Event-Driven

According to market information confirmed so far, the resumption is set for July 1st, and short selling will be restricted to the constituents of KOSPI 200 and KOSDAQ 150.
The surge in trading volume likely stemmed from the return of long-short positions post-short-selling ban, leading to an overall market volume increase.
Another critical factor is the buying pressure on value-up stocks resuming in early July. We should aim at the price impacts of intersecting long-short flows and value-up stock purchases.

Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives

In late March, AZ-Com Maruwa Holdings (9090 JP) made an unsolicited (“hostile”) bid for Chilled & Frozen Logistics Holdings (9099 JP) at a near 50% premium at ¥3,000/share.
It traded through, then C&F ran a bid solicitation process, got four bids. Since the day AFTER that announcement, the stock is up 56%. We approach Alps Logistics multiples.
This deal doesn’t get the split price benefit that HTS and Alps Logistics did. And it is a fundamentally different logistics business. And target management dynamics are different.

Tax-Loss Selling in Australia 2024 – A Trade Basket [Updated]

Three weeks after instantiation of Phase 1, the ASX200 vs LiquidBasket is +1.8% if you traded the basket VWAP the next day. vs LessLiquid it is +8.5%.
Equal weight all names in the two is +3.1%. Trade VWAP over two days it is +0.7%, +7.6%, and +2.7%. So far things are OK.
Next week one would add another basket, then in the last week of June, one would cover and reverse the trade and hold on for 30-40 trading days or so.

HKTV (1137 HK): Co-Founders’ Ruse to Increase Their Grip Through a Share Buyback at HK$2.15

Hong Kong Television Network (1137 HK) has launched a share buyback to acquire a maximum of 100.0m shares (11.25% of shares) at HK$2.15, a 20.8% premium to the undisturbed price.
The offer is conditional on approval by the requisite majority of shareholders and the approval of the whitewash waiver. There is no minimum acceptance condition, and the offer price is final.
The offer is unattractive and is an inefficient use of cash to increase the co-founders’ grip on the shares. Nevertheless, the EGM vote is likely to get up.

PropertyGuru (PGRU US): KKR/TPG Mulling a Buyout

Bloomberg reports that KKR and TPG are exploring options, including a buyout of PropertyGuru (PGRU US), and are gauging initial interest from other global investors.
The favoured privatisation option for US ADRs with the Cayman Islands incorporation is a statutory merger requiring a two-thirds voting approval threshold.
The concentrated shareholder register would suggest that TPG/KKR would aim for irrevocable from the other three substantial shareholders, facilitating a modest takeover premium.

Quiddity Leaderboard F100/250 Jun 24: Names Lurking Close to The Border Should Be Monitored

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.
Based on the current numbers, we see two F100 expected ADDs/DELs and three other F250 expected ADDs/DELs. The final changes will be decided based 4th June 2024 closing prices.
There are several names just outside the border requiring small price changes to trigger more index changes. An intra-review change is also possible.

NIFTY50 Index Rebalance Preview: Two High Probability Changes in September; Adds Are Flying

Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) should replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
Jio Financial Services (JIOFIN IN) and Zomato (ZOMATO IN) meet the free float market cap requirements but are not part of the F&O segment.
Passive NIFTY Index (NIFTY INDEX) trackers will need to trade at least 3.8 days of ADV and 9 days of delivery volume on the index changes.

NIFTY100 Low Volatility 30 Index Rebalance Preview: Bharti Could Replace Power Grid

With a week left in the review period, Bharti Airtel (BHARTI IN) could replace Power Grid Corporation Of India (PWGR IN) in the Nifty100 Low Volatility 30 Index in June.
Constituent changes, volatility changes and capping changes will result in one-way turnover of 6.4% resulting in a one-way trade of INR 2.3bn.
The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.

TAQA & Criteria/Naturgy: Imminent Offer

By Jesus Rodriguez Aguilar

Press reports that CriteriaCaixa and TAQA will launch their takeover bid for Naturgy at €27/share imminently, with conversations between CriteriaCaixa and TAQA on the distribution of control practically finished.
The offer will target approximately 54% of the share capital of Naturgy. TAQA must go through an exhaustive permit request process due to the highly regulated businesses of Naturgy.
The shares look fairly priced vs. comparables. At the closing share price of 22 May of €24.92/share, I would be long Naturgy (gross spread to hypothetical offer is 7.7%).

💡 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

May 22

Daily Brief Event-Driven: A Plausible Explanation for Korea NPS’s Unusually Large Outflow on Local Stocks in May and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

A Plausible Explanation for Korea NPS’s Unusually Large Outflow on Local Stocks in May
JAPAN ACTIVISM: Murakami Now 29% of Mitsui Matsushima. Activism? Or Effort to Make Murakami Listco
StubWorld: Bloisi’s Appointment Stalls The Prosus Accretion Trade
KOSPI Size Indices: Potential Migrations in September Are Moving
HKTV (1137 HK): $2.15/Share Buy-Back
Quiddity Leaderboard DAX/MDAX Jun 24: Hellofresh MDAX Deletion Hinges on Encavis Tender Offer Result

A Plausible Explanation for Korea NPS’s Unusually Large Outflow on Local Stocks in May

NPS’s May net selling of ₩700B likely stems from retrieving outsourced management funds to allocate to the newly selected three value-up outsider managers.
These value-up managers will start investing in Q3. NPS’s May net selling matches their allocations. We should design a setup targeting the likely inflow into value-up targets starting early July.
In particular, we should watch non-financial value-up stocks like Kia Corp and Hyundai Motor, which had more significant May price impacts likely due to NPS outflow.

JAPAN ACTIVISM: Murakami Now 29% of Mitsui Matsushima. Activism? Or Effort to Make Murakami Listco

Noted Japanese activist MURAKAMI Yoshiaki and his entities and relations went from 4.98% to 19.88% of Mitsui Matsushima (1518 JP) at an average ¥3,500/share from 2 May through 10 May.
Then they bought an additional 5.44% on 13 May, just before earnings, in the midst of a huge run-up, paying 40% more for that 5% than the first 5%.
I thought that might be the end, but in two days, they have bought an additional 9+%. There is something else going on. It is worthy of your attention.

StubWorld: Bloisi’s Appointment Stalls The Prosus Accretion Trade

Prosus (PRX NA)‘s discount to NAV and implied stub widened after Fabricio Bloisi’s CEO appointment late last week. But the sell-down of Tencent (700 HK) to buy-back Prosus will continue.
Preceding my comments on Naspers (NPN SJ)/Prosus/Tencent are the current setup/unwind tables for Asia-Pacific Holdcos
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

KOSPI Size Indices: Potential Migrations in September Are Moving

The review period for the September rebalance of the KOSPI Size Indices will run from 1 June to 31 August.
We see 6 migrations from MidCap to LargeCap, 1 new addition to LargeCap, 6 stocks moving from SmallCap to MidCap and 3 new additions to MidCap.
Stocks migrating upward have outperformed stocks migrating lower. But there are still stocks trading at a Price to Book of less than 1.

HKTV (1137 HK): $2.15/Share Buy-Back

Online shopping platform play Hong Kong Television Network (1137 HK) (better known as HKTV) has announced a buy-back of 11.25% of shares out, at $2.15/share, a 20.8% premium to undisturbed.
If successful, the Offer elevates co-founder Ricky Wong’s stake, together with concert parties, to 51.55% (before exercising options), up from 45.75% currently.
HKTV has been in the news lately for all the wrong reasons: claims of non-payments to suppliers; and delaying its 2026 target after a 79% decline in FY23’s net profit.

Quiddity Leaderboard DAX/MDAX Jun 24: Hellofresh MDAX Deletion Hinges on Encavis Tender Offer Result

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.
There could be two regular MDAX changes in June including the long-anticipated deletion of M&A candidate MorphoSys AG (MOR GR).
We do not see any changes for the DAX index based on the current numbers.

💡 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

May 21

Daily Brief Event-Driven: Carlyle To Take KFC Japan (9873) Private at ¥6 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Carlyle To Take KFC Japan (9873) Private at ¥6,500/Share – Big Win For All, a Model Transaction
L’Occitane (973 HK): Who Owns What, And When
JAPAN ACTIVISM: Murakami-Related Buyers Go from 5% to 20% of Mitsui Matsushima (1518) In 5 Days. Hmm
Block Deal Sales of 200 Billion Won Worth of Ecopro Materials by BRV Capital
KFC Holdings Japan (9873 JP): Carlyle Finger Lickin’ Tender Offer at JPY6,500
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 13% One-Way Turnover & US$2.27bn Trade
Star Entertainment (SGR AU): Hard Rock Rolls The Dice
FnGuide Top10 Index Rebalance Preview: Two Changes Possible in June
Hansol Holdings Announces a Tender Offer of 18.53% Stake in Hansol Logistics
EP Group/IDS (Royal Mail): Politically Sensitive

Carlyle To Take KFC Japan (9873) Private at ¥6,500/Share – Big Win For All, a Model Transaction

Carlyle has a deal to buy Kfc Holdings Japan (9873 JP). ¥6,500/share is a 78% premium to undisturbed as a professional holder sells in an auction to the highest bidder.
That’s a great format for achieving a great price. And we got one. This should get done easily.
Importantly, the Bidco is named Crispy KK. It is 100% owned by Juicy KK. Juicy KK itself is 100% owned by Crispy Holdings L.P. Someone had some fun.

L’Occitane (973 HK): Who Owns What, And When

A fortnight ago, I sought access to L’Occitane (973 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under Chapter 571, s329 of the Securities and Futures Ordinance.
This is the same register I discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM; and one also used by proxy solicitors.
The register confirms what has been long rumoured about a certain shareholder activist. It is also informative for what isn’t present.

JAPAN ACTIVISM: Murakami-Related Buyers Go from 5% to 20% of Mitsui Matsushima (1518) In 5 Days. Hmm

Mitsui Matsushima (1518 JP) was a coal company starting over 100yrs ago. A bunch of years ago it started a solar energy business and then started M&A to diversify.
Coal closed last year and since, MMH has become an investment holdco for “basic businesses” (drinking straws, conveyor system chains, document shredders, weighing machines, crystal measuring devices, mask blanks, etc).
Murakami Group accumulated 4.98% in five weeks, then the next 14.9% in five days. Pump & Dump like Pacific Metals? Activism like JAFCO? Or something else more interesting?

Block Deal Sales of 200 Billion Won Worth of Ecopro Materials by BRV Capital

After the market close on 20 May, it was reported that Blue Run Ventures (BRV) sold 204.1 billion won (US$150 million) worth of EcoPro Materials in a block deal sale.
The block deal sale price was 93,000 won, a 9.7% discount to the closing price on 20 May (103,000 won).
This block deal sale at a big discount is likely to raise overhang concerns about further block deal sales by BRV Capital in the coming years.

KFC Holdings Japan (9873 JP): Carlyle Finger Lickin’ Tender Offer at JPY6,500

Kfc Holdings Japan (9873 JP) has recommended a tender offer from Carlyle Group / (CG US) at JPY6,500 per share, a 20.4% premium to the last close.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 31.54% ownership ratio.
Due to the Mitsubishi Corp (8058 JP) irrevocable, the minimum acceptance condition requires a 48.6% minority acceptance rate. The acceptance condition is achievable as the offer is a knockout bid.

Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 13% One-Way Turnover & US$2.27bn Trade

Using data from the close on 17 May, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
There will also be capping and funding flows that will lead to a one-way turnover of 12.6% and a one-way trade of US$1.13bn.
Shorts have increased on the potential adds and potential deletes and covering will lead to rally in some stocks while providing support in others at rebalance implementation.

Star Entertainment (SGR AU): Hard Rock Rolls The Dice

Troubled casino operator Star Entertainment (SGR AU) announced it had “received inbound interest” from several parties, including “Hard Rock Hotels & Resorts … a local partner of Hard Rock”.
Star is in the doghouse, again, as the regulator conducts (another) review amid concerns Star did not do enough to remedy the problems identified in the first review.
Facing “serious and systemic non-compliance” with anti-money laundering laws, Star faces the distinct possibility of losing is casino licence in Sydney; and potentially the one in Queensland.

FnGuide Top10 Index Rebalance Preview: Two Changes Possible in June

The Mirae Asset Tiger Top 10 ETF (292150 KS) tracks the FnGuide Top 10 Index and has an AUM of around US$1.2bn.
We currently forecast two potential changes at the next rebalance in June – one change is high probability while one could change depending on price moves over the next week.
The trade has performed well historically with positive performance till implementation followed by reversion post implementation.

Hansol Holdings Announces a Tender Offer of 18.53% Stake in Hansol Logistics

After the market close on 20 May, Hansol Holdings announced that it is pursuing a tender offer for an additional 18.53% stake in its affiliate Hansol Logistics.
The tender offer price is 3,000 won, which is 22% higher than the close price on 20 May. The tender offer period is from 21 May to 10 June.
We have a positive view of this tender offer. Hansol Logistics trades at EV/EBITDA of 1.8x, P/E of 3.7x, and P/B of 0.6x based on 2023 figures.

EP Group/IDS (Royal Mail): Politically Sensitive

By Jesus Rodriguez Aguilar

The UK Chancellor stated that any bid for International Distributions Services (IDS LN) (Royal Mail owner) would be thoroughly evaluated for national security considerations to prevent any risks to essential infrastructure.
The Board is “minded to accept” the improved 370p takeover proposal (4.8x EV/Fwd NTM EBITDA) from Czech billionaire Daniel Kretinsky’s EP Group, should a formal bid is made.
The improved proposal seems fair. GLS is profitable, while Royal Mail aims break-even by March2025e. Concerns about potential developments post-offer pose a potential political issue. Gross spread is 13.5%.

💡 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

May 20

Daily Brief Event-Driven: FSS Head’s Aggressive Remarks for Value-Up at NY Event and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

FSS Head’s Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June
HK Connect SOUTHBOUND Flows (To 17 May 2024); Banks, Banks, Banks, Tencent, and Big SOEs
Merger Arb Mondays (20 May) – L’Occitane, China TCM, SciClone, Malaysia Airports, I’rom, Hollysys
Hang Seng Index (HSI) Rebalance: BYD Electronics Added; Country Garden Services Deleted
HSCEI Index Rebalance: Zijin Mining In; Xinyi Solar Out; SenseTime Survives (For Now)
HSTECH Index Rebalance: Float & Capping Changes Result in 8% Turnover & US$2.5bn Round-Trip Trade
A/H Premium Tracker (To 17 May 2024): Hs Rally Huge Vs As, Again. Avg A/H Premium Lowest in 4yrs
Weekly Deals Digest (19 May) – ESR Group, L’Occitane, CPMC, Malaysia Airports, I’Rom, Modec
EQD / NSE Volatility Update / 13-May-24 to 17-May-24
Mainland Connect NORTHBOUND Flows (To 17 May 2024):

FSS Head’s Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June

Lee Bok-hyun hopes for short selling to resume by late June. Given his influence on the Value-up policy, it’s likely to happen.
Lee expects key tax incentives for the value-up program to be included in the July tax reform bill, showing a market-friendly stance.
Yesterday’s New York event had a very positive atmosphere with more attendees than expected, showing genuine investor interest, likely ensuring sustained interest in Korea’s Value-up program.

HK Connect SOUTHBOUND Flows (To 17 May 2024); Banks, Banks, Banks, Tencent, and Big SOEs

SOUTHBOUND was again a net buyer for HK$18.6bn on strong two-way volumes. The top three net buys of the week were SOE banks. Some may be Central Huijin.
Some of this may be driven by the dividend w/h tax cancellation on H divs and by significant H-share discounts, but high-div CNOOC was the biggest net sell.
No end to the inflows, and HK valuations are not at a place where they would hamper continued flows. Alibaba making HK a Primary will spur more inflows over time.

Merger Arb Mondays (20 May) – L’Occitane, China TCM, SciClone, Malaysia Airports, I’rom, Hollysys

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK).
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Mimasu Semiconductor Industry (8155 JP), Boral Ltd (BLD AU).

Hang Seng Index (HSI) Rebalance: BYD Electronics Added; Country Garden Services Deleted

BYD Electronics (285 HK) will be added to the Hang Seng Index (HSI INDEX) after market close on 7 June while Country Garden Services (6098 HK) will be deleted.
Estimated one-way turnover is 1.9% and the estimated round-trip trade is HK$8.46bn (US$1.08bn) with over 1x ADV to trade in the add and delete.
We remain at 82 index constituents and the road to 100 index members looks to be a long and winding one.

HSCEI Index Rebalance: Zijin Mining In; Xinyi Solar Out; SenseTime Survives (For Now)

Zijin Mining Group Co Ltd H (2899 HK) will replace Xinyi Solar Holdings (968 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) after the close on 7 June.
An increase in the FAF for SenseTime Group (20 HK) results in the stock avoiding deletion at the June rebalance.
Estimated one-way turnover at the rebalance is 2.9% resulting in a round-trip trade of HK$3.8bn with over 1x ADV to trade on the add and delete.

HSTECH Index Rebalance: Float & Capping Changes Result in 8% Turnover & US$2.5bn Round-Trip Trade

As expected, there are no constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June. However, there are float and capping changes.
Estimated one-way turnover is 8% leading to a round-trip trade of HK$19.2bn (US$2.46bn). There is over 3x ADV to buy in Li Auto (2015 HK).
Short interest is quite elevated on a lot of stocks both in terms of days of ADV and in terms of free float.

A/H Premium Tracker (To 17 May 2024): Hs Rally Huge Vs As, Again. Avg A/H Premium Lowest in 4yrs

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 buy streak was interrupted again this past week, but they still net bought, as did NORTHBOUND. HK stocks continued their rise with liquid Hs outperforming their As by 3.8%.
There were some BIG moves the past two weeks and Average AH Premia are now the lowest in nearly four years vs near 5yr wides less than 12 weeks ago.

Weekly Deals Digest (19 May) – ESR Group, L’Occitane, CPMC, Malaysia Airports, I’Rom, Modec

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: Modec Inc (6269 JP)‘s US$535 million secondary offering.
Event-Driven developments: ESR Group (1821 HK), L’Occitane (973 HK), CPMC Holdings (906 HK), Malaysia Airports Holdings (MAHB MK), I’Rom Group (2372 JP), Great Eastern Holdings (GE SP).

EQD / NSE Volatility Update / 13-May-24 to 17-May-24

By Sankalp Singh

Curtail Short Gamma & Short Vega exposure as Vol-regime has switched to “High & Up” state.
Short-Dated IVs traded markedly lower, driven by recovering equities & the 20-May market holiday
Nifty50 vol curve is exhibiting unusual kinked shape. Monthly IVs are commanding a large vol markup relative to rest of the curve.

Mainland Connect NORTHBOUND Flows (To 17 May 2024):

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 8.8bn of A-shares on lower gross volumes. NORTHBOUND bought Luxshare, CMB, and CATL. AH Premia now lowest in 4yrs.
Foreign attitudes to HK stocks different than to mainland stocks. This may continue.

💡 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

May 19

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

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

(Mostly) Asia-Pac M&A: ESR Group, I’Rom Group, S Line, Huafa Property Services, Kansai Super Market
HSTECH June 2024 Rebal – No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way
Yichang HEC (1558 HK): Absorption Via Speculative Scrip. Avoid
HSI June 2024 Rebal – BYD Electronics (285) ADDed, Cogard Svcs (6098) DELETEd, and Capping Flows
HSCEI June 2024 Rebal – Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd
Last Week in Event SPACE: Japan Post, Great Eastern, Malaysia Airports, L’Occitane

(Mostly) Asia-Pac M&A: ESR Group, I’Rom Group, S Line, Huafa Property Services, Kansai Super Market

Tally 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Three new deals was discussed on Smartkarma this week: Malaysia Airports (MAHB MK), I’Rom Group (2372 JP) and S Line (9078 JP). ESR Group (1821 HK) also in the crosshairs.
Key updates took place on: Huafa Property Services Group (982 HK), Kansai Super Market (9919 JP) , Great Eastern Holdings (GE SP) and L’Occitane (973 HK).

HSTECH June 2024 Rebal – No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way

The Hang Seng Tech Index is more widely-followed than many think, and it is reasonably concentrated, so outperformance and underperformance by big names means capping and re-capping.
This time, those flows are worth about 8% of the index in terms of one-way flows. Meituan, Xiaomi, JD.com, Tencent and Kuaishou Tech DOWN. Li Auto back up.
Those who have pre-positioned on the big buy have recently gotten hurt. There are some FAF changes which are less predictable and may be interesting.

Yichang HEC (1558 HK): Absorption Via Speculative Scrip. Avoid

A “Privatisation via a Merger by Absorption” is nothing new in Hong Kong. But the Offer consideration for Yichang HEC (1558 HK)‘s minorities is in unlisted scrip – that’s new.
The Offeror holds 51.41% in Yichang HEC. Founder Guo Meilan and her son Zhang Yushuai control 62.12% of the Offeror. Yichang HEC shareholders are being offered 0.263614 “Offeror H shares”.
These consideration shares are unlisted. An independent valuer backs out an implied scrip value of HK$18.12-HK$20.60/share. This is a super complicated, overwrought deal. With numerous unknowns. I’d vote this down.

HSI June 2024 Rebal – BYD Electronics (285) ADDed, Cogard Svcs (6098) DELETEd, and Capping Flows

The Hang Seng Index benchmark has been expected to see an increase in names and flows to Healthcare. We have only one ADD (IT/tech) and one DELETE.
But the headlined DELETE candidate in the most recent Quiddity Leaderboard was chosen to be deleted. And the ADD one of our top two.
Flows are somewhat restrained at capping flows, small name change flows, and then a few FFW/FAF changes to be about 1.9% one-way flows in total.

HSCEI June 2024 Rebal – Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd

The HSCEI is well-known and well-followed but sees less passive tracking than you might expect. Quiddity teammember Janaghan had expected up to two ADDs and two DELETEs.
We got one ADD and one DELETE instead as SenseTime Group (20 HK) was “saved” from deletion by a FFW/FAF increase.
Relatively smaller flows here at 3% one-way with the big flows on the name changes.

Last Week in Event SPACE: Japan Post, Great Eastern, Malaysia Airports, L’Occitane

There is Japan Post Bank (7182 JP) buyback risk that might cause Japan Post Holdings (6178 JP)/JPB unwinds; though probably a H2 risk.
Great Eastern Holdings (GE SP) has consistently traded through OCBC (OCBC SP)‘s Offer terms. Someone appears to be accumulating a stake to block an Exit/Delisting Offer, and force a bump.
L’Occitane (973 HK)‘s scrip pre-condition has been satisfied. But still the Offeror prevaricates.

💡 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

May 18

Daily Brief Event-Driven: Naspers X Prosus (NPN and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Naspers X Prosus (NPN, PRX): Market Reacts Negatively to Appointment of CEO
EQD | The Nikkei Can Go Higher From Here

Naspers X Prosus (NPN, PRX): Market Reacts Negatively to Appointment of CEO

By Charlotte van Tiddens, CFA

Naspers and Prosus have announced the appointment of Fabrício Bloisi as Group CEO, effective from 1 July 2024. Unlike his predecessor, Bloisi has an entrepreneurial background.
Prosus and Naspers have sold off on the news. Prosus is down 1.7%, widening the discount by 80bps. Naspers is down 1.3%, widening the discount by 50bps.
Since Bob van Dijk stepped down in September last year, both discounts have narrowed.

EQD | The Nikkei Can Go Higher From Here

By Nico Rosti

The Nikkei 225 INDEX has been rallying a bit last week and closed the week up. A rebound from the previous downtrend is underway.
A temporary bottom may have been established in May, it is not clear if the index is about to go lower or higher, but our pattern model readings suggests higher.
If the index continues to rally, the first major resistance area will be around 40k.

💡 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

May 17

Daily Brief Event-Driven: Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse
L’Occitane (973 HK): Dilemma as the Share Alternative Pre-Condition Met
L’Occitane (973 HK): On Activism And The Scrip Alternative
Kansai Food Market (9919) Minorities Get Squeezed into H2O Retailing (8242)
Business On The Fly: Malaysia Airports (MAHB MK)’s RM11.00/Share Offer
Quiddity Leaderboard ASX Jun 24: Intra-Review Replacement Surprise Possible
Block Deal Sale of 3% Stake in HD Hyundai Heavy Industries
Huafa Property (982 HK)’s Potential Offer
Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

Sep24 Nikkei 225 Rebal – Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).
There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.

L’Occitane (973 HK): Dilemma as the Share Alternative Pre-Condition Met

L’Occitane (973 HK) announced that the share alternative pre-condition was satisfied. However, The share alternative offer is at the offeror’s discretion and with the consent of the financing parties.
The share alternative offer poses a dilemma due to the requirement to satisfy the minimum acceptance condition while not breaching the upper limit of the share alternative offer.
The share alternative offer is a play on higher multiples by relisting the business. At HK$50.00, L’Occitane would trade in line with its median global beauty peers’ multiples.

L’Occitane (973 HK): On Activism And The Scrip Alternative

In the 29th April HK$34/share VGO announcement, a share scrip alternative may be afforded if 10% of L’Occitane (973 HK)‘s disinterested shareholders expressed interest by the 15th May
That pre-condition has been satisfied. However, we are none the wiser whether you receive shares of the levered-up Bidco, at some undetermined scrip ratio; or keep shares of L’Occitane as-is.
Some shareholders, like Butler Hall, considered terms low-balled. They now have the option to rollover. But there are still other large activists on the register, whose intentions are not known.

Kansai Food Market (9919) Minorities Get Squeezed into H2O Retailing (8242)

Two and a half years ago, H2O Retailing (8242 JP) the 10.9% owner, arranged to merge its own units into Kansai Super Market (9919 JP) to get control. OK Corp complained.
OK Corp offered to double the price in a Tender Offer but wouldn’t go hostile. KSM/KFM said no go. Shares popped to ¥2,000+ then when the deal failed, they fell.
H₂O ended up with 58% (64.9% of votes now). The ultimate goal was to swallow it paying zero premium. On 15 May, it announced the merger to do just that.

Business On The Fly: Malaysia Airports (MAHB MK)’s RM11.00/Share Offer

Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and Global Infrastructure Partners, are offering to buy all shares not already owned in Malaysia Airports Holdings (MAHB MK) at RM11.00/share.
The pre-conditional voluntary Offer price is a 5.77% premium to last close; but a life-time high. The Offeror consortium collectively holds 41.22% of shares out.
The pre-cons include regulatory approvals (in Malaysia, Turkey, Saudi Arabia, and Egypt). The Offer is subject to a 90% acceptance condition; which may be reduced.

Quiddity Leaderboard ASX Jun 24: Intra-Review Replacement Surprise Possible

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
We expect one ASX 20 change and two ASX 100 changes during the regular rebalance event.
For the ASX 200 index, there could be two intra-review changes in the month of June 2024 and one of those names could be a surprise.

Block Deal Sale of 3% Stake in HD Hyundai Heavy Industries

HD Korea Shipbuilding & Offshore Engineering (009540 KS) plans to sell 2.66 million shares (3% of outstanding shares) of HD Hyundai Heavy Industries (329180 KS) in a block deal sale.
We would avoid participating in this block deal sale and we have a Negative view of HD Hyundai Heavy Industries (329180 KS) over the next one year.
After this block deal sale, we believe there could be concerns about HD Korea Shipbuilding & Offshore Engineering potentially selling additional shares of HD HHI in the next 2-3 years.

Huafa Property (982 HK)’s Potential Offer

Huafa Property Services Group (982 HK) is currently suspended pursuant to the Takeovers Code.
This SOE-backed property management play recently announced its highest-ever earnings.
Shares have gained ~32% in the past fortnight, touching a three-year high. IF an Offer were to unfold, expect an Offer Price ~10% above the last close.

Potential Samsung Life Insurance Block Deals, Likely to Be Triggered by E Mart

Talks circulate that E-Mart may sell its 5% stake in Samsung Life Insurance, valued around ₩1T, due to fundraising needs linked to SSG.com investors’ put options.
Initially, Starbucks Korea was a potential sale, but U.S. HQ approval makes it unfeasible. Shinsegae L&B and Food weren’t enough to raise funds, leading E-Mart to focus on Samsung Life.
E-Mart’s block deal timing is uncertain due to potential legal disputes over unmet put option conditions, yet recent local market discussions suggest E-Mart may avoid legal battles.

💡 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

May 16

Daily Brief Event-Driven: Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June
Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows
Malaysia Airports (MAHB MK): Pre-Conditional Voluntary Offer at RM11.00
S Line (9078 JP) TOB/MBO at 0.57x Book – Wrong Price by Far but Only AGGRESSIVE Activism Blocks It
Lock & Lock: Second Tender Offer by Affinity Equity Partners
SK Group’s Restructuring Plans for SK IET and an Earnings Shock for SK IET in 1Q 2024
Quiddity Leaderboard SET50 Jun 24: BANPU Vs SAWAD Has to Be Monitored Closely
Liquid Universe of European Ordinary and Preferred Shares: May‘24 Report
Ecopro Materials Lockup Expiry – US$1.5bn Lock-Up Expiry, Can Expect Selling Pressure

Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats

Today, Japan Post Holdings (6178 JP) announced results (and Mar25 guidance) as did its subsidiaries Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP).
There are a number of interesting things in all the announcements/presentations but the most interesting one for JPH holders is a big buyback. Another one.
The company has announced a ¥350bn buyback. It is larger than last year’s (¥300bn) buyback and has another important difference.

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June

Post market close tomorrow, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 June.
There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.
Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.

Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows

Along with its fiscal 2024 results, Alibaba (9988 HK) announced that they were preparing for their primary listing in Hong Kong and the conversion was expected to complete by August.
If the conversion is completed by the end of August, Alibaba (9988 HK) could be added to Southbound Stock Connect in September and that could bring in significant flows.
We do not forecast any passive inflows due to the change with Alibaba Group Holding (9988 HK) capped at 8% of the HSI, HSCEI and HSTECH indices.

Malaysia Airports (MAHB MK): Pre-Conditional Voluntary Offer at RM11.00

Malaysia Airports Holdings (MAHB MK)’s pre-conditional voluntary conditional offer from a four-member consortium is RM11.00, a 5.8% premium to the last close.
Despite the offer representing an all-time high, the 90% minimum acceptance condition could be challenging due to the low takeover premium and discount to historical and peer multiples.
The consortium can overcome issues satisfying the minimum acceptance condition by bumping the offer or lowering the acceptance condition.

S Line (9078 JP) TOB/MBO at 0.57x Book – Wrong Price by Far but Only AGGRESSIVE Activism Blocks It

Today, S Line Co Ltd (9078 JP) announced its CEO would conduct a Tender Offer MBO to buy out the ¥50bn-target revenue logistics company, at 0.6x book.
The company announced results with revenues up. But withdrew its existing MTMP which said revenues would be up 10% from here to March 2025 and ROE would be higher.
This is the wrong price. It should engender some upset, but active investors own almost nothing it seems.

Lock & Lock: Second Tender Offer by Affinity Equity Partners

On 15 May, it was reported in the local media that Affinity Equity Partners (AEP) is expected to launch a second tender offer for Lock & Lock (115390 KS).
The tender offer price in this second tender offer is 8,750 won (same as the first tender offer). The second tender offer will last from 16 May to 5 June.
In the first tender offer, only about half of the target was reached. There was a strong backlash from investors due to low tender offer price.

SK Group’s Restructuring Plans for SK IET and an Earnings Shock for SK IET in 1Q 2024

According to Maekyung Business Daily, SK Innovation maybe planning to sell its controlling interest in SK IE Technology (SK IET) which produces separators for rechargeable batteries.
SK On is experiencing financial difficulties due to the sluggish demand for EVs. SK Innovation’s 61.2% stake in SK IET is worth 2.5 trillion won.
SK IE Technology had an earnings shock in 1Q 2024. It had sales of 46.2 billion won (67.8% lower than consensus) and operating loss of 67.4 billion won 1Q 2024.

Quiddity Leaderboard SET50 Jun 24: BANPU Vs SAWAD Has to Be Monitored Closely

The SET50 index tracks the performance of the top 50 largest and most liquid names listed on the Stock Exchange of Thailand (SET).
In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
Although 80% of the 3-month reference period is now complete, it is still possible for the rankings to change.

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

By Jesus Rodriguez Aguilar

Since mid-April, spreads have generally tightened across our European liquid universe of ordinary and preferred shares (12 have tightened, 7 widened). Views are unchanged.
Recommended trades long preferred / short ordinary shares: Atlas Copco, Danieli, Grifols (see section on the company), Media-for-Europe, Sixt, Volkswagen.
Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal, Roche.

Ecopro Materials Lockup Expiry – US$1.5bn Lock-Up Expiry, Can Expect Selling Pressure

By Ethan Aw

EcoPro Materials (450080 KS) raised around US$320m in its Korean IPO, after pricing the deal at KRW36,200/share. Its six-month IPO lockup will expire on 17th May 2024.
Ecopro Materials (EPM) manufactures and sells high-nickel precursors, one of the key materials for high-nickel cathode materials for secondary (rechargeable) batteries.
In this note, we will talk about the lock-up dynamics and updates since our last note.

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

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

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

May 15

Daily Brief Event-Driven: Tencent Q1 FY24 Results Due and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tencent Q1 FY24 Results Due, a Look into What Is Priced
Key Timing Window for a Surge in Block Deals Before Pre-Disclosure Takes Effect in July
Tencent (700 HK): Q1 FY24 Results Quick Take, Margin Expansion Drives Decent Set of Results
Another HUGE Ushio (6925) Buyback After A HUGE Buyback Last Year
Japan – Another Big Round of Passive Selling
Great Eastern (GE SP): Getting Technical
Quiddity HSTECH Jun 24 Final Expectations: US$1.6bn One-Way; Li Auto, JD, Xiaomi, Meituan, & Tencent
Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow

Tencent Q1 FY24 Results Due, a Look into What Is Priced

By Charlotte van Tiddens, CFA

Tencent is due to release Q1 FY24 results today. The earnings call is scheduled for 14:00 SAST
In this note, we unpack what is priced and how Tencent has performed relative to constituents in the HSTECH index since our last update (29 April).
We also provide an update on how the discounts of Naspers and Prosus have traded.

Key Timing Window for a Surge in Block Deals Before Pre-Disclosure Takes Effect in July

Anticipation grows for increased block deals before July 24th’s pre-announcement rule takes effect, emerging as a key investment focus in the local market.
The local market expects heightened activity in the three weeks post-May 15th, following first-quarter earnings announcements, a strategic move to mitigate insider trading controversies.
Local traders eagerly await which companies will capitalize on the post-first-quarter earnings window, with a highly anticipated block deal involving SK Innovation selling a portion of its stake in SKIET.

Tencent (700 HK): Q1 FY24 Results Quick Take, Margin Expansion Drives Decent Set of Results

By Charlotte van Tiddens, CFA

Tencent reported a decent set of results for Q1 FY24. Revenue for the quarter was up 2.8% QoQ and 6.3% YoY, ahead of consensus estimates (2.3% & 5.9%).
The gross margin came in at 53%, 3 percentage points ahead of consensus, and an increase of 7 percentage points on Q1 FY23.
The gross margin for the Fintech and Business Services segment, which accounts for 33% of revenue, increased by 12 percentage points to 46% (consensus 42.6%).

Another HUGE Ushio (6925) Buyback After A HUGE Buyback Last Year

Last year with earnings, Ushio Inc (6925 JP) announced a HUUUGE buyback discussed in HUUUGE Ushio (6925) Buyback. The headline was 17% of shares out. They ended up buying 13.2%.
Last year the stock popped on the news. Then shares went sideways for months. Then they went up on stable (bad) earnings guidance in H2. Today they beat Q3-updated guidance.
But today they announced a “new growth strategy” to 2030, and guided to a SHARP (-60%) drop in OP and NP to March 2025, and announced a HUUUGE Buyback. Again.

Japan – Another Big Round of Passive Selling

There are 15 stocks in Japan that will be sold by passive trackers at the close on 31 May.
Short interest has been increasing in these stocks over the last few months and there will be covering on implementation date.
Cumulative excess volume on all stocks has risen in the last couple of months though the pace of the increase has varied.

Great Eastern (GE SP): Getting Technical

Great Eastern Holdings (GE SP) has consistently traded through OCBC (OCBC SP)‘s Offer terms from the onset.
OCBC did not declare its S$25.60 cash Offer final. And someone appears to be accumulating a stake to block an Exit/Delisting Offer, presumably towards negotiating a bump in terms.
But what happens if GE’s free float falls <10% at the close of the Offer and GE is suspended? And OCBC has no intention of restoring the float?

Quiddity HSTECH Jun 24 Final Expectations: US$1.6bn One-Way; Li Auto, JD, Xiaomi, Meituan, & Tencent

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
The final results for the June 2024 index rebal event will be confirmed after market close on Friday 17th May 2024.
In this insight, we take a look at our latest flow expectations.

Quiddity HSCEI Jun 24 Final Expectations: 2 Changes Likely; US$496mn One-Way Flow

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
The index changes and indicative weights for the June 2024 index rebal event will be announced after market close on Friday 17th May 2024.
In this insight, we take a look at the potential index changes and our latest flow expectations.

💡 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

May 14

Daily Brief Event-Driven: ESR Group (1821 HK): Offer Musings and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ESR Group (1821 HK): Offer Musings
ESR Group (1821 HK): Starwood Capital and SSW Partners Gauging a Privatisation Bid
Blackstone to Take I’rom (2372 JP) Private in MBO at ¥2800/Share (49% Premium)
Aozora (8304) – Daiwa Securities Group (8601) Tie-Up – Daiwa To Buy 15+%
Toppan Printing (7911) Accelerates Buyback Pace and Amount; But Crossholder Sales Lurk
Luxottica Buys Washin Optical, Paris Miki Next?
Softbank (9984 JP): Has Group NAV Peaked?
CSI Medical Service Index Rebalance Preview: Repeat of the December Rebal Could See Big Gains
I’rom Group (2372 JP): Blackstone-Sponsored Pre-Conditional MBO at JPY2,800
A Comparison Between Ecopro Materials & HD Hyundai Marine Solution Post IPO

ESR Group (1821 HK): Offer Musings

Back in February this year, various media sources reported that the key shareholders of warehouse/fund management play ESR Group (1821 HK), were exploring options, including a privatisation.
Long-Term holders Warburg Pincus and Canadian pension fund OMERS hold 14% and 10.7% respectively. ESR co-founders/directors Jeffrey Shen, Stuart Gibson, Charles de Portes, and Hwee Chiang collectively hold another ~23%.
Shares in ESR were suspended this morning “pursuant to the Hong Kong Code on Takeovers and Mergers“.

ESR Group (1821 HK): Starwood Capital and SSW Partners Gauging a Privatisation Bid

ESR Group (1821 HK) is on a trading halt. Press reports suggest a consortium featuring Starwood Capital Group and SSW Partners is considering a buyout.
Starwood and SSW are approaching other shareholders to join the consortium. The other members are likely Warburg Pincus, OMERS, Jinchu Shen, and Hwee Chiang Lim.
The offer is likely to be structured as a Cayman privatisation scheme. Our best guess is that an offer of at least HK$14.00 per share would be needed.

Blackstone to Take I’rom (2372 JP) Private in MBO at ¥2800/Share (49% Premium)

Today SMO and CRO operator I’Rom Group (2372 JP) announced an MBO where Blackstone would be the sponsor.
From outward appearances, it would seem to be an estate management exercise. It’s not particularly rich as a bid, but it isn’t awful.
I expect this gets done as Mori-san and family and friends appear to have 58% going in. Expected to start in June.

Aozora (8304) – Daiwa Securities Group (8601) Tie-Up – Daiwa To Buy 15+%

Pre-Open on February 1 2024, Aozora Bank Ltd (8304 JP) announced writedowns and a forecast revision, lowering full-year net profit expectations from +¥24bn to -¥28bn.
Shares which had been trading relatively richly (and heavily shorted) fell sharply over the following days, then noted activist Murakami-san started buying in. Then he bought more and went silent.
Today, Aozora reported full-year earnings – much worse than expected and Mar25 guidance lower than already low Street estimates. And they are selling 15% stake to Daiwa Securities Group. Oof!

Toppan Printing (7911) Accelerates Buyback Pace and Amount; But Crossholder Sales Lurk

Toppan Printing (7911 JP) established a new Medium-Term Management Plan with targets in May 2023. 8% ROE, PBR >1.0x. More DX business. More management modernisation. More ESG. Mooooarrrrr!
They also promised capital measures: ¥100bn of buybacks over three years. Total shareholder return of 50%+ over three years. More progress in selling down cross-holdings.
Today the company reported better-than expected full-year revenues, OP, and Net Profit, added more to the buybacks, and shortened the buyback period to two years. Details matter.

Luxottica Buys Washin Optical, Paris Miki Next?

By Michael Causton

EssilorLuxottica has always played a long game in Japan but since 2018 the eyewear giant has been investing in local production and a growing store network.
As reported by Mark Chadwick,Travis Lundy and myself, Luxottica has a stake in Paris Miki Holdings (7455 JP) and the Japanese firm is a key strategic interest for EssilorLuxottica.
That Luxottica is increasing its investments in Japan retail through acquisition is evidenced by its takeover of Washin Optical, a 70-store eyewear chain, last month.

Softbank (9984 JP): Has Group NAV Peaked?

By Victor Galliano

Arm’s valuation has driven the group NAV to a new high at fiscal year-end in March; with Arm accounting for 45% of group equity value, NAV downside risk is high
JPY depreciation has been NAV supportive, but this could reverse; SVF2 remains very exposed to financing costs, with 87% of its equity value in private companies
Softbank shares trade at a 57% discount to the estimated NAV; yet the downside risks to Arm’s valuation, along with SVF2 valuation headwinds, should keep the discount wide

CSI Medical Service Index Rebalance Preview: Repeat of the December Rebal Could See Big Gains

The review period ended on 30 April, there are just over 2 weeks to announcement of the changes, and implementation will be done at the close on 14 June.
We forecast 5 potential changes for the index in June where there could be buying of 1.6-2.6x ADV on the adds and selling of 0.7-2.6x ADV on the deletes.
At the December 2023 rebalance, the adds outperformed the deletes in the weeks prior to announcement of the changes and then spiked post-announcement. Repeat this time?

I’rom Group (2372 JP): Blackstone-Sponsored Pre-Conditional MBO at JPY2,800

I’Rom Group (2372 JP) recommended a Blackstone (BX US)-sponsored pre-conditional MBO at JPY2,800, a 49.5% premium to the undisturbed price.
Approvals under the competition laws of Japan and Australia are a precondition. The tender offer is expected to start in mid-June.
The offer is attractive and requires a 37% minority acceptance rate. While the timing of regulatory approvals is a risk, the transaction is a done deal.

A Comparison Between Ecopro Materials & HD Hyundai Marine Solution Post IPO