Most Read

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Australia: Six Stocks in Passive Selling Crosshairs for February

Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.

Boqi Env (2377 HK)’s Partial Offer Now Open. But First The EGM

On the 23rd October, flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
The buyback lifts the stake of co-founder Zeng Zhijun and concert parties to 32.59% – up from 27.71% – before options. To avoid an MGO, this requires a whitewash waiver
The Offer Doc is now out. The EGM – and the first close – is the 20th December.

2024 Was Ugly for Turnarounds, 2025 Should Be Awesome!

By Michael Allen

Buying the worst-performing stocks of the previous 12 months has outperformed Japan’s Topix index by an average of 7% annually for 9 straight years
For most of 2024, the strategy didn’t work, but an uptick in TOBs, MBOs, and merger talks is suddenly making it unsafe to short low-PBR companies indiscriminately.
Suddenly, dozens of previously complacent companies have the fear of God and are taking action to up their profitability and the market is taking notice.

LG CNS: Updated IPO Valuation Analysis

According to our updated valuation analysis of LG CNS, it suggests a base case implied market cap of 7.4 trillion won, representing target price of 76,383 won per share.
Our base case valuation target price of 76,383 won is 23% higher than the high end of the IPO price range.
We lowered our target price by 6%, mainly due to greater political risks arising from the recent cancelled martial law and ongoing impeachment of President Yoon.

💡 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 Analytics and News
✓ Events & Webinars

Jan 04

Most Read: ZTO Express Cayman , Sun Art Retail, Contact Energy, Bloks Group, ESR Group , Mazda Motor, Viva Goods , Get Nice Financial Group Ltd, Rainbow Robotics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms
Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?
Bossini (592 HK): 10th Feb Scheme Vote
Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist
Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer
Samsung Group ETF Rebalancing Event to Watch for in June

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?

NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.

Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued

By Andrei Zakharov

Shanghai-Based Bloks Group, a leader of assembly character toys in China, has announced the initial price range for its IPO in Hong Kong.
The offering is expected to be between HK$55.65 and HK$60.35, implying a market cap of ~HK$14B or ~$1.8B at the midpoint of the price range.
Assuming IPO offer price of HK$58.00, UBS AM Singapore, Greenwoods AM and Fullgoal Investors have agreed to invest ~HK$388M or ~$50M in the offering.

(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos

For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
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.

Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?

By Michael Allen

2025 will start with more attractive turnaround opportunities than we have seen in a long time.
An uptick in TOBs, MBOs and merger discussions makes it suddenly no longer safe to short low-PBR companies indiscriminately.
Investors are noticing. More than two-dozen large- and medium-cap stocks with deep discounts to the benchmark began to bounce off well-defined support levels in late December.

Bossini (592 HK): 10th Feb Scheme Vote

On the 16th October, Li Ning-backed Viva Goods (933 HK) announced a scrip Offer, by way of a Scheme, for 62.91%-held Bossini International Holdings (592 HK), a casual apparel play.
One new Viva share for five Bossini shares backed an implied scrip price of HK$0.108/share, a 12.2% discount to undisturbed.
Bossini’s Scheme Doc is now out, with a Court Meeting on the 10th February, and expected settlement on the 24th March. The IFA says “fair and reasonable”.

Bloks Group IPO – PHIP Updates – Momentum Remains Strong, Although Some Lingering Doubts Persist

By Clarence Chu

Bloks Group (1850960D CH) is looking to raise US$188m in its Hong Kong IPO.
Bloks Groups (Bloks) operates in the toy segment where it primarily assembles character and brick-based toys.
In our previous note, we looked at the firm’s past performance. In this note, we discuss the latest PHIP updates.

Get Nice Financial (1469 HK): EGM Set For Get Nice (64 HK)’s Scrip Offer

On the 5th November, Get Nice Holdings (64 HK) (GNH) announced a scrip Offer, by way of a Scheme, for 72.99%-held Get Nice Financial Group Ltd (1469 HK) (GNF).
With an implied scrip price & divvy of HK$1.116/share, against a book value of HK1.736/share – and net cash of ~HK$1.00/share – this is probably being down too cheaply.
GNH’s Circular is now out, with an EGM to be held on the 22nd Jan. GNF’s Scheme Doc is expected to be dispatched one or before the 10th Feb.

Samsung Group ETF Rebalancing Event to Watch for in June

By Sanghyun Park

With Samsung finalizing the call option on Rainbow Robotics in February, the FTC will add it to Samsung Group in March, ensuring its inclusion in the ETF by June.
With the market cap boost from the call option, Rainbow Robotics is set to easily exceed 2% weight in the ETF by June.
The rebalancing from June 2-9 will direct 30% of daily volume into Rainbow Robotics, likely enough to move the needle on price action, especially on the first day.

💡 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 Analytics and News
✓ Events & Webinars

Jan 03

Most Read: ITC Ltd, ZTO Express Cayman , Sun Art Retail, Endeavour Group /Australia, Samsung C&T, Canvest Environmental Protection Group, Bloks Group, Amorepacific Corp (Preferred), Contact Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Canvest (1381 HK): Evaluating A Privatisation
ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
Australia: Six Stocks in Passive Selling Crosshairs for February
Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2025
Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction
Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued
Gap Trade Opportunities in Korean Prefs Vs Common Share Pairs in 1Q 2025
NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Canvest (1381 HK): Evaluating A Privatisation

Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%.
There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.

ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)

ITC Ltd (ITC IN) will demerge its Hotels business with the ex-date set as 6 January and shareholders receiving 1 share of ITC Hotels for 10 shares of ITC Ltd.
ITC Ltd (ITC IN) shareholders will own 100% of ITC Hotels – 60% will be owned directly and 40% will be owned through their shareholding in ITC Ltd (ITC IN).
There will be a lot of selling in ITC Hotels within a few days of listing from different passive index trackers and that could provide buying opportunities for those interested.

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 44.4% discount to last close.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. Minorities tendering can receive up to HK$1.58/share. But the question is: why would BABA be cashing out at this price?

Australia: Six Stocks in Passive Selling Crosshairs for February

Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2025

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 1Q 2025.
The recent martial law cancellation and numerous impeachments of acting Presidents have raised political uncertainty in Korea resulting in widening of some gaps among numerous holdcos and opcos in Korea.
Of the 38 pair trades, 25 of them involved holdcos outperforming opcos in the past six months and the other 13 opcos outperforming holdcos in the same period.

Canvest (1381 HK): Attractive Spread with Steady Progress in Precondition Satisfaction

Grandblue Environment Co A (600323 CH) continues to make steady progress in satisfying the precondition for its HK$4.90 privatisation offer for Canvest Environmental Protection Group (1381 HK).
Two of the five preconditions are satisfied, and another will be satisfied by 20 January. The long stop date of 17 July provides ample time to satisfy the remaining two.
Although the peers have materially re-rated, the offer implies a premium compared to peer multiples. Vote risk remains low, aided by selling by a shareholder with a blocking stake.

Bloks Group IPO (0325.HK): Global Offering, The Initial Price Range Is Seen As Attractively Valued

By Andrei Zakharov

Shanghai-Based Bloks Group, a leader of assembly character toys in China, has announced the initial price range for its IPO in Hong Kong.
The offering is expected to be between HK$55.65 and HK$60.35, implying a market cap of ~HK$14B or ~$1.8B at the midpoint of the price range.
Assuming IPO offer price of HK$58.00, UBS AM Singapore, Greenwoods AM and Fullgoal Investors have agreed to invest ~HK$388M or ~$50M in the offering.

Gap Trade Opportunities in Korean Prefs Vs Common Share Pairs in 1Q 2025

In this insight, we discuss numerous gap trade opportunities involving Korean preferred and common shares in 1Q 2025.
Among the 27 major pair trades (prefs vs. common shares), 20 of the pref stocks outperformed their common shares counterparts in 2024.
The 27 Korean preferred stocks’ average prices declined by 1% from end of 2023 to end of 2024 (excluding dividends), outperforming their common counterparts which were down on average 3.7%.

NZ: Contact Energy (CEN NZ) Hotter Than Mercury (MCY NZ) As Catalyst Looms

Contact Energy (CEN NZ) has outperformed Mercury NZ Ltd (MCY NZ) over the last month off the back of expected passive flows in February.
Despite the outperformance, Contact Energy (CEN NZ) trades at a lower forward PE compared to Mercury NZ Ltd (MCY NZ), though it does trade at a higher Price to Book.
There could be large passive inflows to Contact Energy (CEN NZ) and large passive outflows from Mercury NZ Ltd (MCY NZ) in February.

💡 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 Analytics and News
✓ Events & Webinars

Jan 02

Most Read: ITC Ltd, Endeavour Group /Australia, ZTO Express Cayman , Macromill, Inc, Sun Art Retail, ESR Group , Samsung C&T, MS&AD Insurance, KT&G Corporation and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)
Australia: Six Stocks in Passive Selling Crosshairs for February
ITC Hotels Demerger: Listing Anticipation and Index Implications
HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March
Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable
Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38
(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos
Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2025
Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Jan25), TSE Updates
Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (November and December 2024)

ITC Hotels: Index Implications of Demerger from ITC Ltd (ITC IN)

ITC Ltd (ITC IN) will demerge its Hotels business with the ex-date set as 6 January and shareholders receiving 1 share of ITC Hotels for 10 shares of ITC Ltd.
ITC Ltd (ITC IN) shareholders will own 100% of ITC Hotels – 60% will be owned directly and 40% will be owned through their shareholding in ITC Ltd (ITC IN).
There will be a lot of selling in ITC Hotels within a few days of listing from different passive index trackers and that could provide buying opportunities for those interested.

Australia: Six Stocks in Passive Selling Crosshairs for February

Up to six Aussie stocks could be deleted from global passive portfolios in February. The final list of deletions depends on stock performance over the next 2-3 weeks.
If deleted, passive trackers will need to sell between A$370m-A$500m in the stocks. Impact is high at between 7-24 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over every time period from 1 week to 3 months. Positioning is still low in a few stocks.

ITC Hotels Demerger: Listing Anticipation and Index Implications

By Nimish Maheshwari

ITC Hotels is demerging with ITC Ltd (ITC IN) to create value for ITC shareholder and unlock value in hotel business.
Record date for ITC Hotel demerger is 6-Jan-25 and listing can be done in 60 days after NCLT order i.e. 16-Dec-24.
Discussed inclusion and exclusions of various Index including MSCI Emerging Markets Index (MXEF INDEX), FTSE and NIFTY Index (NIFTY INDEX) & S&P BSE SENSEX Index (SENSEX INDEX EQUITY).

HSCEI Index Rebalance Preview: Increase in Velocity Could Lead to 3 Changes in March

BeiGene and ZTO Express Cayman are potential inclusions for the Hang Seng China Enterprises Index in March while Sino Biopharmaceutical and Li Ning are potential deletions.
There is a lower probability of Yum China Holdings (9987 HK) replacing Sunny Optical Technology Group (2382 HK) in the index in March.
There could be a few more index inclusions for ZTO Express Cayman in March and the stock could outperform its peers over the next few months.

Macromill (3978 JP): CVC Bumping Its Offer Is Inevitable

On 26 December, CVC extended its Macromill, Inc. (3978 JP) offer period by 10 business days to 17 January. The offer price remained unchanged, but it was not declared final.
The extension is unsurprising as the shares have traded above terms for 30 out of 32 trading days. The emergence of Oasis as the largest shareholder is an added complication.
Lowering the minimum acceptance condition is not a viable option. A bump is increasingly likely. Trading patterns suggest a minimum required revised offer of around JPY1,200.

Sun Art Retail (6808 HK): BABA Takes Massive Hit After Inking SPA @ HK$1.38

HK$1.38/Share. That’s the key takeaway as Alibaba Group (9988 HK) enters an SPA to offload its 78.7% stake in Sun Art (6808 HK) at HK$1.38/share, a 14.13% discount to undisturbed.
The buyer, Paragon Shine, an entity under Chinese PE outfit DCP Capital, is paying ~HK$12.3bn compared to BABA’s HK$28.1bn purchase of a 51% stake in October 2020.
Should the SPA complete, an unconditional MGO is triggered. But the question is: why would BABA be cashing out at this price?

(Mostly) Asia M&A, Dec 2024: De Grey, Insignia, ESR Group, Fosun Tourism, HKBN, Pentamaster, Beenos

For the month of December 2024, 13 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$16bn.
The average premium for the new transactions announced (or first discussed) in December was ~46%. The average premium in 2024 was ~43%.
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.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 1Q 2025

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 1Q 2025.
The recent martial law cancellation and numerous impeachments of acting Presidents have raised political uncertainty in Korea resulting in widening of some gaps among numerous holdcos and opcos in Korea.
Of the 38 pair trades, 25 of them involved holdcos outperforming opcos in the past six months and the other 13 opcos outperforming holdcos in the same period.

Japan CorpGovReports: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Jan25), TSE Updates

TSE-Listed companies are asked to file “Management Conscious of Capital Cost/Stock Price” awareness reports/policies. Many have. Some are still working on it. And policies change, and CGR reports are updated.
609 new CGRs were filed since 31-Nov-2024. Our tools show every report, links to every document, and now a new diff file tool. Input a name, see the changes.
A surprising number of smaller companies have yet to file a MCoCC/SP Awareness report. As cross-holdings get sold down, I expect they will become activists targets in 2025.

Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (November and December 2024)

In this insight, we discuss the alpha generation through companies that have been buying back their shares in the Korean stock market in November and December 2024.
On average, the share buyback announcements for the 52 companies that announced share buybacks in Korea represented 2.2% of outstanding shares.
Major companies that have announced share buybacks in Korea in the past two months include Celltrion, Samsung Electronics, Doosan Bobcat, and Hyundai Motor.

💡 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 Analytics and News
✓ Events & Webinars

Jan 01

Most Read: Cal Comp Electronics Thailand, China Banking, Samsung Engineering, Posco DX, Shin Kong Financial Holding, Adani Green Energy, InnoScience Suzhou Technology, Vesync, Shandong Hi-Speed New Energy G and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SET50 Index Rebalance: Four Changes; Cal Comp🚀
PCOMP Index Rebalance Preview: Two Changes Likely in February
Korea: Potential Relegations from K League 1
KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
Shin Kong/Taishin Merger – Proceeding Apace
Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is
Charted Insights: India’s Fundraising Booms and Market Cycles; A Data-Driven Analysis

SET50 Index Rebalance: Four Changes; Cal Comp🚀

There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
All changes are in line with our forecasts and there appears to be positioning in all the stocks.
Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.

PCOMP Index Rebalance Preview: Two Changes Likely in February

The review period for the February rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) ends in two weeks.
There could be two changes for the index with passive trackers needing to trade between 23-64x ADV in the stocks.
The passive buying is a lot larger than the passive selling, there will be funding outflows for the other index constituents; some stocks will have over 1x ADV to trade.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations

The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.

When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is

Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing.

Charted Insights: India’s Fundraising Booms and Market Cycles; A Data-Driven Analysis

By Nimish Maheshwari

Periods of market euphoria often create fertile ground for substantial fundraising activity, where companies—both established and speculative—seize the opportunity to raise capital.
IPO surges and other equity fundraisers reflect heightened investor confidence and an increased appetite for risk.
However, as history shows, such periods of exuberance are often harbingers of steep market corrections.

💡 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 Analytics and News
✓ Events & Webinars

Dec 31

Most Read: Cal Comp Electronics Thailand, Samsung Engineering, Tsuruha Holdings, Adani Green Energy, InnoScience Suzhou Technology, Greatview Aseptic Packaging, Shandong Hi-Speed New Energy G, SGX Rubber Future TSR20, Binggrae Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SET50 Index Rebalance: Four Changes; Cal Comp🚀
Korea: Potential Relegations from K League 1
Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule
Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is
Supply Shortage Boost Likely Short Lived; Caution Prevails Around 2025 Outlook
Surging Share Buybacks in Korea in 2024
Our Screening Process Methodology for Picking Top Small Cap Stocks in KOSPI in 2025

SET50 Index Rebalance: Four Changes; Cal Comp🚀

There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 30 December.
All changes are in line with our forecasts and there appears to be positioning in all the stocks.
Cal Comp Electronics Thailand (CCET TB) will have the largest passive buying a percentage of free float and could be the stock to watch.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?

In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

Adani Green Energy (ADANIGR IN): Facing the Passive Boot; But Who Will Buy?

Passive global index trackers sold Adani Green Energy (ADANIGR IN) in November following a big drop in free float for the stock.
There could be more selling in Adani Green Energy in February as the stock is deleted from the same large global index due to failing free float market cap thresholds.
With the company at the center of the U.S indictment focused on bribery charges, active foreign and local investors will be wary of buying the stock.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

GAPack (468 HK): Hong Kong’s Takeovers Code Needs A PUSU Rule

In the UK, once a Bidder is named in a possible offer announcement, the Bidder has 28 days to either announce a firm Offer intention or walk away.
This is known as a ‘put up or shut up’ or ‘PUSU’ deadline. Hong Kong’s takeover rules has no such provision.
It’s ~21 weeks since co-founders Jeff Bi and Gang Hong tabled a non-binding Offer. With no firm Offer in sight, AND contesting a SAMR ruling, they should fold their tent.

Shandong Hi-Speed New Energy (1250 HK)’s Unconditional MGO. It Is What It Is

Back on the 27th November, Shandong Hi-Speed Holdings (412 HK) (SDHG) entered into SPAs with two Citic Securities (6030 HK)-backed funds, holding 13.52% in Shandong Hi-Speed New Energy (1250 HK).
The SPAs were completed on the 27th December, elevating SDHG’s stake to 56.97%, triggering an unconditional MGO. The Offer Price is HK$1.78/share, the same as that under the SPAs.
The premium to last close is just 7.23%. But don’t expect a bump in terms. SDHG intends to maintain Shandong Hi-Speed New Energy’s listing.

Supply Shortage Boost Likely Short Lived; Caution Prevails Around 2025 Outlook

By Arusha Das

Possibility of short peak can result in short-lived shortage
Declining Chinese TSR inventory can lend demand support
Uncertainty around policies weighs upon the market confidence

Surging Share Buybacks in Korea in 2024

Capitalizing on the lower share prices combined with the government’s pressure for Corporate Value up improvements, the share buybacks surged in Korea in 2024.
As of 27 December 2024, the total treasury shares planned acquisition amount by Korean companies increased by 215% YoY to 11.83 trillion won in 2024.
There have been some mixed share price performances among the companies announcing meaningful share buyback/cancellation announcements this year.

Our Screening Process Methodology for Picking Top Small Cap Stocks in KOSPI in 2025

In this insight, we provide our screening process methodology for picking top small cap stocks in KOSPI in 2025.
We used a 7 step process to narrow down a list of 30 stocks in KOSPI including market cap, ROE, sales growth, P/E, P/B, and Smartscore.
The top five stocks on the Korean small cap stocks screen include Binggrae, Innocean Worldwide, Hanil Holding, Miwon Chemicals, and Daechang Forging.

💡 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 Analytics and News
✓ Events & Webinars

Dec 30

Most Read: Samsung Engineering, Makino Milling Machine Co, Shin Kong Financial Holding, Tsuruha Holdings, Vesync, Nec Networks & System Integr, InnoScience Suzhou Technology, ESR Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea: Potential Relegations from K League 1
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Shin Kong/Taishin Merger – Proceeding Apace
Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?
Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done
Three Presidents in One Month in South Korea – What’s Next?
(Mostly) Asia-Pac M&A: Makino, Henlius, GAPack, Nec Networks, Suntec REIT, VCredit, Pentamaster
Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.
InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline
Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Tsuruha (3391) And Welcia (3141) To Move UP Merger to End-2025; Makes It TWO Trades in 18mos?

In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

Vesync (2148 HK): The Yang Family’s Scheme Offer Is Light but Likely Done

Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60, a 33.3% premium to the last close price of HK$4.20. The offer is final.
While the offer is marginally above the IPO price, it is light compared to sell-side price targets, peer multiples and historical trading ranges.
Nevertheless, the scrip option, irrevocables and no disinterested shareholder holding a blocking stake facilitate the scheme vote. The offer could be completed by May.

Three Presidents in One Month in South Korea – What’s Next?

The acting South Korean President Han Duck-Soo was impeached by the South Korea’s Parliament on 27 December. Choi Sang-Mok (finance minister) is now the new, acting President of South Korea.
There could be multiple impeachments of acting Presidents in the next several weeks which would be unprecedented and raise further concerns about the lack of political stability in South Korea.
Amid all this political uncertainty, Yoon Suk-Yeol’s approval rating has been improving sharply to more than 30%.

(Mostly) Asia-Pac M&A: Makino, Henlius, GAPack, Nec Networks, Suntec REIT, VCredit, Pentamaster

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.
Four new deals this week: Makino Milling Machine Co (6135 JP)‘s hostile Offer; VCredit Holdings Ltd (2003 HK)‘s takeunder; Vesync (2148 HK)‘s Scheme, and Pentamaster International (1665 HK)‘s Scheme.
Key updates/news took place on: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Nec Networks & System Integr (1973 JP), and Suntec REIT (SUN SP).

Vesync (2148 HK): 33.3% Premium For An Illiquid Arb – Yep, This Is Done.

When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

InnoScience (2577 HK): Prices at Low End & Lists Today; Index Inclusion Timeline

InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

Merger Arb Mondays (30 Dec) – ESR, Canvest, Vesync, GAPack, SDHS New Energy, CPMC, Makino, Arcadium

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: Vesync (2148 HK), Makino Milling Machine Co (6135 JP), Seven & I Holdings (3382 JP), Arcadium Lithium (LTM AU), Get Nice Financial Group Ltd (1469 HK).
Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Latin Resources (LRS AU), Lac Co Ltd (3857 JP).

💡 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 Analytics and News
✓ Events & Webinars

Dec 29

Most Read: Hang Seng TECH Index, Horizon Robotics, Kokusai Electric , Posco DX, LG CNS, Samsung Engineering, Makino Milling Machine Co, Grab Holdings , HD Hyundai and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

How Has the Index Rebalance Strategy Performed in 2024?
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025
Japan: Potential Passive Selling in February
KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations
LG CNS IPO: Limited Float Pushes Back Passive Buying
Korea: Potential Relegations from K League 1
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Grab Holdings (GRAB US) – Harvest Time
Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law
How Much Higher Can TSLA Go? A Pullback Could Hit in Two Weeks

How Has the Index Rebalance Strategy Performed in 2024?

It has been a decent year for the index rebalance strategy, though there have been some big hiccups along the way.
Forecasting the index changes and impacts has been important, but timing (especially momentum/value regime changes) and hedge selection have also been major factors affecting the returns of the strategy.
As passive AUM continues to increase, we expect focus on the strategy to continue in 2025 with market players taking different approaches to trading the potential and announced index changes.

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March 2025

We see 32 potential and close adds and 44 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
We expect 29 stocks to be added to Southbound Stock Connect following the rebalance while 31 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

KOSPI Size Indices: Overlap Between Global Passive Selling & Downward Migrations

The review period for the March rebalance of the KOSPI Size Indices commenced on 1 December and will end on 28 February.
A quarter of the way through the review period, we forecast 37 migrating stocks. Among new listings, 1 could be added to LargeCap, 3 to MidCap and 2 to SmallCap.
Four downward migrations were deleted from a global index in November. Now, three more downward migrations could be deleted from the same global index in February.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Grab Holdings (GRAB US) – Harvest Time

By Angus Mackintosh

Grab Holdings has expressed excitement for 2025, as it harvests the investments it has made in its laddered approach to new product offerings from Saver to Grab Unlimited in 2024.
Having grown transacting users in 2024 through its Saver offering, Grab will focus on growing its premium offers in 2025. Groceries should outperform along with its offline dining initiatives.
Grab will focus on lending growth at its DigiBanks in Malaysia, and Singapore in 2025 and will double down on its advertising offerings. Grab will book a 2025 net profit.

Dividend Procedure Improvement Plan in Compliance with Global Standards Is Passed into Law

Amid chaos in Korean politics (including impeachment of the Acting President Han Duck Soo), the FSC announced that the change in the procedure for quarterly dividends was passed into law.
The main change that has been made is that the the investors will know in advance how much they will receive in quarterly dividends.
Amid market turmoil, numerous high dividend paying stocks such as Hankook & Company, HD Hyundai, and KT Corp have been outperforming the market this year.

How Much Higher Can TSLA Go? A Pullback Could Hit in Two Weeks

By Nico Rosti

Tesla (TSLA US) has been completelly defying gravity law in the weeks past the US Elections. If you are a long-term TSLA holder you may want to cover soon.
The rally may encounter strong resistance in the next 2 weeks, a pullback could happen in that time frame.
The analysis of our QUANTCHARTS can help pinpoint the support levels where to add positions again to existing TSLA holdings.

💡 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 Analytics and News
✓ Events & Webinars

Dec 28

Most Read: Sanrio, Kokusai Electric , LG CNS, Samsung Engineering, Makino Milling Machine Co, Shin Kong Financial Holding, Hyundai Motor , Samsung Electronics Pref Shares and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
Japan: Potential Passive Selling in February
LG CNS IPO: Limited Float Pushes Back Passive Buying
Korea: Potential Relegations from K League 1
Nidec Goes Hostile On Makino Milling at ¥11,000/Share
Shin Kong/Taishin Merger – Proceeding Apace
Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st
Our Best Calls in 2024: Review and Outlook for 2025
What We’ve Got on Samsung Electronics’ Value-Up Disclosure
Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Nidec Goes Hostile On Makino Milling at ¥11,000/Share

This morning, Nidec Corp (6594 JP)announced that it intended to launch a Tender Offer on Makino Milling Machine Co (6135 JP) without the support of Makino management.
The same pattern as Takisawa Machine Tool (6121 JP). Nidec decides, relying on the METI Guidelines for Corporate Takeovers for procedure, announces, and puts the onus on the Target to accept.
But shareholders should hope Makino Milling takes a page from the example provided by Chilled & Frozen Logistics Holdings (9099 JP) back in spring 2024. This could get funky.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Korea FSC Official: New Rule to Block “Treasury Stock Magic” Takes Effect on 31st

By Sanghyun Park

Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.

Our Best Calls in 2024: Review and Outlook for 2025

By Osbert Tang, CFA

With a range of 34.5-68.1%, our five best calls in 2024 generated an average return of 54.1% YTD, outperforming the Hang Seng Index by 26.2pp.
China Communications Construction (1800 HK) and Dongfang Electric (1072 HK) are expected to sustain strengths into 2025 on market value management and pick-up in new orders.
Xinhua Winshare (811 HK), China Everbright Environment (257 HK), and SITC International (1308 HK) may hold their share price, but gains are unlikely to be as much as 2024.

What We’ve Got on Samsung Electronics’ Value-Up Disclosure

By Sanghyun Park

Yesterday, the FSC pushed for value-up policies, but the real buzz was about Samsung Electronics hinting at rolling out its own value-up plan soon.
Samsung may raise its dividend payout from 50% to 60% and could issue a special dividend if semiconductor results improve or FCF exceeds expectations.
Samsung’s value-up disclosure may not cause short-term price action but could strengthen downside support. It may focus on dividends over buybacks, potentially boosting preferred stock.

Makino Milling Machine (6135 JP): Nidec’s (6594 JP) Hostile Preconditional Tender Offer at JPY11,000

Nidec Corp (6594 JP) announced a hostile preconditional tender offer for Makino Milling Machine Co (6135 JP) at JPY11,000 per share, an 18.9% premium to the last close.
The offer is preconditioned on several regulatory approvals. It is scheduled to start on 4 April, even if the Board does not recommend it.
The Board has three options: engage to facilitate a friendly offer, find a white knight bidder and launch an ambitious MTM plan to thwart the offer.

💡 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 Analytics and News
✓ Events & Webinars

Dec 27

Most Read: Seven & I Holdings, Sanrio, Kokusai Electric , LG CNS, Samsung Engineering, Shin Kong Financial Holding, Macromill, Inc, CPMC Holdings, Malaysia Airports Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
Japan: Potential Passive Selling in February
LG CNS IPO: Limited Float Pushes Back Passive Buying
CPMC (906 HK): Tendering Now Open
Korea: Potential Relegations from K League 1
Shin Kong/Taishin Merger – Proceeding Apace
Macromill (3978 JP) – Five Major Investors Have 50+%; CVC Extends and Will Need to Bump Or Walk
CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional
Malaysia Airports (MAHB MK): Awaiting the Consortium’s Next Move

7&I (3382 JP) – Share Price Dipping Deeper Means Dipping Toes Deeper

Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up.
An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?

The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.

Japan: Potential Passive Selling in February

Currently, 9 stocks could be deleted from global passive portfolios in February. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup on shorts on few stocks with minimal positioning in the other stocks. That could change once the calendar ticks over to 2025.
Kokusai Electric (6525 JP) is a potential inclusion to the Nikkei 225 (NKY INDEX) in March and this deletion could provide liquidity to enter a position ahead of that announcement.

LG CNS IPO: Limited Float Pushes Back Passive Buying

LG CNS (LGCNSZ KS) is looking to raise up to KRW 1,199bn (US$830m), valuing the company at KRW 6 trillion (US$4.15bn) at the top end of the IPO price range.
As a member of the IT sector, inclusion in the KOSPI200 Index will only take place via Fast Entry (near impossible) or as a large-scale company.
Inclusion in global indices could commence in September 2025 and will be easier if the identity of the pre-IPO minority shareholders is disclosed or if the strategic investors sell.

CPMC (906 HK): Tendering Now Open

At a 1.5% gross spread to terms, CPMC Holdings (906 HK) is trading with completion is mind after the last pre-condition – SAFE – was satisfied on the 13th December.
The Offer Doc is now out and the transaction is open for acceptances. The First Close is the 10th January.
I’d expect this deal to turn unconditional on or before the First Close, with payment around the 20th January.

Korea: Potential Relegations from K League 1

There are quite a few stocks in Korea that have underperformed their peers and could be deleted from global passive portfolios in February.
There are still 3 weeks left for the stocks to redeem themselves and avoid relegation from the K League, so watch out for big price moves.
Based on our estimate of passive assets, trackers will need to trade between US$45m to US$114m of the stocks. Impact will vary between 2.6x-30x of ADV to trade.

Shin Kong/Taishin Merger – Proceeding Apace

Once shareholders of Shin Kong Financial Holding (2888 TT) and Taishin Financial Holding (2887 TT) agreed to the merger two months ago, that meant an FSC submission would come shortly.
It came on 3rd December. Normally it takes two months, but can be extended. It appears the TFTC submission (which is considered wholly separately) was made as early as September.
This should get approved within the timeframe or not long afterwards. There is one known “document” missing from the application as of submission, but it shouldn’t be a problem.

Macromill (3978 JP) – Five Major Investors Have 50+%; CVC Extends and Will Need to Bump Or Walk

Three pre-existing Large Shareholders have not sold down. Two new 5+% shareholders have appeared since Tender Launch. Together, their reports give them 51.7% of shares out.
That provides them with a significantly strong implied negotiating hand. Given the midpoint of the Target Company’s Advisor’s DCF Range, I expect a bump.
Today the Bidder extended for 10 more days. They didn’t have the shares to close. I expect they won’t unless they bump a lot.

CPMC Holdings (906 HK): On the Cusp of Being Declared Unconditional

CPMC Holdings (906 HK)’s offer from ORG Technology Co., Ltd. A (002701 CH) is HK$7.21 with a 50% minimum acceptance condition. The first closing date is 10 January.
CCASS data shows that Mr Wei has tendered (22.01% of outstanding shares). Including acceptances, ORG’s shareholding was 46.63% of outstanding shares as of 24 December.
The Board supports the offer, and it is close to being declared unconditional. At the last close and 25 January payment, the gross/annualized spread was 0.8%/10.9%.

Malaysia Airports (MAHB MK): Awaiting the Consortium’s Next Move