This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. CATL (3750 HK): Implications of Potential US$5bn Offering
- CATL (3750 HK) listed in May 2025 by selling 135.579m shares at HK$263/share. The overallotment option of 20.337m shares was also exercised fully. The stock is up 151% since then.
- Media reports indicate that CATL (3750 HK) could use the recent runup in the stock price to raise up to US$5bn in a share sale.
- Passives will mop up around 15% of the offering. Southbound investors have been selling, shorts are rising, and the H/A premium could move sharply lower from here.
2. The Kioxia (285A) Conundrum – Still ¥9trln of Overhang
- Kioxia Holdings (285A JP) tried to IPO but couldn’t. The IPO got pushed back, and shrunk. When it IPOed with a sale of about $700mm in Dec24, it opened down.
- The stock rose 58% to March 2025. Then another 100% to Sep 2025. Then another 100% to Bain’s Dec25 offering. The stock has quadrupled in 4 months since that offering.
- Retail has sold. Passive has bought 45mm shares. Foreign active has 10x-ed their size since March 2025 to 195mm shares. Bain and Toshiba still have 245mm shares left to sell.
3. Victory Giant (2476 HK): Index Inclusion Timeline for US$3bn Offering; Big H/A Discount
- Victory Giant Technology -A (300476 CH) could raise up to HK$23.1bn (US$2.96bn) in its H-share offering if the Offer Size Adjustment Option and the Overallotment Option are exercised.
- The cornerstone investor allocation will vary from 34-45% of the total offering and those shares are locked up for 6 months. Fast entry index inclusion probability is small.
- The H-shares have been priced at a 36.8% discount to the A-shares and that should support the offering. Southbound Stock Connect will come online from the open on 18 May.
4. [Japan M&A] Rohm (6963) – Refreshing Rohm’s Stake Value in Toshiba, and Thinking About NEWCO
- At the end of March, Mitsubishi Electric (6503 JP), Toshiba Corp (6502 JP), and ROHM Co Ltd (6963 JP) agreed to have Mitsubishi Electric join the Toshiba/Rohm power semi talks.
- The language in the documents released is worthwhile a close look. I expect a Rohm/Toshiba deal announcement within the quarter. If control/consolidation/stake levels are agreed, Mitsubishi won’t be far behind.
- Joining the three businesses creates lots of potential synergies, making the businesses #2 in the world. Separately, Kioxia’s recent gains highlight the value of Rohm’s Toshiba stake and Rohm’s value.
5. [Japan Activism] Activists Control Sanken (6707 JP) Going Forward – Watch For Better Plans
- Effissimo Capital Management launched a partial Tender Offer for Sanken Electric (6707 JP) five years ago. The goal was 20%. That tender failed but 6mos later they were at 19%.
- Effissimo bought more, and the company bought back 20% of shares; Effissimo is at 36% now. In late 2022, Oasis bought 6.8%. Now 9.8%. Activists effectively control the vote.
- In Q3 2024, Sanken de-consolidated Allegro MicroSystems (ALGM US) but their stake is still 2x Sanken’s market cap. The “core” business is weak, but should grow. The question is pressure.
6. [Japan Activism] Sun Corp (6736 JP) – Not So Cheap Anymore
- A year ago I wrote Sun Corp (6736 JP) was still/again cheap. Back then it traded at a 48% discount to the value of its shares in Cellebrite DI (CLBT US).
- It spent much of the last few months at a 25-35% discount. Last Tuesday it was a 25% discount. By Friday, it was a 1.2% discount after Cellebrite shares plummeted.
- Sun Corp shares have reacted this morning but the discount is entirely too narrow. If you have the pair on, time to take it off.
7. [Japan M&A/Activism] Sankei REIT (2972) Cancels Previously Announced End-Feb Div – Outcome Murkier
- Through a series of sob stories, Sankei Real Estate (2972 JP) wrote down the value of their biggest building (as of Feb 2025) last August because a tenant left.
- Then they recently said they would have to pay more and wait longer to renovate or sell. Now 11 days later they are taking another writedown. And cancelling the dividend.
- That marks the building down 96% from Feb-25 value. And the dividend is out. And Murakami-san owns 19% of a squeeze-able register. There may be no good outcome here.
8. Makino Milling Machine (6135 JP): Tender Delayed as the Case for a Bump Is Becoming Persuasive
- Due to the delay in securing FEFTA approval, Makino Milling Machine Co (6135 JP) has announced that the start of the MBK tender offer has been delayed to late June.
- Makino is classified as a Type 3 company (core business), suggesting that MBK is negotiating undertakings to secure FEFTA approval.
- Despite mitigating factors, the case for a bump is increasingly persuasive given peers’ material reratings, Makino’s solid financial performance and lack of irrevocables.
9. Merger Arb Mondays (13 Apr) – ENN, Skyworth, Makino, Sankei, Olympic, The Global, NSR, Insignia
- I summarise the latest spreads and newsflow for the merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, the Philippines, Thailand, and Chinese ADRs.
- Highest spreads: Qoria (QOR AU), Skyworth Group Limited (751 HK), ENN Energy (2688 HK), Humm Group (HUM AU), Bluescope Steel (BSL AU), Emmerson Resources (ERM AU).
- Lowest spreads: Bright Smart Securities (1428 HK), Sankei Real Estate (2972 JP), Gunma Bank (8334 JP), Toho Titanium (5727 JP), Magnetic Resources Nl (MAU AU).
10. Arclands (9842) And Joyful Honda (3191 JP) To Merge, Resulting in Japan’s Leading Home Centre Co
- Arclands Corporation (9842 JP) and Joyful Honda (3191 JP) have agreed to become wholly owned subsidiaries of a new joint holding company through a share transfer.
- For each share in Arclands, one share of the joint holding company will be issued, and for each share of Joyful Honda, 1.15 shares will be issued.
- The terms of the transaction are broadly fair to both sets of shareholders, suggesting that the respective EGM votes should pass. NewCo shares will be listed on 1 March 2027.
