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. A Wild First Day Trading for 2x Single Stock Leveraged Products for Samsung Electronics and SK Hynix
- In this insight, I discuss the wild trading of 2x single stock leveraged ETF products for Samsung Electronics (005930 KS) and SK Hynix (000660 KS) which were launched today.
- In particular, i focus on their trading volume, AUM, and share performances.
- In just one day, the AUM of the 2x single stock leveraged ETF products for Samsung Electornics and SK Hynix has jumped to 5.2 trillion won ($3.5 billion).
2. [Japan M&A] Kinden (1944) To Take Over Kodensha (1948) At HUGE UNBELIEVABLE AMAZING Price (¥11,501)
- Today after the close, Japan’s biggest electrical equipment construction co Kinden Corp (1944 JP) announced a deal to take over a smaller electrical equipment construction co Kodensha Co (1948 JP).
- Mitsubishi Electric (6503 JP) owns 51%. Other corporates own 7%. A few banks own a bit under 2%, then retail owns everything else. As of Mar2025, foreign investors held <1%.
- Shares rose sharply last year, and apparently a Nikkei article in January suggested they’d sell the asset. Shares popped on that. Well-flagged. (Inexplicably?) HUGE price. Big win for retail.
3. [Japan Event] Air Water (4088) – Small Picture Vs Big Picture
- Air Water Inc (4088 JP) was a problem stock because of accounting issues. Management got the boot. The TSE said “Security on Special Alert” three weeks ago.
- That meant it got the boot from various domestic indices and there were 30mm shares for sale. It turns out Murakami Group has bought half of that.
- Shares are +35% since the day after I wrote. Small picture, that brings PSR near its 8yr high. Big picture, EV/Revenue is half that of closest Japan comp Nippon Sanso.
4. Taiyo Holdings (4626 JP): Watching and Waiting as the Case for a Bump Gains Credence
- Since KKR & Co (KKR US) announced its preconditional tender offer for Taiyo Holdings (4626 JP) on 31 March, the shares have largely traded above the JPY4,750 offer.
- The case for a bump is gaining credence due to Taiyo’s better-than-expected results, significant peer rerating, the diminishing control premium and the irrevocables’ competing offer clauses.
- Nevertheless, KKR has no immediate cause for concern as no activist has emerged, and the market could sell off in the four months remaining before the offer opens.
5. [Japan Event] Carlyle and ALSOK Compete Then Join To Take Over NDC (1909) – ¥3,730
- ALSOK and Carlyle produced competing bids, overbid each other, then joined, then overbid themselves, to launch a TOB to buy fire safety company Nippon Dry Chemical (1909 JP).
- It’s a ten bagger since pre-covid and 10x forward EBITDA. It’s a decent outcome. But it’s trading through terms a week+ after announcement despite ALSOK+corps owning 50+%.
- While it is not impossible an activist digs their teeth in, this is long enough in the tooth that a strategic jumping in seems unlikely.
6. Merger Arb Mondays (25 May) – Kakaku, Nippon Dry Chem, Skyworth, Changhong Jiahua, Shengmu, Qoria
- 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: Skyworth (751 HK), ENN Energy (2688 HK), Qoria (QOR AU), Changhong Jiahua (3991 HK), Humm Group (HUM AU), European Lithium (EUR AU), Atlantic Lithium (A11 AU).
- Lowest spreads: Kakaku.com Inc (2371 JP), Taiyo Holdings (4626 JP), Shinko Shoji (8141 JP), Nippon Dry Chemical (1909 JP), Magnetic Resources Nl (MAU AU), Toho Titanium (5727 JP).
7. Samsung FCF Estimate Factoring in Bonus Hit
- Despite KRW 37T headline cost, cash impact is mainly tax, so FCF drag is limited; street sees KRW 125T returns split into KRW 10T base dividend, 45T special, 70T buybacks.
- Implied DPS ~KRW 8300, ~3.6% SO retired; yields ~2.6% on commons and ~4.2% on prefs.
- Buybacks may skew prefs, pricing that optionality; with labor risk gone, focus shifts to returns, 37% pref spread and ~4% yield could drive yield rotation and spread compression.
8. I-Med: Jardine Matheson’s Big Push Into Digital Healthcare
- Jardine Matheson (JM SP) has agreed to buy a 100% stake in I-MED Radiology Network (I-MED) from Permira for A$3.4bn (US$2.4bn) in an all-cash deal.
- The outlay for the largest X-ray and medical scan provider in Australia, backs out 11.5x EBITDA for FY26E (June Y/E), excluding I-MED’s minority stake in Harrison.ai.
- The transaction remains “subject to customary closing conditions including regulatory approvals” – that should include FIRB – and is “expected to complete later in 2026“.
9. Atlas Arteria (ALX AU): The IE Says NOT Fair & Reasonable. All Eyes On Skyway’s Put Option
- A lot to unpack: the Panel declines IFM’s application; the Skyway ROFO has expired; and the Target Statement is now out – the IE says NOT fair and NOT reasonable.
- The ROFO expiration should come as no surprise. Nor should the IE conclusion. IFM’s independent directors previously issued a strongly worded rebuttal to IFM’s Offer.
- A key tenant of IFM’s Offer evolves around the Skyworth put option: would/will IFM waive the put condition; or Ontario Teachers’ Pension Plan (OTPP) irrevocably waives its right to put?
10. Atlas Arteria (ALX AU): Target’s Statement Makes Good and Bad Points
- The Atlas Arteria (ALX AU) target’s statement recommends rejecting IFM’s takeover offer. The IE opines that the offer is neither fair nor reasonable.
- The IE valuation range is A$5.39 to A$6.20 per share. IFM will have several reasons to take issue with the IE’s valuation, particularly relating to the Chicago Skyway.
- Despite the Board’s assertions, it could be commercially prudent for OTPP to waive the put option. It is also possible that IFM waives the maximum offer acceptance threshold.
