Event-Driven

Kotak Mahindra Bank (KMB IN) was added to the MSCI India Index at the November 2020 SAIR. However, a LIF of 0.5 was applied due to the low foreign room.
The latest shareholding pattern as of end-March shows a foreign room higher than 25%. That should result in a removal of the LIF at the May QCIR.
The increase in foreign room is a result of FPIs selling the stock despite the inclusion of Kotak Mahindra Bank (KMB IN) in a global index in March.

Target May 15th for LONG Youlchon Chemical with Dongkuk Steel’s Split Approval

Through the regular rebalancing, Kum Yang and Cosmo Chemical will be included in KOSPI 200, and Youlchon Chemical will be included as an ad-hoc change due to Dongkuk Steel’s deletion.
We should prepare for an aggressive long position on Youlchon Chemical from a day trading perspective, targeting May 15th, the day after Dongkuk Steel’s general meeting.
If the meeting is scheduled for the morning, we should consider entering the position in the afternoon of the 12th.

Caverion Switches to Triton’s Offer

Triton’s consortium reduced the acceptance threshold to 2/3rds of all shares, and, as expected, the board of Caverion changed its recommendation in favour of the Triton consortium’s proposal.
Nearly a third of the shares supporting the offer are held by each party. Bain’s consortium hasn’t improved Triton’s offer and expects the latter will encounter antitrust hurdles.
Triton would make a cumulative IRR of about 20% if it sold the business for 7.5x EBITDA by year 7. Long and tender to Triton’s offer (spread is 2.63%/3.75% gross/annualised).

New Unconditional Date

On 6 April, Bidco and Dignity confirmed that the FCA Change in Control Condition had been satisfied on 5 April. The new Unconditional Date is 4 May 2023.
Bidco has so far irrevocables and letters of intent in respect of 39.12%. The end of the life of Dignity as a listed company is nigh.
Spread to cash offer is 3.6%/42% (gross/annualised, assuming settlement on 18 May). Long/tender to the cash offer. The Alternative Offers are either Valderrama D shares (unlisted) or Castelnau shares (illiquid).

💡 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 10

Daily Brief Event-Driven: Last Week in Event SPACE: ANZ/Suncorp and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Last Week in Event SPACE: ANZ/Suncorp, JCNC, Adani, Khan Bank/HS Holdings, Hong Kong Buybacks
Merger Arb Mondays (10 Apr) – Genesis, Estia, Newcrest, Pushpay, Mincor, Golden Energy, Toyo

Last Week in Event SPACE: ANZ/Suncorp, JCNC, Adani, Khan Bank/HS Holdings, Hong Kong Buybacks

In a dealbreak, ANZ (ANZ AU) will either have enough capital in a downturn or excess capital it could use to buy back stock. If behavioural remedies, SunCorp is cheaper.
Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
There is no good reason to be long Adani names, even if GQG is up 25% on his money so far.

Merger Arb Mondays (10 Apr) – Genesis, Estia, Newcrest, Pushpay, Mincor, Golden Energy, Toyo

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), Estia Health (EHE AU), Aag Energy Holdings (2686 HK), Origin Energy (ORG AU).
Lowest spreads – Healius (HLS AU), Golden Energy & Resources (GER SP), Liontown Resources (LTR AU), Norwest Energy NL (NWE AU), Mincor Resources NL (MCR AU), GK Goh.

💡 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 09

Daily Brief Event-Driven: EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Calm Before the Storm? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Calm Before the Storm?
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Mincor, Toyo Construction, Pushpay, Breaker Resources

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Calm Before the Storm?

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

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Mincor, Toyo Construction, Pushpay, Breaker Resources

There are 45 – 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 deal was discussed on Smartkarma this past week: Breaker Resources Nl (BRB AU) all-scrip Offer from Ramelius Resources (RMS AU).
Key updates took place for Mincor Resources NL (MCR AU), Toyo Construction (1890 JP), and Pushpay Holdings (PPH NZ).

💡 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 07

Daily Brief Event-Driven: Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
JCNC’s Logic-Defying Valuation
Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price
Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer
Industrivärden: Q1 Results and Discount to NAV

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?

There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
This implies an essential premise for us to set up a more aggressive preemptive position on KT.

JCNC’s Logic-Defying Valuation

Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
The simple ratio of JCNC/ Astra International (ASII IJ) is also the highest level outside the brief spikes post-Covid and during the 2008 GFC.
There is no apparent justification for the current valuation. And a takeover from Jardine Matheson Holdings (JM SP) at these levels appears unrealistic.

Khan Bank IPO Is Here – At IPO Price, the Stake Is Worth More than HS Holdings’ Share Price

Today, it was announced that HS Holdings (8699 JP) subsidiary Khan Bank LLC – Mongolia’s largest bank – would IPO this month.
This is a big deal. The IPO is for 10% of the bank (US$521mm equivalent). Priced at 4x Dec 2022 earnings for a bank which has ~ 25% ROE.
There is a reason to expect substantial realisation of this value within 2023 due to a section of Feb 2021 Amended Mongolian Banking Law. Plus there is boatloads of cash.

Golden Energy (GER SP): Annual Report Data Points Further Underscore a Low-Balled Offer

Golden Energy & Resources (GER SP)’s valuation is dependent on three key assets – Golden Energy Mines (GEMS IJ), Stanmore Coal (SMR AU) and Ravenswood. GEMS/SMR have observable values.
The valuation of GEAR’s 50% stake in Ravenswood gets little publicity largely as it is unlisted. However, the annual report provides data points to value this key gold asset.
Based on peer EV/Resource and EV/Reserve multiples, Ravenswood 50% stake is worth S$200-465 million. Using the midpoint valuation, the SoTP valuation is S$1.40 (39% upside to the last close).

Industrivärden: Q1 Results and Discount to NAV

Industrivarden AB (INDUA SS) is resilient: NAV on 31 March was SEK 138.3 billion, or SEK 320/share, an increase q-o-q of SEK 27/share, +9%, with some minor additions to the portfolio.
The balance sheet is strong, with a debt/equities ratio kept at 4%. A+ rating was confirmed on 27 March. 5-year total return was 67.5% vs. 66% for the OMX30.
The discount to NAV of C shares is 8.1% (vs. 10.7% average over the last 8 years). During Q1 the discount has tightened from 13.6% on 31 December.

💡 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 06

Daily Brief Event-Driven: Toyo Construction FY23 Profit Forecast – 105% Payout = 6.5% and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Toyo Construction FY23 Profit Forecast – 105% Payout = 6.5%, Lots of Shares Changing Hands
DB Group: Kim Family Feud Leading to a Potential M&A Fight?
GQG Calls Adani Names 5Yr “Multi-Baggers” – It Works at 30% EPS CAGR if You Torture the Numbers
MSCI Japan May QCIR: Couple of Potential Changes
Quiddity Leaderboard for Hang Seng Index Jun 23: Beigene Looks Interesting
Toyo Construction (1890 JP): YFO Loses Ground to the Board’s New Five-Year Plan
Pushpay: Shareholder To Vote (Again) On 27 April

Toyo Construction FY23 Profit Forecast – 105% Payout = 6.5%, Lots of Shares Changing Hands

Two weeks ago, Toyo Construction (1890 JP) released a new Mid-Term Management Plan with a new investment plan, and a new capital plan (100% payout, ¥50/share minimum div til Mar-2026).
Obvious goal: get the stock above ¥1,000/share so YFO’s ¥1,000 bid looks unattractive. Then they attacked on a FEFTA basis, saying YFO’s foreign entities need permission to go over 10%.
Now Toyo has released a March 2024 forecast, with a ¥63/share dividend and 105% guided payout. The stock popped. LOTS of shares trading. Now only up small.

DB Group: Kim Family Feud Leading to a Potential M&A Fight?

By Douglas Kim

In this insight, we discuss another very interesting situation brewing which is the potential family feud at the DB Group.
One of the scenarios of the Kim family at DB Group is a sibling conflict between Nam-Ho Kim (Chairman) and his sister Ju-Won Kim.
Our base case valuation of DB Inc is target market cap of 488 billion won or 2,428 won per share, which is 36% higher than current price.

GQG Calls Adani Names 5Yr “Multi-Baggers” – It Works at 30% EPS CAGR if You Torture the Numbers

The Adani names are seeing new news and commentary. SEBI is probing offshore deals for rules violations, SEBI filed an interim report Sunday with the Court, Cements are refinancing US$4bn.
GQG’s Jain was interviewed by Bloomberg TV in NY saying he sees his Adani basket being a “multi-bagger in five years.”
Assuming growth and margins equivalent to peer max rates, all profits reinvested, and 100% gain in stock price in 5yrs, NP CAGR=33%, 2028 EV/EBITDA average of four names is 29.4x.

MSCI Japan May QCIR: Couple of Potential Changes

Based on the last close, we expect Kawasaki Kisen Kaisha (9107 JP) to replace Nihon M&A Center (2127 JP) in the MSCI Japan Index at the May QCIR.
Passive trackers will need to buy less than 1x ADV on Kawasaki Kisen Kaisha (9107 JP) while selling over 5x ADV on Nihon M&A Center (2127 JP).
Kawasaki Kisen Kaisha (9107 JP) trades cheaper than its closest peers and there are some interesting market neutral trades there.

Quiddity Leaderboard for Hang Seng Index Jun 23: Beigene Looks Interesting

By Janaghan Jeyakumar, CFA

The June 2023 index review results for the Hang Seng index can be expected after the close on 12th May 2023.
In Quiddity Leaderboard for Hang Seng Index Mar 23: Healthcare Names Could Dominate, we expected some healthcare names to be added but there were no index changes in March 2023.
Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for June.

Toyo Construction (1890 JP): YFO Loses Ground to the Board’s New Five-Year Plan

The Toyo Construction (1890 JP) Board has tried every tactic to delay YFO’s JPY1,000 tender offer. The Board’s new five-year medium-term management plan tilts the fight in its favour.
The Board’s new management plan, particularly the dividend payout, now provides shareholders with a credible alternative to accepting YFOs’ tender offer. The payout ratio for FY23-FY25 is set at 100%.
YFO’s primary tactic is to replace the Board at the June AGM, but shareholders have less reason to support it. Improving sentiment and the offer continue to underpin the shares.

Pushpay: Shareholder To Vote (Again) On 27 April

At the 3rd March Scheme Meeting, just 55.5% of Pushpay Holdings (PPH NZ) shareholders voted for BGH/Sixth Street’s NZ$1.34/share Offer. At first glance, that was that.
But uniquely in the M&A world, BGH/Sixth Street returned on the 16 March with a NZ$1.42/share Offer, a bump of 6%, around the mid-point of the independent expert’s valuation range.
The revised Scheme Booklet is now out with a new vote to take place on the 27 April. Key shareholders and the IE are supportive. Implementation is estimated late-May.

💡 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 05

Daily Brief Event-Driven: AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not
Clarifying Market’s Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision
HSCEI Dividend Futures: Nearing the Pointy End of Results Season
AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge
Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure
Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea
Quiddity Leaderboard ES50 Sep 23: Eurozone’s Annual Big Impact Rebal Trades; US$1.1bn+ for ADDs
Loh/Kloeckner & Co Se: Voluntary Takeover Offer
Nucleus Clyde/Curtis Banks: Spread

AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not

That was a quick turnaround. Two days after the pre-conditions were satisfied, the Scheme Document for Xinjiang Xintai (603393 CH)‘s privatisation of AAG Energy (2686 HK) has been dispatched.
The EGM and Court Meeting will take place on the 27 April, with payment, assuming all resolutions get up, on (or before) the 1 June.
The Independent Financial Adviser, Somerley, considers the terms of the Scheme “fair and reasonable.” However, their analysis clearly shows this is not the case.

Clarifying Market’s Inaccurate Constituent Change Forecast in K200 Rebalancing with GICS Revision

DGB Financial Group’s market cap makes it virtually impossible to get deleted even with Kakao Pay’s GICS change in this June rebalancing.
It’s unclear whether this has damaged the price impact of K200 inclusion. Nevertheless, the intensity of the pre-rebalancing flow wasn’t aggressive, possibly due to the combination of factors, including this.
This suggests the possibility of an intense price impact resulting from a more concentrated flow right before the effective date, so we should prepare a setup that considers this.

HSCEI Dividend Futures: Nearing the Pointy End of Results Season

The HSCEI 2023 dividend futures have dropped over the last week as results have trickled in and some of the larger dividend payers have cut their final dividends.
Over 50% of the DIPS are confirmed now and that number will increase significantly over the next couple of days as the remaining companies announce their final dividends.
From our estimates, just over 80% of the DIPS will be confirmed by tomorrow though over 66% of the total DIPS will have CNYHKD risk attached to it.

AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge

Aag Energy Holdings (2686 HK) scheme document is out with the court meeting scheduled for 27 April. The IFA considers the HK$1.85 offer to be fair and reasonable.
The IFA’s conclusion is dubious as the contents of the report could easily have come to the opposite conclusion. The quick despatch of the scheme document is worrying.
The weak IFA report will further annoy minorities and push more towards the NO camp. The vote is on a knife edge which is reflected in the current 13.5% spread.

Alibaba: Business Unit Split Receives Positive Response, Overshadowing Lingering Regulatory Pressure

By Oshadhi Kumarasiri

Yesterday, Alibaba (ADR) (BABA US) announced its intention to divide its business into six distinct units, each with its own CEO and independent board of directors.
Tying this with Jack Ma’s rare public appearance in China since the beginning of the tech crackdown, people are speculating that the tech crackdown is over.
However, if you look at this news more objectively, this split indicates nothing but the tightening of the regulatory framework.

Introducing Another Long Short Basket Trading Event with Semicon ETF Rebalancing in Korea

Mirae Asset TIGER Fn Semiconductor TOP 10 ETF saw a rapid increase in AUM in a short period. Currently, AUM has reached 126 billion won.
Compared to the flow size, the price movement magnitude was substantial. What is particularly important is that the correlation between weight change direction and price impact was quite significant.
Considering Long Short basket trading based on the weight change direction on a day trading window seems worthwhile.

Quiddity Leaderboard ES50 Sep 23: Eurozone’s Annual Big Impact Rebal Trades; US$1.1bn+ for ADDs

By Janaghan Jeyakumar, CFA

The EURO STX 50 Index is one of the most highly-tracked indices in mainland Europe and the annual index review takes place in September.
Historically, these Rebalance events have had significant volume impact and they generally involve large cap names.
In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2023.

Loh/Kloeckner & Co Se: Voluntary Takeover Offer

Loh (29.97% stake) launches a voluntary offer at €9.75/share, 2.5% premium, but doesn’t really intend to increase much its shareholding, rather have the flexibility to do it in the future.
With a favourable market environment, the EU steel sector has re-rated since Autumn. The shares trade 5.2% above the offer price (effectively a floor), so don’t expect many acceptances.
Kloeckner currently trades on 6.3x EV/23e EBITDA (vs. a 6.5x 10-year average), and 0.52x P/BV. The median consensus price target (€9.73) is in line with the offer price.

Nucleus Clyde/Curtis Banks: Spread

Founders (34.9% stake) of Curtis Banks are cashing in a recommended 350p offer (32% premium) launched when the stock had not yet fully recovered from the Covid crisis lows.
The Scheme has been approved at both the Court Meeting and General Meeting. Pending green light from FCA, PRA, SRA, CMA (none of those should pose any problem) and Court sanction.
Spread is 2.6%/10.9% (gross/annualised) assuming closing by 30 June (though it should happen earlier). Although the stock is not massively liquid, many usual arb investors are long. BUY.

💡 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 05

Daily Brief Event-Driven: ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade
Pre-Positioning Targeting Solactive Global Lithium Index’s October Rebalancing
Ramelius Bolts On Breaker
MSCI India May QCIR: Potential Changes & Special Treatment of Adani Group Stocks
Pushpay (PPH NZ): Revised Scheme Meeting on 27 April
Mincor Resources (MCR AU): Production Issues Result in the Board Succumbing to Wyloo’s Offer

ACCC Sour on ANZ/Suncorp Bank Deal Makes for A Good Trade

This morning, ACCC announced that it had released a “Statement of Preliminary Views” on the ANZ/Suncorp deal and sought further views.
For now, the ACCC questions “the nature, likelihood, and extend of claimed public benefits” including synergies or claims regarding investment in Queensland.
Based on my reading of the document, this view is likely to carry over through the final decision due mid-June 2023. That means there’s likely a trade here.

Pre-Positioning Targeting Solactive Global Lithium Index’s October Rebalancing

LG Energy Solution and Samsung SDI will remain in the index as top stocks of pack makers, respectively. Ecopro BM will almost certainly replace L&F in the category of Cathode.
SK IE Technology will newly join the index with Separator’s top stock. On the other hand, Lotte Energy Materials and SKC are unlikely to be included.
This event can be a critical inflection point in predicting the counter-flow for short positions against Ecopro BM and L&F in advance.

Ramelius Bolts On Breaker

On the 20 March, gold play Breaker Resources Nl (BRB AU) announced a Offer from Ramelius Resources (RMS AU) of 1 RMS for every 2.82 BRB shares.
The all-scrip takeover Offer backs out an implied Offer price of A$0.403/share or a 38.9% premium to last close.
The Offer is conditional on 50.1% tendering with 19.92% of shares out supportive. The first close is the 1 May.

MSCI India May QCIR: Potential Changes & Special Treatment of Adani Group Stocks

Currently, we see 1 high probability inclusion and 2 high probability deletions from the MSCI India Index at the May QCIR. Plus there are stocks close to the cutoffs.
There will be selling on two Adani Group stocks following a lowering of the Foreign Inclusion Factor (FIF). That could increase if one of them is deleted from the index.
As expected, Hindustan Aeronautics Ltd (HNAL IN) has continued to move higher post the placement and there could be more buying in the weeks ahead.

Pushpay (PPH NZ): Revised Scheme Meeting on 27 April

Pushpay Holdings (PPH NZ)’s NZ$1.42 revised offer from Sixth Street/BGH is around the midpoint of the IE’s unchanged valuation range of NZ$1.33 to NZ$1.53 per share.
Class 3 shareholders are the key vote. On the assumption of a similar voter turnout to the last scheme, 81.3% of Class 3 shares will vote for the scheme.
This is a done deal. At the last close and for the 17 May payment, the gross and annualised spread is 2.2% and 21.4%, respectively.

Mincor Resources (MCR AU): Production Issues Result in the Board Succumbing to Wyloo’s Offer

Mincor Resources NL (MCR AU)’s Board has unanimously recommended Wyloo’s unconditional off-market takeover bid at A$1.40 per share. The offer price is final.
The Board has taken the path of least resistance by recommending the offer instead of rejecting the low-balled offer and addressing the production quality issues.
The offer is attractive in terms of multiples (EV/Resource and EV/Reserve) but at a discount to recent share prices and analyst price targets. Shares are trading in line with terms.

💡 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 04

Daily Brief Event-Driven: MSCI Korea May QCIR: Potential Adds and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MSCI Korea May QCIR: Potential Adds, Deletes & ‘Extreme Price Increase’ Triggers
Selected European HoldCos and DLC: March’23 Report
HK Buybacks Q1 2023: 8 Names Are 90% of the Total – AIA, Tencent, StanChart, Greatwall the Big 4
Mincor Backs Wyloo’s Offer After BHP Offtake Uncertainties

MSCI Korea May QCIR: Potential Adds, Deletes & ‘Extreme Price Increase’ Triggers

Based on closing price from 3 April, we forecast 5 adds and 4 deletes for the MSCI Korea Index at the May QCIR.
Three of the adds are close to triggering the extreme price increase criteria – if triggered, index inclusion could be deferred to a subsequent index review.
Retail investors have been buying three of the potential adds, while foreign investors have taken the lead on two. Foreign investors have been sellers on all the potential deletions.

Selected European HoldCos and DLC: March’23 Report

Discounts to NAV of covered holdcos have shown mixed performance during March, with spreads widening until short after the UBS/CS deal, now tightening.
Discounts to NAV: C.F.Alba, 51.2%; GBL, 35.8%; Heineken Holding, 14.6%; Industrivärden C, 11.1%; Investor B, 9.7%; Porsche Automobile Holding, 49.6%. The spread of Rio Tinto DLC widened to 18.9%.
Recommended trades: Heineken Holding, Investor AB (long Investor B/short main holdings) and Rio DLC.

HK Buybacks Q1 2023: 8 Names Are 90% of the Total – AIA, Tencent, StanChart, Greatwall the Big 4

In Q1 2023, 86 different Hong Kong-listed companies bought back shares either locally or on foreign exchanges. Total buybacks were HK$22.856bn.
8 Companies made up 90% of the total. On average, they bought back shares 4 days out of every 10 within the quarter.
A lot of the smaller companies doing buybacks were significant portions of their volume.

Mincor Backs Wyloo’s Offer After BHP Offtake Uncertainties

Last week, Mincor Resources NL (MCR AU) said BHP Group Ltd (BHP AU) would not agree to amend off-take agreement specifications, and therefore would no longer accept lower-quality ore.
Mincor subsequently withdrew its earnings guidance, and Wyloo Metals shortly followed by declaring its A$1.40/share unconditional on-market Offer best and final.
This morning (4 April), Mincor released its Target Statement, and recommends shareholders accept the Offer from Wyloo.

💡 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 03

Daily Brief Event-Driven: Weekly Deals Digest (02 Apr) – AAG and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Weekly Deals Digest (02 Apr) – AAG, Liontown, Mincor, Toshiba, Rakuten Bank, Trial, Harita Nickel
Merger Arb Mondays (03 Apr) – Toshiba, Toyo, AAG, Origin, United Malt, Liontown, Mincor, Healius
Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group
Socionext Lock-Up – Up 2.67x Since IPO. US$930m Worth of Shares to Be Unlocked

Weekly Deals Digest (02 Apr) – AAG, Liontown, Mincor, Toshiba, Rakuten Bank, Trial, Harita Nickel

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 – Rakuten Bank (5838 JP), Trial Holdings (5882 JP), PT Trimegah Bangun Persada Tbk (Harita Nickel) (2230010D IJ) and Merdeka Battery Materials (2012725D IJ) IPOs.
Event-Driven developments Aag Energy Holdings (2686 HK), Toshiba Corp (6502 JP), Toyo Construction (1890 JP), Liontown Resources (LTR AU), Mincor Resources NL (MCR AU), Origin Energy (ORG AU).

Merger Arb Mondays (03 Apr) – Toshiba, Toyo, AAG, Origin, United Malt, Liontown, Mincor, Healius

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 111 Inc (YI US), Alliance Aviation Services (AQZ AU), Genesis Minerals (GMD AU), Estia Health (EHE AU), Tyro Payments (TYR AU), Aag Energy Holdings (2686 HK), Toyo.
Lowest spreads Healius (HLS AU), Liontown Resources (LTR AU), Golden Energy & Resources (GER SP), Mincor Resources NL (MCR AU), GK Goh Holdings (GKG SP), SHL Japan Ltd (4327 JP).

Hyundai Elevator: Chairwoman Hyun Jeong-Eun Loses A Major Lawsuit Against Schindler Group

By Douglas Kim

On 30 March, it was announced that Hyun Jeong-Eun (Chairwoman of the Hyundai Group) lost a final lawsuit against the Schindler Group.
The Supreme Court upheld an appeal court ruling that Chairwoman Hyun needs to pay 170 billion won (US$131 million) and delayed interest payments to Hyundai Elevator.
Although this major lawsuit loss for Chairwoman Hyun is a tremendous catalyst, the downturn in the construction sector and uncertainty in the reduction in Chairwoman’s stake remain key negatives.

Socionext Lock-Up – Up 2.67x Since IPO. US$930m Worth of Shares to Be Unlocked

By Clarence Chu

Socionext (6526 JP) was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup will expire on 9th Apr 2023.
Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation in 2015.
Coming up for six-month lockup expiry are the Development Bank of Japan, Fujitsu and Panasonic, the trio had each trimmed their respective stakes in the IPO.

💡 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 02

Daily Brief Event-Driven: Index Rebalance & ETF Flow Recap: Nikkei225 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Index Rebalance & ETF Flow Recap: Nikkei225, KOSDAQ150, KT Corp
Last Week in Event SPACE: Meituan, S.M.Entertainment, Toyo, Mincor, JD.com, AAG
EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Bull Market?
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Liontown, United Malt, Estia, Mincor, Origin, Toyo, Toshiba

Index Rebalance & ETF Flow Recap: Nikkei225, KOSDAQ150, KT Corp

The March rebalances of the NIFTY indices and the Nikkei 225 (NKY INDEX) were implemented last week. Plus some ad hoc rebalances for the KOSPI2 INDEX and KOSDQ150 INDEX.
A quieter week coming up with multiple market holidays across markets. We also near the start of the review period for the MSCI May QCIR.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and iShares FTSE/Xinhua A50 China (2823 HK) during the week while there were outflows from some Korea ETFs.

Last Week in Event SPACE: Meituan, S.M.Entertainment, Toyo, Mincor, JD.com, AAG

One may presume that Prosus (PRX NA) moved their Meituan (3690 HK) shares received from their non-CCASS holdings of Tencent (700 HK). It does not tell us much else.
Allocation in the S.M.Entertainment Co (041510 KS) partial Offer was 44.14%. With shares trading ~₩95k, that was a pretty good outcome.
Toyo Construction (1890 JP) has asked the Japanese government to investigate YFO’s alleged breaches of FEFTA. Expect YFO to say they did no wrong. Expect Toyo to complain about it.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades- Bull Market?

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

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Liontown, United Malt, Estia, Mincor, Origin, Toyo, Toshiba