Smartkarma Daily Briefs

Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high.

KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.

Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.

Hyundai Hyms IPO Bookbuilding Results Analysis

Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading.

Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition

The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

Airport of Thailand (AOT): Near Term Gain

By Henry Soediarko

Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months, AOT earnings could lag their peers.
Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

By Osbert Tang, CFA

The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish.
OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout.

European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.

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Jan 17

Daily Brief TMT/Internet: Alchip Technologies, Flowing Cloud Technology, Globalwafers, China Unicom Hong Kong, Alibaba (ADR), Silergy Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year
Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud
GlobalWafers (6488.TT): 1Q24F Outlook Could Be a Bit Downside, but 2Q24F Could Be Picking Upward.
StubWorld: Unicom’s “Hs” Are Still Cheap
Aequitas 2024 Asia IPO Pipeline – US ADRs
Silergy (6415.TT): Nothing Fundamental Changed in Reality; Semiconductor Cycle Shall Be Bottomed Up.

Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year

By Clarence Chu

Alchip Technologies (3661 TT) is looking to raise US$415m in its GDR offering. As per the firm, the proceeds from the GDR offering will be used to purchase raw materials.
Offering 3.7m GDRs, the deal wouldn’t be a very large one for the firm to digest at just 1.6 days of its three month ADV.
The deal is very well flagged one and momentum on the stock has been very strong.

Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud

The review cutoff date for the March rebalance of the HSIII was 29 December. The changes will be announced on 16 February and become effective after the close 1 March.
We see a high probability of Zx Inc replacing Flowing Cloud Technology (6610 HK) in the index. There is a lower probability of 4Paradigm (6682 HK) replacing CMGE Tech (302 HK).
Capping will result in passives buying Meituan (3690 HK) and selling Tencent (700 HK), Kuaishou Technology (1024 HK), JD.com (9618 HK) and Alibaba Group Holding (9988 HK).

GlobalWafers (6488.TT): 1Q24F Outlook Could Be a Bit Downside, but 2Q24F Could Be Picking Upward.

By Patrick Liao

The Globalwafers (6488 TT) outlook for 1Q24F is likely to show a slightly negative QoQ revenue trend. However, we anticipate a positive direction from 2Q24F onwards.
We have a relatively high conviction for 2024F compared to 2023, indicating upside potential for the Memory and Logic sectors.
The supply of 12″ raw wafers remains constrained among the top market players, and overcoming this constraint won’t be easy.

StubWorld: Unicom’s “Hs” Are Still Cheap

By David Blennerhassett

China Unicom Hong Kong (762 HK) remains inexpensive with respect to parent China United Network A (600050 CH) – its hybrid domestic A-share twin – and to peers.
Preceding my comments on Unicom, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Aequitas 2024 Asia IPO Pipeline – US ADRs

By Sumeet Singh

In this note, we will look at the Asia Pacific IPO pipeline for 2024, following up with US ADRs, after having looked at HK, India, Japan and Korea earlier.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

Silergy (6415.TT): Nothing Fundamental Changed in Reality; Semiconductor Cycle Shall Be Bottomed Up.

By Patrick Liao

The factor of seasonality will be evolved in 1Q24F, but 2Q24F should be picking up most likely.
The Semiconductor cycle shall be reaching the bottom and no more correction, to our expectation.
The recent changes of Silergy’s management didn’t affect the reality.

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Jan 17

Daily Brief Industrials: Benefit One Inc, LS Materials , Befesa , Hyundai Hyms , Korean Air Lines, Airports of Thailand, Orient Overseas International, easyJet PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Benefit One (2412): The Plot Thickens
Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
Hyundai Hyms IPO Bookbuilding Results Analysis
Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition
Airport of Thailand (AOT): Near Term Gain
Orient Overseas Intl (316 HK): Is It Time for a Reversal?
European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

Benefit One (2412): The Plot Thickens

By Travis Lundy

Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.

Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high.

KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

With over 40% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
There could be two changes before that if L&F Co Ltd (066970 KS) and HLB Inc (028300 KS) complete their transfer from the KOSDAQ market to the KOSPI market.
The adds have outperformed the deletes and the KOSDAQ 150 Index since the start of the review period. The ban on short selling could lead to another leg up.

Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.

Hyundai Hyms IPO Bookbuilding Results Analysis

Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading.

Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition

The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

Airport of Thailand (AOT): Near Term Gain

By Henry Soediarko

Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months, AOT earnings could lag their peers.
Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

By Osbert Tang, CFA

The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish.
OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout.

European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.

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Jan 17

Daily Brief Financials: Citigroup Inc, State Bank Of India, Longfor Properties, International General Insura and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Citigroup – Impairment Costs Far Higher than Any Recent Quarter & Net Interest Income near Halting
State Bank Of India (SBIN IN): Initiation – Convergence with Private Peers, Poised for Re-Rating
Morning Views Asia: Lippo Malls Indonesia Retail Trust
International Gen Ins Hl Ltd (IGIC) – Tuesday, Oct 17, 2023

Citigroup – Impairment Costs Far Higher than Any Recent Quarter & Net Interest Income near Halting

By Daniel Tabbush

Total impairment costs are soaring now at Citigroup up to USD3.5bn in 4Q23 compared with an average charge of USD1.8-1.9bn in the recent preceding quarters.
Net interest income appears to be topping out now, as there is generally a lagged impact on funding in a rising rate environment.
The implications of the Citi results, steeped in geopolitical risk, are not positive for large global banks, major US banks in particular and HSBC Holdings (5 HK) specifically.

State Bank Of India (SBIN IN): Initiation – Convergence with Private Peers, Poised for Re-Rating

By Raj Saya, CA, CFA

State Bank Of India (SBIN IN) is the best-performing PSU bank in India and shows clear convergence with private peers across fundamental metrics beyond what its valuations might suggest
Medium-Term ROE Forecast of 16% to 18% and loan growth forecast of 14% to 16%; ROA ~1.2% consistently; Strong fee income; successful cross-selling through subsidiaries; Strong asset quality.
P/BV is cheap at 1.3x FY25e, compared private peers’ valuations of 2.5x to 3.0x. SBIN can potentially re-rate to P/BV of ~1.6x FY25e in the near term (~35% upside).

Morning Views Asia: Lippo Malls Indonesia Retail Trust

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Lippo Malls Indonesia Retail Trust

International Gen Ins Hl Ltd (IGIC) – Tuesday, Oct 17, 2023

Key points (machine generated)

Significant investment in insurance companies, particularly niche providers, has been seen since the Covid pandemic.
The S&P Insurance ETF has outperformed the SPY by 25% over the past 3 years, indicating the success of these investments.
Despite their growth in intrinsic value, the share prices of many insurance companies are not reflecting this, possibly due to overlooking the potential impact of higher interest rates on future profitability. However, some companies have managed their investment portfolios prudently and are in a favorable position.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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Jan 17

Daily Brief Health Care: Grifols SA, Advisorshares Pure Us Cann and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Liquid Universe of European Ordinary and Preferred Shares: January‘24 Report
Dope or Nope?

Liquid Universe of European Ordinary and Preferred Shares: January‘24 Report

By Jesus Rodriguez Aguilar

Since mid-December, spreads have generally tightened across our European liquid universe of ordinary and preferred shares (10 have tightened, 7 widened, 2 at same level).
Recommended trades long preferred / short ordinary shares: Danieli, Grifols (the most interesting situation in this report), Media-for-Europe, Sixt, Volkswagen.
Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, SSAB Svenska Stal.

Dope or Nope?

By Fallacy Alarm

Investing into cannabis stocks has been a soul-crushing experience for investors over the past 10 years.
Check out the performance of the Global Cannabis Stock Index below.
It’s effectively a complete wipe-out.

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Jan 17

Daily Brief Consumer: Hyundai Motor, Amer Sports , Orion Corp, Dongwon Industries, Shakey’s Pizza, Mohawk Industries, Tyson Foods Inc Cl A, Zegna, Flexsteel Inds, Betterware de Mexico Sab de CV and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea
Amer Sports IPO: Valuation First-Look
Orion Corp: Concerns About Diversification into LegoChem Bioscience
Dongwon Industries – Announces Cancellation of 22.5% of Outstanding Shares
Shakey’s Pizza (PIZZA PM): All Set For Upgrades In Q4 and FY24 Outlook
Mohawk (MHK) – Tuesday, Oct 17, 2023
Tyson Foods Inc -Cl A (TSN) – Tuesday, Oct 17, 2023
Ermenegildo Zegna N V (ZGN) – Tuesday, Oct 17, 2023
Furniture/Furnishings Weekly – FLXS Announces Positive Surprise Ahead of Conference
BWMX: Snapping the Catalog: On the Offensive in 2024; Reiterate Buy, $17 PT

40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea

By Sanghyun Park

K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.

Amer Sports IPO: Valuation First-Look

Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise at least US$1 billion.
We previously discussed the IPO in Amer Sports IPO: The Bull Case and Amer Sports IPO: The Bear Case.
In this note, we present our forecasts and take the first look at Amer’s potential valuation range.

Orion Corp: Concerns About Diversification into LegoChem Bioscience

On 15 January, Orion Corp announced that its subsidiary PAN Orion Corp will purchase a 25.7% stake in Legochem Biosciences for 549 billion won.
LegoChem Bio specializes in antibody-drug conjugate (ADC) technology. Legochem Bio signed a total of 13 technology transfer contracts amounting to 8.7 trillion won in the past 9 years.
Most investors in Orion Corp would rather have the company focus on its core confectionery/snack business, rather than expand into high risk/high reward biotech business.

Dongwon Industries – Announces Cancellation of 22.5% of Outstanding Shares

On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.
We are positive on Dongwon Industries. This large amount of share cancellation will boost the company’s earnings per share and book value per share.
The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.

Shakey’s Pizza (PIZZA PM): All Set For Upgrades In Q4 and FY24 Outlook

By Sameer Taneja

Consensus estimates for Shakey’s Pizza (PIZZA PM) for Q4 FY23 (expected April 15th) are too conservative, implying a degrowth in profitability. We believe there would be a comfortable beat there.
We expect incremental growth plans on Potato Corner to continue to be the aggressive one-store-per-day addition.
Despite the recent move, the stock trades at 14x/10x PE FY23e/24e, with management-guided future revenue growth at 20% CAGR for the next three years.

Mohawk (MHK) – Tuesday, Oct 17, 2023

Key points (machine generated)

Mohawk Industries has a stock price of $80 per share, and despite a decline in the global construction market, the company has a strong market position and is considered a medium+ quality business.
The current valuation at 8 times EBIT is seen as an attractive entry point, with expectations for EBIT in 2024 already lowered but still indicating a promising earnings power of $10-14 net income per share in the medium term.
Mohawk Industries is seen as a cheap investment opportunity with significant growth potential in the future, and previous VIC notes have highlighted its potential. Readers are recommended to review the analyses provided by dsteiner84, Value1929, and Glory_Warriors.

Tyson Foods Inc -Cl A (TSN) – Tuesday, Oct 17, 2023

Key points (machine generated)

Tyson denies any involvement in illegal activities and believes the allegations made against it are baseless.
The company is committed to defending itself and operating in compliance with all laws and regulations.
The investigation into alleged collusion and price-fixing in the chicken industry is ongoing and the outcome is uncertain.

Ermenegildo Zegna N V (ZGN) – Tuesday, Oct 17, 2023

By Small Cap Consumer Research

Key points (machine generated)

The author believes that luxury clothing brand Ermenegildo Zegna is a compelling short opportunity due to an overvaluation based on a one-time hype super cycle.
The author predicts that Zegna will reach its peak in popularity as the fashion boom/bust trend plays out.
Weak brand standing within the stealth wealth category, significant exposure to the Chinese market, and execution risks from the acquisition of Tom Ford International are cited as reasons for the potential downside.

Furniture/Furnishings Weekly – FLXS Announces Positive Surprise Ahead of Conference

By Water Tower Research

Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.
The company said 2QFY24 EPS will be $0.57 versus preannouncement consensus of $0.27.
Sales are expected to hit $100 million in the quarter, ahead of the preannouncement consensus of $96 million.

BWMX: Snapping the Catalog: On the Offensive in 2024; Reiterate Buy, $17 PT

We are reiterating our Buy rating, projections and price target after reviewing the Betterware January 2024 catalog.
Further, management flexed the catalog categories back to 8, from a peak of 10, with the Better Kids and Pets categories now incorporated in other sections, allowing for an easier overall catalog read.
As such, we believe the Betterware division continues to recover and reiterate our Buy rating and $17 price target for BWMX.

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Jan 17

Most Read: Tongcheng Travel Holdings , Alchip Technologies, Newmont , Benefit One Inc, Suzhou Novosense Microelectron, L&F Co Ltd, Hyundai Motor, LS Materials and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
Alchip Technologies GDRs Early Look – Another Well Flagged GDR Issuance in the Pipeline
S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont
Benefit One (2412): The Plot Thickens
Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas
L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?
40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea
Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year
Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)

Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK).

Alchip Technologies GDRs Early Look – Another Well Flagged GDR Issuance in the Pipeline

By Clarence Chu

Alchip Technologies (3661 TT) is looking to raise around US$375m in its upcoming global deposit receipts (GDRs) offering.
Similar to previous GDR listings, the deal is a very well flagged one, with a drawn out process of regulatory/approval loops the firm has to jump through up till issuance.
Based on its board’s approval to issue up to 4m new shares in its GDR offering, the deal is a relatively small one at just 5.4% of Alchip’s current mcap.

S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont

With over 80% of the review period complete, there could be 26 adds/deletes across the S&P/ASX family of indices in March.
The largest flow will be on Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
There will be 1.2-38 days of ADV to buy in the inclusions while the impact on the deletions will range between 1-21 days of ADV.

Benefit One (2412): The Plot Thickens

By Travis Lundy

Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February.
The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants.

Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

By Janaghan Jeyakumar, CFA

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
I currently expect three changes for the STAR 50 index in March 2024.

L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?

Posco DX (022100 KS) rallied 50% following approval of its application to transfer from the KOSDAQ to the KOSPI market. Then the stock dropped 20% following completion of the transfer.
With L&F Co Ltd (066970 KS) applying for a section transfer a couple of weeks after Posco DX (022100 KS), approval could be imminent.
L&F Co Ltd (066970 KS) is up 46% since the start of November, but the stock has performed in line with the average of its peers.

40 Names for Dividend Arbitrage in 1Q, Marking a Pioneering Initiative in Korea

By Sanghyun Park

K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.

Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year

By Clarence Chu

Alchip Technologies (3661 TT) is looking to raise US$415m in its GDR offering. As per the firm, the proceeds from the GDR offering will be used to purchase raw materials.
Offering 3.7m GDRs, the deal wouldn’t be a very large one for the firm to digest at just 1.6 days of its three month ADV.
The deal is very well flagged one and momentum on the stock has been very strong.

Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high.

KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping