Most Read

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.

Shinko Electric (6967) – Break/Gap Risk Early May 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.
15wks 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 8wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 3.6% wider than at narrowest, but gap risk has widened as Shinko outperforms, Ibiden.

CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived

The review period for the June rebalance is complete and we expect 11 changes to the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
We estimate one-way turnover of 1.4% at the rebalance leading to a one-way trade of CNY 8.82bn (US$1.22bn). There are a lot of stocks with multiple days ADV to trade.
The potential deletes have bounced off their lows as the market has recovered. But the potential passive selling could see them underperform over the next month.

L’Occitane (973 HK): The Rollover Option, And Alternate Listing Valuations

Concurrent with its HK$34/share VGO, L’Occitane (973 HK)‘s disinterested shareholders may be entitled to a share scrip alternative. IF afforded, up to 5% of shares out can participate.
The big unknown is whether you receive shares of the levered-up Bidco, at some as yet undetermined scrip ratio; or keep shares of L’Occitane as-is.
To trigger the rollover option, 10% of disinterested shareholders need to express interest by the 15th May (a Hong Kong holiday btw). A deadline without details.

China TCM (570.HK) Update – Despite Doubts, This Privatization Seems “Mandatory”

By Xinyao (Criss) Wang

Some investors have concerns that the privatization may fail. We also noticed that Morgan Stanley raised China TCM’s target price to HK$5.4. However, the privatization of China TCM seems “mandatory”.
At this stage, some background information is worth the attention, which will help investors better understand the logic behind this privatization and thus resolve the “confusion”.
According to regulatory requirements, it’s expected that both CNPGC and Taiji will integrate resources in pharmaceutical manufacturing and distribution sectors, so as to solve horizontal competition issue between the two.

Sigma Healthcare (SIG AU): ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe…

In early December, pharmacy distributor Sigma Healthcare (SIG AU) arranged a “transformational merger” with mega chain Chemist Warehouse (CWG). Effectively a reverse takeover designed to get CWG listed.
SIG issued shares, raising cash, enabling it so NEWCO had high enough minimum float upon merging. Financial engineering for the win. SIG popped – a kind of IPO premium trade.
But plenty of people are against the deal, and ACCC hasn’t yet opined (13 June is the provisional date), but on Thursday, S&P announced SIG would join ASX200 despite risks.

HSCEI Dividend Futures: Sell the 2024/25 Steepener

The HSCEI 2024 dividend futures have moved higher following mainland China banks announcing that they will pay out interim dividends starting this year.
The HSCEI 2025 dividend futures have moved higher too, though they have lagged the HSCEI 2024 dividend futures.
Even though the HSCEI 2024/25 dividend steepener has dropped by around 10 points in the last few weeks, we see further downside in the near-term.

Tencent (700 HK): 1Q24 Preview, EPS Up by 40%, But Upside Narrowed by Significant Price Rise

By Ming Lu

We believe total revenue will grow by 7% YoY in 1Q24 and faster in the remaining three quarters of 2024.
We believe EPS will grow by 41% to HK$3.80, which is higher than the market consensus.
The stock has risen by 26% since our last Buy rating, but there is still an upside of 9% till the end of 2024.

SSE50 Index Rebalance Preview: Financials Continue to Outperform

With the review period nearing completion, 6 stocks are in inclusion zone and 9 are in deletion zone. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 7.1% at the June rebalance leading to a one-way trade of CNY 9.9bn (US$1.37bn). Index arb balances should increase the impact on the stocks.
The potential inclusions (of which four are Financials) have continued to outperform the mixed bag of potential deletions. With pretty big impact on the deletes, expect further divergence.

L’Occitane (973.HK) Privatization – The Offer Price Is Good Enough

By Xinyao (Criss) Wang

The HK$34/share offer price is final, which exceeds all-time high closing price of HK$33.60/share since IPO in 2010. EUR6 billion is equivalent to a PE of 52.17x, higher than peers.
Deploying China’s sinking market is “a good story full of imagination”. However, it may fail to bring expected profits considering increasing competition/potential price war, leading to uncertain future performance growth.
For minority shareholders, this privatization provides an attractive opportunity to monetise their investments at a premium over market price. We don’t think the current “technical bull market” to be lasting.

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May 06

Most Read: Shinko Electric Industries, Marathon Digital Holdings, ZEEKR, China Merchants Expressway Net, China Traditional Chinese Medicine, Mini Kospi 200 Futures, Tencent, Hang Seng China Enterprises Index, Hollysys Automation Technologies, APT Medical and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update
S&P500 Index Rebalance: Bitcoin Miner Is a SPCY Add
ZEEKR (ZK US) IPO: Valuation Insights
CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived
Merger Arb Mondays (06 May) – China TCM, L’Occitane, Hollysys, Shinko, QV Equities, Qantm IP, Adbri
Addressing Areas of Confusion Surrounding the KOSPI 200 June Rebalancing
HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold
HSCEI Dividend Futures: Sell the 2024/25 Steepener
Hollysys (HOLI US): Further Thoughts on the Widening Spread
CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes

Shinko Electric (6967) – Break/Gap Risk Early May 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.
15wks 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 8wks ago, recommended taking profits.
Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 3.6% wider than at narrowest, but gap risk has widened as Shinko outperforms, Ibiden.

S&P500 Index Rebalance: Bitcoin Miner Is a SPCY Add

Following Exxon Mobil (XOM US)‘s acquisition of Pioneer Natural Resources (PXD), Vistra (VST US) will be added to the S&P 500 INDEX (SPX INDEX) at the close on 7 May.
Marathon Digital Holdings (MARA US) is an add to the S&P SmallCap 600 Index and the stock could move higher till implementation.
Marathon Digital Holdings (MARA US) stock has underperformed its close peers this year and the ratio of Marathon Digital Holdings stock price to Bitcoin (XBTUSD CURNCY) is near the lows.

ZEEKR (ZK US) IPO: Valuation Insights

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.

CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived

The review period for the June rebalance is complete and we expect 11 changes to the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
We estimate one-way turnover of 1.4% at the rebalance leading to a one-way trade of CNY 8.82bn (US$1.22bn). There are a lot of stocks with multiple days ADV to trade.
The potential deletes have bounced off their lows as the market has recovered. But the potential passive selling could see them underperform over the next month.

Merger Arb Mondays (06 May) – China TCM, L’Occitane, Hollysys, Shinko, QV Equities, Qantm IP, Adbri

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: Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Southern Cross Media (SXL AU), Qantm Intellectual Property (QIP AU), Probiotec Ltd (PBP AU), China TCM.
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Jastec Co Ltd (9717 JP).

Addressing Areas of Confusion Surrounding the KOSPI 200 June Rebalancing

Ssangyong C&E will be excluded in June pre-delisting due to the float rate rule. Replacement will be chosen from the highest market cap existing constituents excluded in the June review.
Likely owing to the recent expansion of macro variables in the local market, a clear correlation between results and price impact is not observed even at the screening period’s conclusion.
There’s a chance of price impact closer to the effective date, suggesting potentially more effective basket trading. However, short instrument absence necessitates using market indices as hedges.

HK Connect SOUTHBOUND Flows (To 30-Apr/3-May 2024); Banks/SOEs Bought, Meituan, Tencent, Mobile Sold

A-Shares only two days of the week and were up small Monday and Tuesday. H-shares took a breather Wednesday after trailing A-shares, then rallied hard on Thursday and Friday.
Net SOUTHBOUND buying was +HK6.0bn. Net buys every day and now 22 days straight, but buying still appears foreign-led price-taking action.
The only big news this week in China/HK was probably the Politburo’s new stance of trying to do more for the mainland property market, concentrating on unsold homes.

HSCEI Dividend Futures: Sell the 2024/25 Steepener

The HSCEI 2024 dividend futures have moved higher following mainland China banks announcing that they will pay out interim dividends starting this year.
The HSCEI 2025 dividend futures have moved higher too, though they have lagged the HSCEI 2024 dividend futures.
Even though the HSCEI 2024/25 dividend steepener has dropped by around 10 points in the last few weeks, we see further downside in the near-term.

Hollysys (HOLI US): Further Thoughts on the Widening Spread

I have received several questions from readers on Ascendent’s binding proposal for Hollysys Automation Technologies (HOLI US) in the context of the current gross spread of 12.1%.
The questions primarily concerned the Capital Forum article, NSR approvals, timelines, auditor resignation and deal break risks.
Most of the questions concerned regulatory approval risk. The delay in closing is mainly procedural (government red tape) rather than an indication that regulators will block the deal.

CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes

With the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index – Shang (SH000905 INDEX) at the close on 14 June.
We estimate a one-way turnover of 9.3% at the rebalance resulting in a one-way trade of CNY10.88bn (US$1.5bn). The Industrials and Information Technology sectors gain at the expense of Materials.
The potential adds have outperformed the potential deletes by 8% over the last 3 months. There could be further outperformance over the next few weeks.

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May 05

Most Read: Amman Mineral Internasional, Shenyang Xingqi Pharmaceutical, Robosense Technology, Deep Yellow Ltd, Berli Jucker, Jeju Semiconductor, Korea Stock Exchange Kospi Index, L’Occitane, Marathon Digital Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
ChiNext/ChiNext50 Index Rebalance Preview: Plenty of Overlap Between the Indices
HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June
ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
SET50 Index Rebalance Preview: Market Consultation & More Changes in June
KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
Local Institutions’ Value-Up Momentum Moves: Watch the July Tax Reform Bill
Weekly Deals Digest (05 May) – L’Occitane, C&F Logistics, KFC Japan, Austal, Hyundai Marine, ZEEKR
(Mostly) Asia-Pac M&A: L’Occitane, KFC Holdings Japan, CSR, Azure Minerals, CIMC, Chilled & Frozen
S&P500 Index Rebalance: Bitcoin Miner Is a SPCY Add

IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks

There are 2 constituent changes for the LQ45 Index and 6 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 30 April.
The largest passive inflows are expected in Amman Mineral Internasional (AMMN IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ) and Merdeka Copper Gold Tbk PT (MDKA IJ).
With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

ChiNext/ChiNext50 Index Rebalance Preview: Plenty of Overlap Between the Indices

Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
The potential adds have outperformed the potential deletes between 9-10% for both indices over the last month with the deletes dropping a lot more than the adds.

HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June

There were only 12 new listings on the Main Board of the HKEX (388 HK) in the first quarter of the year. More than half the listings were in March.
Of those stocks, we only see Robosense Technology (2498 HK) having a chance of being added to the HSCI in June and then into Southbound Stock Connect.
There is a big lock-up expiry for Robosense Technology (2498 HK) in July and that should keep the stock under pressure.

ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance

Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.

SET50 Index Rebalance Preview: Market Consultation & More Changes in June

The SET has run a market consultation on relaxing liquidity thresholds for inclusion of stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) universe.
The consultation is the result of an increase in Average Daily Trading Values and lower turnover ratios, especially for large cap stocks.
Berli Jucker (BJC TB) is now a potential index inclusion in June and that could result in four constituent changes at the next rebalance.

KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends

With the review period complete, there could be up to 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
Even with 15 changes, there is some sector balance among the potential adds and deletes with big churn in the Information Technology sector.
The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the review period but performance has flattened over the last month.

Local Institutions’ Value-Up Momentum Moves: Watch the July Tax Reform Bill

MMAS prioritizes dividends over low-PBR, key to government’s Value-up momentum. Despite initial market disappointment, dividend stocks rebounded, underscoring continued investor interest.
Government officials are collecting historic dividend data to simulate separate taxation impact of dividend income, likely to be included in July’s tax reform bill for National Assembly approval.
Local institutions focus on dividend-centric Value-up trading, targeting stocks with high cash reserves and dividends. Strategy needed to manage market impact pre-tax reform bill in July.

Weekly Deals Digest (05 May) – L’Occitane, C&F Logistics, KFC Japan, Austal, Hyundai Marine, ZEEKR

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: HD Hyundai Marine Solution (443060 KS) and ZEEKR (ZK US) IPOs.
Event-Driven developments: L’Occitane (973 HK), Chilled & Frozen Logistics Holdings (9099 JP), Kfc Holdings Japan (9873 JP), Mimasu Semiconductor Industry (8155 JP), Austal Ltd (ASB AU).

(Mostly) Asia-Pac M&A: L’Occitane, KFC Holdings Japan, CSR, Azure Minerals, CIMC, Chilled & Frozen

Tally 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deals was discussed on Smartkarma this week: L’Occitane (973 HK)‘s VGO from major shareholder, Reinold Geiger. A deal for KFC Holdings Japan (9873 JP) is apparently imminent.
Key updates took place on: CSR Ltd (CSR AU), Azure Minerals (AZS AU), CIMC Vehicle Group Co Ltd (1839 HK), and Chilled & Frozen Logistics Holdings (9099 JP).

S&P500 Index Rebalance: Bitcoin Miner Is a SPCY Add

Following Exxon Mobil (XOM US)‘s acquisition of Pioneer Natural Resources (PXD), Vistra (VST US) will be added to the S&P 500 INDEX (SPX INDEX) at the close on 7 May.
Marathon Digital Holdings (MARA US) is an add to the S&P SmallCap 600 Index and the stock could move higher till implementation.
Marathon Digital Holdings (MARA US) stock has underperformed its close peers this year and the ratio of Marathon Digital Holdings stock price to Bitcoin (XBTUSD CURNCY) is near the lows.

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May 04

Most Read: Great Wall Motor, Hanmi Semiconductor, Jeju Semiconductor, Hanon Systems, Oriental Land, Mediatek Inc, Sigma Healthcare, Jusung Engineering, People’s Insurance (PICC), Korea Stock Exchange Kospi Index and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

RMB Dual Counter Trading Is Coming – This Changes AH Relationships
KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
Local Observations on Carlyle’s Possible Buyout of Hanon Systems
Updated Tool (30Apr24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”
Key Insights from Qualcomm’s Latest Data; Mediatek Taking Market Share?
ASX200 Index Adhoc Rebalance: Sigma Healthcare (SIG) Replaces Boral (BLD)
Jusung Engineering: Announces Equity Spin Off + Physical Division Split
StubWorld: Stay Long PICC (1339 HK)
Local Institutions’ Value-Up Momentum Moves: Watch the July Tax Reform Bill

RMB Dual Counter Trading Is Coming – This Changes AH Relationships

A week after the State Council issued “Several Opinions” (关于加强监管防范风险推动资本市场高质量发展的若干意见》), the CSRC announced Friday five capital market cooperation measures with HK Connect. The goals are to increase cross-border investor flows.
They include: a broader range of ETFs in Connect, including REITs in both directions, include RMB counters in Southbound, improve mutual recognition of funds, increasing China IPOs in Hong Kong.
RMB Dual Counters Southbound-eligible will take time. They have some homework, but it is on the “To Do” list “as soon as possible and smoothly.” Watch impact on H/A Pairs.

KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June

With the review period complete, there could be up to 5 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
Hahn&Co now own over 96% of the shares in Ssangyong Cement Industrial (003410 KS) and there could be another change at or before the June rebalance.
Passive trackers will need to trade between 0.5-15x ADV on the index changes. There are big shorts in L&F (066970 KS) and Lotte Tour Development Co, Ltd. (032350 KS).

KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends

With the review period complete, there could be up to 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
Even with 15 changes, there is some sector balance among the potential adds and deletes with big churn in the Information Technology sector.
The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the review period but performance has flattened over the last month.

Local Observations on Carlyle’s Possible Buyout of Hanon Systems

Carlyle’s renewed interest in acquiring Hanon Systems is evident from recent local market news, indicating outreach to bankers for a potential buyout, as confirmed by a local brokerage.
Carlyle eyes majority control of Hanon Systems, targeting 50.5% from Hahn & Co and 19.5% from Hankook Tire. Carlyle may extend a tender offer for the remaining 30%.
Still early stages; no solid info on deal certainty or specifics. Limited immediate trading opportunities, but worth monitoring as it progresses.

Updated Tool (30Apr24) & “Diff File Generator” For TSE “Mgmt Conscious of Capital Cost/Stock Price”

In mid-January, 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 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.
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.

Key Insights from Qualcomm’s Latest Data; Mediatek Taking Market Share?

By Vincent Fernando, CFA

Qualcomm’s latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results’ key implications for Mediatek.
Qualcomm’s 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.
Qualcomm confirmed Mediatek’s view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.

ASX200 Index Adhoc Rebalance: Sigma Healthcare (SIG) Replaces Boral (BLD)

Seven Group Holdings (SVW AU) now holds 85.8% of Boral Ltd (BLD AU) and that will lead to deletion of Boral from the S&P/ASX 200 (AS51 INDEX).
As expected, Sigma Healthcare (SIG AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 9 May.
Sigma Healthcare (SIG AU) price movements will be largely influenced by its pending merger with Chemist Warehouse Group (CWG).

Jusung Engineering: Announces Equity Spin Off + Physical Division Split

On 2 May, Jusung Engineering (036930 KS) announced an equity spin-off as well as a physical division split.
We are negative on this combination of equity spin-off and physical division split of Jusung Engineering.
After the two units are listed on 6 December 2024, it is likely that the semiconductor unit (Jusung Engineering Co) will rise while Jusung Holdings Co is likely to decline.

StubWorld: Stay Long PICC (1339 HK)

People’s Insurance (PICC) (1339 HK) has bounced off its lifetime low implied stub and simple ratio (PICC/PICC Property & Casualty (2328 HK)); but still trades below its historical trailing/forward metrics.
Preceding my comments on PICC 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%.

Local Institutions’ Value-Up Momentum Moves: Watch the July Tax Reform Bill

MMAS prioritizes dividends over low-PBR, key to government’s Value-up momentum. Despite initial market disappointment, dividend stocks rebounded, underscoring continued investor interest.
Government officials are collecting historic dividend data to simulate separate taxation impact of dividend income, likely to be included in July’s tax reform bill for National Assembly approval.
Local institutions focus on dividend-centric Value-up trading, targeting stocks with high cash reserves and dividends. Strategy needed to manage market impact pre-tax reform bill in July.

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May 03

Most Read: IDP Education, Deep Yellow Ltd, Hanmi Semiconductor, Jeju Semiconductor, Korea Stock Exchange Kospi Index, Austal Ltd, Bukalapak.com PT Tbk, Honasa Consumer and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks
The Bigger Picture As Aussie Government “Approves’ Hanwha Ocean’s Austal Bid
Austal (ASB AU): Spurned Suitor, Hanwha Ocean, Gets a Vote of Confidence
Bukalapak (BUKA IJ) – Eureka Moment with Better Visibility Ahead
Corporate Value Up Program Guidelines Proposed by the FSC – Disappointing & Needs Improvement
Honasa Consumer IPO Lock-Up Expiry – US$500m+ Lockup Expiry with Everyone Well in the Money

Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket

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.
Below I present a study using data from 2012-2023 and this year’s portfolio.

ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance

Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.

KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June

With the review period complete, there could be up to 5 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
Hahn&Co now own over 96% of the shares in Ssangyong Cement Industrial (003410 KS) and there could be another change at or before the June rebalance.
Passive trackers will need to trade between 0.5-15x ADV on the index changes. There are big shorts in L&F (066970 KS) and Lotte Tour Development Co, Ltd. (032350 KS).

KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends

With the review period complete, there could be up to 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
Even with 15 changes, there is some sector balance among the potential adds and deletes with big churn in the Information Technology sector.
The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the review period but performance has flattened over the last month.

NPS Confirms Reference Portfolio & Risky Assets Upweight: Implications for Value-Up Stocks

Today, NPS made the final decision to introduce a reference portfolio. The critical point is the increase in risky assets from 56% to 65%, also decided at today’s meeting.
Initially, overseas equity was prioritized, but recent forecasts suggest significant potential in increasing local equity, aligning with the value-up policy.
Monitoring NPS’s execution plan, including allocation and timing by asset class, is vital to gauge inflow size, especially for Value-up beneficiaries.

The Bigger Picture As Aussie Government “Approves’ Hanwha Ocean’s Austal Bid

Recently, I surmised FIRB would approve Sociedad Quimica y Minera (SQM US)/Hancock’s bid for Azure (AZS AU); but ding Hanwha Ocean (042660 KS)‘s Austal (ASB AU) tilt. I’m batting 50%.
Whereas FIRB gave the green light for Azure this week; reportedly (no official ASX announcement as yet), the Aussie government is “not concerned” with Hanwha’s acquisition. Austal gained 3% yesterday.
Even Austal didn’t high hopes of securing Aussie approval. Presumably the US government is similarly onboard. This development also signals an expanding AUKUS security pact.

Austal (ASB AU): Spurned Suitor, Hanwha Ocean, Gets a Vote of Confidence

On 2 April, Austal Ltd (ASB AU) rejected a non-binding proposal from Hanwha Ocean (042660 KS) at A$2.825 due to concerns about obtaining Australian and US regulatory approvals.
The Board’s claims are on shaky grounds. On 1 May, the AFR reported that Australian Defence Minister Richard Marles had no concerns with Hanwha’s privatisation bid.
The Board’s rejection is a clumsy attempt to negotiate better terms, such as a bump, ticking fees, or significant break fees. At the last close, the gross spread was 21.8%.

Bukalapak (BUKA IJ) – Eureka Moment with Better Visibility Ahead

By Angus Mackintosh

Bukalapak released its 1Q2024 results this week with some palpable relief as it booked its first adjusted EBITDA but underlying revenue growth remains strong, especially for its O2O business.
The company saw take rates improve for both its Mitra O2O business and its marketplace businesses, helping to drive revenue growth. Costs were also reduced allowing for positive contribution margins.
Bukalapak is expected to see sustainable profitability accompanied by revenue growth, with the marketplace recovering with improving product mix. BUKA’S “orphan” cash pile remains an issue but valuations are attractive.

Corporate Value Up Program Guidelines Proposed by the FSC – Disappointing & Needs Improvement

Some of the Corporate Value Up program’s initial guidelines proposed by the Financial Services Commission (FSC) were announced today.
Overall, the initial guidelines were disappointing mainly because they lacked concrete figures with regards to tax incentives for companies that make significant improvements to their corporate governance.
More concrete measures announced today included recommendations for overlapping parent company listing (split listing) and disclosure recommendations for the majority shareholder’s profit transfer to an unlisted private company (tunneling).

Honasa Consumer IPO Lock-Up Expiry – US$500m+ Lockup Expiry with Everyone Well in the Money

By Sumeet Singh

Honasa Consumer (HONASA IN) raised about US$200m in its India IPO. Its pre-IPO investors will be released from its IPO linked lockup soon.
HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

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May 02

Most Read: IDP Education, CJ Cheiljedang, West Japan Railway Co, Krafton , L’Occitane, Rio Tinto Ltd, Chilled & Frozen Logistics Holdings, Jeju Semiconductor, Hanmi Semiconductor and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
Leading Candidates for the First Value-Up Disclosure
JR West (9021 JP) – Shareholder Structure Means Large-Ish Buyback Could Have Impact
Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (Mar and Apr 2024)
(Mostly) Asia M&A, April 2024: Austal, L’Occitane, Langham Hosp., Jastec, Mimasu, Best World, Isetan
Selected European HoldCos and DLC: April’24 Report
AZ-Com Maruwa Launches Hostile TOB on Chilled & Frozen Logistics (9099) – Expect More Fun To Come
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa Calls the Board’s Bluff, Launches the Offer
KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends
KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June

Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket

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.
Below I present a study using data from 2012-2023 and this year’s portfolio.

Leading Candidates for the First Value-Up Disclosure

Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.
Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).
The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index

JR West (9021 JP) – Shareholder Structure Means Large-Ish Buyback Could Have Impact

Yesterday, West Japan Railway Co (9021 JP) announced FY23 earnings, a higher dividend, an update to the Medium-Term Management Plan (p10~), and a Buyback.
Short & Sweet: Revenues were +17.2%yoy, OP +114.1%, NP +1.6%. OPM was 11.0% and ROE 9.2% (both best since FY18). Guidance is Revenue up, OP down, NP tiny up.
The new FY25 (Mar26) OP guide in the MTMP is the old Mar28 target (mostly inbound tourism-driven). The Buyback is biggish. It is worth looking at the details.

Alpha Generation Through Share Buybacks in Korea: Bi-Monthly (Mar and Apr 2024)

In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in March and April 2024.
We provide a list of 30 stocks in the Korean stock market that have announced share buyback programs in the past two months.
Major companies that have announced share buybacks in Korea in the past two months include Krafton (259960 KS), Celltrion Inc (068270 KS), and Woori Financial Group (316140 KS).

(Mostly) Asia M&A, April 2024: Austal, L’Occitane, Langham Hosp., Jastec, Mimasu, Best World, Isetan

For the month of April 2024, 7 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
The average premium for the new transactions announced (or first discussed) in April was ~55%. The average premium YTD is ~42%.
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.

Selected European HoldCos and DLC: April’24 Report

By Jesus Rodriguez Aguilar

The Discounts to NAV of covered holdcos mainly widened during April. Discounts to NAV: C.F.Alba, 49.1% (vs. 47.3%); GBL, 39% (vs. 38.1%); Heineken Holding, 17.3% (vs 16.7%);
Industrivärden C, 4.7% (vs. 1.4%); Investor B, 8.3% (vs. 6.1%); Porsche Automobile Holding, 41.1% (vs. 45.4%). Rio DLC spread tightened to 22.5% (vs. to 24.9%).
What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

AZ-Com Maruwa Launches Hostile TOB on Chilled & Frozen Logistics (9099) – Expect More Fun To Come

Chilled & Frozen Logistics Holdings (9099 JP) had been sending out questions, and trying to get AZ-Com Maruwa Holdings (9090 JP) to delay the start until at least late-May.
AZ-Com Maruwa answered questions (first and second set) and on the 24th, C&F asked AZ-Com to extend. They did not extend. AZ-Com announced the Tender Offer at ¥3,000 today.
C&F responded today saying the TOB is launched without C&F Board approval. Then they said some other things that might be disclosed when C&F’s Board presents its Target Opinion.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa Calls the Board’s Bluff, Launches the Offer

AZ-Com Maruwa Holdings (9090 JP) has satisfied the precondition for its hostile Chilled & Frozen Logistics Holdings (9099 JP) JPY3,000 offer. The offer closes on 17 June (31 business days).
AZ-COM Maruwa has called the Board’s bluff by providing sufficient time (extending the offer period from 20 to 31 business days) for a white knight to lob a competing bidder.
While a bump is probable, the shares already factor in a significant bumpitrage premium. A potential bump has a good chance of being lower than the last close.

KOSDAQ150 Index Rebalance Preview: 15 Changes Possible as Review Period Ends

With the review period complete, there could be up to 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
Even with 15 changes, there is some sector balance among the potential adds and deletes with big churn in the Information Technology sector.
The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the review period but performance has flattened over the last month.

KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June

With the review period complete, there could be up to 5 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
Hahn&Co now own over 96% of the shares in Ssangyong Cement Industrial (003410 KS) and there could be another change at or before the June rebalance.
Passive trackers will need to trade between 0.5-15x ADV on the index changes. There are big shorts in L&F (066970 KS) and Lotte Tour Development Co, Ltd. (032350 KS).

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May 01

Most Read: Amman Mineral Internasional, EcoPro Materials, L’Occitane, WorleyParsons Ltd, IDP Education, Deep Yellow Ltd, Endeavour Group /Australia, China Resources Beverage, CJ Cheiljedang, Keisei Electric Railway Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks
May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials
L’Occitane (973 HK): Geiger’s $34/Share Offer
Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged
China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market
Leading Candidates for the First Value-Up Disclosure
Keisei Electric Rail (9009): For Relative Value Trade

IDX30/LQ45/IDX80 Index Rebalance: BIG Flows for Some Stocks

There are 2 constituent changes for the LQ45 Index and 6 constituent changes for the IDX80 Index at the rebalance to be implemented at the close on 30 April.
The largest passive inflows are expected in Amman Mineral Internasional (AMMN IJ), Indosat Tbk PT (ISAT IJ), Bank Rakyat Indonesia (BBRI IJ) and Merdeka Copper Gold Tbk PT (MDKA IJ).
With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

May Lockup Release & April SSF Listing May Lead to Weird Trading Dynamics for Ecopro Materials

May 17th, all eyes on EcoPro Materials for a buzzed-about lockup release. BRV Capital holds 24.5% stake, 17M shares. Lockup ends May 16th; they’re free to sell off without constraints.
Apparently, they’re eager to cash out, with a profit margin around 30 times and 7 years invested. Many at Yeouido bet they’ll sell out once the lockup’s over.
We might start building a shorting position with futures targeting this lockup release from April 22nd. This could stir up some weird backwardation, which could give us another trading opportunity.

L’Occitane (973 HK): Geiger’s $34/Share Offer

After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final.
This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.

Worley (WOR): Impact of Dar Group’s A$1.4bn Sale

Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket

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.
Below I present a study using data from 2012-2023 and this year’s portfolio.

ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance

Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.

Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged

By Clarence Chu

Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market

By Sumeet Singh

China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
In this note, we talk about the positive aspects of the deal.

Leading Candidates for the First Value-Up Disclosure

Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.
Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).
The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index

Keisei Electric Rail (9009): For Relative Value Trade

By Henry Soediarko

The activist investor is back and has demanded further action to unlock value from Keisei Electric Railway Co (9009 JP) management.
Operational numbers are still healthy, but growth is not as large due to the high base.
Immediate pressure to divest Oriental Land thus short Oriental Land (4661 JP) and long Keisei.

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Apr 30

Most Read: Hainan Jinpan Smart Technology, Maruti Suzuki India, L’Occitane, Kfc Holdings Japan, WorleyParsons Ltd, Mimasu Semiconductor Industry, Toyo Suisan Kaisha and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform
India: Potential Free Float Changes & Passive Flows in May
L’Occitane (973 HK): Conditional VGO at HK$34
Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent
Worley Placement – Largest Shareholder Selling at an Attractive Discount
KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer
Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
L’Occitane (973 HK): Geiger’s $34/Share Offer
Mimasu Semiconductor (8155 JP): Shin-Etsu (4063 JP)’s Pre-Conditional Tender Offer
Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion

STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform

The review period for the June rebalance ends 30 April. We expect the changes to be announced 31 May with the implementation taking place after the close on 14 June.
We forecast 10 changes for the index, including migrations between the STAR 100 Index and the SSE STAR50 (STAR50 INDEX).
Excluding the migrations, the potential adds have outperformed the potential deletes over the last few months and that could continue as we head to the end of the review period.

India: Potential Free Float Changes & Passive Flows in May

Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-September and/or end-December.
The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
Depending on the date that the shareholding was published, there could be 14 stocks with passive inflows from global trackers while 7 could see passive outflows in May.

L’Occitane (973 HK): Conditional VGO at HK$34

L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.

Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent

On 28 Feb, the Nikkei reported (an article I missed) Mitsubishi Corp (8058 JP) would seek to unload its 35% stake in Kfc Holdings Japan (9873 JP)
The stock popped, then continued to rise further. After the close Friday, the Nikkei reported MitCorp was close to a deal with Carlyle. A deal is apparently expected imminently.
I expect this could be a “Split Price Deal” (like Hitachi Transport and Pasona).

Worley Placement – Largest Shareholder Selling at an Attractive Discount

By Clarence Chu

DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer

The Nikkei reports that Carlyle is in the final stages of buying Mitsubishi Corp (8058 JP)’s 35% stake in Kfc Holdings Japan (9873 JP), which will result in a tender offer.
The structure will likely be similar to the KDDI Corp (9433 JP)/ Lawson Inc (2651 JP) tender, where MitCorp provides an irrevocable NOT to accept but vote for share consolidation.
The shares have been up 33.6% since Nikkei flagged the sale on 28 February. KFC Japan will trade in line with peers’ multiples at a JPY5,700 offer.

Worley (WOR): Impact of Dar Group’s A$1.4bn Sale

Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

L’Occitane (973 HK): Geiger’s $34/Share Offer

After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final.
This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.

Mimasu Semiconductor (8155 JP): Shin-Etsu (4063 JP)’s Pre-Conditional Tender Offer

Mimasu Semiconductor Industry (8155 JP) recommended a pre-conditional tender offer from Shin Etsu Chemical (4063 JP) at JPY3,700, a 14.4% and 35.4% premium to the last close and undisturbed price, respectively.
The pre-condition, which cannot be waived, is approval under the competition laws of Japan and Taiwan. The tender offer is expected to start in late July.
While the offer is below the mid-point of the IFA DCF valuation range and the requested price, it is 7.7% higher than the all-time high of JPY3,435. This is done.

Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion

By Oshadhi Kumarasiri

Japanese instant noodle manufacturer Toyo Suisan Kaisha (2875 JP) has become the newest target for activist investors in Japan.
Nihon Global Growth Partners Management, Inc argues that Toyo Suisan’s investments are overly concentrated in its legacy businesses, despite these ventures yielding low returns.
Therefore, they are recommending that Toyo Suisan exit its legacy businesses, increase the payout ratio to 40%, and use some of its excess cash for a share buyback of ¥20bn.

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Apr 29

Most Read: Korea Stock Exchange KOSPI 200, HD Hyundai Marine Solution , Azure Minerals, China Life Insurance Co H, Samsung C&T, Maruti Suzuki India, Keisei Electric Railway Co, Connectwave, Berli Jucker and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Korea Value-Up Guidelines Release Date Is Set for May 2nd
HD Hyundai Marine Solution (443060 KS) IPO: No Passive Buying Near-Term
Merger Arb Mondays (29 Apr) – Azure, Silver Lake, Roland DG, CF Logistics, China TCM, Hollysys
A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A
A Country Without Shareholder Rights (주주 권리가 없는 나라) – A Book Review
India: Potential Free Float Changes & Passive Flows in May
Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American
MBK’s ConnectWave Tender Offer: Details & Trading Angles
Connect Wave: Tender Offer of 30% of Shares by MBK Partners
SET50 Index Rebalance Preview: Market Consultation & More Changes in June

Korea Value-Up Guidelines Release Date Is Set for May 2nd

Chosun reports Korean financial authorities advance Value-up plan guidelines to May 2nd, citing momentum decline post-election. Chosun’s credibility enhances report validity.
Companies will commence Value-up-related disclosures in alignment with the guidelines within May. A dedicated Value-up website is set to launch in May.
The May 2nd guideline release date is crucial for Value-up momentum trading. Anticipate heightened volatility in Value-up stocks approaching this date.

HD Hyundai Marine Solution (443060 KS) IPO: No Passive Buying Near-Term

HD Hyundai Marine Solution (443060 KS) is looking to raise KRW 742bn (US$540m) in its IPO, valuing the company at KRW 3,707bn (US$2.69bn). Listing is expected to be in early-May.
Competition for the shares has been fierce with institutional investors indicating demand for 201x the number of shares on offer at prices higher than the top end of the range.
Barring a doubling of the stock price, the earliest that the stock will be added to major indices is December 2024. So, no passive buying in the short-term.

Merger Arb Mondays (29 Apr) – Azure, Silver Lake, Roland DG, CF Logistics, China TCM, Hollysys

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Qantm Intellectual Property (QIP AU), Azure Minerals (AZS AU), Hollysys Automation Technologies (HOLI US), Probiotec Ltd (PBP AU), Southern Cross Media (SXL AU), China TCM.
Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Roland DG Corp (6789 JP), Mma Offshore (MRM AU), Pact Group Holdings (PGH AU), Newmark Property REIT (NPR AU).

A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A

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 consecutive buying streak ended on Monday 25-March, then started again. 20 days straight net buying. NORTHBOUND saw big inflows Friday. A record day I believe.
HK stocks bounced VERY hard. Seemed like big allocation trade. HSCEI +8.7% vs CSI300 +1.2%. In H/A Pairs, liquid pairs saw Hs outperform their A by 4+% on average.

A Country Without Shareholder Rights (주주 권리가 없는 나라) – A Book Review

This insight is a book review of 주주 권리가 없는 나라 (A Country Without Shareholder Rights), which is one of the best books on the corporate governance in Korea.
There are so much wisdom that are included in this book. The author really goes into details about numerous corporate governance problems in Korea and ways to fix them.
This book was published in January 2024 and it was written by a famous Korean retail investor called Park Young-Ok.

India: Potential Free Float Changes & Passive Flows in May

Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-September and/or end-December.
The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
Depending on the date that the shareholding was published, there could be 14 stocks with passive inflows from global trackers while 7 could see passive outflows in May.

Last Week in Event SPACE: HK Southbound, Jardine Cycle, Keisei/Oriental Land, BHP/Anglo American

The CSRC has announced five capital market cooperation measures for the Hong Kong Southbound Connect programs including RMB dual counters and REITs.
Jardine Cycle & Carriage (JCNC SP)‘s current implied stub value and simple ratio are both highly elevated.
A simple Keisei Electric Railway Co (9009 JP)model says “this doesn’t present me with enough upside to warrant it unless I am also really bullish Oriental Land (4661 JP).”

MBK’s ConnectWave Tender Offer: Details & Trading Angles

MBK Partners will launch a tender offer for ConnectWave from today to May 24th. The target volume is 16.6M shares (40% of SO) at ₩18,000 per share, a 15.6% premium.
MBK commits to acquiring all tendered shares, regardless of subscription rates, in order to expedite the delisting process. So, there is no cancellation or allocation risk.
ConnectWave’s retail investor base, with high entry prices, may hinder reaching 70% of the target volume. Absence of risks suggests considering buy positions for potential secondary tender offer.

Connect Wave: Tender Offer of 30% of Shares by MBK Partners

After the market close on 26 April, it was reported that MBK Partners has launched a tender offer of a 29.61% stake of Connectwave (119860 KS).
The tender offer price is 18,000 won, which is 15.6% higher than the closing price (15,570 won) of the company on 26 April.
The tender offer period is from 29 April to 24 May. The amount of the tender offer is about 300 billion won.

SET50 Index Rebalance Preview: Market Consultation & More Changes in June

The SET has run a market consultation on relaxing liquidity thresholds for inclusion of stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) universe.
The consultation is the result of an increase in Average Daily Trading Values and lower turnover ratios, especially for large cap stocks.
Berli Jucker (BJC TB) is now a potential index inclusion in June and that could result in four constituent changes at the next rebalance.

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Apr 28

Most Read: Bangchak Corporation, Robosense Technology, Korea Stock Exchange KOSPI 200, Roland DG Corp, Tencent, Taiwan Semiconductor (TSMC) – ADR, BHP Group Ltd, Fanuc Corp, China Life Insurance Co H and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SET50 Index Rebalance Preview: Three Potential Changes in June
HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June
Korea Value-Up Guidelines Release Date Is Set for May 2nd
Taiyo Pacific Overbids Brother for Roland DG (6789)
Roland DG (6789 JP): Taiyo Bumps as Brother (6448 JP) Now Faces a Dilemma
HK Connect SOUTHBOUND Flows (To 26 Apr 2024); Strong Net Buying on Banks/Energy Telco SOEs. Again.
Memory Monitor: What SK Hynix Sees For PC and Server Markets Ahead; TSMC’s Strength Vs. Samsung
(Mostly) Asia-Pac M&A: Mimasu Semi, Tietto Minerals, CSR, CPMC, Roland DG, IClick Interactive
Fanuc (6954 JP): Guidance Points Down, but the Market Sees Recovery
A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A

SET50 Index Rebalance Preview: Three Potential Changes in June

Nearing the halfway mark in the review period, we see 3 potential changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
Passive trackers will need to buy between 1.2-4.5 days of ADV on the inclusions and sell 0.9-1.3 days of ADV on the deletions.
Berli Jucker (BJC TB) continues to be a close add on liquidity while Gulf Energy Development (GULF TB) and Intouch Holdings (INTUCH TB) continue to be close deletes.

HSCI Index Rebalance Preview: Robosense (2498 HK) Could Be Added in June

There were only 12 new listings on the Main Board of the HKEX (388 HK) in the first quarter of the year. More than half the listings were in March.
Of those stocks, we only see Robosense Technology (2498 HK) having a chance of being added to the HSCI in June and then into Southbound Stock Connect.
There is a big lock-up expiry for Robosense Technology (2498 HK) in July and that should keep the stock under pressure.

Korea Value-Up Guidelines Release Date Is Set for May 2nd

Chosun reports Korean financial authorities advance Value-up plan guidelines to May 2nd, citing momentum decline post-election. Chosun’s credibility enhances report validity.
Companies will commence Value-up-related disclosures in alignment with the guidelines within May. A dedicated Value-up website is set to launch in May.
The May 2nd guideline release date is crucial for Value-up momentum trading. Anticipate heightened volatility in Value-up stocks approaching this date.

Taiyo Pacific Overbids Brother for Roland DG (6789)

Originally, Brother Industries (6448 JP) wanted to buy Roland DG Corp (6789 JP). Roland invited others to bid, didn’t tell Brother, then said Taiyo Pacific’s ¥5,035 bid won.
That was low. Weeks later, Brother lobbed a ¥5,200 overbid. They are going through the approvals process but it isn’t clear Brother is negotiating.
Taiyo has extended and extended and shown up in interviews. Now it has overbid at ¥5,370.

Roland DG (6789 JP): Taiyo Bumps as Brother (6448 JP) Now Faces a Dilemma

Roland DG Corp (6789 JP) has re-recommended Taiyo’s revised offer of JPY5,370, which is 6.7% higher than its previous JPY5,035 offer and 3.3% higher than Brother Industries (6448 JP)’s JPY5,200 offer.
The Board articulates a compelling case on Brother’s offer dis-synergies, which will help swing some shareholder opinion towards Taiyo (irrespective of the price).
Brother could bump, but it would not address the issue of satisfying the condition precedent (non-completion of Taiyo offer) and securing the Board’s recommendation.

HK Connect SOUTHBOUND Flows (To 26 Apr 2024); Strong Net Buying on Banks/Energy Telco SOEs. Again.

A shares were up small on the week, largely due to a big rally on Friday (led by record Northbound buying). HK Stocks had a HUGE week.
Net SOUTHBOUND buying was +HK10.3bn. Net buys every day and now 20 days straight, but buying was foreign-led.
Little market news. More geopolitical news. Big SOE bank H-shares see relentless buying. HSTECH +13.4%, HSI +8.8%, HSCEI +9.1%.

Memory Monitor: What SK Hynix Sees For PC and Server Markets Ahead; TSMC’s Strength Vs. Samsung

By Vincent Fernando, CFA

SK Reports Massive Margin Rebound; Nanya Tech’s Financial Performance Appears Relatively Weak in Perspective
AI Applications Now Translating Into Rising Solid-State Memory (SSD) Demand
SK Povided Positive Color for Taiwan PC Names; New TSMC Collaboration Highlights TSMC Strength vs. Samsung

(Mostly) Asia-Pac M&A: Mimasu Semi, Tietto Minerals, CSR, CPMC, Roland DG, IClick Interactive

Tally 50 – 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 deals was discussed on Smartkarma this week, being Mimasu Semiconductor Industry (8155 JP)‘s Tender Offer. There’s also BHP Group (BHP AU)‘s unsolicited Offer for Anglo American (NGLOY US).
Key updates took place on: Tietto Minerals Ltd (TIE AU), CSR Ltd (CSR AU), CPMC Holdings (906 HK), Roland DG Corp (6789 JP), and iClick Interactive Asia Group (ICLK US).

Fanuc (6954 JP): Guidance Points Down, but the Market Sees Recovery

By Scott Foster

Fanuc was up 4.7% this past week as the market reacted to a slight uptick in orders and transparently conservative guidance.
The book-to-bill ratio remained below 1.0 in 4Q of FY Mar-24, but was up from 3Q, which appears to have been the low point in the cycle.
Inflation and ongoing inventory adjustments indicate a slow recovery, but demand for automation from traditional markets and new opportunities in aerospace and other industries should support long-term growth.

A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A