Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Marginal float helped fuel the <a href="https://www.smartkarma.com/entities/vinfast-auto-ltd" target="_blank" data-smartkarma-citation="entities:36550:1" rel="noopener">VinFast (VFS US)</a> bubble. Then it popped. </li>
<li>The <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>/<a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> Circularity Detour and subsequent unwind created the B-Share construct which means they can maintain the voting control in South Africa without maintaining economic control.</li>
<li>The backlash against <a href="https://www.smartkarma.com/entities/star-cm-holdings-ltd" target="_blank" data-smartkarma-citation="entities:36658:1" rel="noopener">Star CM Holdings (6698 HK)</a> calls into question the broader Chinese entertainment industry, and how it strikes a balance between viewership/profitability and ethical boundaries.</li>
</ul>


Marginal float helped fuel the VinFast (VFS US) bubble. Then it popped. 
The Prosus (PRX NA)/Naspers (NPN SJ) Circularity Detour and subsequent unwind created the B-Share construct which means they can maintain the voting control in South Africa without maintaining economic control.
The backlash against Star CM Holdings (6698 HK) calls into question the broader Chinese entertainment industry, and how it strikes a balance between viewership/profitability and ethical boundaries.


Last Week In Event SPACE: Vingroup/VinFast, Prosus/Naspers, STAR CM

Travis Lundy

<ul>
<li>Today after the close, <a href="https://www.smartkarma.com/entities/ichigo-inc" target="_blank" data-smartkarma-citation="entities:11386:1" rel="noopener">Ichigo Inc (2337 JP)</a> announced a stock buyback to go through the next 6 months. It is ¥3bn, which is not huge, but not nothing.</li>
<li>It seems like a constant refrain, but shareholder structure matters. </li>
<li>Ichigo has a history of doing buybacks (10% of shares out are in treasury), and the historical patterns are interesting when comparing announced intention and actual result. </li>
</ul>


Today after the close, Ichigo Inc (2337 JP) announced a stock buyback to go through the next 6 months. It is ¥3bn, which is not huge, but not nothing.
It seems like a constant refrain, but shareholder structure matters. 
Ichigo has a history of doing buybacks (10% of shares out are in treasury), and the historical patterns are interesting when comparing announced intention and actual result. 


Ichigo (2337) Buyback - History and Shareholder Structure Give an Edge

<ul>
<li>As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.</li>
<li>This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.</li>
<li>This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.</li>
</ul>


As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.
This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.


2022 JPX Nikkei 400 Rebal Update - Going the Right Way

Last night, Singapore-based fund Aslead Capital Pte announced that it would launch a Tender Offer on <a href="https://www.smartkarma.com/entities/fuji-kosan-company-ltd" target="_blank" data-smartkarma-citation="entities:17867:1" rel="noopener">Fuji Kosan Company (5009 JP)</a> to take at least a 40% stake and possibly full control after ownership and approaches did not lead to "satisfactory" measures to improve corporate value. 
The shareholder had been acquiring shares since last year. It first went above 5% in August 2020 and until yesterday had most recently reported a 14.83% stake on 4 February. 
The stock has an interesting set of investors, and was for many years in the early to mid-2010s a poster child for tiny cap deep value investment targets. 
As of the announcement, Aslead states that it owns 16.8% which means to get to 40.0%, it needs only 23.2% of shares out - of the 83.2% it does not own. 
The company has been building an 'interesting' set of shareholders and relationships. One activist sold last year to be replaced by another. There is someone infamous from the tabloids. This could be fun to watch. It will certainly trade through terms early. The question then is what next?
There is a behind-the-scenes link to the family office responsible for the single most fun <a href="https://www.smartkarma.com/messages/%20https:/y-n10.com/" target="_blank" rel="noopener">family office website</a> ever made (after you press enter, check on the left side to see the sound is on and if you need to read the text more smoothly switch from angled to vertical just above the sound on/off section).

Last night, Singapore-based fund Aslead Capital Pte announced that it would launch a Tender Offer on Fuji Kosan Company (5009 JP) to take at least a 40% stake and possibly full control after ownership and approaches did not lead to "satisfactory" measures to improve corporate value. 
The shareholder had been acquiring shares since last year. It first went above 5% in August 2020 and until yesterday had most recently reported a 14.83% stake on 4 February. 
The stock has an interesting set of investors, and was for many years in the early to mid-2010s a poster child for tiny cap deep value investment targets. 
As of the announcement, Aslead states that it owns 16.8% which means to get to 40.0%, it needs only 23.2% of shares out - of the 83.2% it does not own. 
The company has been building an 'interesting' set of shareholders and relationships. One activist sold last year to be replaced by another. There is someone infamous from the tabloids. This could be fun to watch. It will certainly trade through terms early. The question then is what next?
There is a behind-the-scenes link to the family office responsible for the single most fun family office website ever made (after you press enter, check on the left side to see the sound is on and if you need to read the text more smoothly switch from angled to vertical just above the sound on/off section). 

Aslead Capital Hostile Offer for Fuji Kosan (5009)

<a href="https://www.smartkarma.com/entities/shinoken-group-co-ltd" target="_blank" data-smartkarma-citation="entities:17040:1" rel="noopener">Shinoken Group (8909 JP)</a> - short for Shinohara Kensetsu - was founded 30 years ago by Hideaki Shinohara who set up the company as a 25-year old after starting a few years earlier at a real estate company. The company has grown from something small to something relatively large and the company has been aggressive. It makes most of its money through real estate sales and service, and some money through self-contracting. There are other businesses which are quite decent and could get better - add-ons to the real estate service business which has been a real winner. Over the years, the company has grown through both organic growth and M&amp;A. About 55% of net sales and 50% of Operating Income is through organic businesses. And the growth shown indicates that the company has been able to integrate some of these businesses quite successfully. Since 2017, the plan has been to move a great deal of the business away from real estate sales and more towards real estate service. They've done that pretty well (real estate sales was 77% of revenues in 2017, 48% last year)The New News on the 12th of February was that the company reported full-year profits and a <a href="https://www.shinoken.co.jp/presses/get_img/521/file1_path/20210212_521.pdf" target="_blank" rel="noopener">forecast</a> for 2021 where revenue was set to grow 10% but OP and NP were set to grow 0.2% and 0.8%, respectively.

Shinoken Group (8909 JP) - short for Shinohara Kensetsu - was founded 30 years ago by Hideaki Shinohara who set up the company as a 25-year old after starting a few years earlier at a real estate company. The company has grown from something small to something relatively large and the company has been aggressive. It makes most of its money through real estate sales and service, and some money through self-contracting. There are other businesses which are quite decent and could get better - add-ons to the real estate service business which has been a real winner. Over the years, the company has grown through both organic growth and M&amp;A. About 55% of net sales and 50% of Operating Income is through organic businesses. And the growth shown indicates that the company has been able to integrate some of these businesses quite successfully. Since 2017, the plan has been to move a great deal of the business away from real estate sales and more towards real estate service. They've done that pretty well (real estate sales was 77% of revenues in 2017, 48% last year)The New News on the 12th of February was that the company reported full-year profits and a forecast for 2021 where revenue was set to grow 10% but OP and NP were set to grow 0.2% and 0.8%, respectively. 

Shinoken (8909) - Cheap Stock, Growth Lag, Governance Hiccup: "Gift" To Foundation Unlikely to Pass

Japan

Ichigo Inc. is a value-add real estate company. The Company's three key businesses are Value-Add, in which Ichigo acquires and improves mid-sized, prime location real estate, Asset Management including the Ichigo Office REIT (8975), and Clean Energy, in which Ichigo builds and operates solar power plants  on disused land nationwide.

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Ichigo Inc (2337 JP)

Last Week In Event SPACE: Vingroup/VinFast, Prosus/Naspers, STAR CM

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Ichigo (2337) Buyback - History and Shareholder Structure Give an Edge

Small cap real estate and infra company Ichigo (2337) today announced a buyback. This is the tenth in 6.5yrs. The pattern of past buybacks is...

Travis Lundy

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

Aslead Capital Hostile Offer for Fuji Kosan (5009)

Fuji Kosan (5009) is the lastest smallcap value name to attract a hostile bidder putting a shot across the bow of recalcitrant management. A wake...

Travis Lundy

Shinoken (8909) - Cheap Stock, Growth Lag, Governance Hiccup: "Gift" To Foundation Unlikely to Pass

Shinoken Group (8909) is a well put-together small real estate developer moving to more RE service. It's expanding, transforming, and cheap. There...

Travis Lundy

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