Smartkarma Daily Briefs

In IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book I laid it out like it was. It needed a bump.
It got a bump (IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively) to ¥850/share. From 0.46x PBR it got bumped to 0.48x PBR. For a cash-rich company.
Taking out net cash and securities, paying off deferred tax assets and UPBOs the deal is at 0.41x operating asset book for minorities. Still offensive. Beyond negligent.

Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close

By Arun George

Taisho Pharmaceutical Holdin (4581 JP)’s MBO JPY8,620 offer closes on 15 January. Since announcing the offer, the shares have traded above terms for 21 out of the 30 trading days.
Japan Catalyst has called the offer’s P/B of 0.85x too low. While shares trading above terms does not guarantee that the tender fails, it does increase the risk of failure.
The offeror has no compelling reason to bump as other activists have not publicly supported Japan Catalyst, the high 55.5% premium to undisturbed price and an achievable minority acceptance rate.

Fast Retailing: 1QFY24 Earnings

By Oshadhi Kumarasiri

Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

Fast Retailing (9983) | Another Stylish Quarter

By Mark Chadwick

We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin.
Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.

If Multi-Stakeholder Is Equally Important, a Company Should Make Sufficient Profit First

By Aki Matsumoto

It is desirable for stakeholders other than shareholders for the company to be profitable. The problem lies in holding excess cash without making sufficient returns from the business.
Cash flow should be used for reinvestment and shareholder returns, but in fact many companies didn’t grow their allocations to investment and shareholder returns, but instead accumulated cash on hand.
There is a big difference in corporate value between a company with growing cash flow and increasing shareholder returns and a company with stagnant cash flow but raising shareholder returns.

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Jan 11

Daily Brief Industrials: Korean Air Lines, LG Energy Solution, Arara , Blu-Smart Mobility Pvt , InterGlobe Aviation Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set
LG Energy Solution: A Big Earnings Miss in 4Q 2023
Initiation – Arara (4015 JP)
BluSmart raises $24m to develop large-scale EV charging hubs
Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

By Neil Glynn

We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).
Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.
Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.

LG Energy Solution: A Big Earnings Miss in 4Q 2023

LG Energy Solution reported disappointing preliminary earnings in 4Q 2023. The company reported operating profit of 338.2 billion won (43.5% lower than consensus).
Post a major earnings miss for LGES in 4Q 2023, the consensus is likely to reduce earnings estimates of the company in 2024 and 2025.
Major EV players such as Tesla were reducing prices in the past year causing higher pressures on EV battery makers such as LGES to reduce their prices as well.

Initiation – Arara (4015 JP)

By Sessa Investment Research

Overview: arara primarily serves retailers such as supermarkets and restaurant chains, offering Dokuji Pay (branded currency payment + marketing) and high-speed e-mail delivery software as a service.
With its Dokuji Pay service, where clients are the issuers, the company has a certain level of distinction from its competitors in this niche field, and is solidifying its market position.
Starting in March 2024, the company plans to integrate its digital signage- related business as well, aiming to quickly accelerate its retail marketing platform strategy to help retail stores strengthen their connection with consumers both inside and outside their stores.

BluSmart raises $24m to develop large-scale EV charging hubs

By Tech in Asia

BluSmart Unlike other players in India’s crowded EV scene, BluSmart Mobility does not build its own electric vehicles.
Instead, the company is a ride-hailing firm that leases EV models like the Tata e-Tigor, MG ZS, and Hyundai Kona to be part of its 5,500-strong fleet.
But an equally important of BluSmart’s business is its charging infrastructure division.

Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 25%+ stake will be released from lock-up tomorrow.
He had earlier stated his intention to pare down his stake. He has sold shares in Sep 2022, Feb 2023 and Aug 2023.
In this note, we will talk about the lockup dynamics and possible placement.

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Jan 11

Daily Brief TMT/Internet: Samsung Electronics, Lasertec Corp, Korea Stock Exchange KOSPI 200, Hon Hai Precision Industry, Micoworks and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market
A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea
Apple Partner Hon Hai Reports Weakest December Revenue In Years, But EV Growing; Buying Opportunity
Micoworks scores US$24.5M to expand its marketing platforms into SEA | e27

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS)
The deal appears to be somewhat well flagged, however, the timing could have been much better.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market

By Clarence Chu

MUFG Bank and Mitsubishi UFJ Trust and Banking are looking to raise around US$425m from selling their respective stakes in Lasertec Corp (6920 JP).
Given the strong momentum on the stock, combined with the wave of shareholders ending their cross-shareholdings in Japan, we would argue that the deal is somewhat expected.
Despite the remaining overhang on the stock, the deal would be easily digested by the market as well, representing just 0.14 days of the firm’s three month ADV.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

By Sanghyun Park

The effective date, required by law to start six months post-promulgation, suggests implementation around July this year.
Enforcement decrees and regulations, under the Financial Services Commission’s purview, must be confirmed before the effective date (within six months post-promulgation). The announcement is likely in early to mid-March.
Expecting the amendment, there may be a pre-July surge in block deals as major shareholders expedite plans, creating assertive market activity in the first half with potential trading opportunities.

Apple Partner Hon Hai Reports Weakest December Revenue In Years, But EV Growing; Buying Opportunity

By Vincent Fernando, CFA

Hon Hai released its December revenue figures on January 5th; Revenue came in lower than any other December in recent history.
Hon Hai’s MIH EV consortium is showcasing solutions at CES 2024 this week in Las Vegas. In Taiwan, the Luxgen expects 9,000 customer deliveries for its ‘n7’ EV by June.
Hon Hai is trading at less than 5x forward 2025E PE; and on a trailing basis one of the lower EV/EBITDA’s in history. Latest share drop is a buying opportunity.

Micoworks scores US$24.5M to expand its marketing platforms into SEA | e27

By e27

Micoworks, a marketing company that optimises communication between companies and their customers, has raised JPY 3.5 billion (~US$24.5 million) in a Series B funding round.
Vertex Growth, a growth-stage VC fund anchored by Vertex Holdings, a subsidiary of Temasek, led the round.
Participating investors include JAFCO Group, Mitsubishi UFJ Capital, SMBC Venture Capital, and Mizuho Capital.

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Jan 11

Daily Brief Industrials: Korean Air Lines, LG Energy Solution, Arara , Blu-Smart Mobility Pvt , InterGlobe Aviation Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set
LG Energy Solution: A Big Earnings Miss in 4Q 2023
Initiation – Arara (4015 JP)
BluSmart raises $24m to develop large-scale EV charging hubs
Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

By Neil Glynn

We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).
Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.
Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.

LG Energy Solution: A Big Earnings Miss in 4Q 2023

LG Energy Solution reported disappointing preliminary earnings in 4Q 2023. The company reported operating profit of 338.2 billion won (43.5% lower than consensus).
Post a major earnings miss for LGES in 4Q 2023, the consensus is likely to reduce earnings estimates of the company in 2024 and 2025.
Major EV players such as Tesla were reducing prices in the past year causing higher pressures on EV battery makers such as LGES to reduce their prices as well.

Initiation – Arara (4015 JP)

By Sessa Investment Research

Overview: arara primarily serves retailers such as supermarkets and restaurant chains, offering Dokuji Pay (branded currency payment + marketing) and high-speed e-mail delivery software as a service.
With its Dokuji Pay service, where clients are the issuers, the company has a certain level of distinction from its competitors in this niche field, and is solidifying its market position.
Starting in March 2024, the company plans to integrate its digital signage- related business as well, aiming to quickly accelerate its retail marketing platform strategy to help retail stores strengthen their connection with consumers both inside and outside their stores.

BluSmart raises $24m to develop large-scale EV charging hubs

By Tech in Asia

BluSmart Unlike other players in India’s crowded EV scene, BluSmart Mobility does not build its own electric vehicles.
Instead, the company is a ride-hailing firm that leases EV models like the Tata e-Tigor, MG ZS, and Hyundai Kona to be part of its 5,500-strong fleet.
But an equally important of BluSmart’s business is its charging infrastructure division.

Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 25%+ stake will be released from lock-up tomorrow.
He had earlier stated his intention to pare down his stake. He has sold shares in Sep 2022, Feb 2023 and Aug 2023.
In this note, we will talk about the lockup dynamics and possible placement.

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Jan 11

Daily Brief Health Care: Taisho Pharmaceutical Holdin, Pro-Dex , Acotec Scientific Holdings, Oryzon Genomics and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped
Pro-Dex Inc: A Specialty Contract Manufacturer in Medical Devices with a Burgeoning Order Backlog
Acotec Scientific Holdings (6669.HK) – The Fall in Share Price Is Not over Yet
Oryzon Genomics – PORTICO update with planned FDA EoP2

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

Pro-Dex Inc: A Specialty Contract Manufacturer in Medical Devices with a Burgeoning Order Backlog

By Left Field Investing

Pro-Dex specializes in the design, development and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and maxocranial facial markets.
Pro-dex has patented adaptive torque-limiting software and proprietary sealing solutions which appeals to their customers, primarily medical device distributors
They also manufacture and sell rotary air motors to a wide range of industries.

Acotec Scientific Holdings (6669.HK) – The Fall in Share Price Is Not over Yet

By Xinyao (Criss) Wang

After 23H1 results were released, we have seen some positive business progress in internationalization. There has been no obvious negative news about performance. Acotec’s future prospects are still relatively optimistic.
Contrary to solid fundamentals, Acotec’s stock price continues to decline. The sluggish stock price performance is not directly related to fundamentals, but rather to poor liquidity and unsatisfactory capital inflows.
Stock price hasn’t bottomed yet, so investors’re not advised to rush to buy the dip.For market value management, Acotec’s management need to invest more energy/time to maximize shareholder value/investors’ returns.

Oryzon Genomics – PORTICO update with planned FDA EoP2

By Edison Investment Research

Oryzon Genomics has announced top-line results for the Phase IIb trial (PORTICO) assessing vafidemstat in borderline personality disorder (BPD), and while the primary endpoints (Borderline Personality Disorder Checklist (BPDCL) and Clinical Global Impression – Severity Agitation/ Aggression (CGI-S A/A)) did not reach statistical significance, vafidemstat was favoured over placebo in all efficacy measures, with nominal statistical significance in two key secondary endpoints (Borderline Evaluation of Severity (BEST) and State-Trait Anger Expression Inventory 2 (STAXI-2) Trait Anger). Further, the drug was found to be safe and well-tolerated, consistent with prior studies. Management plans to conduct a detailed analysis of the trial data across the coming months and intends to request an end-of-Phase II (EoP2) meeting with the FDA in early Q224 to discuss a potential registrational Phase III programme. There are currently no approved drugs for this indication and hence gold-standard endpoints are yet to be established. We therefore believe that there is still a significant opportunity for Oryzon in this space, however, further clinical progression will be heavily reliant on the EoP2 meeting request and outcome.

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Jan 11

Daily Brief Financials: Bank Of India, Shui On Land, Bank Of Japan, JPMorgan Chase & Co, Road King Infrastructure and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Aequitas India IPOs + Placements Broker Performance 2023
Morning Views Asia: Shui On Land, Sunny Optical Technology Group, Vedanta Resources, Yuexiu Property
Aequitas Japan IPOs + Placements Broker Performance 2023
[Earnings Preview] JP Morgan Poised to Outperform on Superior NIM & Fortuitous Acquisitions
Morning Views Asia: Road King Infrastructure

Aequitas India IPOs + Placements Broker Performance 2023

By Ethan Aw

In this note, we will take a look at broker performance for Indian IPOs and placements in 2023.
The following dataset includes all Indian IPOs and placements above US$100m, which amounted to a total of 66 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

Morning Views Asia: Shui On Land, Sunny Optical Technology Group, Vedanta Resources, Yuexiu Property

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.

Shui On Land
Sunny Optical Technology Group
Vedanta Resources
Yuexiu Property

Aequitas Japan IPOs + Placements Broker Performance 2023

By Ethan Aw

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

[Earnings Preview] JP Morgan Poised to Outperform on Superior NIM & Fortuitous Acquisitions

By Srinidhi Raghavendra

JPM generated USD 38.9B in profits for the first 9 months of 2023, or about 18% of the industry total.
Since start of 2023, JPM has outperformed S&P by 450 bps and Invesco KBW Bank ETF by a staggering 32.47%.
Tight financial conditions, inflation, elevated rates, & lacklustre M&A activity, will hammer Q4 bank earnings. But JPM will buck the trend.

Morning Views Asia: Road King Infrastructure

By Charles Macgregor

Road King Infrastructure

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Jan 11

Daily Brief Consumer: Pacific Textiles, Naspers , Xtep International, Soybean Active Contract, Amer Sports and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Pacific Textiles (1382 HK): Material Benefits
Naspers (NPN) X Prosus (PRX): A Look Back at 2023, Regulatory Risk Back in Spotlight
Xtep International (1368 HK): Strong Headline Retail Sales Growth In 4Q23 But Quality Is Still Low
[Counting Beans #4]: Soybean Price Tumbles as Headwinds Prevail
Amer Sports IPO: The Bear Case

Pacific Textiles (1382 HK): Material Benefits

By David Blennerhassett

Back in June 2017, Toray Industries (3402 JP) acquired a 28.03% stake in Pacific Textiles (1382 HK) (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.
Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC.
Relatively inexpensive, high digit yield and M&A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for Weiqiao (2698 HK) and David Webb taking a 5% stake.

Naspers (NPN) X Prosus (PRX): A Look Back at 2023, Regulatory Risk Back in Spotlight

By Charlotte van Tiddens, CFA

Regulatory risks back in the spotlight, dampening decent year for both counters.
At the end of last year, China’s regulator released a proposal to introduce spending and time limits on gaming (22 Dec).
Tencent was down 12% on the day, Naspers and Prosus followed suit with more aggressive selling, sending both stocks down 17% for the half day of trading.

Xtep International (1368 HK): Strong Headline Retail Sales Growth In 4Q23 But Quality Is Still Low

By Steve Zhou, CFA

Xtep International (1368 HK) announced an operational update for 4Q23, with retail sales growing more than 30% for the Xtep brand (off of a low base in 4Q22).
The overall quality of the retail sales growth is low, as the growth was mainly driven by higher discount level (around 30% compared to 25-30% in the previous quarter).
I still prefer Anta over Xtep at this stage, as Xtep is more of a beta play if the consumer sentiment turns around in China.

[Counting Beans #4]: Soybean Price Tumbles as Headwinds Prevail

By Pranay Yadav

US Soybean futures have tumbled 4% from their close in 2023 due to favourable weather in Brazil as well as fading demand outlook in US.
Rainfall in Brazil has arrived in droves and remains strong this week but forecasts point to inconsistent rain next week.
CONAB and USDA reports this week should be watched for potential downward revisions in Brazil’s production, following Safras e Mercado’s lead.

Amer Sports IPO: The Bear Case

By Arun George

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 US$2 billion.
In Amer Sports IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on ball & racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.

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Jan 11

Most Read: Samsung Electronics, Visional , Taisho Pharmaceutical Holdin, China Everbright Bank Co A, Lasertec Corp, Pacific Textiles, Alibaba (ADR), Korea Stock Exchange KOSPI 200 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better
TOPIX Inclusions: Who Is Ready (Jan 2024)
Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped
Offshore China ETFs Rebalance Preview: Two Changes Expected in March
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market
Pacific Textiles (1382 HK): Material Benefits
Aequitas 2024 Asia IPO Pipeline – Hong Kong
A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes

Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS)
The deal appears to be somewhat well flagged, however, the timing could have been much better.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

TOPIX Inclusions: Who Is Ready (Jan 2024)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
There are couple of other pre-event names that we have been tracking for the past few months.

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

Offshore China ETFs Rebalance Preview: Two Changes Expected in March

By Brian Freitas

Based on the close of 8 January, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in March.
Shaanxi Coal Industry (601225 CH) and China Everbright Bank Co A (601818 CH) could replace Bank Of Ningbo Co Ltd A (002142 CH) and Aier Eye Hospital Group (300015 CH).
The impact of passive trading will be higher on the inclusions compared to the deletions. Then there are cash and carry positions that will be rebalanced, adding to flow.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market

By Clarence Chu

MUFG Bank and Mitsubishi UFJ Trust and Banking are looking to raise around US$425m from selling their respective stakes in Lasertec Corp (6920 JP).
Given the strong momentum on the stock, combined with the wave of shareholders ending their cross-shareholdings in Japan, we would argue that the deal is somewhat expected.
Despite the remaining overhang on the stock, the deal would be easily digested by the market as well, representing just 0.14 days of the firm’s three month ADV.

Pacific Textiles (1382 HK): Material Benefits

By David Blennerhassett

Back in June 2017, Toray Industries (3402 JP) acquired a 28.03% stake in Pacific Textiles (1382 HK) (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.
Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC.
Relatively inexpensive, high digit yield and M&A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for Weiqiao (2698 HK) and David Webb taking a 5% stake.

Aequitas 2024 Asia IPO Pipeline – Hong Kong

In this note, we will take a look at the Asia Pacific IPO pipeline for 2024, starting with Hong Kong.
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.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

By Sanghyun Park

The effective date, required by law to start six months post-promulgation, suggests implementation around July this year.
Enforcement decrees and regulations, under the Financial Services Commission’s purview, must be confirmed before the effective date (within six months post-promulgation). The announcement is likely in early to mid-March.
Expecting the amendment, there may be a pre-July surge in block deals as major shareholders expedite plans, creating assertive market activity in the first half with potential trading opportunities.

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Jan 11

Daily Brief South Korea: Samsung Electronics, Korea Stock Exchange KOSPI 200, Korean Air Lines, LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better
A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea
Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set
LG Energy Solution: A Big Earnings Miss in 4Q 2023

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS)
The deal appears to be somewhat well flagged, however, the timing could have been much better.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

By Sanghyun Park

The effective date, required by law to start six months post-promulgation, suggests implementation around July this year.
Enforcement decrees and regulations, under the Financial Services Commission’s purview, must be confirmed before the effective date (within six months post-promulgation). The announcement is likely in early to mid-March.
Expecting the amendment, there may be a pre-July surge in block deals as major shareholders expedite plans, creating assertive market activity in the first half with potential trading opportunities.

Korean Air: Earnings Remain Elevated but Premium May Continue to Unwind as Cargo Yields Re-Set

By Neil Glynn

We forecast EBITDAR of KRW3.35trn for Korean Air in 2023 (KRW3.8trn previously) with EBITDAR/ATK up 50% on 2019/32% on 2018. We remain at KRW2.9trn in 2024 (EBITDAR/ATK +28% vs 2019).
Unwinding cargo yields may fully eliminate earnings gains but cost management safeguards future prospects despite Asiana merger uncertainty.
Cost inflation management inflected negatively in 3Q as labour costs rose – control crucial as market conditions normalize and low cost competitors expand.

LG Energy Solution: A Big Earnings Miss in 4Q 2023