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Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

Zhejiang Expressway (576 HK): Life In The (Too) Fast Lane

On the 6 November 2023, Zhejiang Expressway Co H (576 HK) announced its rights offering on both its H-Shares and its A-Shares, previously mooted on 23 May.
The rights were discussed by Travis Lundy in Zhejiang Expressway (576 HK) Rights Offering – The Dynamics May Be Interesting. He liked the stock. That was a good call.
The current implied stub – net of Expressway’s 40.3% look-through stake in Zheshang Securities (601878 CH) – is back to pre-Covid levels. I’d be looking to unwind the stub here.

S&P/ASX Index Rebalance Preview: Lots of Changes; A$1bn to Sell in Newmont

With over 80% of the review period complete, there could be 26 adds/deletes across the S&P/ASX family of indices in March.
The largest flow will be on Newmont (NEM AU) due to the potential S&P/ASX 20 Index deletion and a large decrease in the number of shares held in Australia.
There will be 1.2-38 days of ADV to buy in the inclusions while the impact on the deletions will range between 1-21 days of ADV.

Quiddity Leaderboard STAR 50 Mar 24: Three Changes; ~US$1bn One-Way; Some Trade Ideas

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the March 2024 index rebal event.
I currently expect three changes for the STAR 50 index in March 2024.

PT Avia Avian (AVIA IJ) – A More Glossy Future

By Angus Mackintosh

Avia Avian (AVIA IJ) is Indonesia’s largest paint manufacturer with a strong track record, selling a wide range of architectural solutions products, with a countrywide distribution network.
The company continues to add to its product portfolio by adding more affordable products to cater for consumers trading down due to inflationary pressures depressing disposable incomes.
Avia Avian continues to add to its distribution network and has introduced express delivery that allows retailers to take more products but less inventory. Valuations are attractive with supportive dividends.

L&F (066970 KS): Will the Stock Move Like PoscoDX Following the KOSDAQ to KOSPI Transfer?

Posco DX (022100 KS) rallied 50% following approval of its application to transfer from the KOSDAQ to the KOSPI market. Then the stock dropped 20% following completion of the transfer.
With L&F Co Ltd (066970 KS) applying for a section transfer a couple of weeks after Posco DX (022100 KS), approval could be imminent.
L&F Co Ltd (066970 KS) is up 46% since the start of November, but the stock has performed in line with the average of its peers.

A/H Premium Tracker (To 12 Jan 2024): STAY Long Hs Vs As: Premia Still Wide, Huge High-Div SOE Perf

The New and Better (5mos old) 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 flows were net negative (ETFs negative, high-div SOEs positive) and NORTHBOUND flows a small net sell. AH premia rose slightly on average. Especially at narrow premia.
STILL time to go long Hs vs As for the new year. 52wk wide discounts were just four weeks ago. Wide A/H premia in renewables space look vulnerable.

TRYT Lock-Up – 60% of Outstanding to Be Released, Baring Would Have to Exit Sooner or Later

By Clarence Chu

TRYT (9164 JP) was listed on the TSE on 22nd July 2023. The IPO had been a 100% secondary offering.
TRYT offers employee placement services and temporary staffing services for the elderly care, nursing care and childcare workers segments.
Coming up for six-month lockup is the sole pre-IPO investor who had sold some of its stake earlier in the IPO.

Quiddity Leaderboard ChiNext & ChiNext 50 Jun 24: Double Impacts for Some Names

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
In this insight, we take a look at the names leading the race to become ADDs and DELs in the June 2024 index rebal event.

Insiders Are Buying Shares In These Korean Companies in January 2024

We provide a list of four companies including Fila Holdings, Kolmar BNH, KG Mobility, and Hanwha Galleria where the insiders have been buying shares of their own companies.
These four stocks are up on average 5.6% in the past one month, outperforming KOSPI which is down 1.6% in the same period.
Insiders at Fila Holdings are probably increasing their stakes to capitalize on the price discrepancy as Fila Holdings’ 51% stake in Acushnet is 39% more than its current market cap.

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Jan 15

Most Read: Fuji Soft Inc, Open House, BYD Electronics, Shinko Electric Industries, Nikkei 225, Posco DX, Samsung Electronics, Strike Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far
Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light
Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX
Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao
EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?
KOSPI200 Index Rebalance Preview: Four Potential Changes in June
ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance
Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead
Costa Group (CGC AU): Potential ASX200 Replacements

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds.
A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022.
A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

Fuji Soft (9749) – Much Better Governance Process But The Stock Has Run Too Far

After 3D Investment Partners bought a large slug of Fuji Soft Inc (9749 JP) in early 2022, the company started a review of governance and capital allocation.
The company updated investors in August, and bought in 4 listed subs in November-December 2023. The August update suggested a Q1 2024 decision on use/ownership of real estate.
The Final Report is due in a month. In the meantime, the stock rallied Friday off a news article suggesting the Board was reviewing take-private proposals. Yes, but…

Japan – Increasing Shorts on Some Interesting* Stocks; Positioning Appears Light

Some stocks have continued to underperform the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios next month.
Stocks that were expected to be deleted (but could now be safe) have outperformed the Nikkei 225 (NKY INDEX) over the last couple of weeks.
There has been two-way flow in a lot of stocks with market participants increasing and covering short positions as the stock prices have moved around.

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK).
Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US).

Merger Arb Mondays (15 Jan) – Shinko Electric, Benefit One, T&K Toka, Taisho, IJTT, IRC, Weiqiao

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Hollysys Automation Technologies (HOLI US), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Probiotec Ltd (PBP AU), Irc Ltd (1029 HK), Orecorp Ltd (ORR AU).
Lowest spreads – Tietto Minerals Ltd (TIE AU), T&K Toka Co Ltd (4636 JP), Pact Group Holdings (PGH AU), Benesse Holdings (9783 JP), Taisho Pharmaceutical Holdin (4581 JP).

EQD | Nikkei 225 WEEKLY Lift Off: Can It Go Higher?

By Nico Rosti

The Nikkei 225 INDEX experienced a 1-week explosive rally, last week, reaching nearly +6.6% higher than the previous week’s Close.
The index is now very overbought, can it continue to rise next week? and and how much higher can it go?
Go SHORT in the 36000-38350 price area, but the trade is not without risk.

KOSPI200 Index Rebalance Preview: Four Potential Changes in June

Less than halfway through the review period, we see four changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
The impact on the potential inclusion ranges from 0.14-6 days of ADV while the impact on the potential deletions varies from 3.6-12 days of ADV.
There are small shorts on the potential inclusions while short interest on the potential deletions varies from 5-10 days of ADV and 1.7-8.2% of free float.

ECM Weekly (14th Jan 2024) – Samsung, Lasertec, Ayala, Indigo, Amer, IPO Pipeline, 2023 Performance

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, a number of large filings over the holidays is somewhat positive for 2024 prospects.
On the placement front, 2024 picked up where 2023 left off, with Samsung Electronics (005930 KS) leading the way.

Ohayo Japan | Nikkei Outpaces Global Stocks; Busy Week Ahead

By Mark Chadwick

In the upcoming week, market focus includes U.S. retail sales, bank earnings, Davos discussions on global economic challenges, China’s GDP figures, and volatile oil prices amid geopolitical tensions.
Fujitsu faces scrutiny in Britain regarding potential compensation for post office operators falsely accused of embezzlement due to glitches in its accounting system from the 1990s into the 2010s.
Yaskawa’s 9M financials show a 6% YoY net profit decline at 34bn yen. Motors and robotics, witnessed profit growth despite Chinese economic uncertainties. Orders may be bottoming

Costa Group (CGC AU): Potential ASX200 Replacements

The Scheme Meeting for PSP’s acquisition of Costa Group Holdings (CGC AU) will be held on 30 January and Costa Group could stop trading after the close on 8 February.
Strike Energy (STX AU), SiteMinder (SDR AU) and Audinate (AD8 AU) are potential inclusions to the S&P/ASX 200 (AS51 INDEX) at an ad hoc rebalance.
For the stocks that are not added at the ad hoc rebalance, there is a very high probability of S&P/ASX 200 (AS51 INDEX) inclusion at the March rebalance.

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Jan 14

Most Read: WuXi XDC Cayman , Posco DX, Shriram Finance , Zhongsheng Group, Wipro Ltd, Fujitsu Ltd, Fuji Soft Inc, Taiwan Semiconductor (TSMC) – ADR, Genting Singapore, BYD Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK
HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot
Fujitsu (6702 JP): Horizon Scandal Blows Up
Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges
TSMC Finishes 2023 With A Flourish
Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024
Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

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

We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.

HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time

Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot

Over a third of the way through the review period of the June rebalance, we see one potential index change with Wipro Ltd (WPRO IN) in deletion zone.
There are a bunch of stocks that could be added to the index as a replacement and price changes over the rest of the review period are important.
Passive trackers will need to trade over 1x ADV and over 7x of delivery volume on the index changes, so there will be decent impact on the stocks.

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.

Fuji Soft (9749 JP): A Potential Privatisation Faces Challenges

Fuji Soft Inc (9749 JP) has disclosed that in response to a request from 3D Investment Partners, it has received non-binding privatisation proposals from several private equity funds.
A privatisation proposal would facilitate the exit of 3D, the largest shareholder representing 21.45% of outstanding shares, which has waged an activist campaign since 2022.
A binding privatisation proposal is challenging as the shares have hit a ten-year high, lofty multiple, and the Board seems to prefer its corporate value enhancement measures.

TSMC Finishes 2023 With A Flourish

By William Keating

Q423 revenues amounted to NT$625,529. In US$ terms, using TSMC’s projected exchange rate of 32, this translates to $19.55 billion, a ~13% increase QoQ, and a 2% decrease YoY.
FY 2023 revenues amounted to NT$2,161.74 billion, down 4.5% YoY. In US$ terms, this amounted to $69.1 billion, an 8.8% decrease YoY and the first such YoY decrease since 2009
While we foresee Q124 revenues being down 5-10% QoQ, we expect full year 2024 revenues to grow in the range of 5-10% YoY.

Genting Singapore: A Surprising Value Buy at $1.0l Sgd Driven by Post Covid Catalysts Ahead Die 2024

By Howard J Klein

Parent Genting Berhad Malaysia flagship properties doing well but many of its global holdings spur questions about asset allocation strategy.
Genting Singapore, its integrated resort property Sentosa presents a strong buy story not only because it is undervalued here but because its prospects post covid are strong.
GB’s US footprint by contrast poses questions about the hurdle rate of those huge investments to date given the intense competitive pressures in mature gaming markets.

Index Rebalance & ETF Flow Recap: HSI, LQ45, FXI, 2823 HK, SENSEX

The review period for the next rebalance of a global index kicks off this week and that is where a lot of eyes will be focused.
There were big inflows to ETFs tracking the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) while there were redemptions from the Hang Seng H Share Index ETF (2828 HK).
Inflows continue for iShares Emerging Markets ex China (EMXC US) while there were outflows from iShares ACWI ETF (ACWI US).

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Jan 13

Most Read: Daiwa House Reit Investment, Inabata & Co, Wipro Ltd, Bank Of Japan, Fast Retailing, Orecorp Ltd, KB Financial, Fujitsu Ltd, Benesse Holdings, Samsung Electronics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Japan – Increasing Shorts on Some Interesting Stocks
Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical
SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot
Aequitas Japan IPOs + Placements Broker Performance 2023
Fast Retailing: 1QFY24 Earnings
OreCorp (ORR AU): Musings On The Minimum Bid Price
An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024
Fujitsu (6702 JP): Horizon Scandal Blows Up
Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches
Aequitas Korea IPOs + Placements Broker Performance 2023

Japan – Increasing Shorts on Some Interesting Stocks

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical

On Friday after the close, Inabata & Co (8098 JP) announced Sumitomo Chemical (4005 JP) would sell down a large stake in a ~$200mm secondary equity offering.
Mizuho Bank’s Retirement Benefit Trust account sells down too. Sumitomo Chem will keep 10+% and other crossholders remain.
This is “big” at 80 days of ADV with limited early index demand, but a 10% fall would make this cheap enough to buy vs Peers.

SENSEX Index Rebalance Preview: Likely Wipro Deletion Opens an Index Spot

Over a third of the way through the review period of the June rebalance, we see one potential index change with Wipro Ltd (WPRO IN) in deletion zone.
There are a bunch of stocks that could be added to the index as a replacement and price changes over the rest of the review period are important.
Passive trackers will need to trade over 1x ADV and over 7x of delivery volume on the index changes, so there will be decent impact on the stocks.

Aequitas Japan IPOs + Placements Broker Performance 2023

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

Fast Retailing: 1QFY24 Earnings

By Oshadhi Kumarasiri

Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

OreCorp (ORR AU): Musings On The Minimum Bid Price

On the 27 Dec, to circumvent Perseus (PRU AU)‘s 19.9% dissenting vote, Orecorp (ORR AU) and Silvercorp (SVM CN) agreed to an off-market takeover, on the same terms.
That Offer – A$0.19 in cash and 0.0967 new Silvercorp shares – opened on the 3 January.
Silvercorp paid ~A$0.51/share, on-market, just prior to the Offer. OreCorp is currently trading ~A$0.51-$0.52/share. Is there any legal obligation to set a minimum floor price of A$0.51/share?

An Update on HSCEI Index Related ELS Losses for Korean Financials + BOK’s Pivot in 2024

The local media have started to provide some concrete figures of the amount of losses related to HSCEI related ELS products sold by major Korean banks and securities firms.
If HSCEI continues to remain at about 5,450 to the end of March 2024, the total losses could rise to nearly 1.6 trillion won, impacting more than 45,000 investors.
Concerns about HSCEI index related ELS losses have negatively impacted both the major Korean banks and securities companies in Korea in the past 1-2 months.

Fujitsu (6702 JP): Horizon Scandal Blows Up

By Scott Foster

The UK Post Office “Horizon Scandal” has blown up, putting Fujitsu’s computer system failure on the front pages and on the agenda of Parliament and Prime Minister Sunak.
Fujitsu UK has been awarded £6.8bn in public contracts since 2012. The Justice Secretary is now talking about compensation for the enormous financial and personal damage caused.
Fujitsu’s share price is coming off a new all-time high reached in December. The amount of compensation and loss of potential future contracts is substantial but uncertain.

Benesse (9783) – Through Terms But Maybe Not Enough To Threaten Bump as TOB Launch Approaches

When the announcement for an MBO for Benesse Holdings (9783 JP) was made in November, they suggested it would take 3 months for approvals to launch. SAMR announced approval Wednesday.
Japan approval should be (or have been) easy. One might expect this deal to launch prior to “early February”. The stock is trading through terms…. but…
A reminder that this stock is TOO CHEAP. Bad management means low expectations means a decent premium still ends up at too low a price vs management’s own forecasts.

Aequitas Korea IPOs + Placements Broker Performance 2023

In this note, we will take a look at broker performance for Korea IPOs and placements in 2023.
The following dataset includes all Korean IPOs and placements above US$100m, which amounted to a total of seven deals. Given the small number of deals, we’ll keep the note short.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

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Jan 12

Most Read: Samsung Electronics, Daiwa House Reit Investment, Lasertec Corp, Bank Of Japan, IJTT Co., Ltd., Taisho Pharmaceutical Holdin, Shanghai Rural Commercial Bank, Fast Retailing, InterGlobe Aviation Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
Japan – Increasing Shorts on Some Interesting Stocks
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Aequitas Japan IPOs + Placements Broker Performance 2023
IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer
Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close
Quiddity Leaderboard CSI 300/500 Jun 24: Some Changes in Rankings; US$2.3bn One-Way
Fast Retailing: 1QFY24 Earnings
Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns
Fast Retailing (9983) | Another Stylish Quarter

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes

Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.

Japan – Increasing Shorts on Some Interesting Stocks

There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Aequitas Japan IPOs + Placements Broker Performance 2023

In this note, we will take a look at broker performance for Japanese IPOs and placements in 2023.
The following dataset includes all Japanese IPOs and placements above US$100m, which amounted to a total of 32 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer

In IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book I laid it out like it was. It needed a bump.
It got a bump (IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively) to ¥850/share. From 0.46x PBR it got bumped to 0.48x PBR. For a cash-rich company.
Taking out net cash and securities, paying off deferred tax assets and UPBOs the deal is at 0.41x operating asset book for minorities. Still offensive. Beyond negligent.

Taisho Pharmaceutical (4581 JP): Calm as Offer Heads for the 15 January Close

Taisho Pharmaceutical Holdin (4581 JP)’s MBO JPY8,620 offer closes on 15 January. Since announcing the offer, the shares have traded above terms for 21 out of the 30 trading days.
Japan Catalyst has called the offer’s P/B of 0.85x too low. While shares trading above terms does not guarantee that the tender fails, it does increase the risk of failure.
The offeror has no compelling reason to bump as other activists have not publicly supported Japan Catalyst, the high 55.5% premium to undisturbed price and an achievable minority acceptance rate.

Quiddity Leaderboard CSI 300/500 Jun 24: Some Changes in Rankings; US$2.3bn One-Way

CSI 300 represents the 300 largest stocks by market capitalization and liquidity from the entire universe of Shanghai and Shenzhen Stock Exchanges. CSI 500 represents the next largest 500 names.
In this insight, we take a look at the potential ADDs/DELs for the CSI 300 and CSI 500 rebalance in June 2024.
Since my December 2023 insight, a couple of names have left the CSI 300 Expected ADDs basket and have been replaced by two other names.

Fast Retailing: 1QFY24 Earnings

By Oshadhi Kumarasiri

Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

Interglobe Aviation (Indigo) Lockup – Still Has US$3bn+ Stake Left, After Three Prior Selldowns

InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal’s 25%+ stake will be released from lock-up tomorrow.
He had earlier stated his intention to pare down his stake. He has sold shares in Sep 2022, Feb 2023 and Aug 2023.
In this note, we will talk about the lockup dynamics and possible placement.

Fast Retailing (9983) | Another Stylish Quarter

By Mark Chadwick

We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin.
Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.

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Jan 11

Most Read: Samsung Electronics, Visional , Taisho Pharmaceutical Holdin, China Everbright Bank Co A, Lasertec Corp, Pacific Textiles, Alibaba (ADR), Korea Stock Exchange KOSPI 200 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes
Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better
TOPIX Inclusions: Who Is Ready (Jan 2024)
Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped
Offshore China ETFs Rebalance Preview: Two Changes Expected in March
Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up
Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market
Pacific Textiles (1382 HK): Material Benefits
Aequitas 2024 Asia IPO Pipeline – Hong Kong
A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

Lee Family to Sell 2.6 Trillion Won in Samsung Companies to Pay for Inheritance Taxes

Lee family plans to sell additional 2.6 trillion won worth of Samsung Group companies as part of their fourth installment of inheritance taxes.
This inheritance tax share sale is likely to have a negative impact on Samsung Electronics, Samsung C&T, Samsung SDS, and Samsung Life Insurance.
This may be just a coincidence but the regulators announced today a temporary ban on stock short selling which should help the Lee family to unload their shares.

Samsung Electronics Placement – Somewhat Well Flagged but Could Have Timed It Better

KEB Hana Bank, on behalf of the Lee family, is looking to raise up to US$1.6bn via selling 0.5% of Samsung Electronics (005930 KS)
The deal appears to be somewhat well flagged, however, the timing could have been much better.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

TOPIX Inclusions: Who Is Ready (Jan 2024)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
There are couple of other pre-event names that we have been tracking for the past few months.

Taisho Pharma (4581) – Slouching Activism May Not Get This Bumped

Six+ weeks ago, the founding family which controls a 33% stake in cash-rich Taisho Pharmaceutical Holdin (4581 JP) announced a Tender Offer MBO to buy out minorities.
¥8,620/Share is 0.85x PBR but the takeover is at 0.72x operating assets with net debt at zero That’s low – comps are 2+x book and twice the EV/EBITDA ratio.
But the scourge that is cross-holding investors blindly following management means they have 61-63% before this gets started, and only one small firm has voiced an objection.

Offshore China ETFs Rebalance Preview: Two Changes Expected in March

Based on the close of 8 January, there could be two changes for the iShares A50 China (2823 HK)/ CSOP A50 (HKD) (2822 HK) in March.
Shaanxi Coal Industry (601225 CH) and China Everbright Bank Co A (601818 CH) could replace Bank Of Ningbo Co Ltd A (002142 CH) and Aier Eye Hospital Group (300015 CH).
The impact of passive trading will be higher on the inclusions compared to the deletions. Then there are cash and carry positions that will be rebalanced, adding to flow.

Lasertec (6920) Accelerated Block Offering – ¥60bn Likely Easily Taken Up

Today after the close, there was word of an Accelerated Block Offering by two banks on Lasertec Corp (6920 JP), selling ¥61+bn or US$425mm of shares.
The Nikkei 225 hit a new 34-year high today, and this caused some tech stocks and high-weights to perform very well vs their peers.
This should cause the deal to get taken up easily. HOWEVER, it pays to know where the stock is. The register isn’t what volume tells you it might be.

Lasertec Placement – Opportunistic Selldown Will Be Easily Digested by the Market

By Clarence Chu

MUFG Bank and Mitsubishi UFJ Trust and Banking are looking to raise around US$425m from selling their respective stakes in Lasertec Corp (6920 JP).
Given the strong momentum on the stock, combined with the wave of shareholders ending their cross-shareholdings in Japan, we would argue that the deal is somewhat expected.
Despite the remaining overhang on the stock, the deal would be easily digested by the market as well, representing just 0.14 days of the firm’s three month ADV.

Pacific Textiles (1382 HK): Material Benefits

Back in June 2017, Toray Industries (3402 JP) acquired a 28.03% stake in Pacific Textiles (1382 HK) (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.
Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC.
Relatively inexpensive, high digit yield and M&A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for Weiqiao (2698 HK) and David Webb taking a 5% stake.

Aequitas 2024 Asia IPO Pipeline – Hong Kong

In this note, we will take a look at the Asia Pacific IPO pipeline for 2024, starting with Hong Kong.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

A Comprehensive Update on Implementation of Block Deals Pre-Disclosure in Korea

By Sanghyun Park

The effective date, required by law to start six months post-promulgation, suggests implementation around July this year.
Enforcement decrees and regulations, under the Financial Services Commission’s purview, must be confirmed before the effective date (within six months post-promulgation). The announcement is likely in early to mid-March.
Expecting the amendment, there may be a pre-July surge in block deals as major shareholders expedite plans, creating assertive market activity in the first half with potential trading opportunities.

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Jan 10

Most Read: Samsonite, Socionext, Visional , T&K Toka Co Ltd, Wilmar International, Tencent, Ayala Corporation, Alibaba (ADR) and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
March 2024 Nikkei 225 Rebal: Socionext, Disco, and a Consumer Goods Stock, Still
TOPIX Inclusions: Who Is Ready (Jan 2024)
T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain
StubWorld: Wilmar’s All-Time High Implied Stub As Yihai Kerry Touches New Lows
Aequitas 2023 IPOs and Placements Performance Review – IPOs Forming a Low Base, Placements Pick Up
Aequitas HK IPOs + Placements Broker Performance 2023
KOSPI Superperformance Stocks (2019-2023)
Ayala Corp Placement – While Overhang Will Exist, the Stock’s Momentum Has Been Strong
Aequitas 2024 Asia IPO Pipeline – Hong Kong

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.

March 2024 Nikkei 225 Rebal: Socionext, Disco, and a Consumer Goods Stock, Still

No changes in the rankings since last time. Socionext (6526), Disco (6146), and a Consumer Goods stock (Zozo (3092) top-ranked, Ryohin Keikaku (7453) a better choice) are ADDs.
The DELETEs are still Takara Holdings (2531), Pacific Metals (5541), Sumitomo Osaka Cement (5232) with a dark horse candidate in Hitachi Zosen (7004) to replace Takara.
There is the upweight to Nitori (9843) but now less funkiness with Fast Retailing (9983). But it will continue being an interesting Nikkei 225 influence (for years to come).

TOPIX Inclusions: Who Is Ready (Jan 2024)

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Furuya Metal (7826 JP) and Visional (4194 JP) are expected to be included in the TOPIX index at the end of January 2024
There are couple of other pre-event names that we have been tracking for the past few months.

T&K TOKA (4636 JP): Expect ANOTHER Blandiloquent But Bletcherous Bump From Bain

In August when Bain announced that it would launch a Tender Offer for T&K Toka Co Ltd (4636 JP) I suggested in my first piece it was the wrong price.
I suggested it needed another ¥1,000 added onto the price. If the ¥1,300 price Dalton initially indicated seemed low to T&K TOKA, another ¥100 doesn’t seem right.
It took time. Now it looks like a tender offer launch is imminent. The stock has traded through terms for almost 5 months, but not by a lot.

StubWorld: Wilmar’s All-Time High Implied Stub As Yihai Kerry Touches New Lows

Wilmar International (WIL SP)‘s current implied stub and simple ratio (Wilmar/Yihai Kerry Arawana Holdings C (300999 CH)) are both at all-time highs.
Preceding my comments on Wilmar are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Aequitas 2023 IPOs and Placements Performance Review – IPOs Forming a Low Base, Placements Pick Up

2023 marked our eighth year covering Equity Capital Markets in Asia Pacific. In 2023, IPOs didn’t pick up much from the low base of 2022 while placements showed upward momentum.
We ended 2023 with an accuracy rate of 73.7% across 57 IPOs that we covered and 79.3% across 115 placements.
For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.

Aequitas HK IPOs + Placements Broker Performance 2023

In this note, we will take a look at broker performance for HK IPOs and placements in 2023.
The following dataset includes all HK IPOs and placements above US$100m, which amounted to a total of 27 deals.
The deals you see in this note are based on our historical IPO and placement tracker. Feel free to drop us a message for additional information.

KOSPI Superperformance Stocks (2019-2023)

In this insight, we analyze the top 10 performing stocks in KOSPI in each of the past five years (2019-2023) as well as for this entire period.
The top 10 performing stocks in KOSPI were up on average 310% in 2023, sharply outperforming KOSPI which was up 19%.
There are some important takeaways from a review of the top 10 performing stocks in each of the five years in KOSPI, including market cap, sector rotation, and turnarounds.

Ayala Corp Placement – While Overhang Will Exist, the Stock’s Momentum Has Been Strong

By Clarence Chu

Mitsubishi Corp (8058 JP) is looking to raise US$100m via trimming a portion of its stake in Ayala Corporation (AC PM).
Despite being not explicitly well flagged, Mitsubishi had sold before back in Jan 2019, and in Mar 2018. Thus, we would argue that the deal here is somewhat expected.
While the deal would represent 43 days of the stock’s three month ADV, the recent selldowns by Mitsubishi had held up in the first week.

Aequitas 2024 Asia IPO Pipeline – Hong Kong

In this note, we will take a look at the Asia Pacific IPO pipeline for 2024, starting with Hong Kong.
This list has been compiled on a best effort basis from tracking the company filings and through various other sources.
The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

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Jan 09

Most Read: Tower Bersama Infrastructure, Aoki Super, Wuxi Biologics, L&F Co Ltd, Socionext, Samsonite, TDCX, Hollysys Automation Technologies, Wipro Ltd, Doosan Robotics and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves
Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
FXI Rebalance Preview: Two Potential Changes in March
Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns
March 2024 Nikkei 225 Rebal: Socionext, Disco, and a Consumer Goods Stock, Still
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March
TDCX (TDCX US): Laurent Junique’s NBIO
Hollysys (HOLI US): 8th Feb Shareholder Vote. Dazheng Fails The Sniff Test
Quiddity Leaderboard BSE/SENSEX Jun 24: Wipro SENSEX Deletion Possible
An Early Look at the Potential KOSPI200 Rebalance Candidates in June 2024

LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves

The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)

The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO.
This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO.
This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.

FXI Rebalance Preview: Two Potential Changes in March

With a few weeks to go in the review period, CGN Power (1816 HK) and Yankuang Energy Group (1171 HK) could be added to the ETF in March.
China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK) are potential deletions while there is another stock close to deletion zone.
There are a lot of shorts on Yankuang Energy in terms of days of ADV and as a percentage of float while short interest on the other stocks is lower.

Event Trading on KOSPI Transfer Listings: Notable Post-Listing Price Patterns

By Sanghyun Park

In the past year, four KOSPI transfer listings showed similar patterns, with pre-listing price increases and substantial corrections in the first five trading days post-listing.
ChatGPTAmid a sideways market and a 54.2% YoY growth in the local ETF market last year, the impact of passive flow imbalances may have been more significant than before.
A key factor is the short-selling ban. Posco DX’s SSFs showed significant backwardation pre-KOSPI listing, concentrating proactive short positions, requiring caution in adjusting pre-listing short position costs.

March 2024 Nikkei 225 Rebal: Socionext, Disco, and a Consumer Goods Stock, Still

No changes in the rankings since last time. Socionext (6526), Disco (6146), and a Consumer Goods stock (Zozo (3092) top-ranked, Ryohin Keikaku (7453) a better choice) are ADDs.
The DELETEs are still Takara Holdings (2531), Pacific Metals (5541), Sumitomo Osaka Cement (5232) with a dark horse candidate in Hitachi Zosen (7004) to replace Takara.
There is the upweight to Nitori (9843) but now less funkiness with Fast Retailing (9983). But it will continue being an interesting Nikkei 225 influence (for years to come).

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for March

At 82 index constituents currently, we expect the index committee to progress towards reaching 100 constituents. We are (highly) unlikely to reach the target this calendar year though.
We highlight nine stocks that have a decent chance at being added to the index over the next couple of rebalances. All companies are profitable and meet inclusion requirements.
The market consultation on proposed changes to the Hang Seng Industry Classification System (HSICS) could lead to more inclusions from the Information Technology sector from the June rebalance.

TDCX (TDCX US): Laurent Junique’s NBIO

TDCX (TDCX US), a Singapore-headquartered digital customer experience (CX) provider, has announced a preliminary non-binding proposal from Laurent Junique, founder/CEO, and largest shareholder (98.3% of the voting power).
Junique is offering US$6.60/ADS, a 39% premium to the 30-day VWAP, but a 63% discount to its IPO price a little over two years ago.
One issue dogging TDCX is the key man risk given Junique’s almost absolute control. Now he’s trying to take the company private on the cheap.

Hollysys (HOLI US): 8th Feb Shareholder Vote. Dazheng Fails The Sniff Test

Hollysys Automation Technologies (HOLI US) has announced that an EGM is scheduled for February 8th to vote on the merger agreement with Ascendent Capital Partners.
The Offer price remains at US$26.50/ADS. The shareholder approval required is simple majority. Regulatory approvals include NDRC, MoC and SAFE. Maybe a national security review.
And the Dazheng consortium? Apparently insufficient information as to its financing sources and consortium structure ruled it out. Separately, the SGM to spill the board has now been called off.

Quiddity Leaderboard BSE/SENSEX Jun 24: Wipro SENSEX Deletion Possible

In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the June 2024 index rebal event.
As things stand, there could be one index change for the SENSEX index.
There could be four ADDs/DELs for the BSE 100 index and four ADDs/DELs for the BSE 200 index.

An Early Look at the Potential KOSPI200 Rebalance Candidates in June 2024

We discuss the potential KOSPI200 rebalance candidates in June 2024. In the past several years, there have been a lot of alpha generating stocks arising from the KOSPI200 rebalances.
The following companies are likely candidates which could be included in KOSPI200 rebalance in June 2024, including Posco DX, Doosan Robotics, Hyosung Heavy Industries Corp, and DS Dansuk.
For the potential exclusion candidates, we included 10 stocks that are in the bottom 5% market caps in KOSPI200.

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Jan 08

Most Read: Shriram Finance , Alibaba (ADR), CNOOC Ltd, Aoki Super, Wuxi Biologics, Inabata & Co, Celltrion Pharm, Tower Bersama Infrastructure, Ola Electric, Weiqiao Textile Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK
Alibaba (BABA US): No Where to Go but Up
A/H Premium Tracker (To 5 Jan 2024): STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving
Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
FXI Rebalance Preview: Two Potential Changes in March
Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical
Last Week in Event SPACE: HS Holdings, Celltrion Pharm, NISA, PICC/PICC P&C
LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves
Weekly Deals Digest (07 Jan) – Ola Electric, Mixue, Aoki Super, Hollysys, Weiqiao Textile, Vinda
Merger Arb Mondays (08 Jan) – Weiqiao Textile, IRC, Aoki Super, Hollysys, OreCorp, Tietto, Pact

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

Posco DX (022100 KS) continues to drop following its section transfer from the KOSDAQ market to the KOSPI market. Short interest in the stock nearly halved in December.
There were big net inflows to China ETFs with creations in CSI 300 Index ETFs and redemptions in ETFs tracking the CSI 500 Index and CSI 1000 Index.
Creations continued in the iShares Emerging Markets ex China (EMXC US) ETF with units outstanding reaching a new high.

Alibaba (BABA US): No Where to Go but Up

By Eric Chen

Alibaba is transforming into a leaner, more efficient and more profitable technology company with sharpened focus on core business and shareholder return.
While we don’t expect growth to define the company in the near future, high single-digit P/E more than compensates for the lack of it.
This worst-performing and cheapest technology stock among global peers stands a big chance of staging a comeback in 2024 in our view.

A/H Premium Tracker (To 5 Jan 2024): STAY Long Hs Vs As: A Premia Still Wide, High Div SOEs Moving

The New and Better (5mos old) 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 flows flat/light and NORTHBOUND flows a significant net buy, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 200+bp.
STILL time to go long Hs vs As for the new year. 52wk wide discounts were just last week. Wide A/H premia in renewables space look vulnerable.

Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio.
Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high.

FXI Rebalance Preview: Two Potential Changes in March

With a few weeks to go in the review period, CGN Power (1816 HK) and Yankuang Energy Group (1171 HK) could be added to the ETF in March.
China Resources Beer Holdings (291 HK) and Wuxi Biologics (2269 HK) are potential deletions while there is another stock close to deletion zone.
There are a lot of shorts on Yankuang Energy in terms of days of ADV and as a percentage of float while short interest on the other stocks is lower.

Inabata & Co (8098) – LARGE Equity Secondary Offering by Sumitomo Chemical

On Friday after the close, Inabata & Co (8098 JP) announced Sumitomo Chemical (4005 JP) would sell down a large stake in a ~$200mm secondary equity offering.
Mizuho Bank’s Retirement Benefit Trust account sells down too. Sumitomo Chem will keep 10+% and other crossholders remain.
This is “big” at 80 days of ADV with limited early index demand, but a 10% fall would make this cheap enough to buy vs Peers.

Last Week in Event SPACE: HS Holdings, Celltrion Pharm, NISA, PICC/PICC P&C

Stay long in HS Holdings (8699 JP).But beware. It is possible that there is a slightly uncomfortable outcome.
Celltrion Pharm (068760 KS) is up 37% since the Celltrion Inc (068270 KS)/Celltrion Healthcare (091990 KS) merger completed; and Inc is up 22%. That’s A LOT of expectation baked in.
NEW NISA details are cute, but governance and corporate buybacks matter more. If better education induces a swing from cash/deposits to risky assets, much of that will happen outside NISA.

LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves

The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.

Weekly Deals Digest (07 Jan) – Ola Electric, Mixue, Aoki Super, Hollysys, Weiqiao Textile, Vinda

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 – Ola Electric (1700674D IN) and Mixue Group (MIX HK) IPOs.
Event-Driven developments – Aoki Super (9977 JP), Hollysys Automation Technologies (HOLI US), Weiqiao Textile Co (2698 HK), Vinda International (3331 HK).

Merger Arb Mondays (08 Jan) – Weiqiao Textile, IRC, Aoki Super, Hollysys, OreCorp, Tietto, Pact

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 – Aoki Super (9977 JP), Hollysys Automation Technologies (HOLI US), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), Probiotec Ltd (PBP AU), Adbri (ABC AU).
Lowest spreads – Pact Group Holdings (PGH AU), T&K Toka Co Ltd (4636 JP), A2B Australia (A2B AU), Tietto Minerals Ltd (TIE AU), IJTT Co., Ltd. (7315 JP).

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Jan 07

Most Read: Gresham House PLC, Tongcheng Travel Holdings , WuXi XDC Cayman , Posco DX, Zhongsheng Group, Hollysys Automation Technologies, Aoki Super, Shriram Finance and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Smartkarma Webinar | Top Trade Ideas in European Event-Driven
Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO
HSCI Index Rebalance Preview and Stock Connect: Potential Changes in March
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time
Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)
Aoki Super (9977 JP): MBO Tender Offer at JPY3,800
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki, Kerry Express Thailand, JOYY, Tietto Mins, Pact Group
Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK

Smartkarma Webinar | Top Trade Ideas in European Event-Driven

By Smartkarma Research

In the next installment of our Webinar series, we go live with Smartkarma Insight Provider Jesus Rodriguez Aguilar.
He will be sharing with us his top trade ideas and insights in the European event-driven space.
From current opportunities, to what we can expect next in the region, join us as we get the full picture from Jesus.

The webinar will be hosted on Wednesday, 23 August 2023, 17:00 SGT/HKT.

Register for the Webinar here

Jesus Rodriguez Aguilar is an Event-Driven Analyst looking across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations.

Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO

It was a busy week with rebalance implementations at the close of trading on Thursday in Korea and then across the region on Friday.
The SET 50 Index changes should be announced this week and the Yuanta TW Div+ ETF will continue to implement the changes till Thursday.
There were inflows to China ETFs during the week while there were big outflows from Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) ETFs.

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

We see 30 potential adds (including plenty of new listings) and 28 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in March.
We expect 26 stocks to be added to Southbound Stock Connect following the rebalance while 25 stocks could be deleted from the trading link and become Sell-only.
There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

HSCEI Index Rebalance Preview: Zhongsheng (881 HK) Should Go This Time

Zhongsheng Group (881 HK) pops up as a potential deletion yet again and a much lower rank raises the probability of deletion to just short of a near certainty.
With BeiGene (6160 HK) failing the Velocity Test for Tradeable Indexes, Zhongsheng Group (881 HK)‘s deletion from the index should result in China Unicom Hong Kong (762 HK)‘s inclusion.
Estimated one-way turnover at the rebalance is 1.47% resulting in a one-way trade of HK$946m. Passives will need to trade over 2.5x ADV on both stocks.

Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid

On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
“The Consortium stands ready to engage with the Board“. The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement.

Aoki Super (9977) MBO at ¥3,800/Share (All-Time High, 15x Forecast FCF)

The family which owns and controls ubiquitous Nagoya supermarket chain Aoki Super (9977 JP) will acquire the 47% it does not own in an MBO.
This appears to be an estate planning exercise, creating a context to hand off ownership from the 77yr old former CEO to his 44yr old son and current CEO.
This comes in at a 44% premium, an all-time high price, and 15+x forecast FCF (even if the forecast looks a little light). This gets done easily.

Aoki Super (9977 JP): MBO Tender Offer at JPY3,800

Aoki Super (9977 JP) has recommended an MBO tender offer of JPY3,800 per share, a 43.9% premium to the undisturbed (5 January).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 13.35% ownership ratio.
Based on the irrevocables, the minimum acceptance condition requires a 28.6% minority acceptance rate. This acceptance rate is achievable as the offer represents an all-time high.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Aoki, Kerry Express Thailand, JOYY, Tietto Mins, Pact Group

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.
Two new deals discussed this week: AOKI Holdings (8214 JP)‘s MBO and in-specied-triggered MTO got Kerry Express Thailand (KEX TB).
Key updates took place on: JOYY (YY US), Tietto Minerals Ltd (TIE AU)and Pact Group Holdings (PGH AU).

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, KRX New Deal, NIFTY50, NEXT50, CNXBANK