Event-Driven

HD Hyundai Marine Solution (443060 KS) is looking to raise KRW 742bn (US$540m) in its IPO, valuing the company at KRW 3,707bn (US$2.69bn). Listing is expected to be in early-May.
Competition for the shares has been fierce with institutional investors indicating demand for 201x the number of shares on offer at prices higher than the top end of the range.
Barring a doubling of the stock price, the earliest that the stock will be added to major indices is December 2024. So, no passive buying in the short-term.

Merger Arb Mondays (29 Apr) – Azure, Silver Lake, Roland DG, CF Logistics, China TCM, 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: Qantm Intellectual Property (QIP AU), Azure Minerals (AZS AU), Hollysys Automation Technologies (HOLI US), Probiotec Ltd (PBP AU), Southern Cross Media (SXL AU), China TCM.
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Newmark Property REIT (NPR AU).

India: Potential Free Float Changes & Passive Flows in May

Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-September and/or end-December.
The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
Depending on the date that the shareholding was published, there could be 14 stocks with passive inflows from global trackers while 7 could see passive outflows in May.

MBK’s ConnectWave Tender Offer: Details & Trading Angles

MBK Partners will launch a tender offer for ConnectWave from today to May 24th. The target volume is 16.6M shares (40% of SO) at ₩18,000 per share, a 15.6% premium.
MBK commits to acquiring all tendered shares, regardless of subscription rates, in order to expedite the delisting process. So, there is no cancellation or allocation risk.
ConnectWave’s retail investor base, with high entry prices, may hinder reaching 70% of the target volume. Absence of risks suggests considering buy positions for potential secondary tender offer.

Connect Wave: Tender Offer of 30% of Shares by MBK Partners

By Douglas Kim

After the market close on 26 April, it was reported that MBK Partners has launched a tender offer of a 29.61% stake of Connectwave (119860 KS).
The tender offer price is 18,000 won, which is 15.6% higher than the closing price (15,570 won) of the company on 26 April.
The tender offer period is from 29 April to 24 May. The amount of the tender offer is about 300 billion won.

SET50 Index Rebalance Preview: Market Consultation & More Changes in June

The SET has run a market consultation on relaxing liquidity thresholds for inclusion of stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) universe.
The consultation is the result of an increase in Average Daily Trading Values and lower turnover ratios, especially for large cap stocks.
Berli Jucker (BJC TB) is now a potential index inclusion in June and that could result in four constituent changes at the next rebalance.

EQD / NSE Volatility Update / 22-Apr-24 to 26-Apr-24

By Sankalp Singh

SEBI extends cross-margining discounts to correlated assets with different maturities – Dispersion trading & vol arb strategies to benefit.
In spite of upcoming tier-1 event risks the vol surface has flattened dramatically. Current IV levels are supportive of a continued “High & Down” vol state.
Curve steepening seen in Nifty50 IVs. Unusual kinked-shaped in BankNifty term structure has normalized – vol curve now has a uniform orientation.

BHP to Consider Sweetened Proposal for Anglo

On 27 April, Reuters reported that BHP is considering making an improved offer for Anglo American after its initial proposal was rejected. Anglo’s shares trade at 0.3% discount to proposal.
BHP is not paying any control premium. Despite its robust portfolio and recent share price appreciation, Anglo trades at a 18% discount compared to the sum of its parts (3018p).
Interloper risk is high. Antitrust risk seems low. As a defence, Anglo may conduct some portfolio simplification to unlock value. I would be long at current prices.

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Apr 28

Daily Brief Event-Driven: Roland DG (6789 JP): Taiyo Bumps as Brother (6448 JP) Now Faces a Dilemma and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Roland DG (6789 JP): Taiyo Bumps as Brother (6448 JP) Now Faces a Dilemma
HK Connect SOUTHBOUND Flows (To 26 Apr 2024); Strong Net Buying on Banks/Energy Telco SOEs. Again.
(Mostly) Asia-Pac M&A: Mimasu Semi, Tietto Minerals, CSR, CPMC, Roland DG, IClick Interactive
A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A
Mainland Connect NORTHBOUND Flows (To 26 Apr 2024): Big NB Buy Friday
EQD | Nikkei’s Downtrend Could Continue in May (But the Bottom Is Near)
Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American
CSR (CSR AU): 13th June Shareholder Vote

Roland DG (6789 JP): Taiyo Bumps as Brother (6448 JP) Now Faces a Dilemma

Roland DG Corp (6789 JP) has re-recommended Taiyo’s revised offer of JPY5,370, which is 6.7% higher than its previous JPY5,035 offer and 3.3% higher than Brother Industries (6448 JP)’s JPY5,200 offer.
The Board articulates a compelling case on Brother’s offer dis-synergies, which will help swing some shareholder opinion towards Taiyo (irrespective of the price).
Brother could bump, but it would not address the issue of satisfying the condition precedent (non-completion of Taiyo offer) and securing the Board’s recommendation.

HK Connect SOUTHBOUND Flows (To 26 Apr 2024); Strong Net Buying on Banks/Energy Telco SOEs. Again.

A shares were up small on the week, largely due to a big rally on Friday (led by record Northbound buying). HK Stocks had a HUGE week.
Net SOUTHBOUND buying was +HK10.3bn. Net buys every day and now 20 days straight, but buying was foreign-led.
Little market news. More geopolitical news. Big SOE bank H-shares see relentless buying. HSTECH +13.4%, HSI +8.8%, HSCEI +9.1%.

(Mostly) Asia-Pac M&A: Mimasu Semi, Tietto Minerals, CSR, CPMC, Roland DG, IClick Interactive

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.
One new deals was discussed on Smartkarma this week, being Mimasu Semiconductor Industry (8155 JP)‘s Tender Offer. There’s also BHP Group (BHP AU)‘s unsolicited Offer for Anglo American (NGLOY US).
Key updates took place on: Tietto Minerals Ltd (TIE AU), CSR Ltd (CSR AU), CPMC Holdings (906 HK), Roland DG Corp (6789 JP), and iClick Interactive Asia Group (ICLK US).

A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A

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 consecutive buying streak ended on Monday 25-March, then started again. 20 days straight net buying. NORTHBOUND saw big inflows Friday. A record day I believe.
HK stocks bounced VERY hard. Seemed like big allocation trade. HSCEI +8.7% vs CSI300 +1.2%. In H/A Pairs, liquid pairs saw Hs outperform their A by 4+% on average.

Mainland Connect NORTHBOUND Flows (To 26 Apr 2024): Big NB Buy Friday

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 BUY RMB 25+bn of A-shares on low gross volume but a huge Friday playing catchup to a massive up-week in HK shares.
H outperformed As and it feels like the massive day Friday was just to play reversion on underperformance vs HK shares.

EQD | Nikkei’s Downtrend Could Continue in May (But the Bottom Is Near)

By Nico Rosti

The Nikkei 225 (NKY INDEX) is closing the month of April in negative territory, first month down after 3 months up.
Our seasonal model indicates that May could also close down, but the index should find strong support in the 37770-36750 price area.
The month of May is a coin flip: the index could close up or down, caution is advised.

Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

The CSRC has announced five capital market cooperation measures for the Hong Kong Southbound Connect programs including RMB dual counters and REITs.
Jardine Cycle & Carriage (JCNC SP)‘s current implied stub value and simple ratio are both highly elevated.
A simple Keisei Electric Railway Co (9009 JP)model says “this doesn’t present me with enough upside to warrant it unless I am also really bullish Oriental Land (4661 JP).”

CSR (CSR AU): 13th June Shareholder Vote

After pitching an indicative Offer to CSR (CSR AU) shareholders of A$9/share by way of a Scheme on the 21st Feb, Saint-Gobain (SGO FP) firmed terms on the 26th Feb.
$9.00 is a knockout Offer. The business combination has been unanimously approved by the boards of both companies. Conditions include CSR’s shareholder approval and FIRB signing off.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 13th June. Expected implementation on the 9 July. IE says fair & reasonable.

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Apr 27

Daily Brief Event-Driven: BHP/Anglo American: A Decarbonising Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

BHP/Anglo American: A Decarbonising Solution
Korea Value-Up Guidelines Release Date Is Set for May 2nd
Taiyo Pacific Overbids Brother for Roland DG (6789)
Quiddity Leaderboard ES50 Sep 24: Engie Gets Closer to a US$1.1bn Index Inflow
I Squared & TDR Win the Long Battle for Applus at the Final Auction

BHP/Anglo American: A Decarbonising Solution

BHP (BHP AU)‘s all-scrip unsolicited Offer for Anglo American (AAL LN), zeroes in on AAL’s copper assets as demand for the metal increases for use in EVs and renewable power.
The proposal has been labelled highly opportunistic by some shareholders and South African politicians. And that the value of AAL’s Chilian/Peruvian copper mines are obscured by its sprawling business interests.
The Offer remains conditional and non-binding. A transaction hinges off AAL spinning off its South African iron ore and platinum businesses. Expect AAL to reject terms, but remain engaged.

Korea Value-Up Guidelines Release Date Is Set for May 2nd

Chosun reports Korean financial authorities advance Value-up plan guidelines to May 2nd, citing momentum decline post-election. Chosun’s credibility enhances report validity.
Companies will commence Value-up-related disclosures in alignment with the guidelines within May. A dedicated Value-up website is set to launch in May.
The May 2nd guideline release date is crucial for Value-up momentum trading. Anticipate heightened volatility in Value-up stocks approaching this date.

Taiyo Pacific Overbids Brother for Roland DG (6789)

Originally, Brother Industries (6448 JP) wanted to buy Roland DG Corp (6789 JP). Roland invited others to bid, didn’t tell Brother, then said Taiyo Pacific’s ¥5,035 bid won.
That was low. Weeks later, Brother lobbed a ¥5,200 overbid. They are going through the approvals process but it isn’t clear Brother is negotiating.
Taiyo has extended and extended and shown up in interviews. Now it has overbid at ¥5,370.

Quiddity Leaderboard ES50 Sep 24: Engie Gets Closer to a US$1.1bn Index Inflow

The ES50 Index is one of the most highly-tracked and followed indices in Europe and the annual index review takes place in September every year.
This annual index rebal event usually results in some of the most significant index flow events in Europe every year, typically amounting to billions of dollars of flows.
In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2024.

I Squared & TDR Win the Long Battle for Applus at the Final Auction

I Squared and TDR presented a final offer price of €12.78/share in cash, marking a 16.2% increase over their prior bid and surpassing Apollo Global Management’s final offer of €12.51/share.
The winning offer values the share capital at €1,649 million (7.3x EV/Fwd NTM EBITDA, 13.2x Fwd P/E), 34% above Apollo’s initial offer.
Gross spread is 0.2%. Settlement could happen around 27 May, with 3.7% estimated annual return.

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Apr 26

Daily Brief Event-Driven: Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?
Japan – Increase in Shorts & Potential Passive Selling in May
Today, Korean Regulators Unveiled an Electronic System Aimed at Blocking Naked Short-Selling
An Overlooked Passive Flow Potential for the Korea Index: Foreign Listing Materiality
Quiddity Leaderboard SE600 Mar 24: 7 Changes Likely; Expected ADDs Could Outperform Expected DELs

Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing

Last October, activist Palliser Capital launched a campaign (presentation) on well-known “stub trade” Keisei Electric Railway Co (9009 JP) with a stake of about 1.6%.
The proposal? Monetise a decent stake in Oriental Land (4661 JP), repurchase shares, and invest for growth. Keisei responded 6-8 weeks ago with a buyback and 1% OLC stake sale.
I thought that was time to bail. That was it. But now, Palliser has re-engaged. Today a press release (Japanese/English) and a Letter to the Board.

18yrs Later, Shin-Etsu Chem Takes Out Sub Mimasu Semi (8155) – Cheap But Whatchagonnado?

Shin Etsu Chemical (4063 JP), owner of a 44% stake in Mimasu Semiconductor Industry (8155 JP), has announced a Tender Offer to take out minorities in Mimasu.
This is not surprising. They bought in 19 years ago, raised to 40+% 18yrs ago, then waited. Finally, we have a deal. But it’s too cheap.
Shin-Etsu starts with ~45%, and crossholders and the chairman get it to 52%. Then they need a bit to get them to 67% but it should be straightforward.

Japan – Increase in Shorts & Potential Passive Selling in May

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios in May.
The deletion from passive portfolios will lead to a liquidity event at the end of May where passive trackers will need to sell multiple days of ADV.
Shorts have been built up on all the stocks over the last few months and the extent of the positioning varies across stocks.

Today, Korean Regulators Unveiled an Electronic System Aimed at Blocking Naked Short-Selling

Today’s reveal includes two main parts: first, setting up internal balance management for investors; second, building the detection system to block naked short-selling.
FSC and FSS haven’t provided a set date for system completion but suggest it may start late this year or early next year. Uncertainty remains on overseas investor participation.
A decision on short selling is due in June, but no confirmation was given today. However, the local market anticipates short selling resuming before this system is fully operational.

An Overlooked Passive Flow Potential for the Korea Index: Foreign Listing Materiality

With the rise in Coupang’s market cap, it’s imperative to evaluate if the Korea Index can attain eligibility to include foreign-listed companies.
Coupang’s 45% YTD surge nears a $41B market cap, with a 65% free-float rate equating to $27B. Yet, to meet Korea Index eligibility, an additional $23B is needed.
Aside from Coupang, more companies are preparing for overseas listings. Also, potential stock price increases for Coupang should be considered. The combined market cap approaches the US$50B threshold.

Quiddity Leaderboard SE600 Mar 24: 7 Changes Likely; Expected ADDs Could Outperform Expected DELs

The SE600 index is one of the most widely followed benchmark indices in Europe. This index is rebalanced on a quarterly basis.
In this insight, we take a look at the potential index changes that could take place between now and the end of the June 2024 index rebal event.
Currently, I see 7 ADDs and 7 DELs for the SE600 index. There are more names just outside the border requiring small price changes to get involved in index changes.

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Apr 25

Daily Brief Event-Driven: HK REITs Re-Rate On Southbound Inclusion and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

HK REITs Re-Rate On Southbound Inclusion
IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
Quiddity Leaderboard DAX/MDAX Mar 24: Traton Could Outperform the DAX Index
HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June
Quiddity Leaderboard F100/250 Jun 24: Potential ADDs Could Outperform the Index
International Paper/DS Smith: Spread

HK REITs Re-Rate On Southbound Inclusion

In RMB Dual Counter Trading Is Coming – This Changes AH Relationships, Travis Lundy discussed the forthcoming inclusion of RMB dual counters in the Hong Kong Southbound Connect programs.
This is but one of the five capital market cooperation measures announced by the CSRC last Friday.
The other four measures include ETFs, improving mutual recognition of funds, increasing China IPOs in Hong Kong, and the inclusion of REITs. This insight discusses the latter.

IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks

There are 2 constituent changes for the LQ45 Index and 6 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 30 April.
The largest passive inflows are expected in Amman Mineral Internasional (AMMN IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ) and Merdeka Copper Gold Tbk PT (MDKA IJ).
With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

Quiddity Leaderboard DAX/MDAX Mar 24: Traton Could Outperform the DAX Index

In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the June 2024 index rebal event.
I currently see no changes for the DAX index but there could be one change for the MDAX index.
M&A candidate MorphoSys AG (MOR GR) could be deleted in the run up to the June 2024 review.

HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June

There were only 12 new listings on the Main Board of the HKEX (388 HK) in the first quarter of the year. More than half the listings were in March.
Of those stocks, we only see Robosense Technology (2498 HK) having a chance of being added to the HSCI in June and then into Southbound Stock Connect.
There is a big lock-up expiry for Robosense Technology (2498 HK) in July and that should keep the stock under pressure.

Quiddity Leaderboard F100/250 Jun 24: Potential ADDs Could Outperform the Index

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.
I see two regular changes for the F100 index during the June 2024 review. There are more names very close to triggering F100 index changes.
I see eight other changes for F250 in the run up to the June 2024 review including three intra-review changes. One of those intra-review changes will be confirmed later today.

International Paper/DS Smith: Spread

Following the withdrawal of Mondi PLC (MNDI LN) from the contest to acquire DS Smith PLC (SMDS LN), the gross spread to the deal turned negative (from >10%).
At the median 7.07x EV/Fwd NTM EBITDA (within the range of former transactions), the implied equity value of DS Smith would be 388.4p. (vs. an IBES consensus TP of 395p).
IP is giving away most of the synergies. Spread is 1.91%/2.86% (gross, annualized assuming settlement by Y/E). I would wait for the spread to widen, before setting it up.

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Apr 24

Daily Brief Event-Driven: Find Out When HMM’s Upcoming Early Redemption Requests Might Drop and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Find Out When HMM’s Upcoming Early Redemption Requests Might Drop
Tiantan (600161CH) To Acquire Weiguang (002880CH)- New King Rises in China’s Blood Products Industry

Find Out When HMM’s Upcoming Early Redemption Requests Might Drop

Despite this pattern persisting for years, there has still been a significant price impact each time it surfaces. Therefore, we should pay attention to the upcoming CB conversion schedule.
A consistent observation is that the price impact is most significant at the announcement of early redemption requests.
The anticipated announcement dates for the forthcoming early redemption requests are: around May 20th (195th conversion), around September 20th (196th conversion), and around March 20th of next year (197th conversion).

Tiantan (600161CH) To Acquire Weiguang (002880CH)- New King Rises in China’s Blood Products Industry

By Xinyao (Criss) Wang

Guangming District State-owned Assets Supervision and Administration Bureau reached a cooperation agreement with China National Biotec to establish a joint venture, which will become the new controlling shareholder of Weiguang.
Since Tiantan is already Sinopharm’s subsidiary, there will be horizontal competition issue in the field of blood product business between Tiantan and Weiguang, mainly due to significant business overlap.
Some spin-offs and integrations are expected between Tiantan and Weiguang. As the reform of SOE enters a new stage, the two companies could end up very different.

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Apr 23

Daily Brief Event-Driven: RMB Dual Counter Trading Is Coming – This Changes AH Relationships and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

RMB Dual Counter Trading Is Coming – This Changes AH Relationships
Jardine Cycle & Carriage Is A Short
Roland DG (6789 JP): Taiyo Mulling Three Options or Is It?
Investor Activism Update: Seven & I Sets the Path in Investor Activism Battle
Krafton: Block Deal Sale of About 270 Billion Won
HK Connect SOUTHBOUND Flows (To 19 Apr 2024); Strong Net Buying on Energy/Finance/Telco SOEs. Again.
Quiddity Leaderboard TDIV Jun 24: LONGs up 6% Vs SHORTs in a Month; Time to Update
Mr. Choi Goes to Washington
A/H Premium Tracker (To 19 Apr 2024): Liquid AH Premia Even Higher; Lots Of “Carry” In The Market
Mainland Connect NORTHBOUND Flows (To 19 Apr 2024): NB Net Seller; Semi-Tech Buys, Renewables Sold

RMB Dual Counter Trading Is Coming – This Changes AH Relationships

A week after the State Council issued “Several Opinions” (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the “To Do” list “as soon as possible and smoothly.” Watch impact on H/A Pairs.

Jardine Cycle & Carriage Is A Short

Jardine Cycle & Carriage (JCNC SP)‘s current implied stub value is around its highest-ever level.
The simple ratio of JCNC/Astra International (ASII IJ) is at its highest level outside the 2008 GFC.
A weak Indonesian rupiah is likely a factor. Still, JCNC is trading rich to its NAV. A takeover from parent Jardine Matheson Holdings (JM SP) is idealistic.

Roland DG (6789 JP): Taiyo Mulling Three Options or Is It?

On 19 April, Taiyo Co-CEO Brian Heywood told Bloomberg and Reuters they were considering three options to Brother Industries (6448 JP)’s tender for Roland DG Corp (6789 JP).
Taiyo’s options are bumping its offer, walking away or tendering into the Brother’s offer if it bumps and alleviates dis-synergies concerns.
All three options are likely a ruse. Taiyo’s primary play is to frustrate and pressure Brother to withdraw its bid if it cannot get the Board’s recommendation.

Investor Activism Update: Seven & I Sets the Path in Investor Activism Battle

By Oshadhi Kumarasiri

Value Act’s recent statement might suggest that they have prevailed and Seven & I Holdings (3382 JP) has yielded to their demands. However, the reality might be less straightforward.
Value Act sought new market expansion, but Seven & I is focused on reinforcing its presence in existing, well-established markets.
Given Value Act’s impatience, their acceptance of Seven & I’s plan for a 2026 Super Stores IPO, contingent on a business transformation, is unexpected.

Krafton: Block Deal Sale of About 270 Billion Won

By Douglas Kim

After the market close on 22 April, it was reported that SK Square plans to sell 2.2% stake in Krafton in a block deal sale worth about 270 billion won.
The estimated block deal sales price range is from 243,000 won to 251,000 won, representing a 3.1% to 6.2% discount to the closing price of 259,000 won on 22 April.
We would take the deal. The company’s valuations remain attractive and it has been successful in expanding its sales and profits.

HK Connect SOUTHBOUND Flows (To 19 Apr 2024); Strong Net Buying on Energy/Finance/Telco SOEs. Again.

A shares were up on the week, while Hs were down. BIG divergence among liquid names.
Net SOUTHBOUND buying was +HK32.1bn. SOUTHBOUND ended its consecutive post-CNY daily net buy streak on 25 March, then started a new one. No net sell days since.
Little market news. More geopolitical news. SOE bank H-shares are seeing relentless net and gross buying, very very little selling.

Quiddity Leaderboard TDIV Jun 24: LONGs up 6% Vs SHORTs in a Month; Time to Update

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.
Since my last insight, my index change expectations and flow expectations have changed significantly.
My latest estimate for one-way flow in June 2024 is US$1.06bn (down from US$1.22bn a month ago).

Mr. Choi Goes to Washington

By Douglas Kim

The Deputy Prime Minister Choi Sang Mok reaffirmed the Corporate Value Up program, pushing up the major value driven/low PBR stocks in Korea today.
Deputy Prime Minister Choi emphasized that as part of Corporate Value Up program, corporate tax benefits to companies that have made efforts to strengthen shareholder return policy will be provided.
The Korean government also plans to revise the law to separate taxation on the dividend income of shareholders of companies that expand dividends.

A/H Premium Tracker (To 19 Apr 2024): Liquid AH Premia Even Higher; Lots Of “Carry” In The Market

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 consecutive buying streak ended on Monday 25-March, then started again. NORTHBOUND has been selling recently (this week and last buying semi tech, selling renewables)
Hs fell sharply vs As. AH Premia very wide. Alpha on portfolio vs straight H vs A but a bad week as liquid Hs underperformed liquid As by 2.5+%.

Mainland Connect NORTHBOUND Flows (To 19 Apr 2024): NB Net Seller; Semi-Tech Buys, Renewables Sold

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 6.7bn of A-shares on decent volume. A-shares out-performed H-shares quite dramatically, taking back H-share gains from the week before, which reversed prior weeks.
This week saw net buying of semiconductor/chip names, and net selling of the EV/Solar/Battery space and buying of the Ping Ans, but most notable was liquid A vs H performance.

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Apr 22

Daily Brief Event-Driven: Significant Developments Emerged Today for Korea’s Value-Up and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Significant Developments Emerged Today for Korea’s Value-Up
Merger Arb Mondays (22 Apr) – Shinko, Inageya, C&F Logistics, Hollysys, Azure, Qantm IP, Tietto
EQD / NSE Volatility Update / 15-Apr-24 to 19-Apr-24
Nippon Steel/United States Steel Corp

Significant Developments Emerged Today for Korea’s Value-Up

Deputy PM Choi Sang-mok commits to aggressively pursue separate taxation of dividend income, marking a shift towards concrete action for value-up policies.
Ever since the introduction of the Value-up policy earlier this year, the primary incentive championed by the local capital market has been the separate taxation of dividend income.
Hence, the government’s official commitment to this marks a crucial step in reshaping the Value-up momentum.

Merger Arb Mondays (22 Apr) – Shinko, Inageya, C&F Logistics, Hollysys, Azure, Qantm IP, Tietto

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: Qantm Intellectual Property (QIP AU), Southern Cross Media (SXL AU), Azure Minerals (AZS AU), QV Equities Ltd (QVE AU), Hollysys Automation Technologies (HOLI US), Shinko Electric.
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Newmark Property REIT (NPR AU), Lawson.

EQD / NSE Volatility Update / 15-Apr-24 to 19-Apr-24

By Sankalp Singh

Unprecedented levels of FII option-buying & increasing geo-political risk causing IVs to re-price higher.
Skew/ Smile characteristics of the Vol Surface reflect increased risk aversion but not it panic mode – yet.
BankNifty IVs exhibiting unusual “kink-in-the-curve”. Enter barbell structures to position for reversion in curve shape.

Nippon Steel/United States Steel Corp

On 18 April, a White House official said that any review of the deal between Nippon Steel Corporation (5401 JP) and United States Steel (X US) by CFIUS will continue as scheduled.
X shares trade at ~5.2x on NTM IBES-consensus EBITDA given priced-in deal risk vs. implied 7x at the time of the winning NSC’s bid, and look attractive relative to comparables.
There remains a possibility that Nippon could finalize the takeover after the U.S. presidential election, presenting potential upside.

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Apr 21

Daily Brief Event-Driven: (Mostly) Asia-Pac M&A: Lynas and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

(Mostly) Asia-Pac M&A: Lynas, Tietto Minerals, JSR, Shinko Electric, TDCX
Weekly Deals Digest (21 Apr) – Hollysys, Shinko, Inageya, Hang Lung, Kokusai, HD Hyundai Marine
Last Week in Event SPACE: Pasona/Benefit One, Hang Lung Properties, Hollysys, Azure Minerals

(Mostly) Asia-Pac M&A: Lynas, Tietto Minerals, JSR, Shinko Electric, TDCX

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.
No new deals were discussed on Smartkarma this week; although a Lynas Corp Ltd (LYC AU) / MP Materials Corp (MP US)tie-in (again) rumoured.
Key updates took place on: Azure Minerals (AZS AU), Tietto Minerals (TIE AU), JSR Corp (4185 JP), Shinko Electric (6967 JP), TDCX (TDCX US), and Hollysys Automation Technologies (HOLI US).

Weekly Deals Digest (21 Apr) – Hollysys, Shinko, Inageya, Hang Lung, Kokusai, HD Hyundai Marine

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: Kokusai Electric (6525 JP) and J&T Global Express (1519 HK) lock-ups. HD Hyundai Marine Solution (443060 KS), ZEEKR (ZK US) and Sichuan Baicha Baidao Industrial (2555 HK) IPOs.
Event-Driven developments: Hollysys Automation Technologies (HOLI US), Shinko Electric Industries (6967 JP), Inageya Co Ltd (8182 JP), Hang Lung Properties (101 HK), Tietto Minerals Ltd (TIE AU).

Last Week in Event SPACE: Pasona/Benefit One, Hang Lung Properties, Hollysys, Azure Minerals

Pasona (2168 JP)will pay out 10-20% of the extraordinary gain from the Benefit One (2412 JP) sale. It will take its sweet time doing so. For no apparent reason.
Hang Lung Properties (101 HK)‘s first-ever scrip dividend provides the means for the Chan Family to indirectly chip away at minorities.
Hollysys Automation Technologies (HOLI US) accountant resignation announcement is a nothing burger. An update on PRC regulatory approvals would be welcome about now though.

💡 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

Apr 20

Daily Brief Event-Driven: Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible
Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely
EQD | S&P500 Futures (ES) Deeply Oversold WEEKLY, Reversal (Probably) Imminent

Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible

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/DELs.

Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely