Most Read

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025.

Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications

Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern

I tally 48 – 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 discussed this week: the Capitol Health (CAJ AU) / Integral Diagnostics (IDX AU) merger; and Infocom Corp (4348 JP)‘s Tender Offer.
Key updates took place on: MMA Offshore (MRM AU), L’Occitane (973 HK), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), and Great Eastern Holdings (GE SP).

EQD | The KOSPI 200 Is Ready to Pullback (Again)

By Nico Rosti

After 3 weeks up in a row the KOSPI 200 is ripe for a pullback.
The reversal is probably going to begin this coming week.
If the index goes higher, look at 391 resistance targets to initiate SHORT trades or to cover your LONGs.

Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

By Patrick Liao

We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.
Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.

Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage

Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
L’Occitane (973 HK) finally announces the share alternative. And Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

By Andrei Zakharov

Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon

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: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
Event-Driven developments: L’Occitane (973 HK), Exedy Corp (7278 JP), Infocom Corp (4348 JP), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU).

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

By Patrick Liao

United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

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Jun 22

Most Read: LG Energy Solution, Exedy Corp, Guzman Y Gomez, Ryohin Keikaku, Barito Renewables Energy, SenseTime Group , Giant Biogene, Hengdeli Holdings, China Merchants China Direct Investments, Allied Blenders & Distillers and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
Guzman Y Gomez IPO: Listing & Index Inclusion Timeline
Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close
Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications
Sensetime Placement – Seems Highly Opportunistic
Giant Biogene (2367.HK) Placement – A Turning Point in Performance Growth Has Emerged
Hengdeli Holdings (3389 HK)’s Pitiful Partial Offer
CMCDI (133 HK): Kan Re-Elected. But Only Just
Allied Blenders and Distillers – RHP Updates & Thoughts on Valuation

Mandatory Block Deal Pre-Announcement Requirement in Korea Starting 24 July: Impact on Block Deals

Starting 24 July, there will be a mandatory pre-announcement requirement for block deal sales in Korea.
In other words, the major shareholders of the Korean companies need to report publicly prior to their actual sales of their stakes in these companies through block deal sales.
The potential block deal sales candidates could continue to underperform on average the companies that are selling these stocks in potential block deal sales in the next several weeks.

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Guzman Y Gomez IPO: Listing & Index Inclusion Timeline

Guzman Y Gomez (0817833D AU) has raised A$335.1m in a primary + secondary offering, valuing the company at A$2.23bn. The stock starts trading on the ASX Ltd (ASX AU) today.
Just over 54% of the shares are escrowed which means there is a lot of stock that will be available for sale on listing day.
Guzman Y Gomez (0817833D AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.

Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025.

Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications

Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.

Sensetime Placement – Seems Highly Opportunistic

SenseTime Group (20 HK) aims to raise up to US$263m via selling around 4.5% stake.
Sensetime hasn’t had the best of times since listing, however, the shares have rebounded recently on generative AI buzz around the stock.
In this note, we will talk about the placement and run the deal through our ECM framework.

Giant Biogene (2367.HK) Placement – A Turning Point in Performance Growth Has Emerged

By Xinyao (Criss) Wang

Despite high growth in 2023, the accelerated growth of Giant Biogene has entered a turning point, and its performance has begun to slow down. Long-term growth momentum is highly uncertain.
Giant Biogene plans to prioritize the market entry of Class III medical device products.Due to increasing competition/challenges in marketing/promotion, it takes time to verify if the second growth curve works.
Reasonable valuation for Giant Biogene is P/E of 20-30x.If based on RMB1.8 billion 2024, market value is RMB36-54 billion. Short-term catalyst is the Online 618 Shopping Festival and 24H1 report.

Hengdeli Holdings (3389 HK)’s Pitiful Partial Offer

After watch accessory play Hengdeli Holdings (3389 HK) was suspended on the 17th June pursuant to the Takeovers Code, I didn’t hold out high hopes of a knock-out Offer.
And on cue, CEO Tony Cheung (16%), son of founder Zhang Yuping (holding 17%), has made a Partial Offer (for 15% of shares outstanding) at HK$0.16/share, towards gaining majority control.
That’s a 18.5% premium to last close … and a 80% discount to NAV, and a 47% discount to Hengdeli’s net cash as at 31 December 2023.

CMCDI (133 HK): Kan Re-Elected. But Only Just

At the AGM yesterday, China Merchants China Direct Investments (133 HK)‘s director Elizabeth Kan was re-appointed, but by a wafer-thin margin: 29.97% of shares out FOR, and 29.44% AGAINST.
Stripping out Victor Chu’s stake (~2%?) and China Merchant’s (27.6%), or collectively ~29.6% of shares out, it’s fair to say the remainder of the shareholder register wants her out.
CMCDI is currently trading at a 55% discount to the latest NAV (as at 31st May 2024) of HK$30.42/share. Argyle continues to add to its position.

Allied Blenders and Distillers – RHP Updates & Thoughts on Valuation

By Ethan Aw

Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.
ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
In our previous notes, we talked about various aspects of the company. In this note, we talk about its RHP updates and our thoughts on valuation.

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Jun 21

Most Read: Mcdonald’s Japan, SBI Sumishin Net Bank , Mimasu Semiconductor Industry, Mizuho Financial Group, Tatsuta Electric Wire & Cable, Mma Offshore, SK Innovation, SenseTime Group , Ryohin Keikaku and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JPX Proposes BIG Changes To TOPIX Rules, Affects IPOs More Than Market
TOPIX Market Consultation: Wider Next-Gen Universe in a Couple of Years; But Stocks Moving Already
Shin-Etsu Chem TOB for Rest of Mimasu Semi (8155) – Far Too Cheap, But No Squeaky Wheel No Grease
Mizuho Cross-Shareholding – US$11bn of Cross-Shareholding, with at Least US$2bn to Sell over FY24-26
Tatsuta Electric (5809 JP): Eneos Refuses to Bump, Board Capitulates
MMA Offshore (MRM AU): Cyan Lifts Offer
ENEOS Launches Tatsuta Elec (5809) “Minority” Takeout at Same Price as 18mos Ago
Digging into Chosun Ilbo’s Report on SK Group’s SK Innovation & SK E&S Merger Plans
Sensetime Placement – Seems Highly Opportunistic
Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

JPX Proposes BIG Changes To TOPIX Rules, Affects IPOs More Than Market

In 2021 the JPX established new Listing Rules, and in April 2022 introduced new market segments (Prime/Standard/Growth) to much fanfare. Today, the TSE basically said those changes were meaningless.
Today, the TSE announced proposed new rules for TOPIX constituent selection. There is a 2-month consultation period, then rules come out end-Sep 2024. Expect few changes from the Proposal.
NextGen TOPIX will be created October 2026. 3-4 dozen ADDs, 500-600 DELETEs to create an index of 1,100-1,200 names. Some obvious large impacts 2+yrs from now, but this changes IPOs.

TOPIX Market Consultation: Wider Next-Gen Universe in a Couple of Years; But Stocks Moving Already

JPX has commenced a market consultation on changes to the TSE Tokyo Price Index TOPIX (TPX INDEX) including expansion of the universe and periodic stock selection.
Based on current market cap/ liquidity, there could be 38 adds and 447 deletions for the TSE Tokyo Price Index TOPIX, though the changes only start in October 2026.
The deletions will be phased out of the index in 8 steps that will end in July 2028 and most of the stocks will move to the TOPIX Next-tier.

Shin-Etsu Chem TOB for Rest of Mimasu Semi (8155) – Far Too Cheap, But No Squeaky Wheel No Grease

Shin Etsu Chemical (4063 JP), owner of a 44% stake in Mimasu Semiconductor Industry (8155 JP), will launch the TOB to buy out Mimasu minority holders, as pre-announced 2mos ago.
Not surprising. They bought in 19yrs ago, raised to 40+% 18yrs ago, then waited. Finally, we have a deal. It’s too cheap but in 18yrs, I recall zero activism here.
Shin-Etsu starts with ~45%, and crossholders and the chairman get it to 53%. Then they need a bit to get them to 67% but it should be straightforward.

Mizuho Cross-Shareholding – US$11bn of Cross-Shareholding, with at Least US$2bn to Sell over FY24-26

Following up on our earlier cross-shareholding notes, in this note we look at Mizuho Financial Group (8411 JP)‘s cross-shareholding.
Mizuho had a stake over US$100m in at least 34 listed Japanese stocks, amounting to a total of around US$7bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.

Tatsuta Electric (5809 JP): Eneos Refuses to Bump, Board Capitulates

18 months after announcing the offer, ENEOS Holdings (5020 JP) launched the Tatsuta Electric Wire & Cable (5809 JP) tender offer at unchanged JPY720, 4.9% below the last close price.
The Board requested a bump, but Eneos refused due to Tatsuta’s missed targets, no competing offer and the supportive updated IFA valuation
The lack of a bump, no vocal opposition, deal fatigue, the Board’s unexpected recommendation, weak earnings and 73.9% takeover premium will help acceptance.

MMA Offshore (MRM AU): Cyan Lifts Offer

Back on 25 March, marine and subsea services provider MMA Offshore (MRM AU) entered into a Scheme with Singapore’s Cyan Renewables, a wholly-owned vehicle of Seraya Partners.
The A$2.60/share Offer in cash, a 11% premium to last close, was within the IE’s fair value range of A$2.03 to A$2.83. However, shares have consistently traded through terms.
Cyna has now bumped the Offer to A$2.70/share – best & final. Thorney (7.95% of shares out) is supportive. The Scheme Meeting will still be held on the 1 July.

ENEOS Launches Tatsuta Elec (5809) “Minority” Takeout at Same Price as 18mos Ago

ENEOS announced its deal for Tatsuta Electric Wire & Cable (5809 JP) 18mos ago. China approval took a while. Now they have launched.
The TOPIX Non-Ferrous Metals sector has returned 60%. TOPIX 50%. There is a new TSE Sheriff in town asking for PBR 1.0x. BVPS is up. Presumably, forward CF is up.
But the TOB Price is unchanged. That is disappointing. One reason why a higher price was rejected was that no other buyer approached to take over the company. 🤷🏻‍♂️

Digging into Chosun Ilbo’s Report on SK Group’s SK Innovation & SK E&S Merger Plans

SK Group plans to merge SK Innovation and 90%-owned SK E&S by month-end. Chosun Ilbo’s report solidifies market confidence due to its credibility and likely intentional leak by SK Group.
Initially considered but deemed lower priority than SK IE Technology sale; SK Group opts for this alternative due to challenging market conditions for SKITE sale.
SK Innovation and SKIET rise with hopes of resolving liquidity issues and avoiding sacrifice. SK Inc is negatively impacted by concerns over valuation double counting from this merger.

Sensetime Placement – Seems Highly Opportunistic

SenseTime Group (20 HK) aims to raise up to US$263m via selling around 4.5% stake.
Sensetime hasn’t had the best of times since listing, however, the shares have rebounded recently on generative AI buzz around the stock.
In this note, we will talk about the placement and run the deal through our ECM framework.

Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025.

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Jun 20

Most Read: Mcdonald’s Japan, Infocom Corp, Exedy Corp, Guzman Y Gomez, Hyundai Motor, Lawson Inc, Webtoon Entertainment, Capitol Health and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

JPX Proposes BIG Changes To TOPIX Rules, Affects IPOs More Than Market
Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
Guzman Y Gomez IPO: Listing & Index Inclusion Timeline
Hyundai Motor’s Special Shareholder Return Plan Likely Unveiled in August IR Event
Hong Kong Property: In Need Of A Good Story
KDDI and Lawson: Loyalty Points Just the Start
Webtoon Entertainment IPO – Further Thoughts on Valuation – Acquisitions, Buyouts
Capitol Health (CAJ AU): All-Scrip Non-Binding Merger with Integral Diagnostics
Guzman Y Gomez IPO Trading – Strong Demand, Not All Shares in Escrow

JPX Proposes BIG Changes To TOPIX Rules, Affects IPOs More Than Market

In 2021 the JPX established new Listing Rules, and in April 2022 introduced new market segments (Prime/Standard/Growth) to much fanfare. Today, the TSE basically said those changes were meaningless.
Today, the TSE announced proposed new rules for TOPIX constituent selection. There is a 2-month consultation period, then rules come out end-Sep 2024. Expect few changes from the Proposal.
NextGen TOPIX will be created October 2026. 3-4 dozen ADDs, 500-600 DELETEs to create an index of 1,100-1,200 names. Some obvious large impacts 2+yrs from now, but this changes IPOs.

Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share

15 weeks ago, a specialised media outlet suggested Teijin Ltd (3401 JP) was in process to sell its stake in Infocom Corp (4348 JP).
I caught up later, after the stock had run up significantly, but writing bullishly here and here. Since then, the stock is up another 33-35%.
Today we finally got the announced deal. Blackstone will buy the stock at a valuation of ¥280bn, paying ¥6,060/share for the minority stake, and buying back Teijin’s stake at ¥4,340/share.

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Guzman Y Gomez IPO: Listing & Index Inclusion Timeline

Guzman Y Gomez (0817833D AU) has raised A$335.1m in a primary + secondary offering, valuing the company at A$2.23bn. The stock starts trading on the ASX Ltd (ASX AU) today.
Just over 54% of the shares are escrowed which means there is a lot of stock that will be available for sale on listing day.
Guzman Y Gomez (0817833D AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.

Hyundai Motor’s Special Shareholder Return Plan Likely Unveiled in August IR Event

Hyundai’s IR team appears to have communicated that a new shareholder return policy would be unveiled at the rescheduled CEO Investor Day in August.
Hyundai aims to boost shareholder returns above 30% by canceling ₩800B to ₩1T in shares annually. The new dividend strategy won’t debut in August; last year’s three-year plan stands.
Equal cancellation ratios apply to common and three types of preferred shares. August’s timing, with ISA tax reforms potentially favoring preferred shares, may enhance prefs’ price impact relative to ords.

Hong Kong Property: In Need Of A Good Story

When property advisors (JLL, Knight Frank, CBRE etc) debate the bottom of Hong Kong’s office/retail market, such commentary is often infused with cautious optimism.
And for good reason, as vacancies increase, and rents soften.
Recent press articles and anecdotal evidence suggests market uncertainty lingers, prompting landlords to (further) assess their stance on rents.

KDDI and Lawson: Loyalty Points Just the Start

By Michael Causton

KDDI will complete its acquisition of a 50% share in Lawson this month and the chain will then delist.
KDDI is promising a rapid introduction of services and fresh ideas to leverage its new retail arm.
It will begin by unifying premium loyalty point membership under the Ponta brand and offer new services that it hopes will help boost share. What out LY.

Webtoon Entertainment IPO – Further Thoughts on Valuation – Acquisitions, Buyouts

By Ethan Aw

Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
In our previous notes, we talked about the company’s historical performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we share additional thoughts on valuation.

Capitol Health (CAJ AU): All-Scrip Non-Binding Merger with Integral Diagnostics

On 17 June, Capitol Health (CAJ AU) disclosed a non-binding merger proposal from Integral Diagnostics (IDX AU) at 0.12849 Integral shares per Capitol share.
Integral has been granted a four-week exclusivity period that ends on 15 July. The transaction will require approval from the ACCC and Capitol shareholders.
The offer is attractive compared to historical exchange ratios, trading ranges and peer multiples. At the last close, the gross spread was 11.7%.

Guzman Y Gomez IPO Trading – Strong Demand, Not All Shares in Escrow

Guzman Y Gomez raised around US$221m in its upsized Australian IPO.
GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
We have looked at the company’s performance and valuation in our past notes. In this note, we talk about the trading dynamics.

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Jun 19

Most Read: Hyundai Motor India , Kagome Co Ltd, Infocom Corp, Exedy Corp, Hyundai Motor , Webtoon Entertainment, L’Occitane, E&D Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hyundai Motor India IPO Preview
Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
Webtoon Entertainment (WBTN US) IPO: Valuation Insights
L’Occitane (973.HK) – The Privatization Is About to Succeed
L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co
Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer

Hyundai Motor India IPO Preview

Hyundai Motor India is getting ready to complete its IPO in 2H 2024. Hyundai Motor India plans to offer up to 142.2 million shares (17.5% stake) to investors.
Hyundai Motor (005380 KS) currently owns a 100% stake in Hyundai Motor India. The IPO of Hyundai Motor India could raise as much as US$3 billion.
If Hyundai Motor India (HMI) is valued at US$25 billion and HMC sells a 17.5% stake in the company, HMC’s remaining stake in HMI would be worth nearly US$21 billion.

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase

In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
Friday they announced the Offering. Today shares fell 8+%. This is now cheap.

Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share

15 weeks ago, a specialised media outlet suggested Teijin Ltd (3401 JP) was in process to sell its stake in Infocom Corp (4348 JP).
I caught up later, after the stock had run up significantly, but writing bullishly here and here. Since then, the stock is up another 33-35%.
Today we finally got the announced deal. Blackstone will buy the stock at a valuation of ¥280bn, paying ¥6,060/share for the minority stake, and buying back Teijin’s stake at ¥4,340/share.

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context

Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.

Webtoon Entertainment (WBTN US) IPO: Valuation Insights

Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.

L’Occitane (973.HK) – The Privatization Is About to Succeed

By Xinyao (Criss) Wang

So far, about 49.8% of disinterested shares from Irrevocable Undertakings/Non-binding Letters of Support would accept the Share Offer. Success is within reach based on a “good enough” privatization price.
The Share Alternative is mainly aimed at investors who are hoping for the future re-listing of L’Occitane in the overseas markets – They can still get a vantage point.
However, re-listing seems still distant/uncertain. The value of Rollover Shares in the future remains uncertain. Investors would face risks if they choose the Share Alternative. The Cash Alternative is preferred.

L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump

In a long-awaited development, L’Occitane (973 HK) announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip).
This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).

KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co

Paradise Co Ltd (034230 KS) will move from the KOSDAQ Market to the KOSPI Market from the open of trading on 24 June.
E&D Co Ltd (101360 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 21 June to replace Paradise Co Ltd (034230 KS).
Paradise Co Ltd (034230 KS) belongs to the Consumer Discretionary sector and there is a possibility of inclusion to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.

Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer

Following months of press speculation, Infocom Corp (4348 JP) announced a Blackstone (BX US) tender offer at JPY6,060 per share, a 177.3% premium to the undisturbed price.
After the share consolidation, Infocom will repurchase Teijin Ltd (3401 JP)’s stake at a share repurchase price of JPY4,231. The process is expected to be completed in early October.
The offer is a knockout bid helped by auction. This is a done deal with payment commencing from 7 August. At the last close, the gross spread was 0.5%.

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Jun 18

Most Read: L’Occitane, Great Eastern Holdings, Hyundai Motor India , Exedy Corp, Hengdeli Holdings, XPeng , New Oriental Education & Techn, Kagome Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

L’Occitane (973 HK): Who Owns What, And When
Great Eastern (GE SP): Inching Towards Suspension
L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional
Hyundai Motor India IPO: Key Facts and Financials at a Glance
Exedy Corp (7278 JP): Murakami Becomes a Substantial Shareholder
Hengdeli Holdings (3389 HK): Negative EV Play Halted
Quiddity Leaderboard HSTECH Sep 24: No Changes but US$425mn One-Way Flows Due to Capping
Quiddity Leaderboard HSCEI Sep 24: Two Changes Possible; US$256mn One-Way
Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

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

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

Great Eastern (GE SP): Inching Towards Suspension

Back on the 10th May, OCBC (OCBC SP) made a voluntary unconditional general Offer for the 11.56% in life/non-life insurer Great Eastern Holdings (GE SP) not held.
At a 36.9% premium to last close, the S$25.60/share Offer Price appeared fair. Yet GE has consistently traded through terms, potentially as someone seeks to block delisting, and negotiate terms.
OCBC has now declared terms final. The IFA says “not fair, but reasonable” – and recommends shareholders accept the Offer. GE will be suspended at the close of the Offer.

L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

L’Occitane (973 HK) announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.
The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer.
Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).

Hyundai Motor India IPO: Key Facts and Financials at a Glance

By Devi Subhakesan

Hyundai Motor India’s proposed IPO is an offer for sale by its parent, Hyundai Motor Company, Korea, and reported to raise USD3 billion, potentially making it India’s largest IPO ever.
Hyundai Motor India’s sales growth has been driven by strong domestic and export sales, both in volume and unit realisation.
With SUVs now making up 62% of Hyundai Motor India’s domestic volumes, up from 45% in FY2021, the shift towards premium models has boosted profit margins.

Exedy Corp (7278 JP): Murakami Becomes a Substantial Shareholder

Murakami’s entity, City Index Eleventh, and daughter reported a 5.46% position in Exedy Corp (7278 JP). The shares purchases began two days after the Aisin (7259 JP) secondary offering.
Murakami’s average buy-in price is JPY2,607.30 per share, 2.3% higher than the recent secondary offering price of JPY2,549.
Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents suggest the latter.

Hengdeli Holdings (3389 HK): Negative EV Play Halted

Watch accessory play Hengdeli Holdings (3389 HK) is currently suspended pursuant to the Takeovers Code.
Potentially founder Zhang Yuping (holding 17%), CEO Tony Cheung (16%) and/or Swatch Group (UHR SW) (9.94%) may table an Offer. My money is on Zhang.
This is a very illiquid name. What is interesting is that Hengdeli has net cash of HK$1.3bn – as at 31 December 2023 – against a market cap of HK$0.59bn.

Quiddity Leaderboard HSTECH Sep 24: No Changes but US$425mn One-Way Flows Due to Capping

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the September 2024 index rebal event.
We do not see any index changes in September 2024 but there could be one-way flows of US$425mn due to capping.

Quiddity Leaderboard HSCEI Sep 24: Two Changes Possible; US$256mn One-Way

By Janaghan Jeyakumar, CFA

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in September 2024.
Based on the current data, I see two ADDs and two DELs.

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase

In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
Friday they announced the Offering. Today shares fell 8+%. This is now cheap.

Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

In the past several days, the South Korean Presidential Office has announced that it is pushing for a comprehensive inheritance tax reforms.
Although the Presidential Office mentioned it is pushing to reduce highest inheritance tax rates from 60% to 30%, the more likely scenario is to reduce this rate to about 50%.
The lump sum personal deduction of 500 million won or inheritance tax which has been maintained for nearly 27 years could be doubled to about 1 billion won or more.

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Jun 17

Most Read: Fancl Corp, Keisei Electric Railway Co, Samsung C&T, Great Eastern Holdings, Lynas Corp Ltd, Red 5 Ltd, Webtoon Entertainment, Taiwan Semiconductor (TSMC) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii
Unexpected Inheritance Tax Rate Reduction Included in July Tax Reform: Impact on Value-Up Trading
Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair
Merger Arb Mondays (17 Jun) – Fancl, Tatsuta, A8, China TCM, GAPack, CPMC, Malaysia Airports, Bapcor
MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes
MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$400m
Webtoon Entertainment (WBTN US) IPO: The Bear Case
TSMC (2330.TT; TSM.US): CoWoS Demand Continues to Increase in 2024.
Ohayo Japan | A Quieter Week Ahead

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

The Palliser/Keisei Electric Railway Co (9009 JP) is an unconvincing trade. Avoid being long Keisei vs Oriental Land (4661 JP) except in short-term impact events. Avoid the drift trade also.
On the subject of activism, keep an eye on China Merchants China Direct Investments (133 HK)‘s 20th June AGM. If Kan’s re-election is rejected, this stock should gain more momentum.
A Sigma Healthcare (SIG AU)/Chemist Warehouse merger carried regulatory risk. And now the ACCC has raised a raft of concerns.

Unexpected Inheritance Tax Rate Reduction Included in July Tax Reform: Impact on Value-Up Trading

Senior Presidential Secretary said this morning that a tax reform, including reducing inheritance tax rates to the OECD average, will be disclosed in late July with the tax reform plan.
Stocks sensitive to reduced inheritance tax, notably Hyundai Motor Group subsidiaries like Hyundai Glovis and Hyundai Motor, could see significant attention amid governance restructuring efforts under Chung Eui-sun.
Retroactive application and its extent may impact markets, potentially affecting groups like Samsung, influencing diverse investment strategies based on specifics.

Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair

Great Eastern Holdings (GE SP) IFA opines that the OCBC (OCBC SP) S$25.60 offer is NOT fair but reasonable as it is below the valuation range of S$28.87-S$36.19 per share.
In response, OCBC declared the price final, and the final closing date is 12 July. Great Eastern will likely breach free float requirements and be suspended when the offer closes.
The offer will likely follow the Boustead Projects/Boustead Singapore blueprint, where SGX RegCo eventually (took seven months) enabled dissenters to receive a fair offer with a 24% uplift.

Merger Arb Mondays (17 Jun) – Fancl, Tatsuta, A8, China TCM, GAPack, CPMC, Malaysia Airports, Bapcor

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Fancl Corp (4921 JP), Asia Cement China (743 HK), Ansarada Group Ltd (AND AU).
Lowest spreads: Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP).

MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes

Core Lithium Ltd (CXO AU) and Piedmont Lithium (PLL US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close on 21 June.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 6.4% and in a one-way trade of US$28m.
The largest inflows will be in Sociedad Quimica y Minera de Chile (SQM US), Pilbara Minerals (PLS AU), Arcadium Lithium (ALTM US), Lithium Americas (LAC US) and Sigma Lithium (SGML).

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$400m

There are no constituent changes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in June but there are a lot of float and capping changes.
Estimated one-way turnover is 3.9% resulting in a round-trip trade of US$418m. There are 17 stocks with over 1x ADV to trade from passive trackers.
The largest inflows are expected in Cia de Minas Buenaventura SAA (BVN US), Equinox Gold (EQX US) and Red 5 Ltd (RED AU).

Webtoon Entertainment (WBTN US) IPO: The Bear Case

Webtoon Entertainment (WBTN US), a global storytelling platform, seeks to raise up to US$500 million through a Nasdaq IPO.
In Webtoon Entertainment IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on declining organic revenue, declining Korean paying ratio, a peaking Japan growth driver, optimistic market sizing, and unsustainable low marketing spending.

TSMC (2330.TT; TSM.US): CoWoS Demand Continues to Increase in 2024.

By Patrick Liao

The yearly growth target could approach 25% YoY in 2024.
TSMC’s CoWoS demand continues to rise, with capacity expected to increase by approximately another 5% in 2024.
TSMC’s stock price has risen by 55% in Taiwan and by 66.3% in US markets this year. We believe it has the potential to continue increasing further.

Ohayo Japan | A Quieter Week Ahead

By Mark Chadwick

Hopes of easing inflation supported a weekly rise of 1.6% for the S&P 500 and 3.2% for the Nasdaq.
Sakana AI, founded in July 2023 by ex-Google researchers and a former Japanese official, is set to raise $125 million at a $1.1 billion valuation, becoming Japan’s fastest unicorn
Kirin Holdings plans to acquire additional shares of FANCL Corporation through a tender offer and share warrants to make FANCL a wholly-owned subsidiary

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Jun 16

Most Read: Fancl Corp, Enchem, Great Eastern Holdings, Jeisys Medical, Abacus Storage King, Lynas Corp Ltd, NVIDIA Corp, Sun Corp, Keisei Electric Railway Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
Block Deal Sale of 3.6% Shares of Enchem
Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair
(Mostly) Asia-Pac M&A: Fancl, Jeisys Medical, A8 New Media, Bapcor, Helios Techno,Tatsuta Electric
MV Australia A-REITs Index Rebalance: Abacus Storage King Deleted (Finally!)
MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes
MV US Listed Semiconductor 25 Index Rebalance: US$1bn to Sell in NVIDIA
Weekly Deals Digest (16 Jun) – Sun Corp, Fancl, Tatsuta, Great Eastern, A8, Webtoon, Shift Up
Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price.
The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light.

Block Deal Sale of 3.6% Shares of Enchem

After the market close on 14 June, it was reported that Woori PE/other investors will be selling 705,384 shares of Enchem in a block deal, representing 3.6% of outstanding shares.
The block deal discount rate ranges from 6.9% to 8.92%, resulting in potential block deal sale price of 270,500 won to 276,500 won.
We would not subscribe to this block deal and we are concerned about the valuations of Enchem after a sharp share price appreciation this year.

Great Eastern Holdings (GE SP): Playbook as OCBC Offer Declared Final, IFA Opines NOT Fair

Great Eastern Holdings (GE SP) IFA opines that the OCBC (OCBC SP) S$25.60 offer is NOT fair but reasonable as it is below the valuation range of S$28.87-S$36.19 per share.
In response, OCBC declared the price final, and the final closing date is 12 July. Great Eastern will likely breach free float requirements and be suspended when the offer closes.
The offer will likely follow the Boustead Projects/Boustead Singapore blueprint, where SGX RegCo eventually (took seven months) enabled dissenters to receive a fair offer with a 24% uplift.

(Mostly) Asia-Pac M&A: Fancl, Jeisys Medical, A8 New Media, Bapcor, Helios Techno,Tatsuta Electric

I 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.
Three new deals discussed this week: Fancl (4921 JP)‘s Tender offer, A8 New Media (800 HK)‘s Scheme, and Jeisys Medical (287410 KS)‘s delisting offer. Bain also approached Bapcor (BAP AU).
Key updates took place on: Sigma Healthcare (SIG AU), Alumina (AWC AU), Greatview Aseptic Packaging (468 HK), Helios Techno (6927 JP), and Tatsuta Electric Wire & Cable (5809 JP).

MV Australia A-REITs Index Rebalance: Abacus Storage King Deleted (Finally!)

Abacus Storage King (ASK AU) will be deleted from the Vaneck Vectors Australian Property ETF (MVA AU) in June. There are float changes and capping changes too.
Estimated one-way turnover is 3.33% and will result in a one-way trade of A$19m. There are a couple of stocks with over 1x ADV to trade.
There has been a recent spike in shorts on Abacus Storage King (ASK AU) but passive selling will be larger than the short interest.

MV Global Rare Earth/Strategic Metals Index Rebalance: Two Deletions & Other Changes

Core Lithium Ltd (CXO AU) and Piedmont Lithium (PLL US) will be deleted from the VanEck Rare Earth/Strategic Me (REMX US) at the close on 21 June.
Constituent changes, float changes and capping changes result in an estimated one-way turnover of 6.4% and in a one-way trade of US$28m.
The largest inflows will be in Sociedad Quimica y Minera de Chile (SQM US), Pilbara Minerals (PLS AU), Arcadium Lithium (ALTM US), Lithium Americas (LAC US) and Sigma Lithium (SGML).

MV US Listed Semiconductor 25 Index Rebalance: US$1bn to Sell in NVIDIA

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in June but there are a lot of float and capping changes.
There is US$1bn to sell in NVIDIA Corp (NVDA US) while there will be passive buying in Advanced Micro Devices (AMD US) and Intel Corp (INTC US).
The selling in NVIDIA Corp (NVDA US) will offset part of the potential passive buying from Technology Select Sector SPDR (XLK US) and other similar ETFs.

Weekly Deals Digest (16 Jun) – Sun Corp, Fancl, Tatsuta, Great Eastern, A8, Webtoon, Shift Up

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
Event-Driven developments: Sun Corp (6736 JP), Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), A8 New Media (800 HK), Bapcor.

Last Week in Event SPACE: Keisei Electric, CMCDI, Sigma Healthcare, Sun Corp, Segantii

The Palliser/Keisei Electric Railway Co (9009 JP) is an unconvincing trade. Avoid being long Keisei vs Oriental Land (4661 JP) except in short-term impact events. Avoid the drift trade also.
On the subject of activism, keep an eye on China Merchants China Direct Investments (133 HK)‘s 20th June AGM. If Kan’s re-election is rejected, this stock should gain more momentum.
A Sigma Healthcare (SIG AU)/Chemist Warehouse merger carried regulatory risk. And now the ACCC has raised a raft of concerns.

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Jun 15

Most Read: Hyundai Mobis, EcoPro Materials, Shift Up, Fancl Corp, Helios Techno Holding, Webtoon Entertainment, Shiseido Company, Enchem and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group
Another Block Deal Sale of Ecopro Materials
Shift Up IPO – Refiling and Other Updates, Not Ranked at the Top Anymore
Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer
Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…
Clarifying BRV’s Post-Block Deal Lockup Conditions Involving Ecopro Materials
Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value
Webtoon Entertainment Pre-IPO – Peer Comparison – Relatively Small in Operating Scale as a Platform
Shiseido (4911 JP): Brainstorming For Potential Buyers
Block Deal Sale of 3.6% Shares of Enchem

The Latest on the Rumors Surrounding the Death of Chung Mong-Koo of Hyundai Motor Group

Early this morning, rumors spread that Hyundai’s honorary chairman Chung Mong-koo was hospitalized and died, causing stock prices to surge, but Hyundai denied this news.
Control of Hyundai hinges on increasing the stake in Mobis. Chung Eui-sun aims to keep Mobis’s stock low, but Chung Mong-koo’s health complicates timing and strategy.
Mobis’s trading point depends on Chung Mong-koo’s health. Three scenarios: he’s healthy, critically ill, or deceased. Current rumors’ price impacts are unlikely to subside soon.

Another Block Deal Sale of Ecopro Materials

Shares of EcoPro Materials are down 16% today to 112,300 won, due to another block deal sale of by BRV Capital in the after hours trading on 13 June.
After the second block deal sale on 14 June, BRV’s stake declined further from 21.2% to 18.2%.
This block deal sale at a big discount is likely to raise overhang concerns about further block deal sales by BRV Capital in the coming months/years.

Shift Up IPO – Refiling and Other Updates, Not Ranked at the Top Anymore

Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
We have looked at the company’s performance, undertaken a peer comparison and talked about valuations in our past notes. In this note, we talk about the refiling and other updates.

Fancl (4921 JP): Kirin (2503 JP)’s Light JPY2,690 Tender Offer

Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price.
The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light.

Fancl (4921) TOB – Kirin (2503) Does the Inevitable and Takes Out Minorities. Lightish But…

Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest.
The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x.
This is lightish… but… this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

Clarifying BRV’s Post-Block Deal Lockup Conditions Involving Ecopro Materials

In Korea, the lockup period for block deals is set by the seller and underwriters, not by law, and can be adjusted if both parties agree.
BRV obtained consent from Goldman, UBS, and KB for a second block deal after assessing that many initial buyers had sold their shares.
Understanding this lockup structure provides key insights into predicting when the next block deal might occur.

Helios Techno Holding (6927) – RS Won’t Bid Higher, Market Sees Value

Today at noon JST, Rs Technologies (3445 JP) released an announcement on TDNet, “Our policy regarding the tender offer for Helios Techno Holding Co., Ltd. shares”
In it, they indicated that the price offered – ¥825/share – is a price which “fully returns to general shareholders the increased enterprise value that will result from [transaction] synergies.”
They acknowledge the market price is trading higher than the TOB Price, but say they have no plans to raise the Tender Offer Price. So now what? It depends.

Webtoon Entertainment Pre-IPO – Peer Comparison – Relatively Small in Operating Scale as a Platform

By Ethan Aw

Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
In our previous note, we talked about the company’s historical performance. In this note, we undertake a peer comparison.

Shiseido (4911 JP): Brainstorming For Potential Buyers

By Steve Zhou, CFA

Today, according to public news, Kirin Holdings will launch a tender offer for Fancl Corp (4921 JP) at a likely 30% premium.
The beauty industry is historically ripe with M&A deals. It is not hard to see why, as the global beauty sector trades at a hefty valuation multiple.
In this insight, we brainstorm for potential buyers of Shiseido Company (4911 JP) and analyze the viability of such.

Block Deal Sale of 3.6% Shares of Enchem

After the market close on 14 June, it was reported that Woori PE/other investors will be selling 705,384 shares of Enchem in a block deal, representing 3.6% of outstanding shares.
The block deal discount rate ranges from 6.9% to 8.92%, resulting in potential block deal sale price of 270,500 won to 276,500 won.
We would not subscribe to this block deal and we are concerned about the valuations of Enchem after a sharp share price appreciation this year.

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Jun 14

Most Read: Yunnan Aluminium Co Ltd A, Apple , Korea Stock Exchange Kospi Index, SK Telecom, A8 New Media, Bharat Heavy Electricals, Sigma Healthcare, Taiwan Semiconductor (TSMC) – ADR, Chow Tai Fook Jewellery and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade
Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows
Specifics of Korea’s Official Short-Selling Regulations, Announced This Morning
Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia
A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.
Ban on Short Selling Stocks in Korea Extended Until March 2025
NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive
Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues
Taiwan Dual-Listings Monitor: TSMC Historically Extreme Premium Continues; CHT at Short Level Again
Chow Tai Fook (1929 HK): Disappointed

CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade

There are 12 changes for the CSI 300 Index (SHSZ300 INDEX) and 50 changes for the CSI Smallcap 500 Index (SH000905 INDEX) in June. Most changes were expected.
There are a lot of stocks with over 1 day of ADV to trade. The round-trip trade in June is estimated to be US$5bn.
The adds have outperformed the deletes for both indices but the return profile of a long adds/ short deletes trade for the CSI500 Index is a lot smoother.

Technology Select Sector Index (XLK US): NVIDIA Could Flip Places with Apple; HUGE Flows

The Technology Select Sector SPDR (XLK US) ETF tracks the Technology Select Sector Index and has an AUM of over US$70bn.
NVIDIA Corp (NVDA US) has broken through the US$3tn market cap barrier and is very close to Apple (AAPL US) in terms of free float market cap.
If NVIDIA ranks higher than Apple on free float market cap at the close on Friday, there could be huge inflows to NVIDIA and outflows from Apple a week later.

Specifics of Korea’s Official Short-Selling Regulations, Announced This Morning

Limiting extensions to four times after a 90-day repayment and mandating repayment after 12 months increases short-selling costs. The revision omits limits on position-holding cycles, disappointing retail investors.
Today’s release did not set a timeline for short-selling resumption. The ruling party has requested it after March 2025, with key officials present suggesting next year March resumption.
Regarding the electronic system implementation, core content aligns with the draft, but newly revealed institution numbers add a new perspective. Uncertainties remain on integrating overseas stock borrowing into the system.

Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

On 12 June, SK Telecom (017670 KS) confirmed that its affiliate Sapeon plans to merge with its competitor Rebellions by end of this year.
Sapeon and Rebellions’ largest global competitor is Nvidia. A key aim of the merger is to challenge Nvidia and try to take away its global dominance in AI chips.
If the combined Sapeon and Rebellion can take away just 1% market share resulting in 1% of Nvidia’s market cap, this would suggest valuation of US$31 billion.

A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.

Following a suspension on the 28th May, property rental play A8 New Media (800 HK) has now announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
The Cancellation price is $0.36, a whopping 162.77% to last close. The price is final.
This is a done deal. But A8 is an illiquid micro cap.

Ban on Short Selling Stocks in Korea Extended Until March 2025

On 13 June, the Korean government announced that it will extend a ban on short selling stocks in Korea until end of March 2025.
For now, the government has not given a 100% go-ahead on the end of the ban on short selling stocks starting 1 April 2025.
However, in our view, the government is likely to allow short selling stocks in Korea once again, sometime in 2Q 2025.

NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive

With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

Sigma/Chemist Warehouse Merger: ACCC Has (Many) Issues