Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dai-ichi-life-insurance" target="_blank" data-smartkarma-citation="entities:1109:1" rel="noopener">Dai Ichi Life (8750 JP)</a>'s proposal suggests more upside to <a href="https://www.smartkarma.com/entities/benefit-one-inc" target="_blank" data-smartkarma-citation="entities:14502:1" rel="noopener">Benefit One (2412 JP)</a>'s minorities than originally thought, and less upside (but still a chunk) to <a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona Group (2168 JP)</a>.</li>
<li>It's all over for <a href="https://www.smartkarma.com/entities/eoflow-co-ltd" target="_blank" data-smartkarma-citation="entities:36100:1" rel="noopener">EOFlow (294090 KS)</a>, as <a href="https://www.smartkarma.com/entities/medtronic-plc" target="_blank" data-smartkarma-citation="entities:14982:1" rel="noopener">Medtronic Plc (MDT US)</a> folds it tent. </li>
<li>Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of <a href="https://www.smartkarma.com/entities/hankook-company-co-ltd" target="_blank" data-smartkarma-citation="entities:19369:1" rel="noopener">Hankook &amp; Company (000240 KS)</a> has joined MBK Partners in making a partial Tender Offer for Hankook &amp; Co.</li>
</ul>



Dai Ichi Life (8750 JP)'s proposal suggests more upside to Benefit One (2412 JP)'s minorities than originally thought, and less upside (but still a chunk) to Pasona Group (2168 JP).
It's all over for EOFlow (294090 KS), as Medtronic Plc (MDT US) folds it tent. 
Cho Hyun-Sik (eldest son of Cho Yang-Rae, Chairman of Hankook &amp; Company (000240 KS) has joined MBK Partners in making a partial Tender Offer for Hankook &amp; Co.


Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

Travis Lundy

<ul>
<li>Today post-close, <a href="https://www.smartkarma.com/entities/ryoyo-electro-corp" target="_blank" data-smartkarma-citation="entities:16757:1" rel="noopener">Ryoyo Electro (8068 JP)</a> and larger equity affiliate (20.1%) <a href="https://www.smartkarma.com/entities/ryosan-co-ltd" target="_blank" data-smartkarma-citation="entities:7795:1" rel="noopener">Ryosan Co Ltd (8140 JP)</a> announced their final Management Integration Plan (merger by holdco) after signalling a deal May23.</li>
<li>Activist-Ish-Y Silchester sold their stake in Ryosan to Ryoyo in February at a 20% premium. Activist Murakami-san had a top10 Ryosan stake end-March, went substantial 27 June, now owns 10%.</li>
<li>Both low-margin/ROE electronics traders have been subject to activist campaigns over the years. Both "survived". Now they are banding together to be a bigger independent low-margin electronics trader.</li>
</ul>


Today post-close, Ryoyo Electro (8068 JP) and larger equity affiliate (20.1%) Ryosan Co Ltd (8140 JP) announced their final Management Integration Plan (merger by holdco) after signalling a deal May23.
Activist-Ish-Y Silchester sold their stake in Ryosan to Ryoyo in February at a 20% premium. Activist Murakami-san had a top10 Ryosan stake end-March, went substantial 27 June, now owns 10%.
Both low-margin/ROE electronics traders have been subject to activist campaigns over the years. Both "survived". Now they are banding together to be a bigger independent low-margin electronics trader.


Ryoyo (8068) - Ryosan (8140): Recent and Former Activist Targets To Merge

Shinko Electric Industries / Event-Driven

<ul>
<li>If <a href="https://www.smartkarma.com/entities/descente-ltd" target="_blank" data-smartkarma-citation="entities:8225:1" rel="noopener">Descente Ltd (8114 JP)</a> earnings disappoints, buy the dip. <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> is buying for the long-term.</li>
<li>
<a href="https://www.smartkarma.com/entities/mgm-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:472:1" rel="noopener">MGM China Holdings (2282 HK)</a> has gained market share in mass table market, VIP, and total revenue. Yet MGM's FY24E EV/EBITDA is ~40% below its two-year forward average EV/EBITDA pre-Covid.</li>
<li>If you had a J-REIT portfolio, <a href="https://www.smartkarma.com/entities/sankei-real-estate-inc" target="_blank" data-smartkarma-citation="entities:35239:1" rel="noopener">Sankei Real Estate (2972 JP)</a> would go in and push something else out or smaller. I think one gets beta-plus, which is usually called alpha.</li>
</ul>


If Descente Ltd (8114 JP) earnings disappoints, buy the dip. Itochu Corp (8001 JP) is buying for the long-term.

MGM China Holdings (2282 HK) has gained market share in mass table market, VIP, and total revenue. Yet MGM's FY24E EV/EBITDA is ~40% below its two-year forward average EV/EBITDA pre-Covid.
If you had a J-REIT portfolio, Sankei Real Estate (2972 JP) would go in and push something else out or smaller. I think one gets beta-plus, which is usually called alpha.


Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,

15 months ago, an electronics trading company called <a href="https://www.smartkarma.com/entities/ukc-holdings-corp" target="_blank" data-smartkarma-citation="entities:5466:1" rel="noopener">Restar Holdings Corporation (3156 JP)</a> (formerly UKC, which itself had been a target of well-known Japanese activist Murakami-san) made a <a href="http://www.kabupro.jp/edp/20190520/S100FSQA.pdf" target="_blank" rel="noopener">Large Shareholder Release</a> to the effect that it had purchased a 20.00% stake (a bit higher in terms of voting rights) in another semiconductor and electronics trading house <a href="https://www.smartkarma.com/entities/ryoyo-electro-corp" target="_blank" data-smartkarma-citation="entities:16757:1" rel="noopener">Ryoyo Electro (8068 JP)</a>"because we believe that by expanding our business area (especially system businesses), we can strengthen our lineup and customer strategy, and we expect synergies and innovative business."Ryoyo appears to have been caught <a href="https://www.ryoyo.co.jp/info/ir/7460/" target="_blank" rel="noopener">unaware</a> on the 13th when Restar announced that its board had decided to purchase shares and did so the same day. It made it clear the attention was unsolicited and this was a hostile acquisition. In March of last year, Ryoyo Electro upped its shareholder return policy, and this year it upped it further. Now it is going a step further.  <h2>The NEW News</h2>The new news is that <a href="https://www.smartkarma.com/entities/ryoyo-electro-corp" target="_blank" data-smartkarma-citation="entities:16757:1" rel="noopener">Ryoyo Electro (8068 JP)</a> will conduct a Tender Offer to buy back its shares and Restar has agreed to sell. This was announced yesterday along with <a href="https://www.ryoyo.co.jp/en/wenp/wp-content/uploads/2020/08/2020Q2_Financial-Review.pdf" target="_blank" rel="noopener">Q2 results</a>. The <a href="https://www.ryoyo.co.jp/wryyp/wp-content/uploads/2020/08/ir301.pdf" target="_blank" rel="noopener">Tender Offer</a> (Japanese-only) is set at ¥2,990 which means Restar has made serious coin on its position of a year and change. The Tender Offer quantity is set at a maximum of 7,357,900 shares which is 5% more than the quantity Restar has agreed to sell. The purchase amount is ¥22 billion. There are some who would call this greenmail. Others, I am sure, will be kinder. There is a trade here. Lots more below the fold. <div></div>

15 months ago, an electronics trading company called Restar Holdings Corporation (3156 JP) (formerly UKC, which itself had been a target of well-known Japanese activist Murakami-san) made a Large Shareholder Release to the effect that it had purchased a 20.00% stake (a bit higher in terms of voting rights) in another semiconductor and electronics trading house Ryoyo Electro (8068 JP)"because we believe that by expanding our business area (especially system businesses), we can strengthen our lineup and customer strategy, and we expect synergies and innovative business."Ryoyo appears to have been caught unaware on the 13th when Restar announced that its board had decided to purchase shares and did so the same day. It made it clear the attention was unsolicited and this was a hostile acquisition. In March of last year, Ryoyo Electro upped its shareholder return policy, and this year it upped it further. Now it is going a step further.  The NEW NewsThe new news is that Ryoyo Electro (8068 JP) will conduct a Tender Offer to buy back its shares and Restar has agreed to sell. This was announced yesterday along with Q2 results. The Tender Offer (Japanese-only) is set at ¥2,990 which means Restar has made serious coin on its position of a year and change. The Tender Offer quantity is set at a maximum of 7,357,900 shares which is 5% more than the quantity Restar has agreed to sell. The purchase amount is ¥22 billion. There are some who would call this greenmail. Others, I am sure, will be kinder. There is a trade here. Lots more below the fold. 

Ryoyo Electro Corporate Activism Ends in Buyout

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our weight of the evidence approach leads us to believe the market remains in the early stages of a broad-based advance, meaning a buy-the-dip mentality is warranted. While we want to acknowledge that the potential for a US-China tariff escalation remains a risk for the market, we believe this is likely to be the case for the foreseeable future. In our December International Strategy, we highlight various themes which lead to our positive outlook, including actionable trade ideas in technology, health care and manufacturing.

Our weight of the evidence approach leads us to believe the market remains in the early stages of a broad-based advance, meaning a buy-the-dip mentality is warranted. While we want to acknowledge that the potential for a US-China tariff escalation remains a risk for the market, we believe this is likely to be the case for the foreseeable future. In our December International Strategy, we highlight various themes which lead to our positive outlook, including actionable trade ideas in technology, health care and manufacturing.

Global Equities Headed Up and to the Right: Technology, Health Care Leading

Japan

RYOYO ELECTRO CORPORATION is a wholesaler of electronic components including semiconductors.  The Company sells workstations, personal computers, and printers.  Ryoyo Electro operates offices in Singapore and Hong Kong. The Company trades large amount of semiconductors from Mitsubishi Electric.

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Ryoyo Electro (8068 JP)

Last Week in Event SPACE: Pasona/Benefit One, EOFlow, Swire Pacific, Hankook & Co, Toyo Construction

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

Ryoyo (8068) - Ryosan (8140): Recent and Former Activist Targets To Merge

City Index Eleventh has issued a press release (link in Discussions) stating it believes the Ryoyo/Ryosan merger ratio disadvantages Ryosan...

Travis Lundy

Last Week In Event SPACE: Shinko Electric Industries, MGM China, Decente, Sankei Real Estate,

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

Ryoyo Electro Corporate Activism Ends in Buyout

A Partial Tender Offer Stock Buyback. Japan treatment is special. Don't assume you would participate. It's technical.

Travis Lundy

Global Equities Headed Up and to the Right: Technology, Health Care Leading

Our weight of the evidence approach leads us to believe the market remains in the early stages of a broad-based advance, meaning a buy-the-dip...

Vermilion Research

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