Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

TOYOTA INDUSTRIES CORPORATION, a member of the Toyota Motor Group, assembles motor vehicles and manufactures automotive parts such as engines and air conditioner compressors.  The Company also produces industrial equipment and textile machinery as well as electronic devices such as computer modems and power inverters.

<ul>
<li>On Friday after the close, media reports surfaced that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> Group chairman and founding family member had put forth a take-private proposal to <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>. </li>
<li>The number quoted was ¥6trln market cap (most) or EV (<a href="https://www.ft.com/content/f4a8eeda-2e2e-4947-aac7-d5d71f336432" target="_blank" rel="noopener">FT</a>), financed by personal funds, 3 megabanks, and reportedly some group companies. </li>
<li>¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.</li>
</ul>


On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP). 
The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies. 
¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.


Toyota Industries (6201) - SURPRISE! It's a TOYODA Takeover Proposal (Good Governance May Not Win)

Guangzhou Automobile Group / Event-Driven

Guangzhou Automobile Group Company, Ltd. manufactures, sells, and services automobiles. The Company is also involved in automobile parts and components, and auto finance and related services for both overseas and domestic markets.

<ul>
<li>AH Premia fall sharply. Spread curve torsion is mild but present, with narrow AH Premia widening, and wide premia narrowing.</li>
<li>For a month I thought warning signs were flashing and spreads could widen. That has taken a pause. I am not comfortable it will remain paused or Hs will outperform.</li>
<li>The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from wider spreads coming in, narrow spreads widening, and liquidity dropping. Alpha good again this week.</li>
</ul>


AH Premia fall sharply. Spread curve torsion is mild but present, with narrow AH Premia widening, and wide premia narrowing.
For a month I thought warning signs were flashing and spreads could widen. That has taken a pause. I am not comfortable it will remain paused or Hs will outperform.
The Quiddity Portfolio is pretty hunkered down and nearly flat H/A risk. But benefits from wider spreads coming in, narrow spreads widening, and liquidity dropping. Alpha good again this week.


A/H Premium Tracker (To 25 Apr 2025):  AH Premia Fall Sharply; "Feels" Risk-On But Noisy Spreads

Tencent Holdings Limited operates as an investment holding company. The Company, through its subsidiaries, provides Internet and mobile value-added services (VAS), online advertising, and e-commerce transactions. Tencent Holdings offers services to users worldwide.

<ul>
<li>Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. The first three weeks in April were HK$168bn.</li>
<li>The fourth week (this past week) saw net outflows on low volume as SOUTHBOUND investors sold SOEs quite heavily. </li>
<li>9 of the top 10 Net Sells as % of Volume this past week had China, Beijing, or Shanghai as the first word in their name.</li>
</ul>


Q1 saw record quarterly inflows by SOUTHBOUND investors at HK$435bn, beating the previous record of Q1 2021 by more than HK$100bn. The first three weeks in April were HK$168bn.
The fourth week (this past week) saw net outflows on low volume as SOUTHBOUND investors sold SOEs quite heavily. 
9 of the top 10 Net Sells as % of Volume this past week had China, Beijing, or Shanghai as the first word in their name.


HK Connect SOUTHBOUND Flows (To 25 Apr 2025); First Net Sell in Ages, Led by Heavy SOE Selling

Shin-Etsu Chemical Co., Ltd. produces and distributes synthetic resins and other chemical products such as fertilizers. The Company also manufactures electronic materials such as semiconductor silicon, synthetic, and rare earth quartz. Shin-Etsu Chemical operates in Japan and overseas.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/shin-etsu-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:4481:1" rel="noopener">Shin Etsu Chemical (4063 JP)</a> reported FY earnings to beat January guidance for all four major measures, just slightly. They only guide 1 quarter out, and Q1 is up year-on-year... </li>
<li>...in revenues, but down in OP and NP. Note: OP and NP guidance is nearly identical to what they guided for Q1 last year on ¥585bn revenues (vs ¥610bn now)</li>
<li>The BIG news here is a Very Large Buyback. The company has long has huge piles of cash. This buyback (~90% of annual profit) starts to make use of it.</li>
</ul>



Shin Etsu Chemical (4063 JP) reported FY earnings to beat January guidance for all four major measures, just slightly. They only guide 1 quarter out, and Q1 is up year-on-year... 
...in revenues, but down in OP and NP. Note: OP and NP guidance is nearly identical to what they guided for Q1 last year on ¥585bn revenues (vs ¥610bn now)
The BIG news here is a Very Large Buyback. The company has long has huge piles of cash. This buyback (~90% of annual profit) starts to make use of it.


Shin-Etsu Chemical (4063) - OK Earnings, OK Forecast, But Ground-Breaking Buyback

SHIBAURA ELECTRONICS CO., LTD. manufactures and sells thermistor elements, sensors, measuring devices, and control equipment.  The Company's products include temperature sensors, air flow sensors, liquid level sensors, gas sensors, digital thermometers, temperature controllers, anemometers, digital hygrometers, and humidity controllers.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a> bid ¥4,300 for <a href="https://www.smartkarma.com/entities/shibaura-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:12704:1" rel="noopener">Shibaura Electronics (6957 JP)</a>. <a href="https://www.smartkarma.com/entities/minebea-mitsumi-inc" target="_blank" data-smartkarma-citation="entities:5032:1" rel="noopener">Minebea Mitsumi (6479 JP)</a> overbid at ¥4,500. YAGEO <a href="https://contents.xj-storage.jp/xcontents/AS02620/dfcef47d/8a72/4ce5/b37d/c25033522728/20250418092946788s.pdf" target="_blank" rel="noopener">overbid</a> Minebea at ¥5,400 on 17 April (expected to start 7-May)</li>
<li>Apparently, YAGEO was a bit upset by the public comments by Shibaura regarding custom/mass-market/online different ways of doing business. YAGEO <a href="https://www.yageo.com/upload/media/investor/Press_Room/files/Shibaura0421/YAGEO%20Public%20Letter%2020250421_English.pdf" target="_blank" rel="noopener">responded</a> with receipts. Shibaura will respond later.</li>
<li>On the 22nd, Minebea noted they would delay their intended 23rd start date. Now they have more irrevocables. In the end, I expect YAGEO's, not Minebea's, top price defines this.</li>
</ul>



Yageo Corporation (2327 TT) bid ¥4,300 for Shibaura Electronics (6957 JP). Minebea Mitsumi (6479 JP) overbid at ¥4,500. YAGEO overbid Minebea at ¥5,400 on 17 April (expected to start 7-May)
Apparently, YAGEO was a bit upset by the public comments by Shibaura regarding custom/mass-market/online different ways of doing business. YAGEO responded with receipts. Shibaura will respond later.
On the 22nd, Minebea noted they would delay their intended 23rd start date. Now they have more irrevocables. In the end, I expect YAGEO's, not Minebea's, top price defines this.


YAGEO and Shibaura Still Fighting, Minebea Likely to Bid Up, The Question Is Another YAGEO Overbid

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Travis Lundy
Pan-Asia Catalysts/Events
• Quiddity Advisors

Toyota Industries (6201) - SURPRISE! It's a TOYODA Takeover Proposal (Good Governance May Not Win)

Toyota chair Akio TOYODA has proposed to take Toyota Inds private. This is not for forklifts but for future TM ownership. This is where TICO...

Travis Lundy

A/H Premium Tracker (To 25 Apr 2025): AH Premia Fall Sharply; "Feels" Risk-On But Noisy Spreads

AH Premia fell this week as HK stocks outperformed A-shares. It isn't clear why but the risk-on market rebounds helped. Still too noisy to take AH...

Travis Lundy

HK Connect SOUTHBOUND Flows (To 25 Apr 2025); First Net Sell in Ages, Led by Heavy SOE Selling

SOUTHBOUND activity low again this 4-day week. Trade tantrums not helping, but markets up despite SOUTHBOUND net selling for the first time in a...

Travis Lundy

Shin-Etsu Chemical (4063) - OK Earnings, OK Forecast, But Ground-Breaking Buyback

ShinEtsu Chemical is plugging along. Earnings were OK, Guidance is OK not beautiful (is anyone's now?) but they announced a Very Big Buyback. 5x...

Travis Lundy

YAGEO and Shibaura Still Fighting, Minebea Likely to Bid Up, The Question Is Another YAGEO Overbid

Everyone awaits Minebea's revised bid, which could come any time. Shares are 7.4% through YAGEO's 20% overbid of Minebea's old terms. This gets...

Travis Lundy