Most Read

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.

Alteogen: Block Deal Sale of About 3% of Shares

On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale.
The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won.
This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
As Toyota Group’s leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block.
Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.

CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid

On the 6th Dec 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China (NCSSF).
A decent premium (32.1%), presumed rubber-stamped regulatory approvals, and a 50% acceptance condition with 29.7% in the bag – this Offer looked done. Then ORG announced a possible competing proposal.
Nearly four months have elapsed and details on ORG’s Offer remain unknown. SASAC/NCSSF chip away at reg approvals. Shares are down 2.6% from its recent peak. That makes sense.

Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation

Valuation controversy arises from comparing HD Hyundai Marine Solution, a ship AS specialist, with diverse global companies, leading to a target market cap of ₩5T.
HD KSOE’s inclusion worsens the valuation controversy. Applying HD KSOE’s last year PER without adjusting for a significant one-off profit seems to inflate HD Hyundai Marine Solution’s PER.
Currently, major local IPO funds see HD Hyundai Marine’s valuation nearing ₩4T as excessive, despite the industry’s revival and potential growth in eco-friendly ship conversions, impacting the upcoming bookbuilding process.

SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80

Sciclone Pharmaceuticals (6600 HK) disclosed a scheme privatisation offer from GL Capital at HK$18.80 per share, a 33.9% premium to the undisturbed price (HK$14.04 on 15 March).
The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The Bank of China, which holds a blocking stake, should be supportive.
The offer price has been declared final. It is reasonable, aligning with the all-time high and the IPO price. This is a done deal.

Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents, adjusted every year in August.
We look at the rankings of the potential ADDs/DELs every month for the next rebal, based on most recent trading data.
Every month we provide trade suggestions. The last three months have seen market-neutral returns of +3.0%, +6.5%, +3.2% respectively for the one-month periods. A new trade is suggested below.

HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures

By Ethan Aw

HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
In this note, we talk about the company’s historical performance.

Ohayo Japan | S&P Hits Record: Japan Passes Budget

By Mark Chadwick

US Market Wrap: S&P 500 hits record, Dow inches higher; tech stocks lag.
Japan Budget: Parliament passes ¥112 trillion budget, emphasizing defense spending, inflation mitigation, and earthquake recovery.
Stocks Update: Mercari introduces Eco Mercari Delivery; Kubota’s construction equipment business grows; Mitsubishi Electric expands digital workforce.

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Mar 28

Most Read: ZOZO Inc, Fast Retailing, Shenzhen New Industries Biomedical Engineering-A, Kokusai Electric , HD Hyundai Marine Solution , Lawson Inc, Alteogen Inc, CIMC Vehicle Group Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Fast Retailing (9983) – Now At Double Downweight Levels
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
HD Hyundai Marine Solution IPO Preview
KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
Alteogen: Block Deal Sale of About 3% of Shares
Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches
Fast Retailing: Earnings Preview
CIMC (1839 HK): 18th April Shareholder Vote

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Fast Retailing (9983) – Now At Double Downweight Levels

Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 8.4mm shares (US$2.5bn) to sell.
At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.

HD Hyundai Marine Solution IPO Preview

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.

Alteogen: Block Deal Sale of About 3% of Shares

On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale.
The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won.
This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches

Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share.
The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range.
Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms.

Fast Retailing: Earnings Preview

By Oshadhi Kumarasiri

While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.

CIMC (1839 HK): 18th April Shareholder Vote

On the 11th March, SOE-backed CIMC Vehicle Group Co Ltd (1839 HK) announced a firm Offer at HK$7.50/H-share from its major shareholder, CIMC Group. Terms are final.
CIMC Group holds 74.24% of the H-shares and will abstain from voting at the H-share class meeting. 14.21% of the remaining 25.76% H-shares have given irrevocables supporting the Offer.
The Circular is now out. The shareholder vote is the 18th April. Payment is the 13th May, IF unconditional on the first close. This looks done.

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Mar 27

Most Read: ZOZO Inc, Shenzhen New Industries Biomedical Engineering-A, Kokusai Electric , HD Hyundai Marine Solution , Globalwafers, Shinhan Financial, China Motor, Roland DG Corp, Hana Tour Service and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas
HD Hyundai Marine Solution IPO Preview
Globalwafers GDR Offering – Coming to Market Earlier than Anticipated
Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large
Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way
Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game
Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas
HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

DISCO (6146 JP), Socionext (6526 JP) and ZOZO (3092 JP) will replace Takara Holdings (2531 JP), Sumitomo Osaka Cement (5232 JP) and Pacific Metals (5541 JP) in the Nikkei 225.
Nitori Holdings (9843 JP)‘s PAF will increase from 0.3 to 0.5, and surprisingly there is no PAF adjustment for ZOZO Inc (3092 JP).
Passive trackers need to buy between 1-18 days of ADV on the adds while selling between 2.7-28 days of ADV on the deletes. There is a big funding trade too.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

TOPIX “Big April Basket” 2024 Expectations: More High-Conviction Names; Better Trade Ideas

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2024.

HD Hyundai Marine Solution IPO Preview

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

Globalwafers GDR Offering – Coming to Market Earlier than Anticipated

By Ethan Aw

Globalwafers (6488 TT) is looking to raise up to US$681m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
The deal is a somewhat large one to digest at 20.2 days of three month ADV and the proceeds will be used to purchase raw materials overseas.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Shinhan Financial Group Placement – Another Selldown, Momentum Is Strong but Deal Is Large

BNP Paribas (BNP FP) is looking to raise around US$680m via selling 3.5% of its stake in Shinhan Financial (055550 KS).
This will be the fourth selldown for the stock since the start of the year. It will also be the largest one of the lot, so far.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Quiddity Leaderboard TDIV Jun 24: 5 Changes; US$1.2bn One-Way

In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
I currently see 5 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
The estimate for one-way flow in June 2024 is US$1.22bn.

Roland DG (6789 JP): Taiyo Hoping for the Best as Brother Plays the Waiting Game

In response to Roland DG Corp (6789 JP) request, on 22 March, Taiyo said it was considering a revised offer. However, Taiyo has since remained silent.
Despite discussions with Brother Industries (6448 JP), the Board have not been able to eliminate dis-synergies concerns. The Board has left the decision to accept the Taiyo offer to shareholders.
While the Board is trying to dissuade Brother, Brother will take its offer directly to shareholders if the Taiyo offer fails. Taiyo’s behaviour suggests a reluctance to bump.

Block Deal Sale of 3.6% Stake in Shinhan Financial by BNP Paribas

After the market close on 26 March, it was announced that BNP Paribas plans to sell its 3.6% stake in Shinhan Financial in a block deal sale 18.7 million shares).
The block deal sale is estimated to be about 900 billion won, which would represent one of the largest block deal sales in Korea in the past several years.
We have a Negative view on the Shinhan Financial Group block deal and we would not subscribe to it due to three major reasons.

HanaTour Management Sale: Minority Shareholder Tender Offer & Price Premium Assessment

HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.

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Mar 26

Most Read: ZOZO Inc, HKBN Ltd, Mma Offshore, APM Human Services Internation, Samsonite, Xiaomi Corp, HD Hyundai , Tata Consultancy Svcs, SillaJen Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners
Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM
Samsonite (1910 HK): Dual-Listing Musings
China Consumption Weekly (25 Mar 2024): Xiaomi, Alibaba, Xpeng, Maoyan, JD Health, JD.com
HD Hyundai Marine Solution IPO Preview
ECM Weekly (25th Mar 2024) – TCS, Akeso, Coforge, ABSL, Tokio Marine, Trial, Migao, Mixue, Reddit
SillaJen Rights Offering Worth 34% of Outstanding Shares

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update

ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

MMA Offshore: A$2.60/Share Cash Offer From Seraya Partners

Marine and subsea services provider MMA Offshore (MRM AU) has entered into a Scheme with Singapore’s Cyan Renewables.
Cyan, wholly-owned by Seraya Partners, is offering A$2.60/share in cash, a 11% premium to last close and a 31% premium to the 90-day VWAP.
MMA shareholder approval and FIRB are the key conditions. This Offer will tentatively complete mid-late July.

Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

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: APM Human Services Internation (APM AU), Chilled & Frozen Logistics Holdings (9099 JP), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU).
Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).

Samsonite (1910 HK): Dual-Listing Musings

It seems like every week, Bloomberg reports a HK-listed company weighing privatisation options. HKBN (1310 HK), ESR (1821 HK), and Samsonite (1910 HK) have all been rumoured of late.
Last Friday, Samsonite announced it was focused on pursuing the listing of its shares on a second exchange.
No preferred exchange was mentioned. Nor whether the goal is to secure a dual primary listing, or a secondary listing. A buyout, for now, appears to be on the backburner.

China Consumption Weekly (25 Mar 2024): Xiaomi, Alibaba, Xpeng, Maoyan, JD Health, JD.com

By Ming Lu

Xiaomi released healthy financial results inspite of the shrinking market.
Alibaba Freshippo founder, Mr. Hou, retired from his role as the CEO of Freshippo.
JD began to provide aftermarket service to BYD, the largest new energy vehicle producer.

HD Hyundai Marine Solution IPO Preview

HD Hyundai Marine Solution is getting ready to complete its IPO in KOSPI in May 2024. This will be one of the largest IPOs in Korea in 2024.
The IPO price range is from 73,300 won to 83,400 won. The IPO offering amount is from 652.4 billion won to 742.3 billion won.
A key beneficiary of HD Hyundai Marine Solution IPO is HD Hyundai (62% ownership). Our NAV analysis suggests implied price of 95,632 for HD Hyundai (40% higher than current price).

ECM Weekly (25th Mar 2024) – TCS, Akeso, Coforge, ABSL, Tokio Marine, Trial, Migao, Mixue, Reddit

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, Trial Holdings (5882 JP) ended up doing better than we expected, while Hong Kong finally got its first US$100m+ listing for the year.
For placements, India was again at the forefront, this time with a not-so-pleasant results of Tata Consultancy Svcs (TCS IN).

SillaJen Rights Offering Worth 34% of Outstanding Shares

On 22 March, SillaJen Inc (215600 KS) announced that it will conduct a rights offering worth about 129 billion won for R&D and financials improvement.
The rights offering size is 34.5 million shares, representing 34% of total outstanding shares. The expected rights offering price is 3,750 won which is 26% lower than current price.
We would not subscribe to this rights offering and we remain negative on the company.

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Mar 25

Most Read: TSE Tokyo Price Index TOPIX, Rakuten Bank , Chilled & Frozen Logistics Holdings, Fast Retailing, Tencent, ZOZO Inc, HKBN Ltd, China Longyuan Power, APM Human Services Internation and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions
Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS
Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Last Week in Event SPACE: Fast Retailing, Giordano, C&F Logistics, Swire, Japan’s Big Dividend
HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface
A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides
Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

JAPAN FLOW: Foreigners Vs Cross-Holding Unwinds Vs Buybacks Vs Pensions

For years I have tracked investor category flows in Japanese stocks because I find them quite informative. I write about them every so often in an insight series JAPAN FLOW.
The series, which I have written about for years, suggests foreign investors invest in Japan pro-cyclically and that correlates well to One (relatively) Simple Indicator.
Foreigners have a lot of ammunition left. But cross-holding unwinds are picking up, and buybacks are too, and dividend reinvestments are smaller than public pension selling. Which way next?

Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS

The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Last Week in Event SPACE: Fast Retailing, Giordano, C&F Logistics, Swire, Japan’s Big Dividend

The trade of being short Fast Retailing (9983 JP) vs Nikkei 225 or Sector Basket is fundamentally slightly short Nikkei 225 froth.
Giordano (709 HK)‘s SGM will likely pivot off how the shareholders under Halcyon Securities vote. Digging a little deeper as to who these shareholders are, provides some (not-altogether) surprising results.
AZ-Com Maruwa Holdings (9090 JP) intends to launch a Tender Offer on Chilled & Frozen Logistics Holdings (9099 JP) without having contacted C&F first. A HOSTILE deal. Yum!

HK Connect SOUTHBOUND Flows (To 22 Mar 2024); Strong Net Buying on Tencent and ETFs

A shares were down small on the week. Larger caps down more. H-shares down more after a hard Friday.
Net SOUTHBOUND buying was +HK35.8bn after $21.4bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week.

Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update

ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

A/H Premium Tracker (To 22 Mar 2024): Liquid AH Premia Still At Wides

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 a net buyer every day since the end of Chinese New Year. Still. NORTHBOUND a huge net seller this week, but net buyers in size (RMB +86bn) over 8wks.
For the first time in a while, AH premia among liquid stocks fell convincingly. Narrow AH premia pairs saw Hs outperform more than wide AH premia Hs (vs As).

Merger Arb Mondays (25 Mar) – APM, Genex, C&F Logistics, Roland DG, IntelliCentrics, China TCM

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: APM Human Services Internation (APM AU), Chilled & Frozen Logistics Holdings (9099 JP), Qantm Intellectual Property (QIP AU), Genex Power Ltd (GNX AU), Probiotec Ltd (PBP AU).
Lowest spreads: Roland DG Corp (6789 JP), Tietto Minerals Ltd (TIE AU), CPMC Holdings (906 HK), Pact Group Holdings (PGH AU), Vinda International (3331 HK), Snow Peak Inc (7816 JP).

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Mar 24

Most Read: Yankuang Energy Group, Shenzhen New Industries Biomedical Engineering-A, ZOZO Inc, Nikkei 225, PDD Holdings, HLB Life Science, JSR Corp, Shinko Electric Industries, HKBN Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up
EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….
[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears
HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won
(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR
Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin
Japan Weekly | Real Estate Inflates; Nidec Benefits from AI
HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

Index Rebalance & ETF Flow Recap: STAR50/100, FXI, NIFTY/NEXT50, S&P500, KOSPI, Goodman, Ecopro BM

The last week was a very busy one. The coming week has some announcements and implementations but is a relatively quieter one.
The SSE STAR50 (STAR50 INDEX) and STAR100 Index changes for March will be implemented at the close on Friday, the 8th.
Another week of inflows for the iShares Emerging Markets ex-China (EMXC US) ETF as creations cross US$2bn for 2024. ETF AUM has gone from US$420m in 2021 to US$11bn now!

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

Index Rebalance & ETF Flow Recap: NKY, ASX, CSI300, A50, STTF, LowVol30, Value Up

There were a few rebalance announcements in the last week and the SSE STAR50 (STAR50 INDEX) and STAR100 Index rebalances were implemented at the close on Friday.
There are a lot of rebalances that will be implemented at the close on the coming Thursday and Friday.
Another big week of inflows for onshore China ETFs with Central Huijin likely behind the big flows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).

EQD | Nikkei 225 Flying High, Don’t Burn Your Wings….

By Nico Rosti

The Nikkei 225 INDEX has been rallying for >3 months, rising more than 28%. Is it too much, too fast?
Short-Term, if we look at the Market Reversal Matrix’s SHORT WEEKLY model for the index, it looks like it could either reverse within a couple of weeks, or stall.
Look for the ~41000 resistance area to place SHORT or hedge your LONG positions.

[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears

By Ying Pan

PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;
We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;
We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;

HLB Life Science: Impact of Rights Offering Capital Raise of 150 Billion Won

On 21 March, HLB Life Science announced a rights offering capital raise worth 150 billion won.
The expected rights offering price is 13,630 won (32% lower than current price of 19,930 won) and there are 11 million shares in this rights offering (10% of outstanding shares).
HLB Inc (028300 KS) is the largest controlling shareholder of HLB Life Science (067630 KS) with an 18.7% stake in the company.

(Mostly) Asia-Pac M&A: IntelliCentrics, Chilled & Frozen Logistics, Boral, Orecorp, Link Admin, JSR

I tally 52 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals were discussed this week on Smartkarma: IntelliCentrics Global Holding (6819 HK) disposal/winding-up/special dividend arb; and Chilled & Frozen Logistics Holdings (9099 JP)‘s hostile Offer.
Key updates took place on: Boral Ltd (BLD AU), Orecorp Ltd (ORR AU), Link Administration (LNK AU), and JSR Corp (4185 JP).

Weekly Deals Digest (24 Mar) – Shinko, C&F Logistics, JSR, IntelliCentrics, SciClone, Link Admin

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: Lianlian DigiTech (2104619D CH) launches a US$78 million IPO.
Event-Driven developments: Chilled & Frozen Logistics Holdings (9099 JP), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), IntelliCentrics Global Holding (6819 HK), Sciclone Pharmaceuticals (6600 HK).

Japan Weekly | Real Estate Inflates; Nidec Benefits from AI

By Mark Chadwick

The Nikkei and Topix indexes surged by 5.63% and 5.33% reaching all-time highs
Real Estate majors were the biggest movers in Japan. Beneficiaries of higher inflation and continuation of easy monetary policy
Nidec is reinventing itself again. EV traction motors will remain a core driver, but investors can now get excited by the AI thematic

HKBN (1310 HK): Déjà Vu as Privatisation Rumours Resurface

On 21 March, Bloomberg reported that TPG and MBK had restarted a strategic review to reduce their HKBN Ltd (1310 HK) shareholdings. Previous privatisation rumours have fizzled out.
The options include going private, attracting new investors, or raising cash through some of HKBN’s assets. Infrastructure-focused funds and one Chinese telco (likely China Mobile (941 HK)) were approached.
The probability of an offer is low as TPG and MBK will need to accept a material discount on their cost per share and financing challenges due to high leverage.

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Mar 23

Most Read: ZOZO Inc, Shenzhen New Industries Biomedical Engineering-A, Korea Stock Exchange Kospi Index, Samsonite, ISC Co Ltd, Chilled & Frozen Logistics Holdings, James Hardie Industries Plc, Link Administration, GoTo Gojek Tokopedia Tbk PT and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS
Samsonite (1910 HK): Leader Of The Pack
Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out
Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
Link Admin (LNK AU): 24th April Shareholder Vote
GoTo Gojek Tokopedia (GOTO IJ) – Warming Up the New Engines of Growth

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.

Samsonite (1910 HK): Leader Of The Pack

Luggage maker Samsonite (1910 HK) is up 11.8% today, as I type, after Bloomberg reported it is working with advisers as it studies possibilities, including going private.
With the reopening of China and the ongoing recovery in travel globally, Samsonite’s net sales improved markedly across all regions. 1H23 profit gained 185.3% versus 1H22.
FY23 figures should be out in the middle of next month.

Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out

Will there be changes in April’s rebalancing? With two weeks left, two names are likely. Wonik IPS may be replaced by ISC Co Ltd, given a ₩150B market cap difference.
In the previous rebalancing, constituent changes had a notable price impact. Despite a passive flow impact of +1.0x ADTV, HPSP and EO Technics saw about a 15% 3-day return.
Wonik IPS is estimated to receive -4.0x ADTV, while ISC is expected to receive +1.0x ADTV. This is also quite similar to the previous rebalancing.

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Link Admin (LNK AU): 24th April Shareholder Vote

Back on the 18 December 2023, superannuation service provider Link Administration (LNK AU) entered into a Scheme with Mitsubishi UFJ Financial Group.
MUFJ offered Link shareholders A$2.10/share (in cash) plus a A$0.16/share dividend (25% franked), or a 32.9% premium, all-in.
The Scheme Meeting will now take place on the 24th April, with expected implementation on the 16 May. This looks done – and trading accordingly.

GoTo Gojek Tokopedia (GOTO IJ) – Warming Up the New Engines of Growth

By Angus Mackintosh

GoTo Gojek Tokopedia (GOTO IJ) 4Q2023 results revealed another sequential increase in GTV and positive adjusted EBITDA for both ODS and e-commerce, despite reduced incentive and marketing spending.
GoTo achieved positive top-line growth by expanding its total addressable market through more affordable products and a strong performance from consumer lending in fintech, coupled with great cash cost efficiencies.
2024 will be a transformational year for GoTo without the yoke of Tokopedia promotional spending but with significant cash coming in every quarter that can be used to drive growth.

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Mar 22

Most Read: ZOZO Inc, Chilled & Frozen Logistics Holdings, WT Microelectronics, Link Administration, Pop Mart International Group L, IntelliCentrics Global Holding, James Hardie Industries Plc, PSK Holdings Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better
Link Admin (LNK AU): Scheme Vote on 24 April
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
Pop Mart (9992 HK): International Expansion Is For Real
Back-Testing the Impact of National Assembly Elections on the Korean Stock Market
IntelliCentrics (6819 HK): Clean, Illiquid “Arb”
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better

By Clarence Chu

WT Microelectronics (3036 TT) is looking to raise up to US$444m in its upcoming global depository receipts (GDRs) offering.
WT Microelectronics recently announced its board’s resolution to issue between 68-85m new shares in the form of GDRs, with the use of proceeds geared towards purchasing of raw materials overseas.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Link Admin (LNK AU): Scheme Vote on 24 April

The Link Administration (LNK AU) IE considers Mitsubishi UFJ Financial (MUFG) (8306 JP)’s A$2.26 offer fair and reasonable as it is within its A$2.11-2.70 per share valuation range.
The scheme remains conditional on several regulatory approvals – FIRB, Central Bank of Ireland, Isle of Man Financial Services Authority, India SEBI, and Financial Services Agency of Japan.
Several substantial shareholders have sold or exited, lowering the scheme’s risk. At the last close and for the 16 May payment, the gross/annualised spread was 1.3%/9.7%.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

Pop Mart (9992 HK): International Expansion Is For Real

By Steve Zhou, CFA

The thesis for Pop Mart International Group L (9992 HK) is the successful expansion of its international business, which made up 13% of sales in 1H23 but is growing exponentially.
This has been proved true in the latest announced 2023 results, with a 135% growth in 2023 for the international business, and a further >100% growth guidance for 2024.
The company is trading at 24x 2024 earnings, assuming a 35% net profit growth in 2024.

Back-Testing the Impact of National Assembly Elections on the Korean Stock Market

In this insight, we provide a back-testing analysis of the impact of the National Assembly Elections on the Korean stock market.
KOSPI tends to display positive price performance one month and three months prior to the election date leading up to the election date.
On the other hand, KOSPI tends to decline one month and three months post the election date. We believe that post National Assembly Election, KOSPI could face greater headwinds.

IntelliCentrics (6819 HK): Clean, Illiquid “Arb”

Back on 9th Feb 2024, healthcare technology platform IntelliCentrics Global Holding (6819 HK) announced the proposed disposal of its key operations to Symplr Software Holdings for at least US$246.5mn.
Upon completion of the sale, IntelliCentrics will declare a special dividend, then seek a listing withdrawal. A key condition to the sale was FTC/DOJ approval. That is now satisfied.
The sale/dividend/delisting requires a Scheme-like vote, with 72.1% of shares out supportive. This is a super-clean pseudo arb. Pushback? Very illiquid.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)

KRX announced special changes to KOSDAQ 150. Since STCube (052020 KS) has been designated as “administrative issue,” the Korea Exchange will exclude it from KOSDAQ 150 on 26 March 2024.
PSK Holdings Inc (031980 KS) will be new addition to KOSDAQ 150 index, replacing ST Cube.
PSK Holdings’ core business is providing process technology, source, and hardware for semiconductor packaging equipment.

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✓ Company Analytics and News
✓ Events & Webinars

Mar 21

Most Read: ZOZO Inc, Shinko Electric Industries, Giordano International, Trial Holdings, Snow Peak Inc, IntelliCentrics Global Holding, Doosan Robotics , Akeso Biopharma Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Shinko Electric (6967 JP): Tender State of Play
Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
Trial Holdings IPO Trading – Demand and Valuation Are Towards the Higher Side
Snow Peak: Cheap MBO
IntelliCentrics (6819 HK): Delisting and Special Dividend
Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible
Trial Holdings IPO: Trading Debut
Contrarian Moves: Promoter Buying During Indian Equity Downturns
Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

Shinko Electric (6967 JP): Tender State of Play

Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%.
The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains.
Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.

Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM

Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.

Trial Holdings IPO Trading – Demand and Valuation Are Towards the Higher Side

Trial Holdings (5882 JP) (TH) raised around US$259m after pricing its IPO at the top-end in its Japan IPO.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.

Snow Peak: Cheap MBO

By Michael Causton

Snow Peak agreement with Bain Capital to take the outdoor brand private next month seems to have been in the works for a couple of years.
Although sales are expected to rebound this year to near record highs, Snow Peak insists the domestic camping boom is over and will look at long-term growth overseas instead.
Even so, the MBO price looks cheap. Snow Peak is likely to see a rebound in domestic sales in FY2024 and its plans for overseas expansion are solid.

IntelliCentrics (6819 HK): Delisting and Special Dividend

On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.

Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

Trial Holdings IPO: Trading Debut

Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts.
The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive.

Contrarian Moves: Promoter Buying During Indian Equity Downturns

By Nimish Maheshwari

Promoter buying reflects insider confidence in the company’s future, often driven by access to undisclosed positive developments and growth opportunities.
Increased promoter stake may indicate that the market has undervalued the company, potentially presenting an opportunity for investors to buy at a discount.
Consider the broader market environment, company fundamentals, and industry trends alongside promoter buying activity to form a comprehensive investment thesis.

Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?

By Xinyao (Criss) Wang

Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards.
The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.

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Mar 20

Most Read: Fast Retailing, JSR Corp, Tokio Marine Holdings, Tata Consultancy Svcs, E.W. Scripps Co/The A, Swire Pacific (A), Shinko Electric Industries, Boral Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fast Retailing (9983) – Now At Double Downweight Levels
JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)
Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell
TCS US$1.1bn Placement – Relatively Small but Isn’t Well Flagged, Could Have Implications for Others
Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs
Swire Pac (19 HK): Flying High
Shinko Electric (6967 JP): Tender State of Play
Boral (BLD AU) Rejects Seven’s Offer
Japan – Rising Rates: Focus On Banks With High Cash And Low Margins
Korean Government Announces Tax Incentives for Shares Cancellation and Dividends

Fast Retailing (9983) – Now At Double Downweight Levels

Fast Retailing (9983 JP) is the largest weight in the Nikkei 225. On Friday, it closed at 11.36% of the Nikkei 225, putting it well above the 10% cap level.
If the stock is above 10% on a pro-forma basis on the base date of 31 July 2024, it will get a capping coefficient. 8.4mm shares (US$2.5bn) to sell.
At Friday’s close, we were borderline above a double-downweight trigger. At Monday’s open, just below. 30mins later? Back well above. Lots of interesting issues and nuances here for a short.

JSR (4185 JP) – Launch of The Official Tender Offer (And the Double Arb)

The Tender Offer is finally here. JIC announced the official launch after the close today.
JIC appears to be taking on the SUNY RF risk as-is. The Tender Offer details vs the original expectations in the late June 2023 document are unchanged.
Once started, unless a US court approves an injunction causing regulatory delay, this is done. But there are path events. And of course there is a double arb here.

Tokio Marine Cross-Shareholding – At Least US$18bn of Cross-Shareholding to Sell

The Japanese Financial Services Agency has asked the general insurers to reduce/eliminate their cross-shareholdings.
Tokio Marine Holdings (8766 JP) had a stake over US$100m in at least 33 listed Japanese stocks, amounting to a total of US$16.5bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

TCS US$1.1bn Placement – Relatively Small but Isn’t Well Flagged, Could Have Implications for Others

Tata Sons, holding company of Tata Group, is looking to raise around US$1.1bn via selling a 0.65% stake in Tata Consultancy Svcs (TCS IN).
The deal doesn’t appear to be well-flagged although it could be part of Tata Sons’ recent moves to avoid an RBI mandated listing next year.
In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Quiddity Leaderboard S&P 500 Jun 24 Rebal: Many Intra-Review Changes Possible Due to M&A, Spin-Offs

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELETEs.

Swire Pac (19 HK): Flying High

Swire Pacific (19 HK)‘s discount to NAV is around a one-year high; and its implied stub (net of Swire Properties (1972 HK) has just rolled over from a multi-year high.
45%-Held Cathay Pacific Airways (293 HK) recently reported its highest annual profit in more than a decade.
Reportedly (Bloomberg) Air China Ltd (A) (601111 CH) is mulling a stake increase in the Hong Kong carrier. This is inevitable. It’s just a question of timing.

Shinko Electric (6967 JP): Tender State of Play

Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%.
The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains.
Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.

Boral (BLD AU) Rejects Seven’s Offer

Back on the 19 Feb, Seven Group Holdings (SVW AU) made a cash/scrip Offer for Boral Ltd (BLD AU) shares not owned, with certain tendering thresholds triggering more cash.
Boral has now recommended shareholders to reject the Offer after the independent expert (Grant Samuel) concluded the Offer is neither fair nor reasonable, supporting the view of Boral’s board.
Grant Samuel backed out a price range of $6.50-$7.13/share, versus SGH’s Offer of $5.96-$6.19/share; and up to $6.39/share including the conditional payments. SGH’s terms were best & final.

Japan – Rising Rates: Focus On Banks With High Cash And Low Margins

By Daniel Tabbush

We look at which Japan banks have the most cash which can see a major boost to returns.
Banks with lower margins can see a higher net interest income pick up from rising rates.
Loan growth in Japan has been relatively strong, supportive of rising rates from BOJ.

Korean Government Announces Tax Incentives for Shares Cancellation and Dividends