Event-Driven

The TOPIX October Free Float Weight Review details are out. This is the biggest FFW review of the year. This year, it’s $11.3bn a side.
As discussed in Japan Post Bank (7182) – The October TOPIX FFW Adjustment, JPB is the big buy. $2bn/23d of ADV. There is $2bn to buy of trading cos too.
There are lots of large names to trade in both directions. If you have interests to sell the buys and vice versa, it is good to know the flows.

Korea – Positioning in Stocks That Could Have Global Passive Flows

Posco DX (022100), Kum Yang (001570), SK Telecom (017670), Lotte Energy Materials (020150), Kakao Games (293490), Pan Ocean (028670), BGF retail (282330), Netmarble (251270) have been on investors/traders radars recently.
There could be liquidity events in some of the stocks next month as passive index trackers look to buy/sell the stocks.
Foreign investors have sold Lotte Energy Materials (020150 KS), Kakao Games (293490 KS), Pan Ocean (028670 KS) and Netmarble (251270 KS) while buying BGF retail (282330 KS).

TOPIX Inclusions: Who Is Ready (Oct 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Since my last insight, CellSource (4880 JP) and Kasumigaseki Capital (3498 JP) have confirmed they will move to TSE Prime which means they will be included in TOPIX at end-November.
FP Partner (7388 JP) and I-NE (4933 JP) will get included in TOPIX at the end of October.

Prime Target for Flow Trading Due to Low Pre-Exposure in December KOSPI 200 Rebalancing

Posco DX’s KOSPI 200 fast entry effective date will likely coincide with the December regular rebalancing date.
We should focus on the ad-hoc change deletion as we can expect more pronounced price impact near the effective date due to lower chances of premature exposure than regular reviews.
The following three candidates are screened: K Car, Daesang Corporation, and Shinsegae International. They are all likely to exhibit a significant passive impact (x ADTV).

HSCEI Index Rebalance Preview: One Change; Capping Impact Increases

Zhongsheng Group (881 HK) is in deletion zone and could be deleted. China Unicom Hong Kong (762 HK) could be added to the index as the highest ranked non-index constituent.
Estimated one-way turnover at the rebalance is 2.14% resulting in a one-way trade of HK$1.38bn. Meituan (3690 HK), Alibaba Group (9988 HK) and Tencent (700 HK) will be capped higher.
China Unicom Hong Kong (762 HK) is supported on its 50/100 day moving averages and could move higher. Zhongsheng Group (881 HK) has been trading below its moving averages.

ChiNext/ChiNext50 Index Rebalance Preview: Sector Rotation Continues

Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
Given stock selection uses liquidity as a major input, the impact of passive trading will be much larger on the deletions as compared to the additions.
The potential adds have outperformed the potential deletes, but relative performance has been drifting lower over the last few months. There are stocks that will have flows from other indices.

No Danger in Being Long

By Jesus Rodriguez Aguilar

The 1,350p offer for Ergomed Plc (ERGO LN) (28% premium, 18.9x EV/Fwd NTM EBITDA using IBES estimated) seems optically attractive considering share underperformance, and in line with closest peer Medpace at 19.06x.
Nevertheless there’d be synergies available to a trade buyer and other than 18% from the Founder, there aren’t any other irrevocables, which indicates the offer price is far from knock-out.
I set my TP at 1,350p. Spread turned negative last week, now 0.59%/1.71% (gross/annualised, assuming settlement by mid-February). I would be long considering there’s still time for a competing offer.

EQD | HSI WEEKLY Resistance Levels UPDATED

By Nico Rosti

The HSI INDEX has fallen for 2 more weeks since our last insight – current CC is =-5, and Q3 support was breached last week, the index is clearly OVERSOLD.
If the HSI bounces this week, it could be an occasion to go SHORT – take note that the index could take 3 weeks to rally before rolling down again.
The target price area where to enter SHORT trades,to benefit from a continuation of the downtrend is: 17598-18784.

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Oct 09

Daily Brief Event-Driven: NWS Holding (659 HK): Pre-Condition Satisfied and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

NWS Holding (659 HK): Pre-Condition Satisfied
Liontown Resources (LTR AU): Passive Selling on Lower Float
Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, Hollysys
HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium
SSE50 Index Rebalance Preview: Consolidating After Big Outperformance

NWS Holding (659 HK): Pre-Condition Satisfied

The pre-condition for the Nws Holdings (659 HK) voluntary general offer from the Cheng family is satisfied. The total offer (HK$9.15 + 2H dividend) is HK$9.46 per share.
The key condition is (majority vote) approval by independent NWD shareholders. NWD’s share price decline and dependency on NWS earnings/cash flow support a NO vote.
A reasonable offer which reduces NWD’s gearing, results in a special dividend and helps reduce the holding company discount supports the YES vote. We think that the YES vote prevails.

Liontown Resources (LTR AU): Passive Selling on Lower Float

Liontown Resources (LTR AU) is trading near A$3/share, the level of Albemarle Corp (ALB US)‘s revised offer and where Hancock Prospecting has been buying recently.
With Hancock Prospecting accumulating a stake of nearly 17% over the last month, there will be a float reduction for Liontown Resources (LTR AU) in the next few months.
Short interest has been increasing and the passive selling could provide an exit for the shorts. But Hancock Prospecting could also use the opportunity to buy more Liontown Resources stock.

Merger Arb Mondays (09 Oct) – Eoflow, Haitong Intl, NWS, Boustead, Newcrest, Liontown, 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 – Haitong International Securities Group (665 HK), 111 Inc (YI US), Eoflow (294090 KS), Hollysys Automation Technologies (HOLI US), IMAX China Holding (1970 HK), BPLANT.
Lowest spreads – Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Seiko Pmc Corp (4963 JP).

HDFC Bank (HDFCB IN): Increasing Foreign Room & Decreasing ADR Premium

Foreign shareholding in HDFC Bank (HDFCB IN) has dropped to 59% and the HDFC Bank (ADR) (HDB US) premium to the local line has dropped to 7%.
HDFC Bank (HDFCB IN) has underperformed its peers and the local indices on expectations of lower NIMs and higher NPAs.
There will be passive buying in HDFC Bank in December and March. Further passive buying will require foreign room to increase above 25% which will first require foreign investor selling.

SSE50 Index Rebalance Preview: Consolidating After Big Outperformance

Over 90% of the way through the review period, we see 9 potential adds/10 potential deletes in December. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 6.1% at the December rebalance leading to a one-way trade of CNY 5.27bn. Index arb balances could increase the impact on the stocks.
The adds have outperformed the deletes this year though there has been a deterioration in performance over the last few months.

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Oct 08

Daily Brief Event-Driven: Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52
Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick
Index Rebalance & ETF Flow Recap: Taiwan Div+, Nifty50, Cainiao IPO, Delta Electronics
Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex
(Mostly) Asia-Pac Weekly Risk Arb Wrap: EOFlow, Newcrest, JMDC, Boustead Plantation, Symbio, Aeon
Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI
Reshaping South32’s Low-Carbon Footprint

Haitong International (665 HK): Haitong Securities’ Pre-Conditional Privatisation Offer at HK$1.52

Haitong International Securities Group (665 HK) announced a pre-conditional privatisation offer from Haitong Securities Co Ltd (H) (6837 HK), the controlling shareholder, at HK$1.52, a 114.1% premium to the undisturbed price.
The pre-condition related to regulatory approvals are a formality as Haitong Securities’ largest shareholder is the Shanghai SASAC. The offer price is final.
The key conditions are approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and headcount test. The highest HKEx takeover premium in a year facilitates approval.

Haitong Int’l Securities (665 HK): A 114% Offer Premium Should Do The Trick

When Haitong International Securities Group (665 HK) was suspended on the 27 September, a punchy premium was expected if controlling shareholder Haitong Securities Co (600837 CH) was launching an Offer.
And that is what we got: a $1.52/share Offer, by way of a Scheme, and a 114% premium to last close. Terms have been declared final.
This is a pre-conditional Offer, requiring approvals from approvals from Shanghai SASAC, CSRC, NDRC, and the Shanghai branch of the PBOC.

Index Rebalance & ETF Flow Recap: Taiwan Div+, Nifty50, Cainiao IPO, Delta Electronics

The Philippines Stock Exchange PSEi Index (PCOMP INDEX) rebalance was implemented last week and there were interesting moves at the close on implementation day.
The focus this week will be on pre-positioning for a global index rebalance where the review period commences next week.
Units outstanding on iShares Emerging Markets (EMXC US) are at a new high while there continue to be redemptions in iShares Emerging Markets (EEM US).

Last Week in Event SPACE: Monex/NTT, PICC/PICC P&C, Vertex

Monex (8698 JP) and Docomo announced an agreement. It is not clear ANY of this has to happen at prices favourable to minorities. But equally, it won’t be egregiously bad.
People’s Insurance (PICC) (1339 HK)‘s implied stub is at a lifetime low. The market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
JMDC (4483 JP) is a growth stock, growing organically. It is a rare enough thing. If you want to buy the back end, wait until it gets here.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: EOFlow, Newcrest, JMDC, Boustead Plantation, Symbio, Aeon

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 were discussed on Smartkarma this week: Haitong International Securities Group (665 HK)‘s Scheme; and Aeon Co (8267 JP)‘s partial. Arguably, Boustead Plantations (BPLANT MK)received another offer.
Key updates took place for: EOFlow (294090 KS), Newcrest Mining (NCM AU), JMDC (4483 JP), Boustead Plantations (BPLANT MK), Symbio Holdings (SYM AU), and T&K Toka Co Ltd (4636 JP).

Quiddity Leaderboard for Hang Seng Index Dec 23: High Conviction Names Have Decent Momentum Vs HSI

By Janaghan Jeyakumar, CFA

In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in September 2023.
The index changes for the December 2023 rebalance will be announced in mid-November (17 Nov) and implemented in early-December (with effect from 4 Dec).
Although the Hang Seng index has a highly subjective constituent selection process and index changes are somewhat unpredictable, we will continue sharing our thoughts for each quarterly review.

Reshaping South32’s Low-Carbon Footprint

Since being spun out from BHP in 2015, South32 Ltd (S32 AU) has doggedly addressed its vast asset portfolio.
This strategy has not been without issue, such as the US$1.3bn writedown in Hermosa base metals project (zinc, lead) earlier this year due to inflationary pressure from inputs (steel, cement).
Not unlike other major miners, commodities tethered to the energy transition form a key cornerstone of South32’s forward objective, potentially leading to coal asset divestment and further copper (lithium?) acquisitions.

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Oct 07

Daily Brief Event-Driven: EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition
Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year
Long Short Flow Trading Opportunity: TIGER Semicon Top 10 ETF Rebalancing Next Friday
Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Good News Is Good News

EOFlow: Insulet’s Injunction Doesn’t Thwart Medtronic’s Acquisition

After Insulet Corp (PODD US) lodged a lawsuit against EOFlow (294090 KS), Flex, inter alia, on the 3rd August, the judge has thrice extended the temporary restraining order.
But the big (ger) news is that a preliminary injunction comes into force today. Shares are down 2.5% as I type.
This latest development should have been expected. And put simply: a proposed preliminary injunction doesn’t prevent Medtronic Plc (MDT US) from acquiring EOFlow.

Aeon (8267) Partial Tender at ¥1610 for Inageya (8182) Aiming for Takeover Next Year

Aeon Co Ltd (8267 JP) and Inageya Co Ltd (8182 JP) agreed in late April to prepare a plan so Aeon would buy 51% this year.
They would combine Inageya with 53+%-owned United Super Markets (3222 JP) aiming for a ¥1trln sales supermarket chain in Kanto. That is due end- calendar 2024.
There is a partial offer to buy 33+% of Inageya at a small premium, and inadequate price before merging next year. Cross-holders determine pro-ration.

Long Short Flow Trading Opportunity: TIGER Semicon Top 10 ETF Rebalancing Next Friday

LX Semicon and Tokai Carbon Korea will be excluded, and these two positions will be filled by Eo Technics and either HPSP or ISC Co Ltd.
The effective date is October 16th, and the rebalancing trading by the TIGER ETF occurs towards the closing (likely to start around 2 p.m.) on Friday, October 13th.
The practical setup would entail an EO Technics-TCK Long Short pair. For a more aggressive strategy, we could explore the inclusion of HPSP in this setup.

Inageya (8182 JP): Aeon’s JPY1,610 Partial Tender Offer

Aeon Co Ltd (8267 JP) has announced a partial tender offer for Inageya Co Ltd (8182 JP) to make it a consolidated subsidiary. Aeon flagged this intention on 25 April.
The tender offer is for a maximum of 15.7 million shares (33.78% ownership ratio) at JPY1,610, a 23.2% premium to the undisturbed price. There is no minimum acceptance condition.
The offer price is reasonable. Longer-term, Aeon aims to make Inageya a wholly-owned subsidiary of United Super Markets (3222 JP) by November 2024.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-Good News Is Good News

By Simon Harris

Weekly summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 5 days
We suggest a few trades to take advantage of the implied vol surfaces

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Oct 06

Daily Brief Event-Driven: EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem
PICC’s (1339 HK) Lifetime Low Implied Stub
Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights
Boustead Plantations (BPLANT MK): LTAT Emerges as a White Knight

EOFLOW/Medtronic Tender: Proposed Preliminary Injunction Is a Problem

The US judge has proposed a preliminary injunction which prevents Eoflow (294090 KS) from using Insulet Corp (PODD US)’s trade secrets and disclosing them to any third party.
Eoflow and other defendants must respond by 5 October. The court hearing is set for 16 October. The potential trial is to be discussed in Spring of 2024.
Medtronic Plc (MDT US) faces a difficult choice. If the injunction is enforced, Medtronic would acquire a ring-fenced asset exposed to potential court-determined liabilities.

PICC’s (1339 HK) Lifetime Low Implied Stub

People’s Insurance (PICC) (1339 HK) is currently trading at an all-time low implied stub.
Stripping out PICC’s 68.98% stake in PICC Property & Casualty H (2328 HK), the market is assigning HK$35.6bn less for its steady and profitable life/health insurance stub ops, year-to-date.
PICC is outperforming the HSI. It’s just that PICC P&C is on a hot streak, possibly driven (pun intended) by EV insurance.

Exploring the Launch of a Posco Group-Focused ETF: Flow Trading Insights

KRX approved the listing of ACE POSCO Group Focus. This fund mirrors the performance of the FnGuide POSCO Group Focus Index. KRX will announce the listing date next week.
This index encompasses 6 Posco affiliates and 4 non-Posco stocks. The top 3 constituents, each assigned a 25% weight, are POSCO Holdings, Posco International, and Posco Future M.
We should explore various long-short setups for stocks within the local battery sector (long Posco affiliates and short others), starting with the listing of this ACE POSCO Group Focus ETF.

Boustead Plantations (BPLANT MK): LTAT Emerges as a White Knight

Boustead Plantations (BPLANT MK) shares have been on a rollercoaster ride. As Kuala Lumpur Kepong (KLK MK) pulls its offer, LTAT has emerged as an unlikely white knight.
LTAT aims to launch a general offer at RM1.55 per share, in line with KLK’s aborted MGO price. The government will backstop LTAT’s funding for the offer.
LTAT is vague on approvals and timing. Regulatory approvals should be a formality as LTAT is the Armed Forces pension fund. At the last close, the gross spread was 10.7%.

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Oct 05

Daily Brief Event-Driven: JMDC (4483) Partial Offer Update (Updated Pro-Ration Range) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)
NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet
Proposals, Sweetened Offers & Synergies
CALB IPO Lock-Up – US$2.6bn Lockup Release but Mostly SOE Owned

JMDC (4483) Partial Offer Update (Updated Pro-Ration Range)

When this was launched, it traded more a fair bit on the first day, but then more volume traded than I expected. This could mean a couple of things.
Re-Reading the original doc leaves nuances. The change in management responsibilities this past summer make some holders less certain. It’s complicated.
There have been several blocks traded, and a large short instantiated. And if one has a more conservative estimate at a higher top-end participation, the back end gets uglier.

NTT Docomo’s Deal with Monex (8698); The Goal Is Bigger and Better but Not Compelling Yet

Today, Monex Group Inc (8698 JP) and NTT (Nippon Telegraph & Telephone) (9432 JP)‘s NTT Docomo announced a Capital and Business Alliance Agreement. It is a complicated deal.
Monex GROUP will create a holdco which owns Monex Inc (the broker) and sell 51% to Docomo. Docomo will consolidate. Monex Group will own 49% as an equity method affiliate.
Monex GROUP will then double its dividend, maybe buy back shares, and expects to grow as Docomo pushes and Monex invests. But what remains is a mixed bag.

Proposals, Sweetened Offers & Synergies

By Jesus Rodriguez Aguilar

The game is on with the sweetened offer from Lithia, valued at 35.4p/share (24.5p divi + stake in Pinewood). Pendragon PLC (PDG LN)‘s shares are trading just below, at 35.2p.
It is now the turn of either Hedin or AutoNation to raise their offers. 32p/share seems a fair value for the standalone business. Synergies could be worth up to 10.54p/share.
Assuming a bidder distributes 60% of synergies to Pendragon shareholders, a potential offer price of 38.3p/share, in cash, 8% above Lithia’s offer, could still be value enhancing.

CALB IPO Lock-Up – US$2.6bn Lockup Release but Mostly SOE Owned

By Sumeet Singh

CALB Group (3931 HK) raised around US$1.2bn in its Hong Kong IPO in Oct 2022. The lockup on its pre-IPO shareholders will expire tomorrow.
CALB undertakes design, R&D, production and sales of EV batteries and Energy Storage Systems (ESS) products in China.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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Oct 04

Daily Brief Event-Driven: Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All
NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd
UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise
Cainiao IPO: Index Inclusion Timeline
Setting up to Target Exclusion Stock Post Doosan Robotics’ KOSPI 200 Fast Entry

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

By Janaghan Jeyakumar, CFA

Midsize residential JREIT Daiwa Securities Living (8986 JP) (“DSLIC“) launched a follow-on equity offering to partially fund their recently-announced acquisitions.
The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.
In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC’s previous follow-on equity offerings.

NIFTY50 Index Rebalance Preview: Two’s Company; Three’s A Crowd

There should be two changes for the NIFTY Index (NIFTY INDEX) in March. That could increase to three, but that would take some big price moves from now to January.
Impact on the potential changes is pretty large at over 6 days of ADV to trade from passive trackers. The impact is over 11 days of delivery volume.
Inclusion of Avenue Supermarts Ltd (DMART IN) in the F&O segment before January could lead to another change.

UPDATE: Kasumigaseki Capital (3498) Moving to TOPIX. Forward Earnings/Aggressive Forecast Surprise

Over the weekend I wrote about Kasumigaseki Capital (3498 JP)‘s move to TSE Prime and then move to TOPIX. I noted earnings would be out 3 October.
I talked about the possibility of a surprise. They had revised full-year to end-Sep to ¥2bn. They got ¥2.05bn.
But after growing revenue 79% last year, and growing net profit 101%, this year they expect revs +60% and Net Profit +144%.

Cainiao IPO: Index Inclusion Timeline

Cainiao Smart Logistics (1437124D HK) has filed an application proof to list on the HKEX (388 HK) and could raise US$1bn at a valuation between US$15bn-20bn.
Cainiao Smart Logistics (1437124D HK) could get Fast Entry to the HSCI and be included in Southbound Stock Connect once the price stabilisation period is complete.
Inclusion in other indices will take longer with the highest probability of index inclusion in June. Earlier inclusion will depend on the IPO timing, size and allocation to strategic/cornerstone investors.

Setting up to Target Exclusion Stock Post Doosan Robotics’ KOSPI 200 Fast Entry

Doosan Robotics has the potential to rise up to ₩104,000 on the listing date. The market cap would reach ₩6.74T, which fulfills the criteria for KOSPI 200 fast entry
Based on this calculation, Zinus had the lowest average daily market cap during the previous rebalancing screening period. Therefore, Zinus will be excluded due to the inclusion of Doosan Robotics.
KOSPI 200 passive trackers will need to conduct rebalancing trading reflecting this ad-hoc change on the closing price of November 9th.

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Oct 03

Daily Brief Event-Driven: BPlant/KLK: This Is Getting (Even More) Political and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

BPlant/KLK: This Is Getting (Even More) Political
Boustead Plantations (BPLANT MK): A Transaction Mired in Political Debate
Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade
Alpha Generation Through Share Buybacks in Korea: August & September 2023
Hollysys (HOLI US): Board Starts a Formal Sale Process
Symbio: Aussie Broadband Lobs Competing NBIO
Quiddity A/H Premium Tracker (To Sep28): Hs Suffer Vs As Despite Inflows
EQD | S&P/ASX200 Index Stuck, But Could Bounce Soon

BPlant/KLK: This Is Getting (Even More) Political

On the 24 August, Kuala Lumpur Kepong (KLK MK) entered an agreement with Boustead Holdings (BHB), Boustead Plantations (BPLANT MK)‘s largest shareholder, to acquire a 33% plus 1 share stake.
Upon the completion of the agreement, KLK – together with BHB and LTAT – would make a Mandatory Offer for BPlant. The Offer Price would be RM1.55/share, a lifetime high
It all looked pretty straightforward. However the BHB/LTAT agreement has twice been delayed. This may still get done. But there remain a number of political kinks to be ironed out.

Boustead Plantations (BPLANT MK): A Transaction Mired in Political Debate

Boustead Plantations (BPLANT MK) shares are down 16%, resulting in proprietary day trading and intraday short selling being suspended. The transaction is mired in political debate.
The bull case is that Kuala Lumpur Kepong (KLK MK) continues on-market purchases and the opposition will compromise, paving the way for deal completion. Timing is the key risk.
The bear case is a deal break. The downside is limited as the government will need another buyer, the shares trade below the undisturbed price, and the undemanding valuation.

Yuanta/P-Shares Taiwan Dividend Plus ETF: 20% One-Way Turnover & US$2.72bn Trade

Using data from the close on 28 September, there could be 6 adds and 5 deletes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in December.
There will also be capping and funding flows that will lead to a one-way turnover of 19.8% and a one-way trade of US$1.36bn.
There are 15 stocks with at least 3 days ADV to trade from passive trackers and another 10 stocks that have at least 1-day ADV to trade.

Alpha Generation Through Share Buybacks in Korea: August & September 2023

By Douglas Kim

In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in August and September 2023.
We provide a list of 18 stocks in the Korean stock market that have announced share buyback programs in August and September 2023.
The top three market cap stocks that have announced share repurchases include Celltrion Inc (068270 KS), Celltrion Healthcare (091990 KS), and KT&G Corporation (033780 KS).

Hollysys (HOLI US): Board Starts a Formal Sale Process

The Hollysys Automation Technologies (HOLI US) Board succumbs to shareholder pressure by announcing the formation of a special committee to conduct a formal sale process.
Hollysys has received non-binding proposals from six parties since December 2020. The most recent is a non-binding proposal from the Recco consortium at US$25.00 per share.
The Board’s change of heart should encourage previous bidders to re-engage. Recco’s offer, while attractive, is not a knockout bid, suggesting a possible bidding war.

Symbio: Aussie Broadband Lobs Competing NBIO

On the 22 September, Symbio Holdings (SYM AU) received a best and final NBIO from Superloop Ltd (SLC AU) : A$1.425 cash and 2.14 Superloop shares for each Symbio share.
Those indicative terms backed out an implied price of A$2.85/share, or a 20% premium to undisturbed. Now Aussie Broadband (ABB AU) has snuck in with a superior cash/scrip Offer.
The competing Offer’s implied consideration of A$3.151/share boasts a larger cash component vs. Superloop. Symbio’s board is supportive if terms are firmed. Superloop’s Offer has now lapsed.

Quiddity A/H Premium Tracker (To Sep28): Hs Suffer Vs As Despite Inflows

The Brand-Spanking New (8 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning in pairs over time, etc.
We used to do it. We brought it back better, with lots of cool interactive tables, and charts, heat maps, and comparative data. And 47 Trade Recommendations.
The last 7 weeks (since the start of the new Trcker and Portfolio 8 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%.

EQD | S&P/ASX200 Index Stuck, But Could Bounce Soon

By Nico Rosti

The S&P/ASX 200 INDEX is trading below the Q3 WEEKLY support at 7072 (OVERSOLD). It closed down 2 weeks in a row (CC=-2) and this week is also down (CC=-3).
As previously discussed the index is stuck in a range since August 2021, but from a short-term tactical viewpoint it could bounce soon, still remaining in range.
Current support range is 7072-6900, there is a good chance to see a bounce from this area within 2 weeks.

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✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 02

Daily Brief Event-Driven: Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope?
Merger Arb Mondays (02 Oct) – NWS, Mason, IMAX China, Keiyo, System Info, Toyo, Symbio, Allkem
Haitong International (665 HK): Haitong Securities Ponders an Offer
Quiddity HK Connect SOUTHBOUND Flows (Week to 28Sep23) : Meituan, Tencent, Kuaishou and Banks
Quiddity Mainland Connect NORTHBOUND Flows (To 28Sep23) : Wuxi Apptec, Longi Green BUYS, BYD a SELL
EQD | SPX WEEKLY/MONTHLY OVERSOLD: Global Bounce Upcoming
Selected European HoldCos and DLC: September’23 Report

Delta Electronics (DELTA TB / 2308 TT): Placement Increases Float; Ends Tender Offer Hope?

The Delta Electronics Thai (DELTA TB) / Delta Electronics (2308 TT) spread peaked earlier this year and has been trending lower for the last few months (but it is volatile!).
Delta Electronics Thai (DELTA TB) dropped 20% on Friday following Delta Electronics (2308 TT)‘s placement of 0.72% of shares outstanding. The stock last closed 12.7% below the placement price.
Delta Electronics (2308 TT) still owns over 63% of Delta Electronics Thai (DELTA TB) and there could be more downside for the Thailand line over the near term.

Merger Arb Mondays (02 Oct) – NWS, Mason, IMAX China, Keiyo, System Info, Toyo, Symbio, Allkem

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 – Keiyo Co Ltd (8168 JP), 111 Inc (YI US), Eoflow (294090 KS), Symbio Holdings (SYM AU), IMAX China Holding (1970 HK), JSR Corp (4185 JP).
Lowest spreads Yaizu Suisankagaku Industry (2812 JP), Healius (HLS AU), Pact Group Holdings (PGH AU), T&K Toka Co Ltd (4636 JP), Celltrion Healthcare (091990 KS), Seiko Pmc Corp (4963 JP).

Haitong International (665 HK): Haitong Securities Ponders an Offer

Haitong International Securities Group (665 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 27 September.
Bloomberg reported that Haitong Securities Co Ltd (H) (6837 HK), the controlling shareholder, plans to buy the remainder of Haitong International to stem its losses.
Privatisation through a Bermuda scheme involves the headcount test, so a decent premium is required – privatisation precedents suggest HK$1.08-1.13 per share offer (52%-59% premium to last close).

Quiddity HK Connect SOUTHBOUND Flows (Week to 28Sep23) : Meituan, Tencent, Kuaishou and Banks

This is the brand spanking new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
We like the nifty interactive tables+charts (please play with them!) and we welcome feedback. This 4-day week saw HKD 14.0bn+ of net buying. That makes 11 weeks of net inflows.

Quiddity Mainland Connect NORTHBOUND Flows (To 28Sep23) : Wuxi Apptec, Longi Green BUYS, BYD a SELL

This is the brand spanking new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
Please play with nifty interactive tables+charts. We welcome feedback. This 4-day week saw RMB 17.5bn+ of net selling. Back to the trenches!

EQD | SPX WEEKLY/MONTHLY OVERSOLD: Global Bounce Upcoming

By Nico Rosti

The S&P 500 INDEX is OVERSOLD, WEEKLY and MONTHLY. There will be a LONG reversal soon, and it should be a MONTHLY reversal (at least 1 month uptrending).
The WEEKLY model is telling us the market is oversold, but there is a possibility of having 1-2 more weeks down, that should be the end of the correction.
Go LONG Global Equities and pay attention to the MONTHLY (4203) and WEEKLY (4077) supports: if the index reaches these supports it will be very oversold.

Selected European HoldCos and DLC: September’23 Report

By Jesus Rodriguez Aguilar

The discounts to NAV of covered holdcos have generally tightened during September. Discounts to NAV: C.F.Alba, 49.2% (vs. 46.6%); GBL, 35.3% (vs. 36.2%); Heineken Holding, 14.5% (vs. 17.9%);
Industrivärden C, 7.4% (vs. 7.8%); Investor B, 15.4% (vs. 16.6%); Porsche Automobile Holding, 41.1% (vs. 41.5%). The spread of Rio DLC tightened to 15.8% (vs. 17.8%).
What seems interesting: holding trades, Investor B vs. listed assets, Porsche SE/vs. listed assets and the Rio DLC: long RIO LN/short RIO AU.

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

Oct 01

Daily Brief Event-Driven: Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout
Kasumigaseki Capital (3498) Moving To TOPIX End-November
Target Cosmo AM&T as a Prime Candidate for KOSPI 200 Special Entry in December
Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int’l Sec
(Mostly) Asia M&A, Sept 2023: JMDC, Pact, Takisawa, Golden Eagle Energy, Dic Corp
Index Rebalance & ETF Flow Recap: Thai Bev, Golden Agri, EcoPro Materials, Doosan Robotics, PCOMP
Symbio (SYM AU): Aussie Broadband’s Superior Proposal
(Mostly) Asia-Pac Weekly Risk Arb Wrap: System Info, Keiyo, Invocare, Liontown, ENM, Toyo Const.

Murakami-San’s Masterful Maneuvering to Stymy SBI’s Shysterish Shinsei Squeezeout

The SBI Holdings (8473 JP) takeout of SBI Shinsei Bank (8303 JP) was opportunistic – done at a price SBI Shinsei’s Board considered not reasonable. Until it changed its mind.
I had thought appraisal rights a great trade. I also thought it a good trade to own the back end, but that involved one holder putting ¥55bn on the table.
Activist Murakami-san’s S Grant Corporation has done that. It will own one share of 8 post-consolidation on Monday. They are now equal shareholders with the govt entities. Wow.

Kasumigaseki Capital (3498) Moving To TOPIX End-November

Real estate consultant/developer/speculator Kasumigaseki Capital (3498 JP) announced Friday that it would move from TSE Growth to TSE Prime on 6 October.
The stock was on the list of top potential candidates in TOPIX Inclusions: Who Is Ready (Sep 2023) (and has been for nearly a year). It’s a good list.
This event leads to a TOPIX inclusion on 29 November. Analysis below.

Target Cosmo AM&T as a Prime Candidate for KOSPI 200 Special Entry in December

The introduction of float market cap is anticipated to apply not only to sector-based screening for the KOSPI 200 but also to special entry considerations.
Cosmo AM&T emerges as a direct beneficiary of this change. It currently ranks 52nd within the KOSPI, maintaining a tight gap with the borderline (50th).
Once it enters the KOSPI 200, it will also become a part of KOSPI 200 IT. As a result, the estimated flow size is approximately ₩230B, about 6x ADTV.

Last Week in Event SPACE: Toshiba, CK Infra/Power Assets, Rakuten Bank, Haitong Int’l Sec

Tactically, it isn’t attractive owning Toshiba (6502 JP) at 1% spread. Expect it to trade wider. There is still a fair bit of stock to come down the pipe.
Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH.
There is less fundamental alpha to Rakuten Bank (5838 JP) than before and more “just keep it because it is going up“-ness to the trade.

(Mostly) Asia M&A, Sept 2023: JMDC, Pact, Takisawa, Golden Eagle Energy, Dic Corp

For the month of September 2023, 8 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$2bn.
The average premium for the new deals announced (or first discussed) in September was 37%. The average YTD is 35%.
This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Index Rebalance & ETF Flow Recap: Thai Bev, Golden Agri, EcoPro Materials, Doosan Robotics, PCOMP

There were a few rebalances implemented last week, notably the Nikkei 225 (NKY INDEX) and the NIFTY family of indices. Plus an ad hoc Philippines Stock Exchange PCOMP INDEX rebalance.
Nickel Asia (NIKL PM) will replace UnionBank of the Philippines (UBP PM) in the Philippines Stock Exchange PCOMP INDEX in a surprise move at the close on 3 October.
There were outflows from iShares MSCI Japan ETF (EWJ US), Tracker Fund of Hong Kong (2800 HK) and iShares MSCI Emerging Markets (EEM US) during the week.

Symbio (SYM AU): Aussie Broadband’s Superior Proposal

Symbio Holdings (SYM AU)‘s indicative proposal from Aussie Broadband Pty Ltd (ABB AU) is A$2.36 + 0.192 ABB shares per SYM share, 10.6% premium to Superloop Ltd (SLC AU)’s offer.
The Board has declared ABB’s offer as the superior proposal and granted exclusive due diligence until 20 October. The Board intends to recommend a binding ABB proposal.
Superloop’s offer was the final offer in the absence of a superior proposal. If it chooses to enter a bidding war, Superloop will need a higher cash component.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: System Info, Keiyo, Invocare, Liontown, ENM, Toyo Const.