Event-Driven

Asia Cement China (743 HK) disclosed a Cayman scheme privatisation offer from Asia Cement (1102 TT) at HK$3.22. Including the dividend, the total offer is HK$3.26, 1.7% below the last close.
The offer, which is final, is unattractive as it is materially below net cash and historical trading ranges. The disparity cannot be justified by the potential cash burn this year.
While no shareholder holds the 10% blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break.

Value-Up Tax Support Revealed by End of June: Local Market Eyes Corporate Tax Cut Beneficiaries

A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.
Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.
Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.

CK Asset Holdings (1113 HK): First Down, Then Up?

CK Asset Holdings (1113 HK) has traded lower recently and shorts have exploded in the stock in the last few months.
CK Asset Holdings (1113 HK) has underperformed its peers in the last 6 months and trades cheaper on forward PE and price to book.
There will be passive selling in the stock in just over two weeks. There will be positioning, but not enough to meet passive supply. Expect a further move lower.

Maxell (6810) Launches New MTMP, A “TSE ‘ATIMAoCoC&SP'” Notice, And A Buyback

Today, Maxell Ltd (6810 JP) announced its new MTMP “MEX26 – Commit to Value (CorporateValue,ProfitGrowth)” with lots of consultant-speak and corporate homily.
But they present a capital investment plan, and a capital return plan. These may interest investors. The buyback is the same size as 2019 and 2022. They popped and faded.
Todays tidbits were all announced during the lunch break today, and the stock popped 6% in the PM session on the news.

Asia Cement (743 HK): $3.22/Share Offer – Really?

After Chinese cement play Asia Cement China (743 HK) (ACC) was suspended on the 28th May, a punchy Offer from its parent Asia Cement (1102 TT) was expected.
Not to be. Asia Cement is offering $3.22/share, best & final. A 3.01% discount to last close, ~ 45% premium to undisturbed, and a whopping 37% discount to net cash.
Asia Cement plus concert parties hold 73.38%, so a blocking stake at the Court Meeting is 2.662%. One (possible) aspect in Asia Cement’s favour is that ACC is not shortable.

Quiddity Leaderboard S&P 500 Jun 24: Ranks to Be Finalized Tomorrow; 2 Changes Possible

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
The rankings used for the June 2024 index rebal event will be decided based on the opening prices tomorrow (6th June 2024).
In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.

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Jun 05

Daily Brief Event-Driven: Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update
HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)
MSC May Rebalance: SA & China Net Sells, NPN, PRX & Tencent Sold Down on Buybacks
StubWorld: What Now With Langham (1270 HK)?
HSI/HSCEI/HSTECH June 2024 Rebal Final Re-Capping (Or Re-Re-Capping) Flows
Northern Minerals (NMI AU): Chinese Investors Forced To Exit
Quiddity ChiNext/ChiNext 50 Jun 24 Rebalance: ~US$700mn One-Way Flows; Thoughts on Surprises
China TCM (570.HK) Privatization Update – Investors May Need to Prepare for a Longer Wait
GS Retail: Equity Spin Off of Parnas Hotel and Freshmeat Subsidiaries
MV Australia A-REITs Index Rebalance Preview: ASK May Be Deleted; HMC Close Add; Capping Changes

Shinko Electric (6967) – Break/Gap Risk Early June 2024 Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
Nearly 5mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 12wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 2.6% wider than at narrowest. In May, gap risk narrowed as Shinko underperformed Ibiden.

HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (June 2024)

The June rebalance of the HSI, HSCEI INDEX, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$32bn (US$4.1bn).
Li Auto, Alibaba, NetEase, Zijin Mining, SenseTime and BYD Electronics are the largest buys while Tencent, Meituan, JD.com, Kuaishou Technology, Xiaomi and HSBC Holdings are the largest sells.

MSC May Rebalance: SA & China Net Sells, NPN, PRX & Tencent Sold Down on Buybacks

By Charlotte van Tiddens, CFA

MSC indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R41.9bn, R25bn traded in the closing auction (60%).
Turnover at the February rebalance was R25.6bn. Most SA constituents were pushed lower in the closing auction and for the day, consistent with the downweighting of SA Inc.
China was downweighted in the ACWI and EM indices for a second straight quarter, reducing the country weight in ACWI by 6bps to 2.69%.

StubWorld: What Now With Langham (1270 HK)?

Unexpectantly, Great Eagle Holdings (41 HK) said it would not proceed with an Offer; and Hong Kong hotel-play Langham Hospitality (1270 HK) promptly cratered. But why the flip flop?
Preceding my comments on GE, Langham and Champion REIT (2778 HK), 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%.

HSI/HSCEI/HSTECH June 2024 Rebal Final Re-Capping (Or Re-Re-Capping) Flows

The HSI added BYD Electronics (285 HK) and deleted Country Garden Services (6098 HK). HSCEI added Zijin Mining Group Co Ltd H (2899 HK) deleted Xinyi Solar Holdings (968 HK)
HSTECH had no changes, but lots of flow. The index team sets capping levels, then resets them a three days before the actual rebalancing. There were some capping/recapping changes.
Below we offer tables showing all the changes and flows across the indices for each stock, ranked by Flows, ADV, and Ticker. And a spreadsheet with all the relevant data.

Northern Minerals (NMI AU): Chinese Investors Forced To Exit

Back in February last year, the Aussie Treasurer prohibited Yuxiao Fund from buying an additional 9.92% in Northern Minerals (NTU AU) which would have increased its stake to 19.9%.
On the 20th November 2023, Yuxiao sought the removal of Nicholas Curtis as director of the rare-metal play at an EGM; however Curtis resigned his post and the EGM cancelled.
The Aussie Treasurer has now made orders requiring Yuxiao and four (deemed) associated investors to sell their holdings (~10.4% all-in) within 60 days.

Quiddity ChiNext/ChiNext 50 Jun 24 Rebalance: ~US$700mn One-Way Flows; Thoughts on Surprises

The June 2024 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
There will be seven changes for the ChiNext index and five changes for the ChiNext 50 index. Some of these names surprised us.
In this insight, we take a look at our final flow expectations for the confirmed index changes and our thoughts on the selection process.

China TCM (570.HK) Privatization Update – Investors May Need to Prepare for a Longer Wait

By Xinyao (Criss) Wang

The approval/filing process of China TCM’s privatization is complicated and would take some time, but there’re almost no cases of disapproval. It also depends on the adequacy of materials submitted.
Due to the extension of time for the despatch of Scheme Document, this process would be delayed for more months.But we should receive clear information by October at the latest.
For arbitrageurs, China TCM is an investment opportunity of high success rate, which becomes more attractive if HK stock market is depressed.It’s better suited to idle funds considering potential risks/returns.

GS Retail: Equity Spin Off of Parnas Hotel and Freshmeat Subsidiaries

On 3 June, GS Retail (007070 KS) announced that it will spin off Parnas Hotel and Freshmeat subsidiaries to simplify its business structure and enhance shareholder value.
The company plans to create a new entity tentatively called Parnas Holdings which will include Parnas hotel and Freshmeat (a meat processing company).
We have a positive view of GS Retail’s decision to conduct this equity spin off which simplifies the business structures and it could raise the valuation multiples of GS Retail.

MV Australia A-REITs Index Rebalance Preview: ASK May Be Deleted; HMC Close Add; Capping Changes

The review period for the June rebalance ended last week. There could be one deletion from the index and a bunch of capping changes.
There is one stock that is close to inclusion zone but may not make it in June.
The expected index changes will lead to a one-way turnover of 2.5% resulting in a one-way trade of A$14m. That will increase if there is an inclusion.

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Jun 04

Daily Brief Event-Driven: ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade
Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100
CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock
Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).
Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won
Quiddity STAR 50/100 Jun 24 Rebalance: US$1bn+ One-Way Flow; Some Surprises; New Trade
APM Human Services (APM AU): Madison Dearborn Partners’ Binding Proposal at A$1.45
Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month
Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay

ChiNext/ChiNext 50 Index Rebalance: US$1bn Round-Trip Trade

There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 5/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the one-way trade across both indices is estimated to be CNY 3.69bn (US$508m).

Updated Tool (31May24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”

In mid-January 2024, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
The TSE list shows which companies have disclosed a policy/consideration. But no data/links. We are weeks ahead of the TSE and we have all the links (and the shame list).
We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.

Nagatanien Holdings (2899 JP): Marunouchi Capital-Sponsored MBO at JPY3,100

Nagatanien Holdings (2899 JP) recommended a Marunouchi Capital-sponsored MBO at JPY3,100, a 38.4% premium to the undisturbed price.
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The offer period is from 4 June to 16 July.
While not a knockout bid, the offer represents a five-year high and requires a 58% minority acceptance rate. This is a done deal with payment commencing from 23 July.

CSI Esoteric Index Rebals Jun 24: All Share Brokerage, China Internet, Medical, Defense, & Livestock

We have already discussed our flow expectations for the mainstream indices in the CSI family such as CSI300/500, SSE50/100, and the STAR50/100 for the June 2024 index rebal event.
In this insight, we take a look at our flow expectations for the ADDs/DELs involved in the rebalance of some of the lesser known indices in the CSI family.
The indices covered in this insight are All Share Brokerage, China Internet, Medical Devices, National Defense, and Livestock Breeding indices.

Another Day Ending in Y, Another MBO Done Too Cheap. Today? Nagatanien (2899 JP).

MitCorp – the largest shareholder – and the Nagatani family – today announced an MBO where they will buy a classic ubiquitous brand at an Adjusted EV of 5.4x EBITDA.
The equity check appears to buy at ~2.5x Mar27-29 average FCF but they probably have 50% of the shares in the bag. Retail, or who they sell to, matter.
There is room for a noisy activist to get involved here and disrupt the retail ownership. But there are very few of those around. And none in it now.

Impact on SK Inc Post Record Divorce Ruling for SK Group Chairman Chey Tae-Won

We discuss the outlook for the likely impact on SK Inc post record divorce ruling for the SK Group Chairman Chey Tae-Won and his estranged wife Roh So-Young.
Last week, a South Korean appellate court ordered Chairman Chey to pay 1.38 trillion won to Roh. Chey is appealing this case and the Supreme Court’s ruling is still pending.
It is in the best interest of SK Inc to raise the overall value of the company since the payment of the divorce is mostly based in cash.

Quiddity STAR 50/100 Jun 24 Rebalance: US$1bn+ One-Way Flow; Some Surprises; New Trade

The June 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 31st May 2024.
There will be 3 changes for the STAR 50 index and 9 changes for the STAR 100 index.
We expect one-way flows of approximately US$750mn and US$314mn for the STAR 50 and STAR 100 index rebal events in June 2024.

APM Human Services (APM AU): Madison Dearborn Partners’ Binding Proposal at A$1.45

APM Human Services (APM AU) has entered a SID with Madison Dearborn Partners (MDP) at A$1.45 per share, a 27.5% discount on CVC’s aborted non-binding proposal of A$2.00 per share.
FIRB approval should be forthcoming as MDP is the largest shareholder, representing 45.56% of outstanding shares.
The offer is disappointing but a weak trading update, deal fatigue and a concentrated shareholder register facilitate it. At the last close, the gross spread was 5.3%.

Quiddity SSE50/180 Jun 24 Rebalance: US$1.8bn One-Way Flow; LONGs up 8.6% Vs SHORTs in a Month

The June 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 31st May 2024.
There will be 5 changes for the SSE 50 index and 18 changes for the SSE 180 index.
These changes could collectively cause one-way index flows of ~US$1.8bn during the June 2024 index rebal event. In this insight, we take a look at our final flow expectations.

Kakao Pay Lockup Expiry – US$1bn Overhang from Alipay

By Sumeet Singh

Alipay will come out of its placement linked lockup for its remaining stake in Kakaopay (377300 KS) today.
Alipay (i.e. Alibaba Group (9988 HK)) had earlier sold some of its stake in Jun 2022 and Mar 2024. It still has over US$1bn worth of shares left to sell.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

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Jun 03

Daily Brief Event-Driven: Teijin (3401 JP): Alternative Play on the Potential Infocom Tender and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern
Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention
Tax-Loss Selling in Australia 2024 – The May Basket (April Basket +2.3 to +6.3% Rtn)

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender

Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion.
If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.
United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.
United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.

SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance

There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

Quiddity CSI 300/500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%.

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.

Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern

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), Chilled & Frozen Logistics Holdings (9099 JP), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK).
Lowest spreads: Great Eastern Holdings (GE SP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Mimasu Semiconductor Industry (8155 JP), Kfc Holdings Japan (9873 JP), Alumina Ltd (AWC AU).

Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

Tax-Loss Selling in Australia 2024 – The May Basket (April Basket +2.3 to +6.3% Rtn)

I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
The portfolio worked well in April. Now we let April ride and add the May basket.

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Jun 02

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

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

(Mostly) Asia-Pac M&A: Huafa Prop, Asia Cement, QV Equities, Sciclone, Chilled & Frozen Logistics
Weekly Deals Digest (02 Jun) – Infocom, CF Logistics, Asia Cement, GA Pack, Huafa, Shift Up
Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma
Mainland Connect NORTHBOUND Flows (To 31 May 2024): Net Sell Flows on Weak Gross Volumes
HK Connect SOUTHBOUND Flows (To 31 May 2024); Private Tech, Energy/Financial SOEs See BIG Net Buys
KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out
(Mostly) Asia M&A, May 2024: Malaysia Airports, Alps Logistics, Nihon Housing, Great Eastern
Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap
A/H Premium Tracker (To 31 May 2024): HK Stocks Have an Ugly Week; AH Premium in Liquid Pairs Rises

(Mostly) Asia-Pac M&A: Huafa Prop, Asia Cement, QV Equities, Sciclone, Chilled & Frozen Logistics

I 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.
One new deal was discussed on Smartkarma this week:Huafa Property Services Group (982 HK)‘s Scheme. Asia Cement China (743 HK) also suspended pursuant to the Takeovers Code.
Key updates took place on: QV Equities (QVE AU), Boral (BLD AU), Greatview Aseptic Packaging (468 HK), Sciclone Pharmaceuticals (6600 HK), and Chilled & Frozen Logistics Holdings (9099 JP).

Weekly Deals Digest (02 Jun) – Infocom, CF Logistics, Asia Cement, GA Pack, Huafa, Shift Up

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: Shift Up (462870 KS) seeks to raise up to US$320 million.
Event-Driven developments: Asia Cement China (743 HK), Greatview Aseptic Packaging (468 HK), Huafa Property Services Group (982 HK), Chilled & Frozen Logistics Holdings (9099 JP), Infocom Corp (4348 JP).

Last Week in Event SPACE: Mitsui Matsushima, China Merchants,Kansai Paint, Teijin, Sciclone Pharma

Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
Two activist shareholders. And long only upping its stake. Heavily discounted China Merchants China Direct Investments (133 HK) is in play.
A HUGE new buyback for Kansai Paint (4613 JP). Really big. Buy Kansai Paint vs Nippon Paint. One can buy the pop. One can buy any dips after the pop.

Mainland Connect NORTHBOUND Flows (To 31 May 2024): Net Sell Flows on Weak Gross Volumes

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net SELL RMB 5.7bn of A-shares on lower gross volumes. NORTHBOUND bought Zijin, Yangtze Power, and renewables and sold SOEs.
Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

HK Connect SOUTHBOUND Flows (To 31 May 2024); Private Tech, Energy/Financial SOEs See BIG Net Buys

SOUTHBOUND was again a net buyer for HK$29.7bn on small two-way volumes. Bank Of China Ltd (H) (3988 HK) dropped to #4 this week but SOE buying dominated.
It is not clear how much of this is H/A discounts, expected dividend tax removal, and the KPIs for SOE CEOs to raise prices and payout ratios, but it continues.
Valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out

ZX (9890 HK) will replace Fenbi Ltd (2469 HK) in the KraneShares CSI China Internet ETF (KWEB US) at the close on 14 June.
There will be over 6 days of ADV to sell in Fenbi Ltd (2469 HK) and we estimate over 2 days of ADV to buy in ZX (9890 HK).
There are other ETFs that track very similar indices and there could be a lot more to trade in the stocks at the close on 14 June.

(Mostly) Asia M&A, May 2024: Malaysia Airports, Alps Logistics, Nihon Housing, Great Eastern

For the month of May 2024, 10 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$6.6bn.
The average premium for the new transactions announced (or first discussed) in May was ~60%. The average premium YTD is ~46%. Japan is well up yoy. Hong Kong is down.
This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap

On Friday, acquisitive wafer technology firm Rs Technologies (3445 JP) announced it would buy lamp and printing equipment maker Helios Techno Holding (6927 JP) at a 74% premium.
The premium is big, but Helios is a steal at the price. Granted, it is a small potatoes steal.
The register is not controlled by any one party or group of investors other than retail. That makes this interesting.

A/H Premium Tracker (To 31 May 2024): HK Stocks Have an Ugly Week; AH Premium in Liquid Pairs Rises

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 renewed buy streak continued this past week; every day net positive. Strong net buying. NORTHBOUND saw net selling. Gross volumes on both were light.
AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng/other HK indices fell and A-shares did not do much. Liquid Hs underperformed As by 2%.

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Jun 01

Daily Brief Event-Driven: SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5 and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win
GAPack (468 HK): Shandong Xinjufeng Offer Progesses
Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake
End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024
Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer
Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing
Quiddity JPX-Nikkei 400 Rebal 2024: End-May 2024 Estimates

SG Holdings to Launch TOB on C&F Logistics (9099) At A Whopping ¥5,740/Share – HUGE Governance Win

Chilled & Frozen Logistics Holdings (9099 JP) was near an all-time high in late March when it closed at ¥2,041 the day AZ-Com Maruwa Holdings (9090 JP) bid ¥3,000/share.
That was hostile, and C&F’s Board reacted swiftly, looking for a market check and competitive process. It got one. It was VERY successful in getting the best bid.
SG Holdings (9143 JP) has bid ¥5,740 – a very full multiple and 91% higher than AZ-Com’s price. I don’t expect an overbidder. Huge governance win for Japan minorities.

GAPack (468 HK): Shandong Xinjufeng Offer Progesses

On the 9th May, Shandong Xinjufeng (301296 CH) (XJF) made a pre-conditional voluntary general Offer at $2.65/share (best & final), contingent on a 50% acceptance. Final/special dividends to be added.
GAPack(468 HK) has made it clear that XJF is a competitor of GAPack. And Mengniu (2319 HK) may review its relationship if pre-cons are satisfied/waived; or the Offer gets up.
XJF has announced the necessary applications have been sent to NDRC, MoC, and SAMR; and it prepping for a shareholder meeting to approve the Offer.

Infocom (4348 JP): Blackstone’s Rumoured JPY260bn Bid to Acquire Teijin’s Stake

Bloomberg reports that Blackstone (BX US) has agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a rumoured valuation of JPY260 billion.
The potential minority offer price depends on whether the rumoured valuation refers to market cap or enterprise value and whether Teijin will share TOB tax benefits.
The most likely scenario is that the valuation refers to the market cap, with Teijin sharing TOB tax benefits, resulting in a minority offer of around JPY5,720 per share.

End of Mandatory Lock-Up Periods for 45 Companies in Korea in June 2024

We discuss the end of the mandatory lock-up periods for 45 stocks in Korea in June 2024, among which 5 are in KOSPI and 40 are in KOSDAQ.
These 45 stocks on average could be subject to further selling pressures in June and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in June include Hanwha Ocean, LS Materials, and Komico.

Chilled & Frozen Logistics (9099 JP): SG Holdings’ Stunning JPY5,740 Offer

Chilled & Frozen Logistics Holdings (9099 JP) has recommended SG Holdings (9143 JP)’s JPY5,740 tender offer, a 91.3% premium to AZ-Com Maruwa Holdings (9090 JP)’s JPY3,000 hostile offer.
SG Holdings’ offer premium is stupendous. However, the offer values C&F at a CY2024 EV/EBITDA of 27.2x vs. Alps Logistics (9055 JP) offer at a CY2024 EV/EBITDA of 29.2x.
The Board deserves credit. AZ-COM Maruwa is unlikely to engage in a bidding war as SG Holding’s offer has the Board’s recommendation and comes with a hefty takeover premium.

Hot Topic Among Local Institutions in Recent Days: Utilizing COE in Value-Up Investing

Local institutional investors were disappointed Kiwoom omitted COE from their value-up disclosure. They seek clearer plans to address low-yield assets and reduce COE.
Rapidly rising interest in COE among local institutional investors is now shaping the screening criteria for the Korea Exchange’s value-up index, possibly using COE as a primary factor for inclusion.
Competition likely centers on selecting and weighting stocks, including those beyond KOSPI 200. Key metric: COE linked with ROE.

Quiddity JPX-Nikkei 400 Rebal 2024: End-May 2024 Estimates

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
In this insight, we take a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-May 2024.

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May 31

Daily Brief Event-Driven: Exedy (7278) Huge Offering Resized – Watch the Dynamics Here and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Exedy (7278) Huge Offering Resized – Watch the Dynamics Here
Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints
Detailed Summary of Today’s Second Trial Ruling in Chey Tae-Won’s Divorce Case Involving SK Inc
Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond
Zomato Placement Lockup Expiry – US$800m Overhang
Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae
Quiddity Leaderboard ES50 Sep 24: US$1.1bn Index Inflow for Engie if Nokia’s Rank Falls by ONE
SET50 Index Rebalance Preview: 4 Changes as Review Period Ends Today
Brookfield to Launch Mandatory Offer for Neoen

Exedy (7278) Huge Offering Resized – Watch the Dynamics Here

On Monday 27 May, Aisin (7259 JP) announced an offering to sell ALL of its 36+% stake in equity affiliate Exedy Corp (7278 JP) for likely ¥40bn+.
Exedy announced a big buyback to go with it. It bought back 30% of the total on Weds morning, and that reduced the size of the offer.
I had expected “short-term games” but we haven’t really had them. Which is a bit weird. This update shows the details and dynamics (they differ).

Infocom (4348 JP) – Reports of an Exclusive Negotiation May Give Hints

The entire saga here of Teijin Ltd (3401 JP)‘s disposal of its 55.1% stake in Infocom Corp (4348 JP) is being played out in the non-generally-public press.
There is reportedly a new piece of writing out late Thursday which suggests an approach.
I wrote about the “meaning” of words in Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’ and now there is more nuance to parse.

Detailed Summary of Today’s Second Trial Ruling in Chey Tae-Won’s Divorce Case Involving SK Inc

The first trial in December 2022 ordered Chey to pay 67.5 billion KRW; today’s ruling increased this to 1.38 trillion KRW plus 2 billion KRW, including splitting SK Inc. shares.
The increased settlement and SK Inc. share split could spark a management rights battle, causing SK Inc.’s stock price to jump as investors and shareholders react.
It may take a year for the final verdict, making a sustained stock price increase unlikely. Yet, differences between trial rulings could alter Chey’s SK Inc. stake, sustaining market interest.

Kansai Paint (4613) – Going Hard with a BIG Buyback and More Capital Moves Beyond

24mos ago, Kansai Paint (4613 JP) announced a new MTMP, a large buyback, and plans to unwind cross-holdings. Big. 15mos ago a large secondary offering kicked off the festivities.
Key was Toyota sold. Then KP could sell its Toyota shares – two-thirds of its cross-holdings. The offering was one to buy. A buyback followed. KP vs Nippon Paint doubled.
KP offered a CB recently with the delta hedge done by TN-3. Now there is a HUGE new buyback. Really big. This gets rid of more cross-holders. And there’s more.

Zomato Placement Lockup Expiry – US$800m Overhang

By Sumeet Singh

Antfin will come out of its placement linked lockup for its remaining stake in Zomato soon.
Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024. It still has over US$800m worth of shares left to sell.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Legal Complications on Put Options on SSG.Com to Result in Ongoing Concerns for Emart and Shinsegae

Emart and Shinsegae are facing concerns about put options of nearly 1 trillion won on private equity investors’ investment in SSG.com nearly six years ago.
From AEP and BRV’s point of views, they want to get their money back through put options since an IPO is not likely in the near term.
The most probable result appears to be that this is likely to be dragged on for some time, which will cause continued concerns on both Emart and Shinsegae.

Quiddity Leaderboard ES50 Sep 24: US$1.1bn Index Inflow for Engie if Nokia’s Rank Falls by ONE

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

SET50 Index Rebalance Preview: 4 Changes as Review Period Ends Today

With one day left in the review period, we see 4 potential changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
Berli Jucker (BJC TB) could be added to the index following the market consultation that lowered the inclusion thresholds for Average Daily Trading Values and Turnover ratios.
An equally weighted basket of potential adds has outperformed the potential deletes but there has been a deterioration in performance over the last month.

Brookfield to Launch Mandatory Offer for Neoen

By Jesus Rodriguez Aguilar

Brookfield (BN CN) has entered exclusive negotiations with the top shareholders of Neoen (NEOEN FP) to acquire a 53.32% stake at €39.85/share, 26.9% premium, which will trigger a mandatory offer.
The offer represents 15.1x EV/NTM Fwd EBITDA vs. the median of peers at 9.3x. My fair-value estimate (DCF-based) is €33.76/share, therefore the offer is generous, in my view.
Expect the shares to close the spread tomorrow and trade around 3% gross spread and the convertibles to price higher (2% 06/25 at around €51.85, 2.875% 09/27 around 111.72%).

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May 30

Daily Brief Event-Driven: Asia Cement (743 HK): Parent’s Ready-Mixed Offer? and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Asia Cement (743 HK): Parent’s Ready-Mixed Offer?
TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade
Asia Cement China (743 HK): Privatisation by Asia Cement?
JAPAN ACTIVISM: Murakami-Père Ran Up Mitsui Matsushima (1518 JP), Now Murakami-Fille Selling Down
Latest Info on Value-Up Index Involving KRX & NPS: Potential Flow Trading Patterns
Block Deal Prospects Arising from SK Group’s Corporate Reshuffle
NIFTY200 Momentum30 Index Rebalance Preview: 49% Turnover; US$850m Trade; Election Results Coming
KFIN Tech: Block Deal Trade Special Situations and Tactical Trade Strategy
C&F (9099) Pushes Back on AZ-Com Call for Transparency, Again. Still Not A Buy.
RR Kabel: Block Deal Trade Special Situations and Tactical Trade Strategy

Asia Cement (743 HK): Parent’s Ready-Mixed Offer?

Chinese cement play Asia Cement China (743 HK) (ACC) is currently suspended pursuant to the Takeovers Code.
Asia Cement (1102 TT) has been ACC’s majority shareholder since its 2008 IPO. Asia Cement currently holds 73.07%.
Shares gained ~50% this week. On serious volume. With net cash of US$1.03bn vs. a market cap of US$66mn, a privatisation should command a punchy premium to the last close.

TIP Customized Taiwan Select High Dividend Index Rebalance Preview: AUM Jump & HUGE Trade

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 209bn (US$6.5bn).
There could be 14 changes for the ETF in June with an estimated one-way turnover of around 40% and a round-trip trade of around US$5bn.
The potential adds have outperformed the potential deletes over the last couple of months and there could be more to go heading into announcement and implementation.

Asia Cement China (743 HK): Privatisation by Asia Cement?

Asia Cement China (743 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. Bloomberg reports that Asia Cement (1102 TT) is considering a buyout.
Privatisation interest is unsurprising, as ACC’s EV has been negative since 6 July 2022 due to headwinds from the weak Chinese property sector and uncertainty about cash use.
An offer price of HK$5.18 would imply a zero EV. However, due to the difficult trading conditions, we think an offer would be around HK$4.00 per share.

JAPAN ACTIVISM: Murakami-Père Ran Up Mitsui Matsushima (1518 JP), Now Murakami-Fille Selling Down

Colour me perplexed. Murakami Group ran up Mitsui Matsushima (1518 JP)‘s share price in acquiring 29%. The pattern was clear, but one assumes everyone in-group was on the same page.
The earliest buyer was NOMURA Aya. She bought early, slowly, then aggressively, then onshore buyers bought aggressively at higher prices. But she has now sold 6 days straight.
The pattern is confusing but it will become clearer in coming days.

Latest Info on Value-Up Index Involving KRX & NPS: Potential Flow Trading Patterns

The value-up index aims to align closely with the KOSPI 200’s composition, adjusting stock weights based on factors from KRX Governance Leaders 100 and KRX ESG Dividend Opportunities Index.
Insiders confirm NPS will create new funds to track the value-up index, needing SAA adjustments and Fund Management Committee approval. Despite hurdles, government backing suggests smooth NPS involvement.
Buybacks could cause passive outflows in KOSPI 200 rebalancing and inflows in value-up index rebalancing. This timing discrepancy could create a consistent passive flow pattern for these stocks.

Block Deal Prospects Arising from SK Group’s Corporate Reshuffle

The declining appeal of the separator business prompts SK to seek buyers for SKIET through block deals amid financial pressures. The first deal is anticipated despite recent stock price drops.
SK Ecoplant looks to sell its 37.6% stake in SK Oceanplant. Negotiations stall over the former major shareholder’s 20% stake, prompting consideration of a block deal.
SK Bioscience, under SK Discovery, faces possible sale amid SK’s bio company reshuffle. SK Chemicals may bring SK Biopharm under its wing to help SK Inc focus on semiconductors/batteries.

NIFTY200 Momentum30 Index Rebalance Preview: 49% Turnover; US$850m Trade; Election Results Coming

There could be 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
If all changes are on expected lines, one-way turnover is estimated at 48.8% and that will result in a one-way trade of INR 35.5bn (US$426m).
Since January, the potential adds to the index have outperformed the potential deletes by a big margin. Watch out for the general election results on 4 June for momentum change.

KFIN Tech: Block Deal Trade Special Situations and Tactical Trade Strategy

By Nimish Maheshwari

Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock
These block deals generally include selling promoters and big funds at a price discount to its current market price
Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

C&F (9099) Pushes Back on AZ-Com Call for Transparency, Again. Still Not A Buy.

Chilled & Frozen Logistics Holdings (9099 JP) asked AZ-Com Maruwa Holdings (9090 JP) repeatedly to respond to its entreaties, and delay the start of its tender offer until end-May.
C&F was running a process and wanted to be transparent. When AZ-Com announced, C&F said “we have counter-bidders” and the stock went up. Then a Nikkei article propelled it higher.
AZ-Com then asked, twice, for clarity from C&F, saying investors deserved more information. The shoe was on the other foot. Now C&F has responded. Again.

RR Kabel: Block Deal Trade Special Situations and Tactical Trade Strategy

By Nimish Maheshwari

Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock
These block deals generally include selling promoters and big funds at a price discount to its current market price
Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

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May 29

Daily Brief Event-Driven: S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June
PNB Housing: Block Deal Trade Special Situations and Tactical Trade Strategy
QV Equities (QVE AU): 28th June Shareholder Vote
DS Dansuk: Block Deal Sale by Stonebridge Capital
JSE June ‘24 Rebalance Rankings: No Changes Expected + NPN X PRX Discount Update
Quiddity Leaderboard SE600 Jun 24: Potential ADDs Could Continue to Outperform Potential DELs
BBVA Files Hostile Offer: Conditions, Defences and Probabilities

S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June

With the review period complete, we take a look at the potential index changes at the June rebalance as well as potential index inclusions due to M&A.
Timing is key for the ad hoc inclusions to the S&P/ASX 200 (AS51 INDEX) with an ad hoc inclusion being announced prior to the regular announcement.
Passive trackers will need to buy 1.3-27x ADV on the expected adds and have 0.8-4.7x ADV to sell on the expected deletes. Shorts have built up on the potential deletes.

PNB Housing: Block Deal Trade Special Situations and Tactical Trade Strategy

By Nimish Maheshwari

Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
These block deals generally include selling promoters and big funds at a price discount to its current market price.
Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

QV Equities (QVE AU): 28th June Shareholder Vote

On the 12th March, Aussie-based investment plays QV Equities Ltd (QVE AU) and WAM Leaders Ltd (WLE AU) entered into a Scheme.
The current scrip terms are 0.739 new WAM shares per QVE share; OR A$0.989/share cash. Terms will be adjusted for updated pre-tax NTA/shares of both companies after the Scheme Meeting.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 28th June. Expected implementation on the 15 July. The IE says fair & reasonable.

DS Dansuk: Block Deal Sale by Stonebridge Capital

After the market close on 28 May, it was announced that Stonebridge Capital plans to conduct a block deal sale of a portion of its stake in DS Dansuk.
This deal involves 210,000 to 290,000 shares of DS Dansuk. The block deal price range is from 99,800 won to 101,400 won, which represents 7.06% to 8.52% discount.
After this second block deal, there will be further overhang concerns about additional sales of DS Dansuk by Stonebridge Capital in the coming months.

JSE June ‘24 Rebalance Rankings: No Changes Expected + NPN X PRX Discount Update

By Charlotte van Tiddens, CFA

Last night, the price snapshot was taken for the JSE June rebalance.
We do not anticipate any index changes for the Top 40, FINDI, FINI, INDI or RESI.
There are several noteworthy free float changes across ALSI constituents, particularly amongst foreign counters (detail below).

Quiddity Leaderboard SE600 Jun 24: Potential ADDs Could Continue to Outperform Potential DELs

The SE600 index is one of the most widely followed benchmark indices in Europe. This index is rebalanced on a quarterly basis.
The base date for rankings for the June 2024 index rebal event is 31st May 2024. In this insight, we take a look at the latest list of potential ADDs/DELs.
Currently, I see 7 ADDs and 7 DELs for the SE600 index. There are more names just outside the border requiring small price changes to get involved in index changes.

BBVA Files Hostile Offer: Conditions, Defences and Probabilities

By Jesus Rodriguez Aguilar

On 24 May, Banco Bilbao Vizcaya Argentari (BBVA SM) submitted the authorisation request for its all-stock offer for Banco De Sabadell SA (SAB SM). Closing expected to take 6-8 months.
Gross spread (CSP 27 May) is 7.6%, which This translates in a 52% implied probability of deal success. The fixed income market appears to share this view.
Nevertheless, from a long-only perspective, the risk/reward of Sabadell is interesting. The deal values Sabadell’s shares at €2.07 each, an implied equity value of €11,187 million, for a 0.92 P/TBV.

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May 28

Daily Brief Event-Driven: Cash-Rich Exedy (7278) Sees Huge Offering Offset by Huge Buyback – Watch For Short-Term Games and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Cash-Rich Exedy (7278) Sees Huge Offering Offset by Huge Buyback – Watch For Short-Term Games
Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’
HYBE: Block Deal Sale of SM Entertainment
Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade
Huafa Property Services (982 HK)’s Knockout Offer
Activism Takes On CMCDI (133 HK)
Huafa Property Services (982 HK): Scheme Offer at HK$0.29
Taiwan Top 50 ETF Rebalance Preview: Asia Vital Components (3017 TT) In Back-To-Back Inclusion?
Best World (BEST SP): Best & Final Offer
An Early Look at Potential Deletions and Additions to KOSPI200 in December 2024

Cash-Rich Exedy (7278) Sees Huge Offering Offset by Huge Buyback – Watch For Short-Term Games

Toyota equity affiliate Aisin (7259 JP) last September said it would sell all its crossholdings. That now includes a 36.5% stake in Exedy Corp (7278 JP).
Today, they announced an offering of all the shares (when including the greenshoe). That is nearly ¥50bn. That is offset by a ¥15bn buyback which could reduce the offering size.
Games may be played, but there is considerable accretion, and Exedy will see higher float and still-high net cash.

Infocom (4348 JP) – The Meaning of ‘Binding Bids’ and ‘¥250bn’

A variety of articles of recent from private media sources have suggested that Teijin Ltd (3401 JP) has its 55% stake in Infocom Corp (4348 JP) up for auction.
According to earlier articles, binding Second Round bids were due last week. According to an article out late last week, binding bids have been made, with some “around ¥250bn.”
What that means for price may depend on what the “around ¥250bn” means. A brief exploration below.

HYBE: Block Deal Sale of SM Entertainment

After the market close on 27 May, HYBE (352820 KS) announced that it will conduct a block deal sale of 0.75 million to 0.94 million shares of SM Entertainment.
The block deal sale price discount is 4% to 5.5% discount to the closing price on 27 May (95,800 won).
One of the major positive, recent issues facing the Korean K-Pop related stocks has been the potential easing of Korean content restrictions by China.

Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade

With the review period now complete, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
Price changes and changes to dividend estimates have led to names dropping off the list of potential adds and deletes over the last week.
Constituent changes, capping and funding flows will lead to a one-way turnover of 12.7% and a one-way trade of US$1.17bn. There are 12 stocks with over 4x ADV to trade.

Huafa Property Services (982 HK)’s Knockout Offer

After entering a trading halt on the 16th May pursuant to the Takeover’s Code, property manager Huafa Property Services (982 HK) has now announced a privatisation by way of a Scheme.
The cancellation price of A$0.29/share is a 30.63% to last close, a 70.59% premium over the 30-day average close, and a life-time high price. The price is final.
The Offeror, Zhuhai Huafa, a state-owned enterprise wholly-owned by Zhuhai SASAC, plus concert parties hold 42.63% of shares out. Clean deal.

Activism Takes On CMCDI (133 HK)

In January this year, Argyle Street, a (now) 8% shareholder of China Merchants China Direct Investments (133 HK) (CMCDI), a closed-end investment company, proposed a solution to boost shareholder value.
Two months later, Rydal Value Fund (stake unknown) also proposed a means to boosting shareholder value along similar lines.
CMCDI is currently trading at a ~63% discount to NAV. But it is up 78% since Argyle’s initial proposal, and recently touched a six-year high. Argyle is still buying.

Huafa Property Services (982 HK): Scheme Offer at HK$0.29

Huafa Property Services Group (982 HK) announced a privatisation offer from Huafa Industrial Co., Ltd. Zhuhai (600325 CH) at HK$0.29 per share, a 30.6% premium to the undisturbed price.
Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection) and a headcount test. No shareholder holds a blocking stake.
The offer, which has been declared final, is attractive compared to historical share prices and peer multiples. This is a done deal, with payment likely in November.

Taiwan Top 50 ETF Rebalance Preview: Asia Vital Components (3017 TT) In Back-To-Back Inclusion?

Asia Vital Components (3017 TT) could replace Chang Hwa Commercial Bank (2801 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the June rebalance.
This ETF inclusion for Asia Vital Components (3017 TT) could come back-to-back with another index inclusion scheduled for the end of May.
Shorts in Asia Vital Components (3017 TT) have been increasing recently while shorts in Chang Hwa Commercial Bank (2801 TT) are near their lows.

Best World (BEST SP): Best & Final Offer

The $2.50/share Exit Offer announced last month seemed fair. Not great, but okay. Best World International (BEST SP)‘s founders Dora Hoan and Doreen Tan have now blinked, and bumped.
Terms are S$2.56/share – best & final. The increase in the Exit Offer price followed “a review of its most recent financial and cash position“. More likely, shareholder pushback.
Elsewhere, nephews and siblings of Hoan, bought shares just prior to the initial Offer announcement; and have been selling since. Not a great look.

An Early Look at Potential Deletions and Additions to KOSPI200 in December 2024