Event-Driven

• A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
• Preceding my comments on Amorepacific 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%.

• Back on the 19th July, online Q&A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS). 
• Assuming the buyback is fully taken up, chairman Yuan Zhou’s stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares). 
• The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on  net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated. 

• On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
• The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone. 
• We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire. 

• ENEOS Holdings (5020 JP) has increased the Tatsuta Electric Wire & Cable (5809 JP) tender offer price by 8.3% to JPY780 and extended the offer period to 19 August.
• Eneos tried to get the required acceptances by refusing to bump and subsequently extending the offer period. The tactics failed as minorities required a bump due to the market re-rating. 
• While the revised offer remains light, the token bump and deal fatigue should suffice to nudge the marginal vote to accept. At the last close, the gross/annualised spread was 5.0%/85.8%.

• The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
• While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
• Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.

• Koninklijke Vopak Nv (VPK NA) & Shaftesbury PLC (SHB LN) are currently passing the entry rank of SXXP. Forecasted passive fund demands are $22m-$34m and 3-5 ADV. 
• Indivior PLC (INDV LN) is currently the only one below the exit rank of SXXP. Forecasted passive fund supply is $11.5m and 1.4 ADV.
• ‘Most liquid stock’ criterion can cause a ‘switch‘ of share lines in the index as it happened with Lindt (LISP SW) and Lindt (LISN SW) in September 2022. 

• The highest dividend tax rate drops from 49.5% to 25%, leading the local capital market to view the reform as more shareholder-focused than company-focused.
• The top inheritance tax rate drops from the 60% range to 40%, a meaningful reduction for conglomerates like Hyundai and Hanwha, though below initial expectations.
• Tax incentives in the reform are less aggressive than expected, with modest corporate and inheritance tax cuts. However, this compromise increases the likelihood of its passage, boosting short-term market expectations.

• Biotech play Genscript Biotech (1548 HK) and ~48%-held Legend Biotech (LEGN US) popped recently on a reported tilt for Legend.  Neither Genscript nor Legend made exchange announcements supporting the claim. 
• Preceding my comments on Genscript/Legend 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%.

• Arvida (ARV NZ), a leading retirement living and aged care service provider in New Zealand, announced a Scheme from PE-outfit Stonepeak at NZ$1.70/share, in cash, a 65% premium to undisturbed. 
• The Offer has unanimous board support. ~18% of shares out are supportive. Standard Scheme voting applies. Consent from NZ’s Overseas Investment Office also required. 
• A Scheme Meeting is expected to be held in 4Q24 with implementation in the same quarter. Optics are a tad opportunistic; but this looks priced to complete. 

• On the 22 July, waste-to-energy play Canvest Environmental Protection  (1381 HK) announced a pre-conditional Offer from Grandblue Environment (600323 CH) at $4.90/share (best & final), by way of a Scheme.
• Terms mirror that announced on the 7th July. Best Approach (54.75% of shares out) is seeking to roll over 7.23%. Pre-cons include the usual regulators: MoC, NDRC, SAMR and SAFE.
• Any new dividends paid will be netted. 4.478% blocking stake. Pre-IPO investor AEP Green Power, has 5.67%. Best Approach is required to abstain from voting on the Scheme and rollover.

• Solactive has announced the constituent changes for the Global Uranium & Nuclear Components Index with implementation at the close on 31 July.
• Oklo Inc (OKLO US) and Western Uranium & Vanadium Corp (WUC CN) will be added to the index. Estimated one-way turnover is 7.9% resulting in a round-trip trade of US$486m.
• There are only 4 trading days to implementation of the changes and we’d watch out for big moves on stocks that have more than 2x ADV to trade.

• On 22 July, Arvida (ARV NZ) entered a scheme implementation agreement with Stonepeak at NZ$1.70, a 65.0% premium to the undisturbed price.
• The transaction will require OIO approval, statutory supervisors’ consent and shareholder approval. The Metlifecare Ltd (MET NZ) precedent suggests that the OIO and statutory supervisor should be forthcoming.
• The offer is attractive, and shareholders representing 18% of outstanding shares are supportive. At the last close and for a November payment, the gross/annualised spread was 4.9%/14.2%.  

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 indices in the December 2024 index rebal event.
• At present, 3 changes for the BSE 100 index and 7 changes for the BSE 200 index.
• The BSE 100 handling rules for names without futures and options (F&O) sometimes punish companies that have enjoyed good share price rallies and Zomato could get into such a trap.

• There is 1 constituent change for the LQ45 Index and 2 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 31 July.
• The largest passive inflows are expected in Amman Mineral Internasional (AMMN), Bank Rakyat Indonesia (BBRI), Bank Central Asia (BBCA), Bank Mandiri Persero (BMRI) and Jasa Marga (Persero) (JSMR). 
• The adds have moved higher over the recent past and are near their highs while the deletes have dropped over the last few years and are trading near their lows.

• Last month, aesthetic laser maker Jeisys Medical (287410 KS) announced French PE outfit Archimed SAS was seeking to delist the company.
• Via a Tender Offer, Archimed sought to acquire 72% of Jeisys at ₩13,000. Archimed also inked agreements with founders/directors for 26.44%, taking its possible % holding to 98.44%.
• The Tender Offer closed on the 22nd July with Archimed holding 81.39% (including the aforementioned agreements). Archimed has now reloaded, on the same terms. There is no minimum acceptance condition. 

• Nokia OYJ (NOKIA FH) is currently the lowest ranked security in SX5E but still above the exit threshold. Its potential deletion can cause the addition of DSM-Firmenich (DSFIR NA). 
• Deutsche Post (DHL GR) & Reckitt Benckiser (RKT LN) are below the SX5P exit threshold. Their deletion can cause the addition of Intesa Sanpaolo (ISP IM) & Banco Bilbao (BBVA SM) .
• Cap Gemini SA (CAP FP) and Compass (CPG LN) are examples of companies with significant market caps which are excluded due to supersector coverage. 

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.
• We expect two regular changes during September. More interestingly, a couple of SP500 members are working on spin-offs which could trigger some high-impact deletions over the next few months.

• 3D Investment Partners, known to be activist-ish-y, purchased 18% of Tohokushinsha Film (2329 JP) in the 12 months to March 2024. They started a public activism campaign in February.
• The company has started down a better governance track, but now 3D has made a takeover proposal to Tohokushinsha, which will consider it under Special Committee.
• There are a couple of possible outcomes here which are interesting to consider. There are no other spoilers possible except those friendly to founders and management.

• On 24 July, the Financial Supervisory Service (FSS) ordered the Doosan Group to resubmit the merger plan. 
• It is rare for FSS to reject companies’ merger reports but there has been an exception this time since this deal is egregiously negative to many minority investors.
• Doosan Group needs to resubmit a revised merger plan within next three months. Otherwise, the securities report involving the merger plan of the Doosan Group companies will be considered withdrawn. 

• On 15 July, the precondition for Changping Industrial’s HK$6.87 offer for CPMC Holdings (906 HK) was satisfied, but the despatch of the offer document was delayed until or before 30 July.
• Since ORG Technology Co., Ltd. A (002701 CH) announced its HK$7.21 offer on 7 June, the shares have traded above Changping Industrial’s offer on all but bar one trading day
• Changping Industrial has three options: launch at unchanged terms (low probability), match ORG’s offer (medium probability) or bump marginally higher than ORG’s offer (high probability).

• The FSS requested Doosan Robotics to revise the prospectuses for both the Share Swap with Doosan Bobcat and Merger with Doosan Enerbility.
• Although the FSS’s wording seems aggressive, it does not request the cancellation. Authorities are displeased but lack political momentum to derail Doosan’s restructuring.
• The FSS asks Doosan to clarify merger synergies, warn of Robotics’ overvalued stock price and potential decline, and highlight the collaborative robot market’s growth risks.

• Since all the Pre-Conditions have been fulfilled, Baosteel has taken a solid step towards the successful acquisition of CPMC. Comparatively, ORG could encounter resistance and uncertainties in the upcoming process.
• The acquisition of CPMC by ORG cannot be completed by ORG and Zhang Wei alone.Without the “nod” of COFCO/SASAC, what ORG’s going to do is equivalent to a “hostile takeover”. 
• ORG’s acquisition of control of CPMC could go against the national strategy of “building strong alliances between SOEs”. In fact, what ORG wants is for Baosteel to raise its Offer.

• In the first tender offer, 42.5 million shares of Jeisys Medical were purchased by Archimed Group. Post tender offer, Archimed now owns an 82.1% stake in Jeisys Medical. 
• On 24 July, it was announced that Archimed will be conducting a second tender offer for Jeisys Medical. The second tender offer will be made for 17.2% of common shares.
• It could be difficult for Archimed to gain more than 95% stake at the end of the second tender offer. Rather, a third tender offer is likely in 2025.

• Shinsung Tongsang shares rose 10% to 2,510 won today after it was announced that the tender offer failed. Basically, the tender offer failed because the tender offer price was too low. 
• Only 26% of the 31.664 million shares responded to the tender offer. Accordingly, the shareholding ratio of Chairman Yeom and his related parties increased from 77.98% to 83.88%. 
• Top Ten has benefited from executing its strategy well (such as employing Lee Na-Young in advertisements to grab customers from Uniqlo). Overall, we remain positive on Shinsung Tongsang.

• The review period for the September rebalance of the KOSPI Size Indices commenced on 1 June and will end on 31 August.
• We see 8 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 11 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
• There are a few stocks that are expected to have passive flows from global and local index trackers over the next few months and that will add to the impact.

• After the market close on 24 July, Hanwha Corporation (000880 KS) announced that Hanwha Energy secured an additional 5.2% stake in Hanwha Corp through a tender offer.
• A total of 3.9 million shares have been applied for the tender offer as of 24 July (65% of targeted amount). 
• We believe that the Hanwha Group is likely to grab more shares in Hanwha Corp through an additional tender offer sometime in the next 6-12 months. 

• Today after the close, Advantage Partners announced the intention to launch a TOB to take over Furukawa Battery (6937 JP) at ¥1,400 – a 26% premium to last.  
• This will require substantial time to obtain regulatory and foreign investment clearances so it is anticipated the Tender Offer will be launched at end-March 2025. I expect that is conservative.
• The price paid to minorities is a premium. But the price paid by the buyer is actually a takeunder. And it gets worse from there. 

• Furukawa Battery (6937 JP) recommended a pre-conditional tender offer from Advantage Partners, Tokyo Century Corp (8439 JP) and Furukawa Electric (5801 JP) consortium at JPY1,400, 22.6% premium to the undisturbed price.
• The precondition is approval under the competition laws of Japan and Thailand. The offer is long-dated and anticipated to commence in March 2025.
• While not a knockout bid, the required minority acceptance rate is not onerous. A long-dated offer presents a free option on a bump due to earnings upside or a counteroffer.

• True Wind has increased its partial offer for Sun Corp (6736 JP) by 8.0% to JPY4,750 and lowered the minimum number of shares to be purchased from 3.8 to 3.3m.
• True Wind’s offer has inadvertently spotlighted the valuation disparity vs the Cellebrite DI (CLBT US) stake, resulting in the shares trading through terms.
• True Wind’s revised offer will struggle to succeed as the 8% price uplift is materially lower than the 19% value increase in the Cellebrite stake (since the offer announcement).

• In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the September 2024 index rebal event.
• We see one ASX 100 change and two ASX 200 changes but there are a couple of names lurking just outside the border which have to be monitored carefully.
• For ASX 300, we see 13 ADDs and 6 DELs. Many of these expected ADDs and DELs could have more than 10 days of volume to trade.

• The Hang Seng Index has been falling in June and July, but our MONTHLY seasonal pattern model indicates the index has a very good chance to close August up.
• The condition we need, to forecast that August will be closing up, is to have July closing down, i.e. <17718.61.
• The index is WEEKLY OVERSOLD, so the timing to buy will be critical, because you want to get in early, but not too early (and July must close down).

• A month out from cutoff for the September rebalance, we see one potential change for the iShares China Large-Cap (FXI) (FXI US). 
• China Tower (788 HK) is a potential inclusion while China International Capital Corporation (3908 HK) should be deleted from the ETF.
• Shorts have been dropping in China Tower (788 HK) and are near their lows while increasing in China International Capital Corporation (3908 HK). 

• The CSRC has approved Midea Group Co Ltd A (000333 CH)‘s application to issue H-shares to be listed on the HKEX (388 HK). 
• Under the approval, Midea Group Co Ltd A (000333 CH) can issue up to 650.85m shares. Depending on the H-share discount, that could raise up to HK$43.6bn (US$5.6bn).
• The IPO is likely to be smaller and will depend on market conditions and the discount demanded on the H-shares. That in turn will determine index inclusion for the H-shares.

• The major framework of this realignment is likely decided, integrating KOSPI and KOSDAQ into a tiered system based on liquidity, market cap, and financial status, with periodic replacements.
• The KOSPI 200’s continued existence is uncertain under the new realignment plan, which may shift its role to the value-up index, resembling Japan’s market restructuring model.
• The first-tier market’s entry requirements will likely reflect value-up index criteria, suggesting greater speculative money movement toward the value-up index starting in September.

• Kirin Holdings (2503 JP)’s JPY8,620 offer for Fancl Corp (4921 JP) closes on 29 July. The shares have traded above terms for 25 out of the 26 trading days.
• MY.Alpha Management has amassed 10.3 million shares (8.51% ownership ratio) with several purchases above terms. MY.Alpha could catalyse other shareholders to rally against a light offer. 
• The emergence of MY.Alpha, the high volume above terms, peers re-rating, the required minority acceptance rate, and an offer unattractive to historical trading ranges increase the probability of a bump. 

• Kakao’s Kim Beom-su has been arrested over alleged stock price manipulation in the SM Entertainment buyout, marking a new peak in the company’s legal troubles.
• Kakao Corp’s stock might drop due to the absence of a key figure. KakaoBank could also struggle from uncertainty about its largest shareholder and weakened business ties.
• Kakao’s potential sale of SM Entertainment shares could initially hurt the stock price, but potential bidding interest might boost it.

• Today, the final day of the Tender Offer that True Wind Capital launched on 10 June 2024 to buy 19% of Sun Corp (6736 JP), TWC raised its price to ¥4,750/share./
• They also lowered their minimum from 3.7934mm shares (17.0%) to 3.3472mm shares (15.0%).
• As Cellebrite DI (CLBT US) had traded higher, SunCorp had too, and even though shares fell today, they are at ¥4,785/share.

• Canvest Environmental Protection Group (1381 HK) disclosed a pre-conditional Cayman scheme privatisation from Grandblue Environment Co A (600323 CH) at HK$4.90 per share, an 11.6% premium to the last close price.
• The precondition relates to the completion of capital injection into the offeror, Grandblue shareholder, and regulatory approvals. The heavy presence of SOE entities makes this a formality.
• While not a knockout bid, the offer (which is final) is reasonable. Shareholders with blocking stakes will be supportive. Timing is the key risk as the offer is long-dated.

• During Kim Byung-hwan’s hearing, he acknowledged market concerns about the Doosan merger, increasing skepticism about Doosan’s ability to maintain the original merger ratio.
• Calculating Bobcat’s net asset value using the net asset value method yields approximately ₩6.1T, derived from ₩5.95T in year-end equity plus ₩0.13T in adjustments.
• Reassess arb trading opportunities; with no short hedge for Robotics, consider an outright long position in Bobcat if its swap price is revised and the spread widens.

• General merchandise retailer Warehouse Group Limited (WHS NZ) (TWG) has announced it has received an approach from Stephen Tindall and PE outfit, Adamantem Capital Partners
• Founder and major shareholder Tindall holds a shade over 50%. He launched a $1.6bn privatisation attempt in 2006, but Foodstuffs and Woolworths Ltd (WOW AU) effectively blocked the Offer.
• The approach arrives after TWG’s shares trade around multi-year lows. 

• Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are shoo-ins to replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
• Passive NIFTY Index trackers will need to trade at least 3.3x ADV and 7.7x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
• Cumulative excess volume has increased in all stocks but there are some stocks where there will still be more positioning over the next few weeks.

• Woori Bank completed a block deal sale of 11 million shares of Kumho Tire Co (073240 KS) (3.83% of outstanding shares) on 18 July. 
• After the recent sales by Woori Bank and the Export-Import Bank of Korea, the creditors’ stakes in Kumho Tire has been reduced to 19.17%.
• Despite Kumho Tire’s recent improvement in financial performance, we are more concerned about the additional stake sale by the financial institutions that still own 19.2% stake in the company. 

• Based on the close of 22 July, there could be two changes for the iShares A50 China (2823 HK) / CSOP China A50 (2822 HK) ETFs in June.
• China National Nuclear Power and Huaneng Lancang River Hydropower could replace China Tourism Group Duty Free Corp Ltd and Yihai Kerry Arawana Holdings in the ETFs. 
• China Tourism Group Duty Free (1880 HK) could be deleted from a global index in August, so there could be selling in the A-shares and H-shares.

• Kokusai Electric (6525 JP) could price their secondary offering after market close today. The stock is down 10.5% since the rumors of the placement began 7 trading sessions ago.
• The Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) has been dropping over the last few days and is 8.6% lower over the last 8 trading days.
• Kokusai Electric (6525 JP) has been trading higher on expectations of index inclusion in August, but that could move to November now.

• Discounts likely set for a re-rating as market continues to overreact to appointment of CEO amid good set of results.
• The discounts of both Naspers and Prosus have continued to widen since the appointment of Fabricio Bloisi to Group CEO was announced in May (effective 10 July).
• At the end of June, the group released its strongest set of results in years, delivering on consolidated ecommerce profitability ahead of target.

• ENEOS Holdings (5020 JP) announced its deal for affiliate Tatsuta Electric Wire & Cable (5809 JP) 18-plus months ago. China approvals held it up more than a year.
• Last month, they launched. The sector was up a lot. TOPIX was up a lot. The stock had recently been trading through terms. But ENEOS didn’t bump the price.
• A month later, and the tender was supposed to have closed Friday 19 July. It didn’t. ENEOS extended, for no reason, which suggests they don’t have the shares. 

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), China Traditional Chinese Medicine (570 HK), Asia Cement China (743 HK), Canvest Environmental Protection Group (1381 HK), Greatview Aseptic Packaging (468 HK).
• Lowest spreads: Tatsuta Electric Wire & Cable (5809 JP), Alumina Ltd (AWC AU), Fancl Corp (4921 JP), Mimasu Semiconductor Industry (8155 JP), Infocom Corp (4348 JP), Hollysys.

• Since announcing Shandong Xinjufeng Technology Packaging (301296 CH)’s pre-conditional voluntary offer for Greatview Aseptic Packaging (468 HK) at HK$2.65 per share, the gross spread has increased. 
• The Board’s strategy is to rally shareholders against a hostile offer. However, the recent AGM protest votes suggest that the Board cannot easily thwart the offer. 
• Shandong Xinjufeng’s renewed efforts to secure Board representation suggest that its offer is in trouble. Meanwhile, China Mengniu Dairy Co (2319 HK) seems disinclined to engage in a bidding war. 

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND inflow strong but SOEs not leading and Hang Seng down hard. Bank buying minimal. NORTHBOUND saw significant selling, but A-share indices generally strong on the week. Window-dressing?
• AH Premia rose 3.3% on average. Really bad week for H vs A as Liquid Hs underperformed their As by 4%. Stunning week really. Relative performance a sea of red.

• SOUTHBOUND was again a net buyer, for HK$19.2bn this week, on smallish two-way volumes. Tencent and ETFs stood out as large net buys.
• I’ve thought national team was buying banks for months. This week, no banks showed in the top five net buys, and only 1 in the top ten.
• It is somewhat perplexing that the flows just stopped. But that may be a sign of things to come. Confirmation may require a week or two.

• Weekly IVs marked significantly higher. Options demand returns post holiday-shortened week. Market focuses on 23.07.2024 Budget & Corporate Earnings announcements. 
• Put-Call Ratio compression + Rising IVs indicative of call-buying activity. Significant Open-Interest buildup seen in 25000 calls.
• Vol Term-structure: Entire curve in Backwardation. Much of which can be attributed to the India Budget event. Curve expected to flatten out post event.

• SoftwareONE is currently considered a special situation case by the market, with its new Board of Directors being more receptive to a potential transaction, possibly above CHF 20/share.
• Compelling stock narrative: strong balance sheet (10.3% of market cap in net cash&equivalents), low valuation (8.7x EV/NTM EBITDA, 17.5x Fwd P/E), shareholder return policy (buyback and dividend), and ongoing recovery.
• My fair value estimate is CHF 20.04/share, which implies an undemanding 9.8x EV/Fwd NTM EBITDA. SoftwareONE releases Q2 and H1 results on 21 August. Long.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB +19.3bn of A-shares. NORTHBOUND sold everything. Consumer, Finance, and Energy hit hardest.
• Net flows as a percentage of value traded are clearly “short gamma”, but the net buys this week were of stocks previously a net sell. 

• Zhihu Technology (ZH US) has launched a conditional share buyback offer to acquire a maximum of 46.9m Class A ordinary shares (15.93% of outstanding shares) at HK$9.11 (US$3.50 per ADS).
• The offer is conditional on shareholder approval by a majority of votes cast at the EGM. There is no minimum acceptance condition. The EGM vote is done due to irrevocables. 
• Zhihu’s share buyback returns 19% of cash not subject to government controls, below Douyu International Holdings (DOYU US)’s comparable 34%. The minimum pro-ration is expected to be around 34%. 

• I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Three new deals discussed this week on Smartkarma: Samson Holding (531 HK)‘s Scheme, and VTOs for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB).
• Key updates took place on Capitol Health (CAJ AU), Alumina (AWC AU), Ansarada (AND AU), TCM (570 HK), CPMC  (906 HK), Fancl (4921 JP),and Hollysys Automation Technologies (HOLI US).

• The Gulf Energy (GULF TB)/Intouch (INTUCH TB) merger is an opportunistic, bullying method designed to have GULF shareholders buy INTUCH and therefore AIS (ADVANC TB) at too low a price. 
• CK Infrastructure Holdings (1038 HK)‘s interest in a possible London listing coincides with the LSE undergoing a listing regime change.
• Management continue to creep their stake in Zhongsheng Group (881 HK), and now hold a shade under 50%. 

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: ASICS Corp (7936 JP) and Kokusai Electric (6525 JP) placements; Sanil Electric (062040 KS) and Timee Inc (215A JP) IPOs.
• Event-Driven developments China Traditional Chinese Medicine (570 HK), Huafa Property Services Group (982 HK), Samson Holding (531 HK), Zhihu Technology (ZH US), Intouch Holdings (INTUCH TB), Gulf Energy Development (GULF TB). 

• Maximizing Lee Jae-yong’s dividend income is crucial, making Samsung SDS’s ₩5.5T cash assets key, thus prompting the merger of Samsung C&T and Samsung SDS’s BPO division.
• With no legal risks for Lee Jae-yong, Samsung C&T needs the merger to increase assets and avoid forced holding company conversion, making the acquisition of Samsung SDS’s BPO division necessary.
• We should target a setup for likely appraisal rights for C&T. Monitor and capture the spread between the stock price and appraisal rights exercise price.

• Thai Beverage(THBEVSP)‘s  proposed swap deal involves acquiring a 41.3% stake in F&N from promoters, seemingly at book value than fair market value, expected in case of an arms length transaction.
• Fraser And Neave (FNN SP)  holds a 20.3% stake in Vietnam Dairy(VNM VN), Vietnam’s leading dairy player, which is now trading at nearly a 40% discount to the investment value.
• Understanding TCC Assets’ ownership history of F&N may help clarify the deal’s valuation rationale.

• The Nikkei 225 INDEX pulled back last week, and it may continue to fall for another 1-2 weeks.
• Make sure you read the Market Reversal Matrix – Charts Analysis section below: we are introducing a possibile new Premium Service using our trend prediction models in algorithmic trading format.
• The price support area to buy the Nikkei 225 would be between 39800 and 39300, this coming week (or the next).

• KT’s foreign room has been exhausted due to value-up trading inflows, NPS selling shares, and KT canceling treasury stocks.
• Hyundai Motor may sell 0.5% of its KT stake, likely to overseas investors. KT’s 700,000 share cancellation will lower foreign ownership to the low-4% range, possibly below 3.75% by November.
• Focus on the stock price surge from ETF recall requests around the effective date, and note that passive outflow corrections typically occur afterward.

• Huafa Property Services Group (982 HK)’s IFA opines that Huafa Industrial Co., Ltd. Zhuhai (600325 CH)’s HK$0.29 privatisation offer is fair and reasonable. The vote is on 28 August. 
• Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. The offer price is final.
• No shareholder holding a blocking stake, low AGM minority participation rate and calm retail boards suggest low vote risk. At the last close, the gross/annualised spread is 9.4%/52.5%. 

• Thai Beverage(THBEV SP)  has proposed a share swap-deal with a promoter company to acquire additional stake in FraserAnd Neave(FNN SP)  in exchange for Frasers Property at negotiated valuations, not market prices.
• Post-Completion of the swap deal with the promoter-owned entity, which requires shareholder approval, Thai Bev will hold a 69.6% stake in F&N and no stake in Fraser Property (FPL).
• If the stake swap were valued at yesterday’s closing share prices, it would imply a drop in the total stake value for Thai Bev after the proposed deal.

• On 17 July, SK Innovation (096770 KS) officially announced a merger with SK E&S. The merger ratio between SK Innovation and SK E&S has been set at 1 to 1.1917417.
• We believe this is the wrong timing for this merger from SK Innovation’s point of view. SK Innovation is trading at near three year lows.
• This merger is likely to generate backlash from KKR which holds SK E&S redeemable convertible preferred stock (RCPS) worth 3.1 trillion won.

• 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.
• Unlike the other popular Chinese indices (CSI, SSE, ChiNext, etc.) that rebalance semiannually, the STAR 50 index has a quarterly rebalance cycle and the next rebalance will be in September.
• With the reference period for the September 2024 STAR 50 index rebal event coming to an end, we have presented our final expectations for ADDs and DELs in this insight.

• Capitol Health (CAJ AU) has entered a binding merger proposal with Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
• The transaction will require approval from the ACCC and Capitol shareholders. Due to the minimal geographic overlap, ACCC clearance should be forthcoming.
• The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 8.0%. 

• Back on the 17th June, diagnostic imaging provider Capitol Health (CAJ AU) announced it had entered into a process deed with Integral Diagnostics (IDX AU). Terms are now firmed.
• IDX will issue 0.12849 new IDX shares for each Capitol share. Scrip terms are unchanged from that announced previously. Upon completing the transaction, Integral would hold 63% in the NewCo. 
• Apart from ACCC signing off, this transaction looks priced to complete. 

• Since mid-June, share-price spreads have generally tightened across our European liquid universe of ordinary and preferred shares (13 have tightened, 5 widened, 1 remained at same level).
• Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols (see section on the company), Media-for-Europe, Sixt.
• Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal.

• Dell Technologies (DELL US) is the main candidate for addition-transition with uncertainty arising from the ‘Multiple Share Classes’ criterion. Forecasted demand is ~$7bn and ~4 ADV.
• Williams Sonoma (WSM US) is one of the top candidates for addition-migration with uncertainty due to the migrations’ inconsistent market cap selection pattern. Forecasted demand is $840m and ~2.6 ADV.
• American Airlines Group (AAL US) is one of the main candidates for deletion with uncertainty due to price hence ranking fluctuations until cut-off. Forecasted supply is $290m and ~0.8 ADV.

• There are a bunch of stocks listed in Hong Kong that have underperformed the HSCEI INDEX and their peers and could be deleted from global passive portfolios in August.
• The deletion from passive portfolios will lead to a liquidity event at the end of August where passive trackers will need to sell multiple days of ADV.
• There has been a big jump in cumulative excess volume in some stocks and the A/H premium on a lot of the names has jumped over the last few months.

• Last night, the Board of Intouch Holdings (INTUCH TB)  announced an amalgamation with Gulf Energy Development (GULF TB) and Tender Offers for Advanced Info Service (ADVANC TB) (at THB 216.30) 
• And Thaicom Pcl (THCOM TB) (THB 11.00) shares. This is really big news. It appears to try to cap years of re-arrangement of the capital structure. It’s complicated.
• But it is not fair. INTUCH shareholders lose 22% of earnings value per investment value in 2024. 20% in 2025. But, there may be a way to block it…

• Korea’s majority party plans to amend the Capital Markets Act to base listed companies’ merger ratios on intrinsic rather than market value, dubbed the “Doosan Bobcat Prevention Law.”
• Other conglomerates, like Hanwha and Hyundai Motor Group, may execute mergers just before this amendment.
• We should expect shareholder-favorable merger ratios. So, we should position in such companies before announcements, ideally just before the new amendment’s enforcement.

• The amalgamation will entail the ratios for allocations of shares in the NewCo to the shareholders of GULF and INTUCH as detailed below.
• The amalgamation process and the establishment of the NewCo are expected to be completed in 2Q25.
• The restructuring is aimed at reducing duplication in the shareholding structure and facilitating growth opportunities in the energy, infrastructure, and digital businesses.

• The merger ratio, not as unfavorable to SK Innovation as feared, shows SK Group acting cautiously amid political and regulatory scrutiny.
• SK Inc.’s stake will drop to mid-60s; the 1.2x merger ratio for SK E&S could positively affect SK Innovation’s stock price short-term.
• Persuading KKR is crucial. SK E&S won’t convert ₩3T in RCPS or grant appraisal rights, potentially leading KKR to consider litigation, a significant risk to the merger.

• An interview in the Nikkei of Koito Manufacturing (7276 JP) CFO Takahito OTAKE offered the comment that Koito Mfg expected a shareholder return of 130% a year through March 2029.
• The stock popped 19% after lunch on that comment, then fell back to end up 5.0%.
• This is the same pop as we saw end-March. Then it was +24.6% and it stayed up the next day. Same reason for the pop. This was an echo.

• Andrew Walker hosts the podcast and introduces John Haskell, CIO at Ulta Global Management
• Ulta Global focuses on international public real estate investing, particularly in emerging markets
• Despite negative perception and underperformance in emerging markets, there are opportunities for value investing in international real estate

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Intouch Holdings (INTUCH TB) and Gulf Energy Development (GULF TB) announced restructuring transactions to merge into NewCo and VTOs for Advanced Info Service (ADVANC TB) and Thaicom Pcl (THCOM TB). 
• Shareholders will receive 1.69335 NewCo shares per Intouch share (excluding shares held by Gulf) and 1.02974 NewCo shares per Gulf share.
• The key conditions are shareholder approvals, completion of VTOs and purchase of dissenting shares. The transaction is long-dated and expected to be completed in 2Q25.

• KKR and KSP Kokusai Investments are looking to raise approximately US$1.7bn through an extended secondary follow-on offering, via selling approximately 22.3% of Kokusai Electric (6525 JP). 
• We have looked at the lockup expiry and deal dynamics in our earlier notes.
• In this note, we talk about share price performance since then.

• Furniture trader Samson Holding (531 HK) has announced a Scheme from Shan Huei Kuo, Samson’s Chairman. 
• The Cancellation price is $0.48, a 50% to last close. The premium is more pronounced if going back a month. The price is final.
• This looks done. But Samson is an illiquid micro cap.