Event-Driven

KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.

Alteogen: Block Deal Sale of About 3% of Shares

On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale.
The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won.
This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches

Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share.
The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range.
Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms.

Probiotec (PBP AU): Scheme Vote on 29 May as Doubts on Pyridam’s Funding Linger

The Probiotec Ltd (PBP AU) IE considers Pyridam Farma (PYFA IJ)’s A$3.00 offer fair and reasonable as it is within its A$2.79-A$3.28 per share valuation range.
The scheme remains conditional on shareholders’ (Probiotec and Pyridam), FIRB, and OJK approvals. Probiotec can also pay a permitted dividend of up to A$0.04 per share.
The gross spread of 4.9% (6.3% including dividends) reflects doubts about Pyridam’s funding credibility, as Pyridam’s market cap is 16% of Probiotec’s implied by the offer.

Probiotec (PBP AU): Trading Wide Ahead Of 29th May Shareholder Vote

On the 22 December 2023, drugs maker/packager group Probiotec Ltd (PBP AU) entered into a Scheme with Indonesia’s Pyridam Farma (PYFA IJ).
Pyridam is offering Probiotec shareholders A$3.00/share (in cash, or a 19% premium to the undisturbed price). An interim dividend of A$0.035/share was also added (now gone ex).
The Scheme Booklet is now out. The Scheme Meeting will be held on the 29th May. The IE says terms are fair. I agree. Trading wide. Gross spread is 4.9%.

Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity

Lotte Tour Development announced that it will conduct a major asset revaluation which could positively impact its share price.
The company’s assets will increase to 2.39 trillion won and equity will increase to 569.3 billion won (up more than 8x) at end of 1Q 2024 due to asset revaluation.
As a result of the asset revaluation, the company’s balance sheet will improve significantly and this likely result in many investors taking another look at the company for potential investments.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 27

Daily Brief Event-Driven: Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment
CIMC Vehicles (1839 HK): Vote on 18 April as Uncertainty Lingers on the 90% Acceptance Threshold
Hanmi Science: NPS Sides With Mother (Chairwoman) And Daughter
Hana Tour Service: Major Shareholders Including IMM PE Likely to Sell Their Shares
EQD | S&P/ASX200 Pullback In Sight (This Week or the Next)
Quiddity Leaderboard F100/250 Jun 24: LONG OCN – SHORT FSJ Could Be Interesting
Preference for Deleveraging, Model Update
W-Scope IPO Lock-Up – Part of the Parent’s Stake Will Be Freed, but It’s Been Adding Instead

Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game

In response to Roland DG Corp (6789 JP) request, on 22 March, Taiyo said it was considering a revised offer. However, Taiyo has since remained silent.
Despite discussions with Brother Industries (6448 JP), the Board have not been able to eliminate dis-synergies concerns. The Board has left the decision to accept the Taiyo offer to shareholders.
While the Board is trying to dissuade Brother, Brother will take its offer directly to shareholders if the Taiyo offer fails. Taiyo’s behaviour suggests a reluctance to bump.

Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas

After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares).
The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons.

HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

By Sanghyun Park

HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.

CIMC Vehicles (1839 HK): Vote on 18 April as Uncertainty Lingers on the 90% Acceptance Threshold

CIMC Vehicle Group Co Ltd (1839 HK) has despatched the offer document, and the H Share HK$7.50 offer is open. The H Shareholders class vote is on 18 April.
The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.
The de-rating of peers and ongoing US investigation favours meeting the 90% threshold. However, the dire minority AGM/EGM participation rates suggest that retail apathy may derail the offer.

Hanmi Science: NPS Sides With Mother (Chairwoman) And Daughter

After the market close on 26 March, it was reported that NPS has decided it will side with Chairwoman Young-Sook Song (mother) and her daughter Ju-Hyun Lim.
As a result, Chairwoman Young-Sook Song (mother) and Ju-Hyun Lim have secured 40.86% of the shares, which is slightly higher than the ownership of her two sons (38.4%).
In the near term, this battle for the control of the company could have a positive impact on Hanmi Science’s share price.

Hana Tour Service: Major Shareholders Including IMM PE Likely to Sell Their Shares

Hana Tour Service (039130 KS), the number one travel platform in Korea, announced that IMM PE (controlling shareholder of the company) is planning to sell its controlling stake.
The total stake in the company that is up for sale could rise to 27.78%, including stakes held by Hana Tour founder Park Sang-hwan and co-founder Kwon Hee-seok.
Potential buyers of the controlling stake in Hana Tour include Yanolja, Hotels.com, Booking.com, and Trip.com.

EQD | S&P/ASX200 Pullback In Sight (This Week or the Next)

The S&P/ASX 200 Index has reached a specific resistance level that often precedes a short-term pullback, when this pattern is encountered.
The pullback may happen next week, but this week is also a potential candidate since the 2nd week up is usually pretty weak when this pattern is encountered.
Hold your LONG positions and cover them to hedge. Going SHORT is probably best at the end of the week, on Friday, if the week is closing up.

Quiddity Leaderboard F100/250 Jun 24: LONG OCN – SHORT FSJ Could Be Interesting

In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the June 2024 index rebal event.
There could be up to three intra-review changes for the F250 index during the next two months.
Separately, there could be one change for F100 and two changes for F250 during the regular rebalance in June 2024.

Preference for Deleveraging, Model Update

Net debt improved by around €1 billion to c. €5.8 billion. Prioritising deleveraging and allocations to new venture investments over dividends seem to have a negative impact on valuation.
Porsche SE is viewed as a holding company of Volkswagen Group, which should warrant a discount of 15%-25% on the stock, instead of the massive 44.6% discount to NAV.
Assuming a typical company holding discount of 15-25% range, the current share price indicates Porsche SE is liable for the whole c. €6.5 billion legal claims.

W-Scope IPO Lock-Up – Part of the Parent’s Stake Will Be Freed, but It’s Been Adding Instead

By Sumeet Singh

WCP raised around US$314m via selling a mix of primary and secondary shares in its Korean IPO. The lockup on some of its parent’s stake will expire soon.
WCP designs, manufactures, and sells separators, which are one of the four core materials for secondary Lithium-ion batteries.
In this note, we will talk about the lock-up dynamics and updates since our last note.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 26

Daily Brief Event-Driven: MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners
Samsonite (1910 HK): Dual-Listing Musings
SillaJen Rights Offering Worth 34% of Outstanding Shares
MMA Offshore (MRM AU): A Polarising Offer from Seraya Partners
Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way
Quiddity Leaderboard T50/100 Jun 24: TDIV Deletion Likely for Bizlink and Farglory Land
Boral (BLD AU): Seven Slams “Fundamentally Misleading” IE Report

MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners

Marine and subsea services provider MMA Offshore (MRM AU) has entered into a Scheme with Singapore’s Cyan Renewables.
Cyan, wholly-owned by Seraya Partners, is offering A$2.60/share in cash, a 11% premium to last close and a 31% premium to the 90-day VWAP.
MMA shareholder approval and FIRB are the key conditions. This Offer will tentatively complete mid-late July.

Samsonite (1910 HK): Dual-Listing Musings

It seems like every week, Bloomberg reports a HK-listed company weighing privatisation options. HKBN (1310 HK), ESR (1821 HK), and Samsonite (1910 HK) have all been rumoured of late.
Last Friday, Samsonite announced it was focused on pursuing the listing of its shares on a second exchange.
No preferred exchange was mentioned. Nor whether the goal is to secure a dual primary listing, or a secondary listing. A buyout, for now, appears to be on the backburner.

SillaJen Rights Offering Worth 34% of Outstanding Shares

On 22 March, SillaJen Inc (215600 KS) announced that it will conduct a rights offering worth about 129 billion won for R&D and financials improvement.
The rights offering size is 34.5 million shares, representing 34% of total outstanding shares. The expected rights offering price is 3,750 won which is 26% lower than current price.
We would not subscribe to this rights offering and we remain negative on the company.

MMA Offshore (MRM AU): A Polarising Offer from Seraya Partners

Mma Offshore (MRM AU) has entered a scheme implementation deed with Seraya Partners at A$2.60 per share, a 10.6% premium to the undisturbed price (22 March).
While the offer is attractive compared to historical prices, it is light compared to peer and historical multiples. Some shareholders are supportive, while others are not.
The shares are trading at terms that suggest an expectation for a bump to get the vote up or a competing bidder. The offer has not been declared final.

Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way

In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
I currently see 5 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
The estimate for one-way flow in June 2024 is US$1.22bn.

Quiddity Leaderboard T50/100 Jun 24: TDIV Deletion Likely for Bizlink and Farglory Land

In this insight, we take a look at the names leading the race to become ADDs/DELs for the T50 and T100 Indices for the June 2024 index rebal event.
I do not see any changes for the T50 index but there could be at least four changes for the T100 index based on current data.
If prices fluctuate significantly between now and the base date, there could be more changes.

Boral (BLD AU): Seven Slams “Fundamentally Misleading” IE Report

In its 19th March Target Statement, Boral (BLD AU) rejected Seven Group Holdings (SVW AU) cash/scrip Offer after the independent expert (IE) concluded the Offer was neither fair nor reasonable.
In its updated Bidder’s Statement, Seven slammed the IE report and its conclusions, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
Of interest: the IE’s maximum value for Seven’s Offer is just 1.7% below its fair valuation range. Including a control premium. Yet Seven obtained control of Boral in July 2021.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 25

Daily Brief Event-Driven: HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides
Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM
EQD / NSE Volatility Update / 18-Mar-24 to 22-Mar-24
Mainland Connect NORTHBOUND Flows (To 22 Mar 2024): NB Turns Net Seller, CATL the Big Buy

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

A shares were down small on the week. Larger caps down more. H-shares down more after a hard Friday.
Net SOUTHBOUND buying was +HK35.8bn after $21.4bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week.

Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update

ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides

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 a net buyer every day since the end of Chinese New Year. Still. NORTHBOUND a huge net seller this week, but net buyers in size (RMB +86bn) over 8wks.
For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

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: APM Human Services Internation (APM AU), Chilled & Frozen Logistics Holdings (9099 JP), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU).
Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).

EQD / NSE Volatility Update / 18-Mar-24 to 22-Mar-24

By Sankalp Singh

Indian markets to implement T+0 settlement cycle starting 28-March-2024. Phase-wise transition planned .
Upcoming long weekends causing drastic markdown in IV levels. This combined with “High & Down” vol regime – short gamma/ short vega trades recommended.
Contango shape of Volatility curves are an additional reason to be short gamma & earning theta

Mainland Connect NORTHBOUND Flows (To 22 Mar 2024): NB Turns Net Seller, CATL the Big Buy

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 7.8bn of A-shares on decent volume after buying RMB 32.8bn the week before. This is a small sell vs 6 weeks of buying.
The volume now is still chasing momentum. CATL the big buy, and less passive-feeling than last week.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 24

Daily Brief Event-Driven: EQD | Nikkei 225 Flying High and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….
(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR
Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
Last Week in Event SPACE: Fast Retailing, Giordano, C&F Logistics, Swire, Japan’s Big Dividend
EQD | The Hang Seng Index’s Crucial Fork Is at the End of March

EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….

The Nikkei 225 INDEX has been rallying for >3 months, rising more than 28%. Is it too much, too fast?
Short-Term, if we look at the Market Reversal Matrix’s SHORT WEEKLY model for the index, it looks like it could either reverse within a couple of weeks, or stall.
Look for the ~41000 resistance area to place SHORT or hedge your LONG positions.

(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR

I tally 52 – 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 were discussed this week on Smartkarma: IntelliCentrics Global Holding (6819 HK) disposal/winding-up/special dividend arb; and Chilled & Frozen Logistics Holdings (9099 JP)‘s hostile Offer.
Key updates took place on: Boral Ltd (BLD AU), Orecorp Ltd (ORR AU), Link Administration (LNK AU), and JSR Corp (4185 JP).

Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin

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: Lianlian DigiTech (2104619D CH) launches a US$78 million IPO.
Event-Driven developments: Chilled & Frozen Logistics Holdings (9099 JP), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), IntelliCentrics Global Holding (6819 HK), Sciclone Pharmaceuticals (6600 HK).

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

Last Week in Event SPACE: Fast Retailing, Giordano, C&F Logistics, Swire, Japan’s Big Dividend

The trade of being short Fast Retailing (9983 JP) vs Nikkei 225 or Sector Basket is fundamentally slightly short Nikkei 225 froth.
Giordano (709 HK)‘s SGM will likely pivot off how the shareholders under Halcyon Securities vote. Digging a little deeper as to who these shareholders are, provides some (not-altogether) surprising results.
AZ-Com Maruwa Holdings (9090 JP) intends to launch a Tender Offer on Chilled & Frozen Logistics Holdings (9099 JP) without having contacted C&F first. A HOSTILE deal. Yum!

EQD | The Hang Seng Index’s Crucial Fork Is at the End of March

The Hang Seng Index is at a turning point: investors want to know if the current rally can continue into April.
Our MONTHLY seasonal matrix model indicates that to see the index rallying in April, usually we should have a negative close in March, so this week will be crucial.
Buy between 16281 and 15924 to ride the continuation of the rally in April.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 23

Daily Brief Event-Driven: Link Admin (LNK AU): 24th April Shareholder Vote and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Link Admin (LNK AU): 24th April Shareholder Vote
HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won
Antin/Opdenergy: Squeeze-Out. Who’ll Be Next?
Special Changes in KOSDAQ 150: Deletion (CanariaBio) + Addition (C&C International)

Link Admin (LNK AU): 24th April Shareholder Vote

Back on the 18 December 2023, superannuation service provider Link Administration (LNK AU) entered into a Scheme with Mitsubishi UFJ Financial Group.
MUFJ offered Link shareholders A$2.10/share (in cash) plus a A$0.16/share dividend (25% franked), or a 32.9% premium, all-in.
The Scheme Meeting will now take place on the 24th April, with expected implementation on the 16 May. This looks done – and trading accordingly.

HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won

On 21 March, HLB Life Science announced a rights offering capital raise worth 150 billion won.
The expected rights offering price is 13,630 won (32% lower than current price of 19,930 won) and there are 11 million shares in this rights offering (10% of outstanding shares).
HLB Inc (028300 KS) is the largest controlling shareholder of HLB Life Science (067630 KS) with an 18.7% stake in the company.

Antin/Opdenergy: Squeeze-Out. Who’ll Be Next?

With acceptances from 99.6%, settlement of the offer for Opdenergy Holdings (OPDE SM) will happen on 26 March and squeeze-out on 15 April.
A done deal since outset, at a fair price. The agreement of Anti with the top shareholders left minorities with virtually no capacity to ask for a sweetening.
Readacross: Ecoener, Grenergy, Audax, Solaria could all be the object of takeover bids (either from private equity or minority buyouts), with Grenergy preferred. See comparables table in the insight.

Special Changes in KOSDAQ 150: Deletion (CanariaBio) + Addition (C&C International)

On 22 March, the Korea Exchange announced special changes to KOSDAQ 150. CanariaBio will be excluded from KOSDAQ 150 and it will be replaced by C&C International.
Canaria Bio was designated as “administrative issue” and “investment attention issue” on 22 March 2024, which resulted in KRX deciding to remove this stock from KOSDAQ 150 on 26 March.
We believe that this inclusion of C&C International in KOSDAQ 150 is likely to further positively impact its share price.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Event-Driven: Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Link Admin (LNK AU): Scheme Vote on 24 April
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
IntelliCentrics (6819 HK): Clean, Illiquid “Arb”
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)
Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS
AstraZeneca/Fusion Pharma: Small Contingent Value
GXO/Wincanton: Scheme Document

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Link Admin (LNK AU): Scheme Vote on 24 April

The Link Administration (LNK AU) IE considers Mitsubishi UFJ Financial (MUFG) (8306 JP)’s A$2.26 offer fair and reasonable as it is within its A$2.11-2.70 per share valuation range.
The scheme remains conditional on several regulatory approvals – FIRB, Central Bank of Ireland, Isle of Man Financial Services Authority, India SEBI, and Financial Services Agency of Japan.
Several substantial shareholders have sold or exited, lowering the scheme’s risk. At the last close and for the 16 May payment, the gross/annualised spread was 1.3%/9.7%.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

IntelliCentrics (6819 HK): Clean, Illiquid “Arb”

Back on 9th Feb 2024, healthcare technology platform IntelliCentrics Global Holding (6819 HK) announced the proposed disposal of its key operations to Symplr Software Holdings for at least US$246.5mn.
Upon completion of the sale, IntelliCentrics will declare a special dividend, then seek a listing withdrawal. A key condition to the sale was FTC/DOJ approval. That is now satisfied.
The sale/dividend/delisting requires a Scheme-like vote, with 72.1% of shares out supportive. This is a super-clean pseudo arb. Pushback? Very illiquid.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

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 June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)

KRX announced special changes to KOSDAQ 150. Since STCube (052020 KS) has been designated as “administrative issue,” the Korea Exchange will exclude it from KOSDAQ 150 on 26 March 2024.
PSK Holdings Inc (031980 KS) will be new addition to KOSDAQ 150 index, replacing ST Cube.
PSK Holdings’ core business is providing process technology, source, and hardware for semiconductor packaging equipment.

Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS

After the market close on 21 March, Daishin Securities announced a capital raise worth 230 billion won through RCPS. Daishin Securities currently has a market cap of 901 billion won.
Through this issue of 230 billion won in RCPS, Daishin Securities achieved 3 trillion won in equity capital, which is a condition for applying as a comprehensive financial investment business.
We are Negative on Daishin Securities in the next 6-12 months as the concerns about RCPS capital raise related shares dilution are likely to weigh negatively on its stock price.

AstraZeneca/Fusion Pharma: Small Contingent Value

AstraZeneca PLC (AZN LN) bid to acquire Fusion Pharmaceuticals (FUSN US) for $21/share (~$2 billion; 97% premium) plus a non-transferrable CRV of $3/share, for up to $2.4 billion.
The transaction is expected to close in Q2 2024, which I expect to proceed given AZN’s lack of radiopharma R&D is not likely to raise anti-trust concerns.
I set my PT to $21. CVR offers 13.6% potential gain, 2.4% annualised (likely small considering the time it might take to materialise). The market may be pricing interloper risk.

GXO/Wincanton: Scheme Document

GXO Logistics (GXO US) offers 605p for Wincanton PLC (WIN LN), in a strategic move worth a 104% premium, 8.6x EV/25e EBITDA, 18.2 Fwd P/E (IBES), via scheme with 34% irrevocables.
Regulators are used to monitoring this industry, gradually consolidating on a worldwide scale as a result of cost pressures. GXO has smaller scale in the UK.
I don’t think antitrust issues are going to prevent this transaction. Interloper risk is minimal (DHL, Deutsche Post would have regulatory issues). Spread is 1.00%/7.14% (gross/annualised). Long.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 21

Daily Brief Event-Driven: The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
IntelliCentrics (6819 HK): Delisting and Special Dividend
Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible
Noteworthy Price Movements Associated with 1Q Ex-Dates Trading Setups
WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better
Coforge QIP Early Look – Shares Have Corrected Since the Announcement, Last Deal Did Well

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM

Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.

IntelliCentrics (6819 HK): Delisting and Special Dividend

On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.

Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

Noteworthy Price Movements Associated with 1Q Ex-Dates Trading Setups

By Sanghyun Park

Investors buying on February ex-dates, perhaps due to the Value-up factor, led to a successful strategy for local managers: buying before ex-date and selling at close, yielding positive results.
On March 19th, Kia Corp (000270 KS) diverged from February’s pattern. Notably, FINANCIAL INVESTMENT sold heavily on Kia’s ex-date, a deviation from their quiet February activity.
FINANCIAL INVESTMENT’s trend of liquidating positions held since last quarter, especially for dividends, gains momentum as March ends, possibly overshadowing February’s Value-up factor.

WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better

By Clarence Chu

WT Microelectronics (3036 TT) is looking to raise up to US$444m in its upcoming global depository receipts (GDRs) offering.
WT Microelectronics recently announced its board’s resolution to issue between 68-85m new shares in the form of GDRs, with the use of proceeds geared towards purchasing of raw materials overseas.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Coforge QIP Early Look – Shares Have Corrected Since the Announcement, Last Deal Did Well

By Clarence Chu

Coforge (COFORGE IN) is looking to raise around US$386m in its upcoming qualified institutional placement (QIP).
In an announcement released on Saturday, Coforge had mentioned its board’s approval to raise up to INR32bn via a QIP. Since then, the shares have corrected 9.1%.
The deal would be a large one to digest at 14 days of three month ADV. That being said, the company’s last selldown did well.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 20

Daily Brief Event-Driven: Shinko Electric (6967 JP): Tender State of Play and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shinko Electric (6967 JP): Tender State of Play
Boral (BLD AU) Rejects Seven’s Offer
SciClone Pharma (6600 HK): GL Capital Consortium Reload?
Tencent (700 HK): Gross Margins, Cost Cutting Likely to Be Focus Going into Q4 FY23 Results
SciClone Pharma (6600 HK): Privatisation Déjà Vu All over Again?
Snow Peak: Cheap MBO
Quiddity Leaderboard SET50 Jun 24: Reference Period Begins; Three Changes Likely; Some Trade Ideas
JSE Mar24 Rebalance: Auction Analytics
Orecorp (ORR AU): Well Played Perseus
EQD | KOSPI 200 WEEKLY Bottom May Be Behind the Corner

Shinko Electric (6967 JP): Tender State of Play

Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%.
The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains.
Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.

Boral (BLD AU) Rejects Seven’s Offer

Back on the 19 Feb, Seven Group Holdings (SVW AU) made a cash/scrip Offer for Boral Ltd (BLD AU) shares not owned, with certain tendering thresholds triggering more cash.
Boral has now recommended shareholders to reject the Offer after the independent expert (Grant Samuel) concluded the Offer is neither fair nor reasonable, supporting the view of Boral’s board.
Grant Samuel backed out a price range of $6.50-$7.13/share, versus SGH’s Offer of $5.96-$6.19/share; and up to $6.39/share including the conditional payments. SGH’s terms were best & final.

SciClone Pharma (6600 HK): GL Capital Consortium Reload?

A little over a year ago, shareholders approved Sciclone Pharmaceuticals (6600 HK)‘s buyback, which lifted GL Capital’s holding to 31.63% from 28.09%, enabling creep provisions.
After the share price gained 14% yesterday, SciClone was suspended pursuant to the Code on Takeovers and Mergers before trading commenced this morning. Mmm.
GL Capital, together with CDH Investments, Ascendent Capital Partner, Ocean Falcon Limited, and Boying Investments Limited, took SciClone private in 2017. Time for another privatisation?

Tencent (700 HK): Gross Margins, Cost Cutting Likely to Be Focus Going into Q4 FY23 Results

By Charlotte van Tiddens, CFA

Tencent is due to release FY23 results tomorrow morning after the HK close. The earnings call is scheduled for 14:00 SAST.
The market is expecting 1.8% QoQ revenue growth, 8.6% YoY. Strong QoQ revenue growth of 10% is expected for the advertising segment.
QoQ revenue growth for the gaming sector is expected to decline by 4.9%. Domestic gaming revenue is expected to fall by 7.6%, international gaming revenue expected to increase by 9.6%.

SciClone Pharma (6600 HK): Privatisation Déjà Vu All over Again?

After rising 14% on Monday, Sciclone Pharmaceuticals (6600 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.”
SciClone US was listed on NASDAQ in March 1992 and was privatised in October 2017 by a GL Capital-led consortium. It was relisted on the HKEx on 3 March 2021.
A GL Capital-led consortium will likely once again lead the privatisation. An offer price at or slightly above the IPO price (HK$18.80) would be sufficient to get the vote up.

Snow Peak: Cheap MBO

By Michael Causton

Snow Peak agreement with Bain Capital to take the outdoor brand private next month seems to have been in the works for a couple of years.
Although sales are expected to rebound this year to near record highs, Snow Peak insists the domestic camping boom is over and will look at long-term growth overseas instead.
Even so, the MBO price looks cheap. Snow Peak is likely to see a rebound in domestic sales in FY2024 and its plans for overseas expansion are solid.

Quiddity Leaderboard SET50 Jun 24: Reference Period Begins; Three Changes Likely; Some Trade Ideas

The SET50 index tracks the performance of the top 50 largest and most liquid names listed in the Stock Exchange of Thailand (SET).
In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
The 3-month reference period used for average market cap rankings started on 1st March 2024 and as things stand, there could be three ADDs/DELs in June 2024.

JSE Mar24 Rebalance: Auction Analytics

By Charlotte van Tiddens, CFA

JSE indices were rebalanced in the closing auction on Friday.
Turnover for the day on the JSE was R59.3bn, R44bn traded in the closing auction (74%).
Turnover at the December rebalance was R60bn, where around half traded in the closing auction.

Orecorp (ORR AU): Well Played Perseus

After Perseus (PRU AU) announced it had secured Tanzanian Fair Competition Commission approval, Orecorp (ORR AU) continued to sit on its hands as, technically, Silvercorp (SVM CN) terms were superior.
PRU added 2% overnight bringing its stake to 22% vs SVM’s 21%. SVM said they won’t extend beyond the 22nd March. Something had to give.
This morning, PRU bumped its all-cash Offer to A$0.575/share (from A$0.55/share), with 15.6% of shares out intending to accept. SVM have five business days to counter.

EQD | KOSPI 200 WEEKLY Bottom May Be Behind the Corner

The KOSPI 200 INDEX is falling for the second week in a row, but the pullback is modest so far.
This pullback is probably just another occasion to buy at better prices, however some more pullback may be in store between here and the end of the week.
The support area where we think a LONG trade has good probability of success based on our models is between 356 and 350.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 19

Daily Brief Event-Driven: JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)
Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs
JSR Corporation (4185 JP): JIC Tender Starts and Should Succeed Despite Shin-Etsu’s Re-Rating
Orecorp Should Now Back Perseus’ Offer
Exploring Trading Setups Utilizing NPS’s ESG Fund Flows After July
Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell
Currys Lifts Profit Outlook After Suitors Walk Away
Southern Cross Media (SXL AU): Re-Engages with ARN Media (A1N AU)/Anchorage on Revised Terms

JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)

The Tender Offer is finally here. JIC announced the official launch after the close today.
JIC appears to be taking on the SUNY RF risk as-is. The Tender Offer details vs the original expectations in the late June 2023 document are unchanged.
Once started, unless a US court approves an injunction causing regulatory delay, this is done. But there are path events. And of course there is a double arb here.

Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs

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.
The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELETEs.

JSR Corporation (4185 JP): JIC Tender Starts and Should Succeed Despite Shin-Etsu’s Re-Rating

JSR Corp (4185 JP) notes that the pre-condition for JIC’s tender has been satisfied. The offer price remains unchanged at JPY4,350 per share.
The offer remains attractive despite the material re-rating of peers. The tender should succeed when combined with shareholder fatigue and a lack of vocal opposition.
The tender requires a 66.7% minority acceptance rate. The gross and annualised spread for a 23 April payment is 0.6% and 7.1%, respectively.

Orecorp Should Now Back Perseus’ Offer

Back in August, Silvercorp (SVM CN) bid A$0.15/share and 0.967 scrip for Orecorp (ORR AU); and secured board support after bumping the cash portion to A$0.19/share via an Off-market Offer.
Perseus Mining (PRU AU) countered on the 22 January with a A$0.55/share Offer, which was rejected by Orecorp, ostensibly over concerns Perseus had not secured Tanzanian Fair Competition Commission approval.
That regulatory approval has now been satisfied. The Offers for both Perseus and Silvercorp are conditional on 50.1% acceptance hurdles. I think Perseus’ all-cash Offer is superior.

Exploring Trading Setups Utilizing NPS’s ESG Fund Flows After July

By Sanghyun Park

From July, Korea’s listed firms will disclose value enhancement plans. Korea’s NPS may exclude non-compliant firms, pending official response, though internal review suggests likely implementation.
It’s crucial to know portfolio stocks for proactive positioning. A setup targeting potential exclusion from NPS’s ESG funds due to post-July compliance must be designed.
Managers often use KRX ESG Leaders 150, aligning portfolios with it. Thus, it’s crucial to use this list for post-July compliance monitoring and to adapt setups for NPS’s flow impacts.

Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell

By Sumeet Singh

The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
Tokio Marine Holdings (8766 JP) had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

Currys Lifts Profit Outlook After Suitors Walk Away

Neither Elliot nor JD.com (9618 HK) intend to pursue Currys PLC (CURY LN) at this stage and thus won’t be able to present an offer for the next six months.
Currys has issued an upbeat trading update. My new TP is 78p/share, >16% above Elliot’s sweetened offer, 10.4x 24e P/E vs 7.6x currently, and 9.1x 25e P/E vs 6.6x currently.
My TP implied equity value is 864 million. I believe the Board and top shareholders would be willing to consider offers around 80p.

Southern Cross Media (SXL AU): Re-Engages with ARN Media (A1N AU)/Anchorage on Revised Terms