Event-Driven

Senior Presidential Secretary said this morning that a tax reform, including reducing inheritance tax rates to the OECD average, will be disclosed in late July with the tax reform plan.
Stocks sensitive to reduced inheritance tax, notably Hyundai Motor Group subsidiaries like Hyundai Glovis and Hyundai Motor, could see significant attention amid governance restructuring efforts under Chung Eui-sun.
Retroactive application and its extent may impact markets, potentially affecting groups like Samsung, influencing diverse investment strategies based on specifics.

Merger Arb Mondays (17 Jun) – Fancl, Tatsuta, A8, China TCM, GAPack, CPMC, Malaysia Airports, Bapcor

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), Hollysys Automation Technologies (HOLI US), Fancl Corp (4921 JP), Asia Cement China (743 HK), Ansarada Group Ltd (AND AU).
Lowest spreads: Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP).

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$400m

There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in June but there are a lot of float and capping changes.
Estimated one-way turnover is 3.9% resulting in a round-trip trade of US$418m. There are 17 stocks with over 1x ADV to trade from passive trackers.
The largest inflows are expected in Cia de Minas Buenaventura SAA (BVN US), Equinox Gold (EQX US) and Red 5 Ltd (RED AU).

NASDAQ 100 Index Rebalance: Arm Holdings Replaces Sirius XM

ARM Holdings (ARM US) will replace Sirius Xm Holdings (SIRI US) in the Nasdaq-100 Stock Index (NDX INDEX) after the close of trading on 21 June.
Passive trackers will need to buy just over US$500m of ARM Holdings (ARM US) while the estimated selling in Sirius Xm Holdings (SIRI US) is smaller.
There could be passive selling in NVIDIA Corp (NVDA US), but this will be a lot smaller than the expected buying from the Technology Select Sector SPDR (XLK US) ETF.

Great Eastern (GE SP): Inching Towards Suspension

Back on the 10th May, OCBC (OCBC SP) made a voluntary unconditional general Offer for the 11.56% in life/non-life insurer Great Eastern Holdings (GE SP) not held.
At a 36.9% premium to last close, the S$25.60/share Offer Price appeared fair. Yet GE has consistently traded through terms, potentially as someone seeks to block delisting, and negotiate terms.
OCBC has now declared terms final. The IFA says “not fair, but reasonable” – and recommends shareholders accept the Offer. GE will be suspended at the close of the Offer.

EQD / Weekly Vol Update / Positive Risk-Sentiment & Short Trading Week Put Pressure on IV Levels

By Sankalp Singh

IVs move lower at an accelerated pace driven by holiday shortened week & risk-seeking sentiment.
Vol-Regime has switched to “High & Down” state, projecting an elongated period of falling IV levels.
Nifty50 Smile & Skew dynamics continue to compress. Vol term structure has moved from Backwardation to Contango in conjunction with falling IVs

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

By Jesus Rodriguez Aguilar

Since mid-May, share-price spreads have not shown a clear trend across our European liquid universe of ordinary and preferred shares (9 have tightened, 7 widened, 1 remained at same level).
Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols, Media-for-Europe, Sixt, Volkswagen.
Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal.

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Jun 16

Daily Brief Event-Driven: Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair
(Mostly) Asia-Pac M&A: Fancl, Jeisys Medical, A8 New Media, Bapcor, Helios Techno,Tatsuta Electric
MV Australia A-REITs Index Rebalance: Abacus Storage King Deleted (Finally!)
MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes
MV US Listed Semiconductor 25 Index Rebalance: US$1bn to Sell in NVIDIA
Weekly Deals Digest (16 Jun) – Sun Corp, Fancl, Tatsuta, Great Eastern, A8, Webtoon, Shift Up
Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii
MV Australia Equal Weight Index Rebalance: IDP Education (IEL) & Lendlease Group (LLC) Out
MarketVector Vietnam Local Index Rebalance: Two Adds and Other Changes

Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair

Great Eastern Holdings (GE SP) IFA opines that the OCBC (OCBC SP) S$25.60 offer is NOT fair but reasonable as it is below the valuation range of S$28.87-S$36.19 per share.
In response, OCBC declared the price final, and the final closing date is 12 July. Great Eastern will likely breach free float requirements and be suspended when the offer closes.
The offer will likely follow the Boustead Projects/Boustead Singapore blueprint, where SGX RegCo eventually (took seven months) enabled dissenters to receive a fair offer with a 24% uplift.

(Mostly) Asia-Pac M&A: Fancl, Jeisys Medical, A8 New Media, Bapcor, Helios Techno,Tatsuta Electric

I tally 50 – 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: Fancl (4921 JP)‘s Tender offer, A8 New Media (800 HK)‘s Scheme, and Jeisys Medical (287410 KS)‘s delisting offer. Bain also approached Bapcor (BAP AU).
Key updates took place on: Sigma Healthcare (SIG AU), Alumina (AWC AU), Greatview Aseptic Packaging (468 HK), Helios Techno (6927 JP), and Tatsuta Electric Wire & Cable (5809 JP).

MV Australia A-REITs Index Rebalance: Abacus Storage King Deleted (Finally!)

Abacus Storage King (ASK AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in June. There are float changes and capping changes too.
Estimated one-way turnover is 3.33% and will result in a one-way trade of A$19m. There are a couple of stocks with over 1x ADV to trade.
There has been a recent spike in shorts on Abacus Storage King (ASK AU) but passive selling will be larger than the short interest.

MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes

Core Lithium Ltd (CXO AU) and Piedmont Lithium (PLL US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close on 21 June.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 6.4% and in a one-way trade of US$28m.
The largest inflows will be in Sociedad Quimica y Minera de Chile (SQM US), Pilbara Minerals (PLS AU), Arcadium Lithium (ALTM US), Lithium Americas (LAC US) and Sigma Lithium (SGML).

MV US Listed Semiconductor 25 Index Rebalance: US$1bn to Sell in NVIDIA

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in June but there are a lot of float and capping changes.
There is US$1bn to sell in NVIDIA Corp (NVDA US) while there will be passive buying in Advanced Micro Devices (AMD US) and Intel Corp (INTC US).
The selling in NVIDIA Corp (NVDA US) will offset part of the potential passive buying from Technology Select Sector SPDR (XLK US) and other similar ETFs.

Weekly Deals Digest (16 Jun) – Sun Corp, Fancl, Tatsuta, Great Eastern, A8, Webtoon, Shift Up

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: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
Event-Driven developments: Sun Corp (6736 JP), Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), A8 New Media (800 HK), Bapcor.

Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

The Palliser/Keisei Electric Railway Co (9009 JP) is an unconvincing trade. Avoid being long Keisei vs Oriental Land (4661 JP) except in short-term impact events. Avoid the drift trade also.
On the subject of activism, keep an eye on China Merchants China Direct Investments (133 HK)‘s 20th June AGM. If Kan’s re-election is rejected, this stock should gain more momentum.
A Sigma Healthcare (SIG AU)/Chemist Warehouse merger carried regulatory risk. And now the ACCC has raised a raft of concerns.

MV Australia Equal Weight Index Rebalance: IDP Education (IEL) & Lendlease Group (LLC) Out

IDP Education (IEL AU) and Lendlease Group (LLC AU) will be deleted from the MV Australia Equal Weight Index at the June rebalance.
Constituent, float and capping changes will result in a one-way turnover of 5% and in a round-trip trade of A$228m.
There are many stocks from the S&P/ASX index family that will have same way or opposing flows from VanEck Vectors Australian Equal Weight ETF (MVW AU).

MarketVector Vietnam Local Index Rebalance: Two Adds and Other Changes

Viettel Construction (CTR VN) and EVN Finance (EVF VN) will be added to the MarketVector Vietnam Local Index at the close on 21 June.
Estimated one-way turnover is 5.2% and that results in a one-way trade of US$27m. There are 3 stocks with more than 1x ADV to buy from passives.
There will be over US$1m to buy in Vinhomes (VHM VN), Bank for Foreign Trade of Vietnam (VCB VN) and Vingroup Jsc (VIC VN).

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Jun 15

Daily Brief Event-Driven: The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group
Another Block Deal Sale of Ecopro Materials
Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value
FII’s High Short Positions on Indian Markets : Crisis or Opportunity
Block Deal Sale of 3.6% Shares of Enchem
EQD | Is the HSI Correction Going to Continue? (Yes, For 1-2 Weeks)

The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group

Early this morning, rumors spread that Hyundai’s honorary chairman Chung Mong-koo was hospitalized and died, causing stock prices to surge, but Hyundai denied this news.
Control of Hyundai hinges on increasing the stake in Mobis. Chung Eui-sun aims to keep Mobis’s stock low, but Chung Mong-koo’s health complicates timing and strategy.
Mobis’s trading point depends on Chung Mong-koo’s health. Three scenarios: he’s healthy, critically ill, or deceased. Current rumors’ price impacts are unlikely to subside soon.

Another Block Deal Sale of Ecopro Materials

Shares of EcoPro Materials are down 16% today to 112,300 won, due to another block deal sale of by BRV Capital in the after hours trading on 13 June.
After the second block deal sale on 14 June, BRV’s stake declined further from 21.2% to 18.2%.
This block deal sale at a big discount is likely to raise overhang concerns about further block deal sales by BRV Capital in the coming months/years.

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price.
The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light.

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value

Today at noon JST, Rs Technologies (3445 JP) released an announcement on TDNet, “Our policy regarding the tender offer for Helios Techno Holding Co., Ltd. shares”
In it, they indicated that the price offered – ¥825/share – is a price which “fully returns to general shareholders the increased enterprise value that will result from [transaction] synergies.”
They acknowledge the market price is trading higher than the TOB Price, but say they have no plans to raise the Tender Offer Price. So now what? It depends.

FII’s High Short Positions on Indian Markets : Crisis or Opportunity

By Nimish Maheshwari

It is important for investors to not get swayed by popular narratives and instead look at the data and historical patterns to make informed decisions.
While a large short position by FIIs may seem concerning, it could actually signal a potential opportunity for positive returns in the Nifty 50 index.
By understanding the reasons behind this contrarian move and the historical trends, investors can navigate bet when FII’s short positions are high.

Block Deal Sale of 3.6% Shares of Enchem

After the market close on 14 June, it was reported that Woori PE/other investors will be selling 705,384 shares of Enchem in a block deal, representing 3.6% of outstanding shares.
The block deal discount rate ranges from 6.9% to 8.92%, resulting in potential block deal sale price of 270,500 won to 276,500 won.
We would not subscribe to this block deal and we are concerned about the valuations of Enchem after a sharp share price appreciation this year.

EQD | Is the HSI Correction Going to Continue? (Yes, For 1-2 Weeks)

By Nico Rosti

The Hang Seng Index correction has restarted this week, after a brief 1-week bounce.
The index may continue to downtrend for another 1-2 weeks, then a reversal should come and the uptrend should restart.
Look at the price support area in the 17500-17000 range, because that is where my model indicates the highest chance of LONG reversal.

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Jun 14

Daily Brief Event-Driven: Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows
Specifics of Korea’s Official Short-Selling Regulations, Announced This Morning
Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues
HKTV (1137 HK): 9th July Vote On Share Buy-Back

Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows

The Technology Select Sector SPDR (XLK US) ETF tracks the Technology Select Sector Index and has an AUM of over US$70bn.
NVIDIA Corp (NVDA US) has broken through the US$3tn market cap barrier and is very close to Apple (AAPL US) in terms of free float market cap.
If NVIDIA ranks higher than Apple on free float market cap at the close on Friday, there could be huge inflows to NVIDIA and outflows from Apple a week later.

Specifics of Korea’s Official Short-Selling Regulations, Announced This Morning

Limiting extensions to four times after a 90-day repayment and mandating repayment after 12 months increases short-selling costs. The revision omits limits on position-holding cycles, disappointing retail investors.
Today’s release did not set a timeline for short-selling resumption. The ruling party has requested it after March 2025, with key officials present suggesting next year March resumption.
Regarding the electronic system implementation, core content aligns with the draft, but newly revealed institution numbers add a new perspective. Uncertainties remain on integrating overseas stock borrowing into the system.

Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues

Back on the 11th December 2023, pharmacy distributor Sigma Healthcare (SIG AU) announced a “transformational merger” – in effect a reverse takeover – with mega chain Chemist Warehouse (CWG).
In Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover I flagged pushback from ACCC; but on balance thought the merger should still get up.
Travis Lundy struck a more tentative tone in Sigma Healthcare: ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe… Rightfully so it seems. The ACCC has now raised competition concerns.

HKTV (1137 HK): 9th July Vote On Share Buy-Back

Back on the 22nd May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a 20.8% premium to undisturbed.
Should the Offer complete, co-founder Ricky Wong’s stake, together with concert parties, increases to 51.55% (before exercising options), up from 45.75% currently. Optically, it’s a opportunistic share grab.
The Offer Doc is now out, with an EGM to vote on the whitewash waiver on the 9th July.

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Jun 13

Daily Brief Event-Driven: Helios Techno Holding (6927) TOB – Today Could Be The Day and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Helios Techno Holding (6927) TOB – Today Could Be The Day
Tatsuta Electric (5809 JP) Crunch Time = Bump Time?
Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump
A8 New Media (800 HK): A Scheme with a 162% Takeover Premium
Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia
Quiddity Leaderboard NIFTY Sep 24: Multiple Changes Possible for NIFTY 50; Some New Trade Ideas
Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024
NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive
A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.

Helios Techno Holding (6927) TOB – Today Could Be The Day

Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

Tatsuta Electric (5809 JP) Crunch Time = Bump Time?

ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different.
The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement.

Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump

18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.
The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.

A8 New Media (800 HK): A Scheme with a 162% Takeover Premium

A8 New Media (800 HK) disclosed a Cayman scheme privatisation offer from Mr Liu Xiaosong (Founder, Chairman, CEO) at HK$0.36 per share, a 162.8% premium to the last close price.
The massive premium is unsurprising, as A8’s EV has been negative since April 2023 due to headwinds from the weak Chinese leasing sector and uncertainty about cash use.
The high takeover premium, no shareholder holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small-cap illiquid stock.

Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

On 12 June, SK Telecom (017670 KS) confirmed that its affiliate Sapeon plans to merge with its competitor Rebellions by end of this year.
Sapeon and Rebellions’ largest global competitor is Nvidia. A key aim of the merger is to challenge Nvidia and try to take away its global dominance in AI chips.
If the combined Sapeon and Rebellion can take away just 1% market share resulting in 1% of Nvidia’s market cap, this would suggest valuation of US$31 billion.

Quiddity Leaderboard NIFTY Sep 24: Multiple Changes Possible for NIFTY 50; Some New Trade Ideas

By Janaghan Jeyakumar, CFA

NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
In this insight, we take a look at the names leading the race to become ADDs/DELs during the September 2024 index rebal event.
Since my last insight, we have observed a couple of important changes to candidate rankings and that has resulted in some changes to our index change expectations.

Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024

On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.
Meanwhile, starting 1 July, the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.
The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD.

NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive

With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.

Following a suspension on the 28th May, property rental play A8 New Media (800 HK) has now announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
The Cancellation price is $0.36, a whopping 162.77% to last close. The price is final.
This is a done deal. But A8 is an illiquid micro cap.

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Jun 12

Daily Brief Event-Driven: [JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
Jeisys Medical (287410 KS): Archimed’s Delisting Offer
Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions
Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market
CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up
ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light
Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer
KOSDAQ Global Rebalancing This Week: Trading Considerations
Rakuten Bank (5838 JP) – The Bank in Current Form and the Promise of FinTech Reorganization
Alumina (AWC AU): Scheme Vote on 18 July

[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?

In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness.

Jeisys Medical (287410 KS): Archimed’s Delisting Offer

Aesthetic laser maker Jeisys Medical (287410 KS) has announced French PE outfit Archimed SAS is seeking to delist the company.
Archimed intends to acquire 72% of Jeisys at ₩13,000, a 20.82% premium to undisturbed. Archimed has also inked agreements with founders/directors for 26.44%, taking its possible % acquisition to 98.44%.
A Korean medical device maker – not another Eoflow (294090 KS)?! Jeisys did face a patent infringement case from Syneron Medical (ELOS US) in 2018; but since resolved.

Korea’s Finalized Short-Selling Rules Include Limiting 90-Day Short Position Extensions

The government will announce short selling improvements Thursday. A leaked detail includes limiting 90-day short position extensions.
Limiting the 90-day short position holding period may ease local investor concerns, but it could shrink the short selling market, potentially affecting overseas fund outflows.
Resuming short selling in early July may bring new flow patterns due to temporary distortions from mandatory repayment within 90 days and limitations on position extensions, increasing price impacts.

Medical Data Vision (3902) – SBI Upping Their Stake AGAIN In The Market

Today after the close, SBI Holdings (8473 JP) – which currently owns 32.4% of Medical Data Vision (3902 JP) – announced it would buy another 1.91mm shares over 7mos.
This market purchase would lift them to ~37.4% by year-end. Interestingly, they plan to go through the one-third level without a Tender Offer. But their buying history hasn’t been great.
SBI bought 20% in 2020. It fell by half. They bought another 5%. Then it dropped 50%, so they bought another 5%. Now -25% so they are buying another 5%.

CMCDI (133 HK): AGM Outcome May Provide Another Leg-Up

Activist Argyle Street’s approach to closed-end investment company China Merchants China Direct Investments (133 HK) (CMCDI) has a certain David Webb-like quality.
Apart from the deep value angle, the analysis of director Elizabeth Kan’s potential conflict of interest is particularly insightful. Argle will vote against Kan’s re-election at the 20th June AGM
Given this upcoming vote, as I’ve done with Giordano (709 HK) and L’Occitane (973 HK) previously, it’s useful to investigate the lesser-known shareholder register, a byproduct of investigative disclosure reports.

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer

In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May.
The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors.

KOSDAQ Global Rebalancing This Week: Trading Considerations

KRX announced KOSDAQ Global rebalancing. Annually in June, effective date follows June options expiry. Passive flow trading on Thursday, the 13th. 49 companies designated, with nine excluded and eleven added.
Predicting passive capital movement is challenging, but attention must be given to price impacts because reshuffle predictability is low, lacking preemptive trading setups.
We must anticipate the SSF reshuffle in August, likely including new KOSDAQ Global constituents. KRX plans to list SSFs for all remaining constituents, potentially advancing setup timing for price increases.

Rakuten Bank (5838 JP) – The Bank in Current Form and the Promise of FinTech Reorganization

By Victor Galliano

Rakuten Bank, in its present form, is positioned to benefit from rising interest rates in Japan, with its low LDR, high cash balances, growing loan book and healthy capital ratio
The proposed FinTech reorganization of the group around the bank should drive further potential shareholder benefits; higher ROE, lower customer acquisition costs, increased active account penetration and lower operating costs
We believe that there will be effective governance checks and balances in place to ensure fair valuations of the FinTech segments pre-reorganization; we include our base valuations in this report

Alumina (AWC AU): Scheme Vote on 18 July

The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range.
The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.

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Jun 11

Daily Brief Event-Driven: Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor
Yuanta/P-Shares Taiwan Div+ ETF Rebalance: One Surprise as Round-Trip Trade Hits US$2.3bn
Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer
Tender Offer of Jeisys Medical by Archimed Group
S&P/ASX Index Rebalance (June 2024): Changes, Flows, Impact, Shorts & Positioning
Taiwan Top 50 ETF Rebalance: Asia Vital Components to Replace Chang Hwa Commercial Bank
Jun24 S&P 500/400/600 Index Rebal – Both More and Less Interesting Than You Think, But 3 Big Buys
CPMC Holdings (906.HK) – ORG Can’t Afford to Lose, But Baosteel Is a Step Ahead
Interglobe Aviation : Block Deal Trade Special Situations and Tactical Trade Strategy

Unsolicited Partial Offer for 19% of Sun Corp (6736 JP) – Play on Cellebrite from SPAC Sponsor

Sun Corp (6736 JP) for years has been a play on its investment holding in Cellebrite DI (CLBT US), brought to market in a $2.4bn SPAC deal announced 30Aug2021.
The SPAC entity was an entity called TWC Tech Holdings II Corp (TWC = “True Wind Capital”). The next day, Cellebrite DI (CLBT US) was born, trading up to US$11.00+.
Sun Corp (6736 JP)‘s value realisation path had begun. Today, a True Winds entity announced a Partial Tender Offer – unsolicited, unannounced previously – on Sun Corp, for 19.0%.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance: One Surprise as Round-Trip Trade Hits US$2.3bn

There are 5 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June with implementation taking place from 21-27 June.
The constituent changes and capping changes result in an estimated one-way turnover of 12.8% and in a one-way trade of TWD 37.2bn (US$1.15bn).
The changes are in line with our forecasts with one exception. Uni President Enterprises (1216 TT) was not added and Yulon Finance (9941 TT) was added instead.

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea.
In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks.

Sun Corporation (6736 JP): True Wind’s Hostile Partial Offer

True Wind has launched a hostile partial tender offer for Sun Corp (6736 JP) for a minimum (3.8m) and maximum (4.2m) shares at JPY4,400, 19.2% premium to the undisturbed price.
The offer was prompted by frustration with the Board’s lack of urgency in closing the disparity between Sun Corp’s market cap and the value of its Cellebrite DI (CLBT US) stake.
The Board has three options: do nothing (low probability), find a white knight bidder (high probability), or commit to selling/distributing its Cellebrite stake (medium probability).

Tender Offer of Jeisys Medical by Archimed Group

On 10 June, it was announced that France’s Archimed Group is conducting a tender offer of 55.72 million shares of Jeisys Medical (287410 KS) (72% of outstanding shares).
The tender offer period will run from 10 June to 22 July. The tender offer price is 13,000 won.
Archimed also signed a contract to purchase the entire stake (23.2%) held by Kang Don-Hwan (Chairman of Jeisys Medical) and (3.2%) held by a Director Myung-Hoon Lee.

S&P/ASX Index Rebalance (June 2024): Changes, Flows, Impact, Shorts & Positioning

There is 1 change for the S&P/ASX20 Index, 1 change for the S&P/ASX50 Index, 2 changes for the S&P/ASX100 Index, and no regular changes for the S&P/ASX200 INDEX in June.
The surprise inclusion of Wisetech Global (WTC AU) means that positioning is likely to be lower than the passive buying and there could be a move higher in the stock.
There will be one adhoc inclusion to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June following Cie De Saint-Gobain (SGO FP)’s acquisition of CSR Ltd (CSR AU).

Taiwan Top 50 ETF Rebalance: Asia Vital Components to Replace Chang Hwa Commercial Bank

Asia Vital Components (3017 TT) will replace Chang Hwa Commercial Bank (2801 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 21 June.
Asia Vital Components (3017 TT) was added to a global index at the end of May and the stock has dropped nearly 25% from its highs.
Asia Vital Components (3017) trades at a much higher forward PE compared to its peers while Chang Hwa Commercial Bank (2801) trades at a lower PB compared to its peers.

Jun24 S&P 500/400/600 Index Rebal – Both More and Less Interesting Than You Think, But 3 Big Buys

On Friday, the S&P index committee announced the June 2024 changes to the three major indices in the S&P1500 universe.
KKR, Crowdstrike (CRWD), and GoDaddy (GDDY) replace Robert Half (RHI), Comerica (CMA), and Illumina (ILMN) in the S&P500. There are 6 ADDs to S&PMidCap400, 13 DELETEs from Sm600.
There are some BIG and impactful flows here. Some are very big. Netted 2-way flow on 21 June is ~US$66-80bn. But as always, details matter.

CPMC Holdings (906.HK) – ORG Can’t Afford to Lose, But Baosteel Is a Step Ahead

By Xinyao (Criss) Wang

Baosteel’s SOE background helps bring more advantages- This deal is a consolidation of assets under SASAC, which may involve some strategic intent at national level. Baosteel has an upper hand.
ORG cannot afford to fail considering the strategic significance of CMPC for ORG. Major shareholder of CPMC Zhang Wei has picked ORG side, making it maintain the hope of winning.
For arbitrageurs, the good news is CPMC would be acquired by either Changping Industrial or ORG, with high certainty.Baosteel is also worth watching since it could be a new leader.

Interglobe Aviation : Block Deal Trade Special Situations and Tactical Trade Strategy

By Nimish Maheshwari

Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
These block deals generally include selling promoters and big funds at a price discount to its current market price.
Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

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Jun 10

Daily Brief Event-Driven: S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks
Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys
Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders
Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent
Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas
A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win
Quiddity ASX Jun 24 Rebal: Regular Index Changes + One Potential Intra-Review Replacement
Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price
NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff
HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly

S&P500/400/600 Index Rebalance: Huge Size to Trade in a Few Stocks

There are 3 changes for the S&P 500 INDEX, 7 changes for the S&P Midcap400 Index and 13 changes for the S&P SmallCap600 Index at the June rebalance.
There is huge size to trade in KKR & Co (KKR US) and Crowdstrike Holdings (CRWD US) and both stocks were up big in the after-hours market.
There has been positioning in some stocks recently but stocks including KKR & Co, RB Global and Texas Pacific Land could see further positioning in the next week.

Merger Arb Mondays (10 Jun) – GA Pack, Asia Cement, CPMC, Nagatanien, APM, Ansarada, Genex, Hollysys

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), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK).
Lowest spreads: Alumina Ltd (AWC AU), Great Eastern Holdings (GE SP), Pact Group Holdings (PGH AU), Nagatanien Holdings (2899 JP), Mimasu Semiconductor Industry (8155 JP), QV Equities Ltd (QVE AU).

Breakdown of Archimed’s Massive Tender Offer for Jeisys Medical Shareholders

Archimed aims to acquire 72% of Jeisys Medical’s shares, totaling 55,724,838 shares. The tender offer runs from the 10th of this month to the 22nd of the following month.
If tendered shares fall short of the 18,013,879 minimum, Archimed refrains from purchases. If exceeded, Archimed buys all, eliminating allocation risk.
With over 70% substantial volume and a large portion held by local retail investors, surpassing the 26% threshold seems feasible.

Genex Power (GNX AU): Scheme Vote on 16 July as Skip Remains Silent

The Genex Power Ltd (GNX AU) IE considers Electric Power Development C (9513 JP)’s scheme (A$0.275) and off-market takeover offer (A$0.270) fair and reasonable.
The offer is conditional on FIRB and shareholder approval. Skip Capital, which can block the scheme, has not declared its intention regarding J-Power’s offer or launched a competing offer.
Skip’s silence suggests a greater probability of accepting the scheme offer. If the scheme fails, the takeover offer, due to its structure and price, caps the downside.

Quiddity TDIV/50/100 Jun 24 Rebal: 15/18 Hits; Updated Flow Expectations and Trade Ideas

By Janaghan Jeyakumar, CFA

The index changes for the T50/100 index family and the TDIV index were confirmed after market close on Friday 7th June 2024.
While the T50 and T100 index changes were perfectly in line with our expectations there were some surprises among the TDIV index changes.
In this insight, we take a look at Quiddity’s final flow expectations for the June 2024 index rebal event and potential trade ideas based on the flow dynamics.

A/H Premium Tracker (To 7 Jun 2024): Hs Outperform Their As. Great Wall (2333) Suffers, Utes Win

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’s renewed buy streak continued this past week; every day net positive. Strong net buying. NORTHBOUND saw small net buying on renewables, utilities, and semiconductors.
AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng/other HK indices fell and A-shares did not do much. Liquid Hs underperformed As by 2%.

Quiddity ASX Jun 24 Rebal: Regular Index Changes + One Potential Intra-Review Replacement

By Janaghan Jeyakumar, CFA

The ASX 20/50/100 index changes for the June 2024 index rebal event was announced after market close on Friday 7th June 2024.
In this insight, we take a look at our flow expectations for the ADDs/DELs and the trends in short interest buildup for these names.
Separately, the completion of the CSR Ltd (CSR AU) M&A deal could trigger an intra-review deletion in June 2024 and the potential replacement name could have very high-impact.

Asia Cement China (743.HK) Privatization- There May Be “Surprises” Despite Disappointing Offer Price

By Xinyao (Criss) Wang

Since the China/Taiwan situation looks increasingly tense, Xu Xudong/Far Eastern Group may be eager to privatize ACC considering geopolitical conflicts and political risks. Its business is subject to strict regulation.
HK$3.22 Offer Price is disappointing, but the privatization isn’t completely impossible (The headcount does not apply now). A certain number of investors are still willing to accept the Offer Price.
For arbitrageurs, the return looks not bad. However, considering the high uncertainties/failure risks, we still advise investors to be cautious. HK$2.5/share is a price point worth participating in.

NIFTY200 Momentum30 Index Rebalance: 13 Changes, 42% Turnover, Momentum Recovers After Selloff

There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.

HK Connect SOUTHBOUND Flows (To 7 June 2024); China Mobile, Energy, Financials All Bought Bigly

SOUTHBOUND was again a net buyer, for HK$27.2bn this week, on small two-way volumes. China Mobile (941 HK) dominated as it reached dividend ex-date. Other high-div SOEs also saw buying.
It is not clear how much of this is H/A discounts, expected dividend tax removal, and the KPIs for SOE CEOs to raise prices and payout ratios, but it continues.
Valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

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Jun 09

Daily Brief Event-Driven: Potential Merger Dynamics Involving SK Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix
CPMC Holdings (906 HK): ORG’s Competing Offer Kicks off an Auction
(Mostly) Asia-Pac M&A: CPMC, Nagatanien, APM Services, Altium, Austal, Shinko Elect, Hollysys
Weekly Deals Digest (09 Jun) – Teijin, Nagatanien, CF Logistics, Asia Cement, CPMC, MMG, Shift Up
Game On As ORG Lobs Competing Offer For CPMC (906 HK)
Last Week in Event SPACE: Jardine Cycle & Carriage, “Name & Shame”, Asia Cement, Northern Minerals

Potential Merger Dynamics Involving SK Inc, SK Square, & SK Hynix

Regardless of the divorce proceedings, SK still urgently needs SK Inc’s stock price to rise for other reasons. That reason is to position SK Hynix directly under SK Inc.
SK Inc boosts stake in SK Square with SK Telecom shares, followed by a public tender offer to exchange SK Square shares for new SK Inc shares.
SK Inc’s involvement in the divorce lawsuit makes it a focus for traders seeking relative outperformance among the SK companies involved in this situation.

CPMC Holdings (906 HK): ORG’s Competing Offer Kicks off an Auction

CPMC Holdings (906 HK) disclosed a competing pre-conditional voluntary offer from ORG Technology Co., Ltd. A (002701 CH) at HK$7.21, a 4.9% premium to Changping Industrial’s HK$6.87 offer.
Like the Changping Industrial offer, ORG’s offer is pre-conditional on regulatory approvals and has a 50% minimum acceptance condition. Changping Industrial has secured all regulatory approvals except SAMR.
ORG’s skinny premium and precarious irrevocable from Mr Zhang Wei suggests Changping Industrial’s next move is to secure Mr Wei’s irrevocable with a revised higher offer.

(Mostly) Asia-Pac M&A: CPMC, Nagatanien, APM Services, Altium, Austal, Shinko Elect, Hollysys

I tally 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed on Smartkarma this week: Asia Cement China (743 HK)‘s rubbish Scheme; and the low-balled MBO for Nagatanien Holdings (2899 JP).
Key updates took place on: CPMC Holdings (906 HK), APM Human Services (APM AU), Altium (ALU AU), Austal (ASB AU),Shinko Electric Industries (6967 JP), and Hollysys Automation Technologies (HOLI US).

Weekly Deals Digest (09 Jun) – Teijin, Nagatanien, CF Logistics, Asia Cement, CPMC, MMG, Shift Up

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: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) seeks to raise up to US$320 million.
Event-Driven developments: Asia Cement China (743 HK), CPMC Holdings (906 HK), Chilled & Frozen Logistics Holdings (9099 JP), Nagatanien Holdings (2899 JP), Teijin Ltd (3401 JP), Altium Ltd (ALU AU).

Game On As ORG Lobs Competing Offer For CPMC (906 HK)

After six months had elapsed, and CPMC Holdings (906 HK)‘s Offeror just needing SAMR/SAFE clearance before launching a firm bid, a competing Offer from ORG Technology (002701 CH) appeared unlikely.
Yet in a surprise move, ORG has made a pre-conditional (NDRC, SAFE, MoC, SAMR, and shareholder approval) Offer at HK$7.21/share, a 4.9% premium to the ongoing SASAC/NCSSF Offer.
ORG’s pre-con Offer also has a 50% acceptance condition. ORG and concert parties have 24.43%. And Zhang Wei (22.01%) has given has an irrevocable. Directors have 0.87%. Intriguing situation.

Last Week in Event SPACE: Jardine Cycle & Carriage, “Name & Shame”, Asia Cement, Northern Minerals