to mid-point.
Given the domestic shares and unlisted foreign shares will not be converted to H-shares, there is no chance of MSCI inclusion and a small chance of FTSE inclusion.
Onewo (2602 HK) is also unlikely to be added to the HSCI and consequently will not be added to Stock Connect.

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Sep 25

Most Read: LG Energy Solution, Softbank Group, Hanwha Solutions, Pine Care Group, Porsche Automobil Holding Se, Taiwan Glass Industry, Toshiba Corp, Greatek Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
Softbank – So The Arm IPO Isn’t Looking All That Hot Then?
A Detailed Summary of Hanwha Solutions Demerger & Tender Offer
Pine Care Group (1989.HK) – Hard to Make Profits Due to Industry Characteristics; Here Is What to Do
Last Week in Event SPACE: Toshiba, Oz Minerals, Link Admin, Sands China
Hong Kong Buybacks Weekly (Sep 23rd): Buyback at One Year High
Porsche AG: IPO Set for Success
FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Market Consultation Could Cause Massive Flows
Toshiba Bidders Switching Partners May Be Bullish
FTSE TWSE 50 & 100 Quiddity Leaderboard Dec 22: Greatek in a Pickle

LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion

LG Energy’s locked shares approach 96-97% of SO. Now, we will see an additional passive flow equivalent to another 1% of SO: KOSPI 200/MSCI Standard up-weights and LIT inclusion.
Each passive impact is also substantial. The MSCI up-weight alone will cause an impact equivalent to 2.44x ADTV. It would be 2.20x for the KOSPI 200 and 1.03x for LIT.
For the KOSPI 200 December review, the event-driven flow will likely focus on up-weights, including LG Energy. For LIT, we should consider an aggressive LONG/SHORT with LG Chem.

Softbank – So The Arm IPO Isn’t Looking All That Hot Then?

By Mio Kato

Apparently prospects for a high valuation on a potential Arm IPO are so staggeringly, AI-rifically good that Masayoshi Son is now sounding out Samsung on a strategic partnership.
Samsung itself has not been having the greatest time of late with Micron and SK Hynix making serious inroads against its prior technological leadership in memory.
So as desperate and desperate-er ponder an alliance we can only be thoroughly convinced that this move absolutely, positively has nooooothing to do with trying to prop up share prices.

A Detailed Summary of Hanwha Solutions Demerger & Tender Offer

There is no unlocking of treasury shares, so a flow betting on dramatic value accretion will not occur. For tendering, the proration risk appears to be relatively high.
Passive trackers will sell at the close on February 24 and repurchase (likely only for Solutions) at the close on March 31. The flow size would be around 5.5x ADTV.
ECO risk wouldn’t be a concern as the new rule will grant appraisal/preemptive rights to the existing shareholders. Also, Hanwha hinted at the possibility of choosing private placement over ECO.

Pine Care Group (1989.HK) – Hard to Make Profits Due to Industry Characteristics; Here Is What to Do

By Xinyao (Criss) Wang

Although Pine Care’s revenue kept growing in recent years, its net loss widened, with declining profitability. Single customer risk, high debt and cash flow pressure are also hidden dangers.
The elderly care service is characterized by high investment, long payback period, high risk, low profit margin/rate of return, strong public welfare attributes, etc. So, Pine Care’s outlook is challenging.
We recommend investors to view Chinachem’s acquisition of Pine Care rationally, unless Pine Care could demonstrate some positive signals in Mainland business, which is the key for future valuation expansion.

Last Week in Event SPACE: Toshiba, Oz Minerals, Link Admin, Sands China

The only way that noisy shareholders in Toshiba Corp (6502 JP) can be eliminated, allowing management and employees to focus on “making Toshiba stronger” is to arrange a privatisation.
BHP Group Ltd (BHP AU) approached OZ Minerals Ltd (OZL AU) with a bid of A$25/share. Oz very quickly rejected. There are hints now that A$30 may be the price.
After 23 months of negotiations with various parties, culminating in a protracted on-again, off-again, negotiation with Dye & Durham, Link Administration (LNK AU) is now without an Offer.

Hong Kong Buybacks Weekly (Sep 23rd): Buyback at One Year High

By Ke Yan, CFA, FRM

We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Sep 23rd based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Ck Asset (1113 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), Aia (1299 HK), Xiaomi (1810 HK).

Porsche AG: IPO Set for Success

By Jesus Rodriguez Aguilar

Volkswagen sets the price range for the Porsche AG IPO between €76.50 and €82.50. The books are covered several times. Porsche AG will begin trading on September 29.
Through a holding chain, the Pïech and Porsche families will control 25% of the votes of Porsche AG directly and 39.975% indirectly (total of 64.975%), with just a 24.275% economic interest.
The IPO looks set for success, with possible DAX inclusion, and pricing likely towards the top-end. This should favour Volkswagen’s re-rating and tighten the discount to NAV of Porsche SE.

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Market Consultation Could Cause Massive Flows

The FTSE Taiwan Dividend+ Index is a fascinating index. The rebalance works the opposite way from most float market cap-weighted indices, but maintains a grounding in positive fundamentals.
It has issues, shown in the recent non-constituent review which nonetheless saw ~10% one-way flow. And more flows has meant more impact to changes.
FTSE Russell has commenced a consultation closing shortly, with the goal of increasing members from 30 to 50. This provides for some interesting potential changes.

Toshiba Bidders Switching Partners May Be Bullish

When the Bidding started, at least 10 parties were in the data room. It ended up with 4 parties moving from Round1 to Round2 where binding bids come.
The Final Four: Brookfield, Bain, JIC+JIP, and CVC. Bidders advancing to Round2 weren’t allowed to join together. But JIC+JIP are apparently splitting, and now JIC wants to partner with Bain.
They’d need an exception but this keeps four in the same format. It also likely makes more bids competitive.

FTSE TWSE 50 & 100 Quiddity Leaderboard Dec 22: Greatek in a Pickle

In this insight, we take a look at the names leading the race to become ADDITIONs/DELETIONs for the Taiwan 50 and Taiwan Mid-Cap 100 Indices for the December 2022 Rebalance.
Based on current prices, Via Technologies (2388 TT) is an ADD and AP Memory Technology (6531 TT) is a DEL to the Taiwan Mid-Cap 100 index.
While there are currently no ADDs/DELs expected for the Taiwan 50 index, there are a couple of names that are close to triggering index changes in the December 2022 review.

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Sep 24

Most Read: LG Energy Solution, Chubu Steel Plate, ioneer Ltd, Leapmotor, Hong Kong Hang Seng Index, CALB, Softbank Group, Pine Care Group, Jenscare Scientific and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible
Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support
Asia Top Short Update
CALB IPO – Low-End Appears Reasonable but Will Still Need Some Charging Support
Softbank – So The Arm IPO Isn’t Looking All That Hot Then?
Pine Care Group (1989 HK): Chinachem Takeover Offers a Good Exit Opportunity for Investors
Jenscare (健世科技) IPO: Candidate for Shorts
CALB IPO Valuation Analysis

LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion

LG Energy’s locked shares approach 96-97% of SO. Now, we will see an additional passive flow equivalent to another 1% of SO: KOSPI 200/MSCI Standard up-weights and LIT inclusion.
Each passive impact is also substantial. The MSCI up-weight alone will cause an impact equivalent to 2.44x ADTV. It would be 2.20x for the KOSPI 200 and 1.03x for LIT.
For the KOSPI 200 December review, the event-driven flow will likely focus on up-weights, including LG Energy. For LIT, we should consider an aggressive LONG/SHORT with LG Chem.

Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility

Today, Nagoya Premier-listed Chubu Steel Plate (5461 JP) announced that it had applied today to be listed in Tokyo.
It is one of very few Japan names not listed in Tokyo. A TSE listing examination will be conducted, and there is a possibility it moves to TSE Prime.
There are 6 key segment transfer and listing requirements to gain a listing in TSE Prime. Chubu Steel Plate is really close.

S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible

In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
Tassal (TGR AU) and Nearmap Ltd (NEA AU) could get deleted from ASX200 before the December Rebalance, triggering high-impact intra-review additions. There should be two changes in the Review itself.
Pilbara Minerals (PLS AU) is close to becoming an ASX 50 ADD and Lendlease Group (LLC AU) is close to becoming an ASX 50 DEL in the December 2022 review.

Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support

Leapmotor (9863 HK) is looking to raise between US$800m-US$1.03bn by selling 130.82m shares at a price range of HK$48-62/share. Between 30-39% of the shares will be taken by cornerstone investors.
The continued slide in its closest peers could put pressure on the stock post listing, though there could be some passive buying in December.
Leapmotor (9863 HK) could be added to the HSCI and Hang Seng Tech Index (HSTECH INDEX) in December. Stock Connect could come online in December too.

Asia Top Short Update

By Thomas Schroeder

Our top short bets in Asia (HSI, Taiwan, Korea) show risk of breaking to new lows. The RTY breaks gives the bear trade another leg down.
Our relative perform longs (STI and SET 50) are due to drift to support but holding up well. USD is breaking to new highs with momentum.
Asian markets that have held up are now at risk of late-stage capitulation – ASX, Nifty and NKY.

CALB IPO – Low-End Appears Reasonable but Will Still Need Some Charging Support

CALB aims to raise up to US$1.7bn in its Hong Kong IPO.
CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products.
In this note, we will run the deal through our ECM framework and talk about IPO pricing.

Softbank – So The Arm IPO Isn’t Looking All That Hot Then?

By Mio Kato

Apparently prospects for a high valuation on a potential Arm IPO are so staggeringly, AI-rifically good that Masayoshi Son is now sounding out Samsung on a strategic partnership.
Samsung itself has not been having the greatest time of late with Micron and SK Hynix making serious inroads against its prior technological leadership in memory.
So as desperate and desperate-er ponder an alliance we can only be thoroughly convinced that this move absolutely, positively has nooooothing to do with trying to prop up share prices.

Pine Care Group (1989 HK): Chinachem Takeover Offers a Good Exit Opportunity for Investors

By Tina Banerjee

Hong Kong’s leading property developer, Chinachem Group agreed to acquire a 56.15% stake in Pine Care Group (1989 HK) for HKD451.2 million ($57.5 million) from its controlling shareholders.
Post-Acquisition, Chinachem will launch an unconditional mandatory offer for the remaining shares, which it does not hold at HKD0.89 per share, same as the purchase price.
Considering delisting risk, limited upside potential of the shares after a huge run-up, and muted growth outlook of the company, investors should tender their holdings.

Jenscare (健世科技) IPO: Candidate for Shorts

By Ke Yan, CFA, FRM

Jenscare is a China-based medical device company with a focus on structural heart disease. The company launched a deal to raise up to USD 30m via a Hong Kong listing.
In our previous note, we looked at the company’s product lines and provided a brief overview on the company’s valuation.
In this note, we provide an update for the book building. We provide our quick thoughts on the valuation and deal dynamics.

CALB IPO Valuation Analysis

CALB (3931 HK) is getting ready to complete its IPO in early October in Hong Kong. The IPO price range is between HK$38 and HK$51 per share.
Based on our valuation sensitivity analysis, our base case valuation of CALB is HK$53 per share, which is 20% higher than the mid-point of the IPO price range.
CALB has a rare combination of surging sales growth rate, operating profitability, and increasing market share in the EV battery market globally.

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Sep 23

Most Read: Central Glass, LG Energy Solution, Chubu Steel Plate, ioneer Ltd, Kito Corporation, CALB, Porsche AG, Sands China, Socionext, Leapmotor and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours
LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion
Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible
Kito (6409) – KKR/Crosby Takeover Launches – High Premium in Weak Year, But Still Light to Value
CALB IPO: Valuation Insights
Porsche IPO Valuation Analysis
Sands China (1928 HK): Positives And Negatives
Socionext Pre-IPO Valuation – Thoughts on Valuation
Leapmotor IPO: Forecasts and Valuation

Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours

Activist Murakami-san and entities spent 4+ years going from 2% to 30% of Central Glass (4044 JP). In that period, they helped management change governance.
There were buybacks, asset sales, cross-holding sale decisions, and a new Mid-Term Management Plan. The stock went up, so now it is time to get out.
True to Murakami-san style/form, it is an own-share Tender Offer by the TargetCo which means most other active holders can’t really participate. It’s high-quality greenmailgagement.

LG Energy Flow Crunch with Additional Passives: K200/MSCI Up-Weight & LIT Inclusion

LG Energy’s locked shares approach 96-97% of SO. Now, we will see an additional passive flow equivalent to another 1% of SO: KOSPI 200/MSCI Standard up-weights and LIT inclusion.
Each passive impact is also substantial. The MSCI up-weight alone will cause an impact equivalent to 2.44x ADTV. It would be 2.20x for the KOSPI 200 and 1.03x for LIT.
For the KOSPI 200 December review, the event-driven flow will likely focus on up-weights, including LG Energy. For LIT, we should consider an aggressive LONG/SHORT with LG Chem.

Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility

Today, Nagoya Premier-listed Chubu Steel Plate (5461 JP) announced that it had applied today to be listed in Tokyo.
It is one of very few Japan names not listed in Tokyo. A TSE listing examination will be conducted, and there is a possibility it moves to TSE Prime.
There are 6 key segment transfer and listing requirements to gain a listing in TSE Prime. Chubu Steel Plate is really close.

S&P/ASX Quiddity Leaderboard Dec 22: Couple of High-Impact Intra-Review Changes Possible

In this insight, we take a look at the potential index changes for S&P ASX 200, 100, 50, and 20 in the run up to the December 2022 Rebalance.
Tassal (TGR AU) and Nearmap Ltd (NEA AU) could get deleted from ASX200 before the December Rebalance, triggering high-impact intra-review additions. There should be two changes in the Review itself.
Pilbara Minerals (PLS AU) is close to becoming an ASX 50 ADD and Lendlease Group (LLC AU) is close to becoming an ASX 50 DEL in the December 2022 review.

Kito (6409) – KKR/Crosby Takeover Launches – High Premium in Weak Year, But Still Light to Value

KKR-Owned Crosby got SAMR approval to buy Kito Corporation (6409 JP) several days ago apparently and has launched its deal. It will be a 21-day tender. Very quick.
It was a strong premium, but still a light price, at announcement. And that was when USD/yen was lower. Since then, earnings and forecasts are way up. But price unchanged.
What looked like a likely candidate for bump agitation has seen none (that I am aware of) so this is pretty straightforward.

CALB IPO: Valuation Insights

CALB (CALBLZ CH) has launched its HKEx listing at HK$38.00-51.00 per share to raise up to US$1.7 billion. Books are open from 23 to 28 September.
We previously discussed the IPO in CALB IPO: The Bull Case, CALB IPO: The Bear Case, CALB IPO: Updates Support the Bull Case, CALB IPO: What’s It Worth?.
CALB should be, at least, valued in line with the median peer multiples. CALB is attractively valued at the IPO price range. We would participate.

Porsche IPO Valuation Analysis

Our base case valuation of Porsche is EV of 83.6 billion EUR, implied market cap of 88.9 billion EUR, and target base case price target of 98 EUR per share.
This represents 23% higher than the mid-point of the IPO price range. Given the relative solid upside, we have a Positive View of the Porsche IPO.
The market related risk is clearly the biggest risk for the Porsche IPO right now in our view.

Sands China (1928 HK): Positives And Negatives

Macau gaming companies gained this week as Hong Kong is expected to ease Covid restrictions, with Macau expected to follow suit.
Last week, the six incumbent Macau gaming operators submitted tenders for the gaming concessions, together with last-minute interloper, the Genting Group.
Sands China (1928 HK) has borrowed heavily and also leads other Macau gaming plays in dividends paid out to shareholders. This may not be lost on Macau officials.

Socionext Pre-IPO Valuation – Thoughts on Valuation

By Shifara Samsudeen, ACMA, CGMA

Socionext (6526 JP) is looking to raise up to US$285m in its Japan IPO.
As stated in our earlier notes, Socionext has been growing its number of design wins per year historically, which should aid to its near/medium term sales and profitability.
In our previous note, we undertook a peer comparison. In this note, we will talk about valuations.

Leapmotor IPO: Forecasts and Valuation

Leapmotor (2007699D HK) is a leading smart EV company in China. The company plans to raise net proceeds of US$904m through its HKEx IPO.
In our previous insight Leapmotor IPO: Stuck in the Middle , we concluded that the company will have to compromise on margins to grow its top line.
Our valuation analysis suggests that Leapmotor’s shares are not even attractive at the lower-end of the IPO price range and the premium vs local peers is hard to justify.

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Sep 22

Most Read: Porsche AG, Raysum Co Ltd, Central Glass, Link Administration, Twitter Inc, Chubu Steel Plate, Total Access Communication, Shandong Fengxiang, Tencent and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Porsche IPO Preview
Raysum (8890 JP) Mystery Bidder Is a Hedge Fund – And That Makes It More Interesting
Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours
But Wait … Even More Penalties In The Link Admin/D&D Situation
Twitter V. Elon V Twitter: Elon Finally Hits A Vein
Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility
True/DTAC Pop As Council Of State Rules NBTC Has No Teeth
Fengxiang (9977 HK): MGO Expected To Follow Judicial Auction
Tencent Nearing Our Bear Target to Reverse from Short to Long
DTAC/True Merger: Council of State’s Decree Paves the Way for Completion

Porsche IPO Preview

The Porsche IPO is expected to be the second largest IPO ever in Germany. Total proceeds from the IPO will be 18.1 billion to 19.5 billion euros.
The IPO price range is from 76.50 euros to 82.50 euros per share, which suggests a valuation of 70 billion to 75 billion euros.
After the IPO, Volkswagen will have an extraordinary shareholders meeting in December to propose to pay 49% of total proceeds to shareholders in early 2023 as a special dividend.

Raysum (8890 JP) Mystery Bidder Is a Hedge Fund – And That Makes It More Interesting

Raysum Co Ltd (8890 JP) has been in a weird kind of limbo for well over a year. The Chairman/Founder resigned late last year for health reasons.
The company needed to take action to stay listed on TSE Standard. There was a plan to transfer 60+% of the shares to a foundation, through an odd arrangement.
Then a hedge fund stepped up and said “I’ll have 64% of the company at a near life-time high.” So now we have an interesting deal. And interesting potential future.

Central Glass (4044 JP) – Huge Buyback Tender, Meant For Murakami-San’s Exit, Not Yours

Activist Murakami-san and entities spent 4+ years going from 2% to 30% of Central Glass (4044 JP). In that period, they helped management change governance.
There were buybacks, asset sales, cross-holding sale decisions, and a new Mid-Term Management Plan. The stock went up, so now it is time to get out.
True to Murakami-san style/form, it is an own-share Tender Offer by the TargetCo which means most other active holders can’t really participate. It’s high-quality greenmailgagement.

But Wait … Even More Penalties In The Link Admin/D&D Situation

Earlier this week, Link Administration (LNK AU) rejected Dye & Durham’s revised proposal to factor in any redress payments from the UK’s FCA in regards to the Woodford Fund.
FCA has now assessed an appropriate penalty of £50mn in addition to the previously announced restitution payment of £306.1mn.
The FCA is all but telegraphing it will default LFSL unless Link steps in. Link says it has made no such commitment. D&D should walk.

Twitter V. Elon V Twitter: Elon Finally Hits A Vein

By Vicki Bryan

Bondholders on alert as a whistleblower complaint gives Elon’s case the substance he lacked as he tries break his agreement to buy Twitter
But this doesn’t win Elon’s case—he has to prove deliberate fraud, which is far from clear
It’s much easier for Twitter to prove Elon’s biggest complaint is buyers’ remorse—which isn’t sufficient grounds to terminate the deal.

Chubu Steel Plate (5461) – Unusual TOPIX Inclusion Possibility

Today, Nagoya Premier-listed Chubu Steel Plate (5461 JP) announced that it had applied today to be listed in Tokyo.
It is one of very few Japan names not listed in Tokyo. A TSE listing examination will be conducted, and there is a possibility it moves to TSE Prime.
There are 6 key segment transfer and listing requirements to gain a listing in TSE Prime. Chubu Steel Plate is really close.

True/DTAC Pop As Council Of State Rules NBTC Has No Teeth

According to media reports, Thailand’s Council of State has ruled the NBTC has no authority to approve or reject the True Corp (TRUE TB) / Total Access Communication (DTAC TB) merger.
The NBTC can prescribe measures to govern the deal but these appear almost of no consequence.
The ruling is a positive development for the merger getting over the line. Both stocks enjoyed strong gains today.

Fengxiang (9977 HK): MGO Expected To Follow Judicial Auction

The controlling shareholders of Shandong Fengxiang Co Ltd-H (9977 HK), a company engaged in chicken breeding, slaughtering, and processing, are unable to meet their debts.
As such, these shareholders who hold 70.92% of shares out in Fengxiang, via domestic shares, have been forced into a judicial auction, the completion of which may trigger an MGO.
Taking pointers from Dongzheng Automotive Finance (2718 HK)‘s recent auction means we back out a possible payment around late December – on the assumption an unconditional MGO is triggered.

Tencent Nearing Our Bear Target to Reverse from Short to Long

By Thomas Schroeder

Tencent short from 395 is nearing our 282/264 target zone where we see a low to reverse to long as bull divergence matures.
Tencent 282/264 buy zone (cycle low due in early October) targets 335 once back above 310.
MACD bull divergence is more constructive and warns of an upside surprise in 2023 (after a Q1 decline) to challenge 395/400 macro pivot resistance.

DTAC/True Merger: Council of State’s Decree Paves the Way for Completion

The press reports that the Council of State has stated that the regulator, NBTC, can only prescribe measures to govern the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger.
The Council of State decree paves the way for the merger to complete and the launch of the VTOs. The NBTC remedial measures will likely focus on consumer protection measures.
The current share price ratio is 9.150x vs the swap ratio of 10.221x. At last close, DTAC and True’s gross spread to the VTO price is 4.4% and 1.8%, respectively.

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Sep 21

Most Read: Toshiba Corp, Porsche AG, Raysum Co Ltd, WCP, Keppel Corp, Leapmotor, Aier Eye Hospital Group, CALB and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely
Porsche IPO Preview
Raysum (8890 JP) Mystery Bidder Is a Hedge Fund – And That Makes It More Interesting
WCP IPO: Final IPO Price Set, Still an Avoid
Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel Situation Could Cause Index Changes
Leapmotor IPO – Peers Recent Down Move Won’t Help
Leapmotor IPO: Valuation Insights
WCP IPO: Order Table, Revised Terms, & Passive Flow Schedule
Aier Eye Hospital (300015.CH) 22H1 – More Downside Ahead; The Long Logic Doesn’t Exist
CALB IPO: What’s It Worth?

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News “Leaks” Likely

Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
If no deal, there’s downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
I don’t see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.

Porsche IPO Preview

The Porsche IPO is expected to be the second largest IPO ever in Germany. Total proceeds from the IPO will be 18.1 billion to 19.5 billion euros.
The IPO price range is from 76.50 euros to 82.50 euros per share, which suggests a valuation of 70 billion to 75 billion euros.
After the IPO, Volkswagen will have an extraordinary shareholders meeting in December to propose to pay 49% of total proceeds to shareholders in early 2023 as a special dividend.

Raysum (8890 JP) Mystery Bidder Is a Hedge Fund – And That Makes It More Interesting

Raysum Co Ltd (8890 JP) has been in a weird kind of limbo for well over a year. The Chairman/Founder resigned late last year for health reasons.
The company needed to take action to stay listed on TSE Standard. There was a plan to transfer 60+% of the shares to a foundation, through an odd arrangement.
Then a hedge fund stepped up and said “I’ll have 64% of the company at a near life-time high.” So now we have an interesting deal. And interesting potential future.

WCP IPO: Final IPO Price Set, Still an Avoid

WCP (WCP KS), a lithium-ion batteries separator company, has set its IPO price at KRW60,000 per share, a hefty 25-40% discount on the “desired” IPO price range of KRW80,000-100,000.
The target raise has declined from KRW720-900 billion (US$517-646 million) to KRW432 billion (US$310 million) due to the lower IPO price and offer shares.
While the final IPO price is now reasonable, the process smacks desperation and calls into question the credibility of the syndicate’s forecasts. This is still an avoid.

Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel Situation Could Cause Index Changes

The FTSE Straits Times Index (STI) (STI INDEX) has a quarterly rebalancing cycle with index reviews performed in March, June, September, and December every year.
The March and September reviews are complete index reviews while the June and December reviews are only for new listings.
In this insight, we take a look at the potential index changes that can take place between now and the end of the March 2023 index review.

Leapmotor IPO – Peers Recent Down Move Won’t Help

Leapmotor (LM) aims to raise around US$1.0bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
In this note, we will run the deal through our ECM framework and talk about valuations.

Leapmotor IPO: Valuation Insights

Leapmotor (2007699D HK) has launched its HKEx listing at HK$48.00-62.00 per share to raise up to US$1.0 billion. Books are open from 20 to 23 September.
We previously discussed the IPO in Leapmotor IPO: The Bull Case, Leapmotor IPO: The Bear Case, Leapmotor IPO: Look Before You Leap, Leapmotor IPO: Valuation First-Look.
Leapmotor, at best, should trade in line with median peer multiples. Leapmotor is fairly valued at the low end of the IPO price range. We pass on the IPO.

WCP IPO: Order Table, Revised Terms, & Passive Flow Schedule

WCP’s institutional subscription rate was 33.28 to 1, one of the lowest for an IPO this size. And nearly all orders sit below the lower end.
WCP set the price at ₩60,000, even lower than the floor, at an implied market cap of ₩2T. And the issuer also reduced the offering volume from 9M to 7.2M.
Passive flows equivalent to about 3% of SO will likely flow into WCP by March next year. It is substantial enough to consider designing a flow trade setup.

Aier Eye Hospital (300015.CH) 22H1 – More Downside Ahead; The Long Logic Doesn’t Exist

By Xinyao (Criss) Wang

The fundamental changes in the population structure will lead to a decline in the growth rate of the total retail sales of consumer goods. The long logic doesn’t exist.
Aier has hit a growth ceiling. As the endogenous demand will be stepped downward gradually, the performance of Aier will further decline. The downward elasticity of valuation is greater.
It is still difficult for healthcare sector to have its own independent growth logic. The bottom of healthcare sector would appear after the collapse of Aier’s valuation.

CALB IPO: What’s It Worth?