Weekly Top Ten Event-Driven and Index Rebalance – Apr 27, 2025

1. Zomato/Eternal: Lower Foreign Ownership Limits & The BIG Passive Selling

By Brian Freitas, Periscope Analytics

• Zomato (ZOMATO IN), now Eternal, listed in July 2021 with a Foreign Ownership Limit (FOL) of 100%. Since listing, foreign ownership has dropped from over 70% to just under 45%.
• Eternal is looking to cap foreign ownership at 49.5% to continue qualifying as an Indian-Owned-and-Controlled Company. That will give the company greater operational flexibility, especially for inventory ownership.
• The FOL decrease will result in selling from passive global index trackers. With the stock 23.5% off its highs and a steady increase in futures open interest, covering could ensue.

2. Swiggy (SWIGGY IN): US$7.6bn Lock-Up Expiry & Index Inclusion

By Brian Freitas, Periscope Analytics

• Swiggy (SWIGGY IN) listed in November 2024 and around 85% of the shares outstanding (US$7.6bn) will unlock on 13 May.
• Nearly 80% of the shares that unlock are held by pre-IPO PE/VC investors and they are 100% in the money in most cases. Expect the selldown to commence soon.
• Swiggy (SWIGGY IN) should be added to one global index in June, while inclusion in the other global index will require a small price increase or selling from PE/VC investors.

3. Merger Arb Mondays (21 Apr) – ENN Energy, Canvest, OneConnect, Makino, Shibaura, Welcia, Topcon

By Arun George, Global Equity Research Ltd

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Insignia Financial (IFL AU), Oneconnect Financial Technology (6638 HK), ENN Energy (2688 HK), Seven & I Holdings (3382 JP), Smart Share Global (EM US), Domain Holdings.
• Lowest spreads: Makino Milling Machine Co (6135 JP), Sinarmas Land (SML SP), Shibaura Electronics (6957 JP), Tenma Corp (7958 JP), Aeon Delight (9787 JP), Naigai Trans Line (9384 JP). 

4. StubWorld: GMO Internet (4784) Will Be Squeezy. Until It’s Not.

By David Blennerhassett, Quiddity Advisors

• Negligible float, 150x+ forward earnings – yes, investors can afford NOT to have GMO Internet (4784 JP) in their portfolio.
• Preceding my comments on the GMO group 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%.

5. Poon Moves On Dickson Concepts (113 HK)’s Cash Hoard?

By David Blennerhassett, Quiddity Advisors

• Dickson Concepts Intl (113 HK) (DC), which is principally engaged in the sale of luxury goods business, is suspended pursuant to the Takeovers Code.
• DC’s Chairman, Dickson Poon (& spouse), hold 60.5%. Super-net-cash rich DC is trading in sync with historical metrics. 1H25 (Mar Y/E) net profit dropped 40.1%. Shares are roughly flat yoy. 
• Given DC’s cash hoard, taking the company private makes sense. I doubt Poon is seeking to exit his stake.

6. *NEW* USTR Section 301 Proposed Actions on China Maritime Dominance

By Travis Lundy, Quiddity Advisors

• Biden’s USTR came out with a flawed Section 301 report on Chinese maritime “dominance” in January. It is not that China shipbuilding is not dominant, but the report was flawed.
• In February/March (flawed) measures were proposed. Then mostly minimally-insightful hearings were held. Then Trump came out with an Executive Order “Restoring America’s Maritime Dominance” (that requires looking back 80yrs). 
• Now we have new USTR Proposed Measures which water down the old ones quite considerably.

7. JAFCO (8595) Good Results, Higher Div, Buyback, More Plans; Not Quite There, But Maybe Will Be Later

By Travis Lundy, Quiddity Advisors

• At noon today, Jafco Co Ltd (8595 JP) announced full year (to March 2025) results. Revenues were up 21.4% this year, OP +49.7%, and Net Income +27.8%.
• The company announced a ¥5bn buyback, and also announced a new dividend policy of 6% DOE or 50% payout ratio. As it is a markets business, there is no guidance. 
• The stock popped significantly in the PM session, but the market zeitgeist is a tailwind. And there is supportive new news.

8. Mayne Pharma (MYX AU): This Is A Buy

By David Blennerhassett, Quiddity Advisors

• On the 21st Feb 2025, Mayne Pharma (MYX AU), a leader in dermatology and women’s health, entered into a Scheme Implementation Deed with US-based pharmaceutical outfit, Cosette Pharmaceuticals.
• Cosette is offering A$7.40/share, a 37% premium to last close. The Offer has the backing of Mayne’s two largest shareholder, Viburnum and Bruce Mathieson, collectively holding 14.1%.
• Mayne has now revised the Scheme timeline, with completion targeted late June, early July. This is done. 

9. Fujitsu (6702) – Earnings/Guidance OK, Margins Better, But New Quiddity Buyback Data Tool

By Travis Lundy, Quiddity Advisors

• Fujitsu Earnings. Revenues +2.1%, OP +77.5%, Pretax +65.1%, Net -13.0% (basis effect from FY23 one-offs). Forecast? Revs -2.8%, OP/adj +35.8%/+17.2%, Net/adj +77.4%/+3.7%. All guided measures shy vs the Street consensus.
• The company presented a progress update on its Medium-Term Management Plan. Core profits are better. Things are improving. 
• The company also announced a big 11-month ¥170bn buyback. Last year’s was ¥180bn (completed 24 March). Worth checking out the details (and our brand-new buyback tool)

10. Korea Dems’ Surprise Proposal: Separate Tax for Dividends Over 35% Payout

By Sanghyun Park, Clepsydra Capital

• The bill submitted by the Democratic Party today highlights that separate taxation on dividend income applies only to dividends from companies with a 35% payout ratio or higher.
• We might see re-rating on dividend stocks with solid cash flow but below 35%, especially banks over telcos. Holdcos like Samsung C&T, LG, and Hyundai Glovis could attract attention too.
• Dark horses like NAVER, with earnings potential, and Samsung Electronics, currently at 25%, could attract attention if they increase payouts to 35%.