Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
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<p>I number 46, mostly firm, deals around the region.</p>
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<p>More below the fold.</p>
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This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 46, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Shinsei Bank, HomeCo/Aventus, Irongate, Spark Infra, ICar, Yorkey

<p>M&amp;A deals in the Aussie energy space continue.</p>
<p><a href="https://www.smartkarma.com/entities/posco-international-corporation" target="_blank" data-smartkarma-citation="entities:5954:1" rel="noopener">Posco International Corporation (047050 KS)</a>, the trading arm of South Korea's mega-steel play <a href="https://www.smartkarma.com/entities/posco" target="_blank" data-smartkarma-citation="entities:208:1" rel="noopener">Posco (005490 KS)</a>, has been granted exclusive due diligence through to 5 November to bump its indicative Offer of A$4.40/share for natural gas producer <a href="https://www.smartkarma.com/entities/senex-energy-ltd" target="_blank" data-smartkarma-citation="entities:18390:1" rel="noopener">Senex Energy (SXY AU)</a>. </p>
<p>PIC first approached Senex on the 2 September with a A$4.00/share Offer, then A$4.20 on the 27 August, before submitting an indicative proposal of A$4.40/share on the 2 September, which is a 40% premium to the 30-day VWAP on that day. </p>
<p>PIC was granted due diligence on the 15 September. The DD extension is to provide PIC with additional time to assess a further revised proposal at a higher price.</p>
<p>Should a firm Offer transpire, it will be done via an off-market takeover with a 50.1% minimum acceptance condition. FIRB approval would also be a condition. </p>
<p>Senex is open to other offers:</p>
<blockquote>
<p>The Senex Board believes it is in the best interests of its shareholders to continue to engage with POSCO International and will assess any proposal received on its merits</p>
</blockquote>
<p>The proposal follows ongoing deals for <a href="https://www.smartkarma.com/entities/oil-search-ltd" target="_blank" data-smartkarma-citation="entities:773:1" rel="noopener">Oil Search Ltd (OSH AU)</a> (<em><a href="https://skr.ma/jxkVJ" target="_blank" rel="noopener">Oil Search/Santos: PNG a Potential Party Pooper</a></em> ) and <a href="https://www.smartkarma.com/entities/woodside-petroleum-ltd" target="_blank" data-smartkarma-citation="entities:177:1" rel="noopener">Woodside Petroleum (WPL AU)</a> tilt for <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> O&amp;G ops (<em><a href="https://skr.ma/wsrxa" target="_blank" rel="noopener">If Woodside Buys BHP Petroleum for Scrip, There Will Be Flowback</a></em>). </p>
<p>More below the fold.</p>

M&amp;A deals in the Aussie energy space continue.
Posco International Corporation (047050 KS), the trading arm of South Korea's mega-steel play Posco (005490 KS), has been granted exclusive due diligence through to 5 November to bump its indicative Offer of A$4.40/share for natural gas producer Senex Energy (SXY AU). 
PIC first approached Senex on the 2 September with a A$4.00/share Offer, then A$4.20 on the 27 August, before submitting an indicative proposal of A$4.40/share on the 2 September, which is a 40% premium to the 30-day VWAP on that day. 
PIC was granted due diligence on the 15 September. The DD extension is to provide PIC with additional time to assess a further revised proposal at a higher price.
Should a firm Offer transpire, it will be done via an off-market takeover with a 50.1% minimum acceptance condition. FIRB approval would also be a condition. 
Senex is open to other offers:

The Senex Board believes it is in the best interests of its shareholders to continue to engage with POSCO International and will assess any proposal received on its merits

The proposal follows ongoing deals for Oil Search Ltd (OSH AU) (Oil Search/Santos: PNG a Potential Party Pooper ) and Woodside Petroleum (WPL AU) tilt for BHP Group (BHP AU) O&amp;G ops (If Woodside Buys BHP Petroleum for Scrip, There Will Be Flowback). 
More below the fold.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Cross Asset Strategy

<div class="content-highlight"><p><strong>It has been reported in the past few days that <a href="http://www.koreaninvestors.com/?p=12175" target="_blank" rel="noopener">NPS</a> is likely to put a greater emphasis on ESG (environmental, social, &amp; governance) based investing for Korean stocks and bonds starting 2021. </strong>NPS has currently given a mandate to a company to help NPS to apply ESG based investment system. The ESG evaluations are expected to aid NPS to actively exercise shareholder rights and also to carry out negative screening of stocks.</p></div><h3>Implications of NPS Incorporating More ESG Criteria on Domestic Investments (Bonds &amp; Stocks)</h3><ul>
<li>Negative Impact on VICE industries </li>
<li>Positive Impact on Renewable Energy Industries</li>
<li>Negative Impact on Coal &amp; Oil Industries</li>
<li>Greater Representation of Women in Senior Management Team/BOD</li>
</ul>

It has been reported in the past few days that NPS is likely to put a greater emphasis on ESG (environmental, social, &amp; governance) based investing for Korean stocks and bonds starting 2021. NPS has currently given a mandate to a company to help NPS to apply ESG based investment system. The ESG evaluations are expected to aid NPS to actively exercise shareholder rights and also to carry out negative screening of stocks.Implications of NPS Incorporating More ESG Criteria on Domestic Investments (Bonds &amp; Stocks)
Negative Impact on VICE industries 
Positive Impact on Renewable Energy Industries
Negative Impact on Coal &amp; Oil Industries
Greater Representation of Women in Senior Management Team/BOD


NPS - Greater Emphasis of ESG Based Investing for Korean Stocks & Bonds Starting 2021

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Quantitative Analysis

<p>First, let me tell you this. The worst may not yet be to come. But it also seems right that we are currently in a highly rare situation as well. The previous 5D yield of the KOSPI index hit -12.03% as of now. What does it mean? The odds that we are in this situation are 0.04% based on the last 30 years from 1990 to today.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/753/original/5.png?1584029598" class="editor-image img-responsive" data-smartkarma-image-id="122753"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/754/original/3.png?1584029617" class="editor-image img-responsive" data-smartkarma-image-id="122754"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/755/original/1.png?1584029629" class="editor-image img-responsive" data-smartkarma-image-id="122755"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/756/original/2.png?1584029635" class="editor-image img-responsive" data-smartkarma-image-id="122756"></figure><p>It is worth noting that the winning percentage in a situation like this for the next five trading days is a whopping 73%, and the average KOSPI index yield was 4.32%.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/759/original/4.png?1584030387" class="editor-image img-responsive" data-smartkarma-image-id="122759"></figure>

First, let me tell you this. The worst may not yet be to come. But it also seems right that we are currently in a highly rare situation as well. The previous 5D yield of the KOSPI index hit -12.03% as of now. What does it mean? The odds that we are in this situation are 0.04% based on the last 30 years from 1990 to today.It is worth noting that the winning percentage in a situation like this for the next five trading days is a whopping 73%, and the average KOSPI index yield was 4.32%.

Time for Capital Structure Basket Arbitrage in Korea? Target Names in Basket to Short & Long

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

<p style="text-align: justify;">There is a tendency to view <a href="https://www.smartkarma.com/entities/637" target="_blank" data-smartkarma-citation="entities:637:1">Toshiba (6502 JP)</a> as an extreme, but ultimately typical example of Japanese corporate culture (e.g. this well-worth reading Reuters article <a href="https://goo.gl/NEZqK9" target="_blank">https://goo.gl/NEZqK9</a> ) and by extension a warning to investors about the risks Japanese corporate culture pose. In as much as those elements of Japanese corporate culture - the secrecy, the deference to seniority, the subservience of shareholders to management, the shame resulting from the publication of a single mistake…</p>

There is a tendency to view Toshiba (6502 JP) as an extreme, but ultimately typical example of Japanese corporate culture (e.g. this well-worth reading Reuters article https://goo.gl/NEZqK9 ) and by extension a warning to investors about the risks Japanese corporate culture pose. In as much as those elements of Japanese corporate culture - the secrecy, the deference to seniority, the subservience of shareholders to management, the shame resulting from the publication of a single mistake…

Toshiba: The Surprising Lack of Read-Across to the Rest of Japan Inc.

South Korea

LX International is a commodity trading and mining company.  The Company develops and trades coal, oil, gas, non-ferrous metals, palm oil, and renewable energy. LG International also trades IT related component/equipment, petrochemical and steel product.

SK Networks Co., Ltd. is a general trading company.  The Company trades general merchandise, such as steel, oil, timber, petrochemical, household appliances, clothing, textile products, and information technology equipment.  SK Networks provides insurance and financial services through subsidiaries.

Hyundai Corporation is a trading company.  The Company exports Hyundai Group's products, such as steel, ships, plants, automobiles, semiconductors, and machinery.  Hyundai Corporation also imports machinery and raw materials.

iMarketKorea Inc. provides procurement services and MRO goods.  The Company operates in North America, South America, Asia, and Europe.

GS Global Corporation is a general trading company which exports heavy industrial products.  The Company's exports include steel, machinery, electronic chemical products, coal, and oil.  GS Global exports its merchandise mainly to the U.S., Japan, and China.

Sam Yung Trading Co., Ltd. imports and exports chemicals, such as monomer and solvent.  The Company also exports plastic ophthalmic lenses to Japan, China, Hong Kong, Britain, Germany, and other countries.

Hydro Lithium Inc manufactures and distributes full scale lithium products. The Company produces battery grade lithium hydroxide and other related products. Hydro Lithium also offers structural metal products, bridge, tunnel, and railway construction services.

STX Corporation is an investment holding company.  The Company, through its subsidiaries, manufactures medium-sized diesel engines for ships, generators, trains, and tanks.

AJ Networks Co., Ltd. is a holdings company that is engaged in various industries including auto rentals, general rentals, logistics/distribution, and finance.  The Company's subsidiaries include AJ Rentacar, AJ Total, AJ Park, and AJ Capital Partners.

Samsung Heavy Industries Co., Ltd. manufactures crude oil tankers, container vessels, bulk carriers, cruisers, and passenger ferries.  The Company also produces steel and bridge structures, and material handling equipment.  In addition, Samsung Heavy Industries provides civil engineering, architectural, and plant construction services.

Air Lease Corporation is an aircraft leasing company. The Company is principally  engaged in purchasing commercial aircraft and leasing to airlines around the world. Air Lease operates on a global basis, providing aircraft to airline customers in regions that include Asia, the Pacific Rim, Latin America, the Middle East and Eastern Europe.

Beacon Roofing Supply, Inc. distributes residential and non-residential roofing materials in the United States and Canada.  The Company also distributes other complementary building materials, including siding, windows, specialty lumber products, and waterproofing systems, for residential and non-residential building exteriors.

WESCO International, Inc. distributes electrical products and other industrial maintenance, repair, and operating supplies.  The Company also provides integrated supply services.  WESCO operates branches and distribution centers in the United States, Canada, Puerto Rico, Guam, Mexico, the United Kingdom, and Singapore, which serve customers worldwide.

GATX Corporation leases, operates, manages, and remarkets long-lived, widely used assets, primarily in the rail and marine markets. The Company leases tank and freight cars and locomotives in North America, Europe, and India. GATX also actively manages transportation and other leased assets on behalf of third parties.

Sojitz Corporation is a general trading company.  The Company has business divisions such as Machinery & Aerospace, Energy & Mineral Resources, Chemicals & Plastics, Real Estate Development & Forest Products, Consumer Lifestyle Business, and New Business Development Group.  Sojitz was formed through the business integration between Nichimen and Nissho Iwai.

MISUMI Group Inc. distributes precision machinery parts by mail order. The products include a variety of components such as press die, plastic mold, automated machinery, pc & network, and wiring.  The Company also sells supplies for factories, hospitals, and restaurants and semi-conductors by mail order.

MonotaRO Co., Ltd. mainly sells machine tools, engine parts, and factory consumable goods on the web site.

Univar Inc. distributes industrial and specialty chemical products. The Company offers solvents, resins, pigments, acids, bases, surfactants, glycols, inorganic compounds, and alcohols. Univar supplies its products to the coatings and adhesives, food, oil and gas, personal care, and pharmaceutical industries worldwide.

Applied Industrial Technologies, Inc. distributes bearings and seals, power transmission and fluid power components, hydraulic and pneumatic components, industrial rubber products, linear components, and general maintenance items. The Company also provides engineering design and systems integration services, as well as mechanical, fabricated rubber, and fluid power shop services.

IMCD Group NV sells specialty chemicals and food ingredients. The Company supplies detergent surfactants, builders, rheology modifiers, solubilizers, and functional additives. IMCD serves customers worldwide.

Posco International Corporation is a general trading company.  The Company exports and imports steel, cement, crude oil, heavy machinery, automobile parts, and textiles.  Daewoo also manufactures synthetic fabrics for footwear, garments, and car seats, and operates a department store in Masan.

Posco International Corporation (047050 KS)

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Posco International Corporation (047050 KS)

Asia-Pac Weekly Risk Arb Summary: Shinsei Bank, HomeCo/Aventus, Irongate, Spark Infra, ICar, Yorkey

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Senex (SXY AU): Posco's Looming Offer

Given DD has been afforded, $4.40/share is approaching full value Currently trading just below terms. I think $4.60/share will garner board...

David Blennerhassett

NPS - Greater Emphasis of ESG Based Investing for Korean Stocks & Bonds Starting 2021

It has been reported in the past few days that NPS is likely to put a greater emphasis on ESG (environmental, social, & governance) based...

Douglas Kim

Time for Capital Structure Basket Arbitrage in Korea? Target Names in Basket to Short & Long

First, let me tell you this. The worst may not yet be to come. But it also seems right that we are currently in a highly rare situation as well....

Sanghyun Park

Toshiba: The Surprising Lack of Read-Across to the Rest of Japan Inc.

There is a tendency to view Toshiba (6502 JP) as an extreme, but ultimately typical example of Japanese corporate culture (e.g. this well-worth...

Pelham Smithers Associates

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